LedgerX co-founder Paul Chou is building on the sale of the company he created by raising capital for a new kind of cryptocurrency that can be spent on Earth, the Moon, Mars and beyond.
It’s just before midnight on a rainy autumn Friday. Paul Chou and his entourage dodge puddles on the runway of the Teterboro Airport in New Jersey as they board a Gulfstream private jet bound for Las Vegas. The flight attendant cracks open a bottle of champagne and with a nod welcomes the passengers aboard. The girls disappear into the back and emerge minutes later wearing sequined cocktail dresses and feather boas. Sensing she’s in for a party, the attendant offers a round of tequila shots just as the inertia from the plane taking off to the Bellagio Hotel & Casino, forces her laughing into her seat.
Ostensibly, Chou, 38, is celebrating not only his birthday but the sale for an undisclosed amount of LedgerX, the ground-breaking bitcoin derivatives firm he co-founded with his wife in 2013. As the plane levels off at 45,000 feet, traveling at nearly the speed of sound, Chou hits play on the plane’s sound system, blaring Fuckin’ Problems by A$AP Rocky. He unlocks a black Halliburton briefcase handcuffed to a slender brunette in thigh-high stiletto boots and strikes a pose as he reveals his Audemars Piguet watch, and several plastic baggies obscured by $70,000 worth of hundred-dollar bills.
But the celebration is bittersweet and feels more like what Chou thinks should have been than what it actually was. Three years earlier, just as LedgerX was on the verge of getting historic regulatory permission to trade bitcoin futures, Chou published a fiery tirade against the very regulators he’d been working with for years, getting him and his co-founder wife, fired in the process. Away from the festivities, through a pair of automatic doors that separate the main cabin from a smaller vestibule nearer the cockpit, the mood on the plane changes. Kid Cudi’s ironic anthem, Pursuit of Happiness, plays over the sound system and Chou sinks into an oversized, champagne-colored recliner.
As he stares out the window the lights of New York City disappear around the inky curvature of the Earth behind him. His eyes flicker as if his thoughts have shifted from what might have been to what might be. “There’s a nonzero chance the Earth is doomed,” says Chou, his voice cracking with emotion. “We should have a backup plan.” For entrepreneurs like Elon Musk, Jeff Bezos and Richard Branson, that backup plan is increasingly in outer space, where Musk, the billionaire founder of SpaceX hopes to have tens of thousands of people living by 2040. The moguls are leading the charge to build what Morgan Stanley predicts will be a $1 trillion space economy that same year.
But Chou is concerned these billionaires’ work runs the very serious risk of importing the same preconceived notions and biases that colonists have brought with them for millennia. To subvert the old aphorism that trade follows the flag, he is raising capital from a syndicate of MIT grads to build his next project, Foundation Coin, a new category of digital assets that like bitcoin doesn’t rely on any government, and depending on your interpretation of the law, finally and truly escapes the reach of those meddling regulators. But unlike bitcoin, Foundation is being designed from the ground up to settle transactions on any planet (or moon) in the Solar System. If successful, when the first bodega, or brothel, or bank sets up shop on the moon or Mars—or any other planet surrounding the sun—it will have a new kind of money, void of colonial baggage, ready and waiting.
“Mars is a unique, blank slate starting point where we can try something from scratch,” says Chou. “So we should treat it as such, and then take all the advantages and use that speed that’s going to be necessary for those intrepid people that go there to move as quickly as possible. And we just need a financial bridge to do it.”
In the vacuum that resulted from Chou being forced out of LedgerX in 2019, he started looking anew at an old idea he’d dabbled with years before, called StarCoin. What began as an idea to use starlight to create a unique cryptocurrency key by pegging each oscillation of a light wave to a one or a zero, slowly evolved into an idea for a constellation of satellites that would let anyone spend bitcoin without an internet signal, before settling into a new kind of cryptocurrency that could be spent on any planet in the solar system.
