Charles Adams from Nickel Digital: From Bitcoin Mining in a School Dorm to Digital Asset Hedge Funds

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Episode description

In this episode of the Applied Blockchain Podcast, Adi Ben-Ari (Founder, CEO) speaks with Charles Adams, Head of Investor Relations at Nickel Digital Asset Management, one of Europe's leading digital asset hedge funds, about what a decade inside crypto actually looks like, and where the industry is heading next.

Charles is a true crypto native who has never worked in traditional finance. He bought a Bitcoin miner and a book on blockchain off eBay in 2013, set up a mining rig in his school dorm, and has been in the space ever since — through ICOs, DeFi, institutional adoption, and now the convergence of AI and digital assets.

Together, Adi and Charles explore, but not limited to:

• Why Charles started mining Bitcoin in his school dorm in 2013 — and why he originally planned to sell it all immediately
• Why utility tokens remain the most under-appreciated innovation in the ecosystem
• How Uniswap and automated market makers represent one of the few genuinely original innovations in digital assets
• Why autonomous AI agents may be the natural native users of crypto infrastructure
• The risk management challenges of deploying AI agents in a regulated investment environment
• Why hackathons are no longer just for coders — and what's coming up at Applied Blockchain's AI Hackathon

Resources Mentioned & Themes Discussed

• Uniswap and automated market makers
• Hyperliquid — decentralised perpetuals trading
• Stablecoins and the GENIUS Act
• KYC/AML friction in institutional fund operations

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The episode also covers Applied Blockchain's upcoming AI Hackathon, where participants can build AI-powered solutions, with Dan Brockwell (Portfolio Manager, Directional Digital Liquid Venture, Nickel Digital Asset Management) serving as a judge.

Register for the AI Hackathon → https://luma.com/5m9c16x4

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Transcript

Narrator (00:00:01):You're listening to the Applied Blockchain Podcast hosted by Adi Ben-Ari, founder and CEO of Applied Blockchain.

Narrator (00:00:09):Today's guest is Charles Adams, Head of Investor Relations at Nickel Digital Asset Management, one of Europe's leading digital asset hedge funds. Charles has spent over a decade in crypto, from early Bitcoin mining to institutional digital asset investing.

Adi Ben-Ari (00:00:28):Welcome to the Applied Blockchain Podcast. Thank you very much for having me — it's great to be here. Thank you for joining us. Please, tell the audience a little bit about yourself, your background, how you got into the space.

Charles Adams (00:00:47):So I'm Charles Adams, Head of Investor Relations at Nickel Digital Asset Management. We are a London-based investment manager focused solely on digital assets. My trip into the space has perhaps been a bit of an interesting one. I work at a very institutional, regulated investment manager, but I'd actually say I'm one of the token crypto natives on the team. I've been in digital assets since, I think, 2013. I bought a Bitcoin miner and a book on blockchain off eBay. I was an entrepreneurial kid — I was trying to make money and I had a couple of startups. But managing people was the most painful part of running a business. A friend told me about Bitcoin mining and I thought, "Oh, this is great — no people. I can just buy computers and they can mine Bitcoin." I bought a book because I had no idea what any of it was or whether it would actually come to anything. So I set up the miner and went through all of that. They weren't as sexy pieces of equipment as they are these days — it was a rig. I bought the rig, then realised I had to buy the power unit separately. I set it all up in my dorm at school and started mining Bitcoin.

My intention was just to sell the Bitcoin the second I got it. I didn't believe in it. I didn't think it would be around. But I thought, if I can make some money and then shift the mining equipment on afterwards, big adventure.

Adi Ben-Ari (00:01:55):Did the numbers add up at the time? Were you actually making money on it?

Charles Adams (00:02:01):The payback time was about three years. I wasn't paying electricity — my school was — so that was a little bit of an edge. They were just happy I wasn't getting into trouble, so anything that kept me in my room was a good thing. I always say I would have done a lot better had I just bought Bitcoin. I wouldn't have gone through that whole learning experience — understanding the architecture, mining pools, all of that. But it was interesting. It was only after I set it up and it was working that I started reading the book, and I thought, "Hold on a minute — there's something here." It went from "sell it quickly and move on" to actually starting to believe.

