5 Questions with Zach Pandl - Managing Director, Research

Last Update 08/02/2023

1. What drew you to a career in finance in the first place?

I had a teacher in high school who handed out copies of the Wall Street Journal. He had us flip to the Money & Investing section and showed us how to read the stock price tables, explained the meaning of 52-week highs and lows, P/E multiples, etc. From that point I was hooked.

My interest has always been drawn to the intersection of macroeconomics and financial markets, rather than corporate finance or accounting. I studied economics in undergrad and graduate school and then began working as a professional economist or “global macro” analyst on Wall Street. Choosing to work as an economist, rather than a financial analyst, has meant my work has been focused on trying to understand the drivers of macroeconomic variables like Gross Domestic Product or inflation, and to gain insight into the direction of assets sensitive to the health of the overall economy, like interest rates or currencies.

2. How did your relationship with crypto begin, and what convinced you to make the career jump?

I’m not sure when I first heard about Bitcoin, but certainly by 2013 it was already being widely discussed in the economics community. I first wrote about Bitcoin in a professional capacity during the 2017-2018 cycle. A colleague and I argued that Bitcoin (or possibly other cryptocurrencies) could be a viable form of money in less developed economies with less functional monetary systems. Historically we see “Dollarization” in these places—the use of the US Dollar instead of the national currency—so it seemed possible we could also see “crypto-ization” (and to some extent this is happening). As Decentralized Finance (DeFi) emerged in the most recent cycle, I went much deeper into crypto and could imagine a much wider range of applications for this public blockchain technology. 

At some point in this process I decided I wanted to move full-time into crypto—hopefully for the rest of my career. I find the subject matter incredibly interesting and think that public blockchain technology will eventually be ubiquitous. I felt a need to watch this all play out up close.

3. Why join Grayscale in particular?

The first reason was integrity. It was important for me to join a firm that takes its regulatory responsibilities seriously, that establishes best practices when the rules of the road are unclear, and that always acts in the best interest of investors. 

The second reason was the business model. As a leading asset manager, Grayscale will very likely benefit as crypto market capitalization grows over time. It has a big head start in the US market and a track record of successfully launching and managing new products.

Lastly, I was impressed with the leadership team. They are in it to win it.

4. What do your former colleagues in traditional finance misunderstand most about crypto?

This could be a long list, but the strangest one is when people tell me that they are excited about “blockchains” but don’t like “cryptocurrencies.” Private or permissioned blockchains are not a very interesting innovation, in my view—it is just another way to set up a database. The groundbreaking technology, first demonstrated by Bitcoin, are public or permissionless blockchains. These are similar to a database or server that has no centralized administrator—no person, company, or government. Anyone can come and go, pseudo-anonymously, and yet the system functions extremely well. Cryptocurrencies provide the economic incentives that encourage a decentralized set of actors to maintain these networks—without them the technology does not work.

5. Crypto is such a complex field. How do you and the research team decide what to focus on?

It is a big topic, but we have a relatively specific focus: to educate current and potential investors as they access crypto markets. Grayscale already provides industry-leading digital asset investment products within the US regulatory perimeter. The role of my team is to help investors understand these assets as well as possible: how the technology works, what the emerging use cases are, what drives valuations, and how these assets can contribute to portfolio diversification.

I believe strongly that certain cryptocurrencies will offer superior returns to other asset classes for a long time. But the technology is complicated and poorly understood, and some members of the public are understandably put off by its boom/bust cycles. I want Grayscale’s research team to be recognized as a trusted source of information about crypto so that the average investor’s portfolio can benefit from this unique asset class.

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