While it takes less than a second for light to travel around the Earth, making it relatively easy to sync up transactions on a terrestrial distributed ledger, it takes an average of 28 minutes for a signal to reach Mars, making it impossible using current tech to ensure the same cryptocurrency isn’t spent on two planets at once. It’s called the double-spend problem.
After helping a few LedgerX staffers who lost their jobs in the weeks following his ouster Chou booked a hotel room in Atlantic City and held a brainstorming session on a whiteboard away from the chaos of New York. “We did math and crypto in a suite,” says Chou. “Then played blackjack at night.” The result was a new kind of consensus mechanism that takes into account the time it takes for light to travel from planet to planet at any given point in their orbits around the sun.
“We know how the speed of light works depending on how close Mars is to Earth at any given point,” he says. “Now it’s a coding problem.”
Then, last October, Chou got a call from LedgerX’s first investor: his mom. She still owned equity in the company and had just learned it was being sold to FTX, which is in the process of adapting its licenses to sell highly lucrative leveraged futures. “It’s obviously gonna be totally huge for the business,” says FTX co-founder and CEO, Sam Bankman-Fried, “If and when that happens.” While terms of Chou’s departure from LedgerX are being kept under tight wraps, he says the sale ended up yielding at least a 10X return for his mother, turning her $100,000 seed investment into a seven-figure sum.
The real celebration, however, didn’t start until the following day when his old LedgerX investors, friends from MIT and elsewhere started to call him, asking about his next project? One previous investor told him in a text: “Let it ride.” Jameel Khalfan, a business developer at Google, and a former classmate of Chou’s who calls him one of the smartest people at MIT, has closed his first investment in the firm for undisclosed terms. He’s now gathering a group of Chou’s former classmates, previous investors in LedgerX and others to form a special purpose vehicle with the sole purpose of backing the firm.
“Every kind of building project, every pizza restaurant that’s open requires some sort of financial resources, whether dollars or yen or euros or whatever,” says Chou. “And if we’re going to build that infrastructure on other planets, we need to rethink how that financial system works.” “If you could design this whole financial system from scratch, what does that look like?” adds Khalfan. “To me, that’s the really exciting part.”
Rechristened Foundation Coin after the Isaac Asimov novel about humanity exploring the furthest reaches of the Milky Way, the cryptocurrency is now much more than scribbles on a whiteboard. Chou calls Foundation Coin Inc, a “DARPA for cryptocurrencies,” inspired by the U.S. State Department’s Defense Advanced Research Projects Agency, that laid the foundation for decades-long projects, leading to the creation of the internet, GPS and other “out there” technologies.
Based in New York, Chou’s team of a half-dozen theoretical mathematicians, computer engineers and blockchain developers from the NSA, NASA and Google are figuring out how to build a new financial infrastructure that helps groups of strangers on different planets avoid the double-spend problem without the need of middlemen. Bitcoin solves this problem by using what’s called a consensus mechanism, known as proof of work, that rewards a network of computers that audit the transactions, sometimes taking a few minutes, other times longer than a day. Chou likens this to a traditional race to a finish line.
“Whoever happens to get their first wins,” he says. But given the great distances in space, Foundation will need more precision. An early version of the white paper describing the technology lays out what Chou calls “transition blocks” that offset the delays resulting from planets revolving at varying distances around the sun. These blocks flip the race concept on its head with what Chou calls proof-of-timed-work. “We can fix it so we know we’re going to get a block within a set period of time,” he says.
Though bitcoin can be sent via the traditional internet or satellite-based alternatives, Foundation will require super-powerful alternatives. NASA already has an array of global radio satellites, the Deep Space Network, sending enhanced signals to spacecraft on other planets. But Chou would prefer the hardware not to be controlled by a government. “I am not talking about sending a confirmation on ACH or a wire transfer to Mars, because who knows who’s gonna be there?”…