Adi Ben-Ari (00:02:44):I tried it with a home PC. I don't remember what year it was — probably around a similar time. I heard about it on a podcast and set it up. I realised I was contributing to a mining pool, did the maths, and Bitcoin wasn't worth much at the time. I realised I wasn't actually making money on it, so I gave up.

Charles Adams (00:03:08):It was really tough. Back then, the biggest issue was that no one thought Bitcoin was divisible. People thought you had to have one whole Bitcoin. And even when one Bitcoin was around $300, people still thought it was expensive. It's interesting — I think it was two or three weeks ago, someone mining on their phone hit a block. The chances of that... you're better off playing the EuroMillions. But it's interesting that people are still doing it — trying to get a reward solo, without a mining pool. It's more akin to playing the lottery than running an actual mining business.

Adi Ben-Ari (00:03:42):Imagine being that solo miner and getting that notification.

Charles Adams (00:03:46):Exactly! But anyway — that was the moment. I was reading the book and I started to believe. It snowballed from there. I remember Ethereum's ICO. I always say that your journey into crypto is described as going down a rabbit hole because you don't just have one "penny drop" moment — you have several, and they keep happening. My next one was smart contracts. I thought, "Okay, anyone can create an asset now." Then Uniswap came out with automated market makers — that was the next one. As long as you keep learning and keep trying to keep up with the space — which is easier said than done — you keep having these moments, and that pulls you further in. I haven't left the space. I think I'm a true crypto native. I've never worked in traditional finance, but it's been a phenomenal journey over the last 13 years.

Adi Ben-Ari (00:04:35):Amazing. You mentioned those moments — Bitcoin, then smart contracts. What was it that you saw in smart contracts that caught your attention?

Charles Adams (00:04:42):This is perhaps a bit unfashionable now, but it was actually utility tokens. I saw this world of closed economies having utility tokens — whether it was a tiny business using them to incentivise people to ride a bike to work instead of driving, or loyalty points becoming tradable and worth something instead of just sitting in a closed ecosystem. I saw tens of thousands of businesses all having utility tokens to incentivise people to do the right thing. That's actually one of the cool things about Bitcoin too — on the mining side, you're not expecting anyone to do the right thing. You're just trusting people to do what they're most incentivised to do, and that can be the optimal outcome. I was always really interested by that. I remember creating a token economy for an environmental business that wanted to incentivise people to run or cycle to work instead of driving. You create tokens, let people leave half an hour early, create a market for them — and suddenly it creates this really interesting little ecosystem. All you're doing is getting people to run or cycle to work. I think that's been the most under-appreciated and underdeveloped side of the ecosystem in the last ten years since Ethereum's ICO made it possible.

Adi Ben-Ari (00:06:25):And you're still a believer?

Charles Adams (00:06:27):I'm still a believer. Long term, I think there'll be a couple of digital assets that everyone knows about, and the majority of coins and tokens will be very niche — having found product-market fit with a very specific use case, whether that's deposit tokens or even stablecoins. I don't see a world where everyone in the UK is holding stablecoins. But around the world, where you don't have access to a trusted currency like the US dollar or euro, or yield on that currency — that's the product-market fit. My parents aren't worried about the Bank of England stealing their money in the middle of the night, despite inflation being perhaps above where it was five or ten years ago.

Adi Ben-Ari (00:07:16):That's really interesting. You see all the reasons why stablecoins might be used and why individuals or businesses might move onto crypto or public blockchain infrastructure. I think it all depends on where the individual or business is and what they're trying to accomplish. One of the reasons the adoption of the whole asset class has taken so long is that, going back to when I first got involved, there was a lot of "tech for good" but also a large part was the crypto-anarchist "down with the system" crowd. A lot of people thought everyone would be using Bitcoin. Some of that spirit has been dampened, which is a shame. But I think a large part of the issue is that the technology was really coming from Europe, the West, Singapore, Hong Kong — places that don't need a decentralised currency. The Singapore dollar is very strong. The US dollar, the euro, the pound — trying to tell someone in those places there's going to be rampant inflation and they'll need to use something else just didn't land. But if you look at where crypto adoption is highest — Lebanon, Turkey, Argentina — those are the places with currency instability. The US is the only Western developed economy in the top five for crypto adoption rates.

Charles Adams (00:08:47):Exactly. And you mentioned Uniswap — I think part of my interest there was driven by the startup I was trying to launch at the time. One of the biggest issues was exchange listings. All these tokens coming out and paying exchanges millions of dollars to get listed — the wrong incentives leading to the wrong actions. Then Uniswap came out and anyone could list any asset and create a market for any asset. That was really powerful. I remember Compound Finance had also just come out around the same time. ETH was still quite nascent. I remember being on my phone, stuck on a delayed Overground train, going from pounds to DAI to Compound — and I was earning interest. I thought this was phenomenal. I'd been waiting years for crypto to be usable from a mobile phone. But I was also thinking, if you still have to go to Binance and pay them millions to get a token listed, it's not going to work. Then Uniswap came out and anyone could create a market. Automated market makers can never fully solve for bad liquidity, but they mean you can create a market with as little as $20 — whether it's that utility token to get people cycling to work or something else. Billions, trillions of dollars have been traded through Uniswap and other assets since. That was the core building block of DeFi — actually having people able to transact in a decentralised way.

Adi Ben-Ari (00:10:44):What do you think of Uniswap and automated market makers versus centralised exchanges, which are still probably the most widely used, and then also Synthetix, perpetual DEXs, and all of that?

Charles Adams (00:10:57):I think they both solve a purpose. At Nickel, we run a traditional multi-manager fund that's been pioneering in the digital asset space — taking what's worked really well for Millennium and the big hedge funds of the last decade or two, and bringing that model over to digital assets. When we speak to traders from traditional finance coming into crypto, they understand central order books and how Binance works. The only difference is perpetual swaps instead of futures — it's an easy jump to make. The issue with Uniswap is that it takes a lot more learning. You can't take a trading strategy you've been running for 20 years on the London or New York Stock Exchange and copy-paste it onto Uniswap. There's a much steeper learning curve. I spend most of my time speaking to traditional institutions and bringing them into digital assets. I can explain how Binance works and they get it. Whereas Uniswap takes a lot more education to get traditional institutions comfortable. But as a core building block of DeFi, it's absolutely fundamental. Other than smart contracts, automated market makers are one of the true innovations of digital assets. Most of what we see has just been digitised and brought over from the real world, whereas automated market makers are a genuine, original innovation.

Adi Ben-Ari (00:12:32):If I think about the benefits of Uniswap, it's really the ability to introduce new assets that wouldn't have liquidity otherwise — bringing them in from zero effectively.

Charles Adams (00:12:53):Absolutely. The ability for anyone to create a market, give it liquidity, and for anyone to trade against it. There are some disadvantages, of course. Back then, most liquidity was paired against ETH, which made price discovery a lot tougher than it is now with stablecoins. When ETH went from $2 to over $1,000, that caused some issues. But now anyone can create an asset, price discovery can happen, and anyone can trade it. That's really important.

Adi Ben-Ari (00:13:30):And the layers on top of that — lending, borrowing — you mentioned Compound. The advantage there is again that you're building on top of assets that wouldn't otherwise have a home.

Charles Adams (00:13:48):Absolutely. These core borrowing and lending protocols — Aave has become almost more than that. I think the token ecosystem is in a really interesting space in its timeline right now. The previous ten years were dominated by speculation — people speculating about the future and changing the world. A lot of that speculative energy has been absorbed by AI, prediction markets, and other things. People are now looking towards real usage — what's the base revenue, what effect is that having on the token, how many people in developing economies are using Aave as their source of yield on US dollar stablecoins. It's going from a speculative-driven market to a picks-and-shovels-driven market: what's actually working, what's seeing adoption. That's perhaps been a big dampener on altcoin prices for the last 12 to 36 months, but long term it's incredibly positive. The speculative mania is leaving the space. The usage on Solana is primarily driven by meme coins right now, which makes it tough to measure real adoption — but long term, that's a really positive thing.

Adi Ben-Ari (00:15:01):What do you see as the long-term benefit then — access to stablecoins in other economies?

Charles Adams (00:15:12):For stablecoins, absolutely. It gives anyone the ability to hold effectively any major currency in the world. Circle now covers most major currencies with stablecoins. Anyone with a mobile phone can go from whatever fiat currency or mobile money credits they have into a US dollar stablecoin that's earning a yield. And even setting the yield aside — a stablecoin is arguably better than a pound sitting in a bank account, because that pound is subject to fractional reserve banking and being lent out to others, whereas a properly regulated stablecoin, under something like the GENIUS Act in the US, has to be backed one-for-one. That is an incredible use case.

Adi Ben-Ari (00:16:06):Why do you think we're not seeing more adoption?

Charles Adams (00:16:11):Regulation, mainly. And the technical expertise required to feel comfortable using this is still significant. It needs to be as easy as signing up for a Monzo account. You can get some of this with Revolut, and it's getting there. But you still need to be able to do KYC and AML, which is a struggle if your primary currency is mobile money credits. Regulation has absolutely been the main barrier. Hopefully, with the US going over the last year from quite a destructive regulatory environment to a very constructive one, that should pave the way.

Adi Ben-Ari (00:16:42):From a Nickel perspective, how are you looking at the market right now?

Charles Adams (00:16:49):Nickel has two funds. There's the multi-manager fund, which pioneered the prop-shop model — bringing niche prop-shop-style trading teams onto our risk systems. We manage the counterparty risk, the audit, the admin, and take all that complexity away from them. On the other side, we give institutional investors access to these niche strategies in digital assets without having to evaluate every custody arrangement individually. So we're kind of a fund-of-funds, but instead of allocating capital to trading teams, we give them trading APIs and we manage the risk. We're a 30-person team based here in London. That fund is a non-directional, alpha-driven fund targeting 15 to 20% per year. It's not taking directional views, and 97% of assets are held in off-exchange settlement solutions — a very conservative setup designed for institutional investors. Then we have the Directional Digital Liquid Venture, which is more involved in the picks-and-shovels side.

I'd echo that we're in a transitionary period between a speculative-driven market and one that's getting repriced on fundamentals. That's actually a good thing from a traditional allocation perspective — you can start looking at these protocols from a revenue perspective rather than just from sentiment on Twitter or Discord. That makes running a directional vehicle really tough otherwise, because three people on crypto Twitter can have an outsized impact regardless of what the quantitative analysis says. So I think the speculative energy moving on to AI and prediction markets is genuinely a good thing.

Adi Ben-Ari (00:19:03):That was going to be my next question — you've seen a lot happening in the AI space over the last three months. Are you seeing an impact?

Charles Adams (00:19:21):It's really interesting. AI entered the zeitgeist about two and a half years ago when ChatGPT came out. On both sides of our business, we've seen that play out. For the managers in our multi-manager fund, I'd say 90% or more of them had a machine learning component to their strategies long before ChatGPT popularised it. On the directional token side, I've always seen crypto as something that autonomous agents will gravitate towards. If you have autonomous agents transacting with each other, they're not going to want to use a traditional banking system — it's clunky, slow, subject to settlement delays. Crypto is instant, 24/7. I actually think there's an argument that digital assets were created more for autonomous agents than for human-to-human transactions. If you look at private and public keys and crypto wallets — for humans, it's a nightmare. Comparing the first four or six characters of a public address, worrying about which network you're connected to — that's difficult for people. But for an autonomous agent? Perfect.

Adi Ben-Ari (00:20:52):What use cases do you see for agent payments?

Charles Adams (00:21:35):It's a good question. There are still lots of startups and companies trying to build the infrastructure for the use cases to really take off, but they're all still quite nascent. The projects seeing the most adoption in the Web3 ecosystem are still primarily trading infrastructure. The most successful launch of the last couple of years has been Hyperliquid — a decentralised trading platform for perpetuals. The challenge is that when you look at where volume and activity is going, trading just dwarfs everything else. Even remittance startups sending $10 or $100 around the world get dwarfed by trading volume. Hopefully we'll see some more diverse use cases emerge, but at the moment most of what I'm seeing is still revolving around trading and speculation.

Adi Ben-Ari (00:22:37):From our perspective, building applications and platforms — we looked at Hyperliquid and were struck by the volumes. I see it as a halfway house between centralised exchanges and DeFi. The collateral is stablecoins, you get a really fast order book, it's its own layer one — we could have a separate conversation about the merits of that. But then thinking about more mainstream commercial use cases — will businesses come onto this infrastructure for treasury management, payroll, B2B payments? We've always dabbled in this because we have crypto clients, but we'd love to see mainstream adoption. Every business coming on-chain would be great, but there needs to be a reason.

Looking at Nickel's business — hugely bullish on the technology, constantly thinking about how to utilise it. Obviously tokenisation of funds comes up.

Charles Adams (00:24:33):Can I pick up on that? Tokenisation came up at a similar time as stablecoins — back in 2017-2018, everyone was very bullish. Here we are eight years later. Stablecoins have reached that point where everyday investors are asking me about them. Tokenisation feels like the second one up — Larry Fink and all the big banks are talking about it and doing stuff. But when you actually think about it as a day-to-day business: we would only tokenise our funds if it benefits investors, if it gives them something they didn't have before that they're actually asking for. And despite how intellectually stimulating the option of tokenising our funds is for all of us — I don't have investors asking me for it. We've got over 100 investors at Nickel, and I don't think a single one has asked "when are you going to tokenise your funds, because I really want to do X, Y or Z with it?" When that starts to happen, that's when you'll start to see businesses coming on-chain and interacting with the technology more broadly.

Adi Ben-Ari (00:25:36):Do you have an idea of what might drive that?

Charles Adams (00:25:42):I think the main thing would be being able to use your investments as collateral. Investments in digital asset funds are already quite capital-efficient compared to traditional counterparts, and tokenising them could unlock some of that further. But even then, you think — what would you do with that capital efficiency? Leverage it up? For large institutional investors, there's not a huge appetite to leverage up their crypto investments. On the more retail side, which Nickel doesn't service, you're seeing it with platforms like Morpho and Midas. Making investments more divisible is another driver — a minimum investment of $1 million could perhaps come down. We have liquidity timeframes as we're allocating capital to managers, so we can't just return it at a moment's notice. Creating a secondary market for Nickel investments could be interesting, though the bigger investors would still likely interface with us directly. But I think the main practical benefit would actually be streamlining the investment process. If you have a fully tokenised fund using a provider where you only need to do KYC and AML once, and just refresh it once, instead of doing it with a hundred different fund administrators across all your investments — that would be absolutely transformative.

Adi Ben-Ari (00:27:20):That's already huge. All the banks in Canary Wharf have whole floors of people doing onboarding, making sure everything runs smoothly. And just decreasing the time it takes to make investments — my bank drives me nuts with KYC refreshes every year. More documents, more questions, two more weeks, never ending. And then you've got an investor going to their solicitor, getting docs certified, sending them to the fund administrator, only to find one word is different between US and EU standards and they have to go back. It's hugely inefficient. But you mentioned stablecoins being used practically — you had a real-world story?

Charles Adams (00:28:13):Yes — over 80% of our investors have their first exposure to the space through us. But I have one story I tell all the time. An investor who came in through us has since become really knowledgeable and very involved in the space. They called us on the last dealing day of the month. Normally we ask for three days' notice, but they said they really wanted to invest this dealing day — was there anything we could do? The wire coming from a European bank took about four working days — painful when you're pressing refresh every day waiting for it to arrive. We said there was no way they'd make it in time. They asked what they could do. I said, "Do you have any stablecoins?" They said, "Oh, actually, yes." So they put the stablecoins in a wallet, we used Chainalysis-type tools to verify the assets came from a KYC'd exchange — and this all took ten minutes. The fund administrator was happy, and by enough time in the PM, we'd moved the funds. Everyone was just like, "If only we could do that every time." It was incredible. And this was moving money from a European regulated institution to our American banking provider — which should theoretically be easy — but still took days the traditional way. Being able to do it instantly was fantastic.

Adi Ben-Ari (00:29:39):Going back to AI for a minute — we've seen in the last couple of months all these autonomous AI agents being set up as trading bots, minting their own tokens, building Twitter followings. Is that signal or noise?

Charles Adams (00:29:49):From an institutional perspective, I think AI is fantastic on the data side — being able to ingest and process huge amounts of data very quickly. That's genuinely great for trading. But when you start talking about it from a risk management perspective — you give money to these agents, you say "go make money" — how do you risk-manage that? How do you make sure they don't touch a dirty pile of tokens that were touched by the Lazarus Group, and then you can't cash out the other side? How do you programme all of that in? That's where it gets really challenging. Someone asked me the other day how long until all our risk management — agents monitoring all our managers across all the exchanges — goes fully autonomous. My answer is there still needs to be a human element. I read about one agent that crashed at some point and forgot about its wallet from its context. It had made some money, restarted, and just started again from scratch. Even if everything works perfectly, one of our core risk management philosophies is removing single points of failure — not one thing can happen that causes a material loss across all assets. Not one exchange can go down, not one server can be hacked and a private key lost. That's really tough to maintain when you start talking about agents. The keyword that keeps coming back is supervision. You need a framework with enough control to manage the risks you want to manage. We were the first successfully regulated investment manager focused on digital assets, authorised in the UK and registered with the NFA and CFTC in the US. We often say we're the most boring people in digital assets — and now talking about agents in DeFi, how do you ensure they don't touch something like Tornado Cash? Supervision is absolutely key, whether on a centralised or decentralised exchange, making sure everything falls within regulatory and risk management boundaries.

That's why most of the adoption we're seeing today is from a trading strategy enhancement perspective — people using AI to improve their models. We're fully systematic, so development efficiency has gone up exponentially. On the marketing and operational side too, it's been hugely beneficial. But I think we're quite a way from just letting agents run off and come back with piles of cash — although I'd love for that to be just around the corner.

Adi Ben-Ari (00:32:56):So, we've got a hackathon coming up, which actually brings some of these topics to the table and gives people a chance to experience them hands-on. It's an AI hackathon, inviting people to build their own applications and solutions — dream them up and build them very quickly using low-code and AI coding tools. We're also opening up our platform, Silent Data, so people can build Web3 applications that use privacy in a compliant way that's useful in a regulated business environment. And we've got someone from your team as a judge.

Charles Adams (00:33:34):Absolutely. Dan Brockwell, who's the portfolio manager of our Directional Digital Liquid Venture, will be there as a judge. He's absolutely better placed than me to be judging that hackathon.

Adi Ben-Ari (00:33:46):It's going to be amazing having someone so knowledgeable and deep in the space to guide people and ultimately judge what they're building.

Charles Adams (00:33:55):He's probably very upset that he's judging instead of taking part — that might be a conflict of interest! Hopefully he can do a bit of both. I can't wait to see some of the outcomes. Four hours into a hackathon should be hugely more exciting today than it would have been five or ten years ago.

Adi Ben-Ari (00:34:21):Many pizzas — yes, it was a budget consideration! Have you done many hackathons?

Charles Adams (00:34:23):I think this might be our first external hackathon in a long time. Internally, we've done them many times over the years just to get the team up to speed with different things.

Adi Ben-Ari (00:34:28):Fantastic. You should see smaller teams being able to take part — one-man shows, one-woman shows. I think the interesting thing is that hackathons, up until about three months ago, were exclusively for coders. You had someone who wanted to learn more, spend a weekend coding and showing off their skills — that was the audience. Now you can have business people actually learn the power of these tools. Maybe I should be taking part in more hackathons myself over the next few years. There's just so much happening, and staying on top of it has always been the challenge. Being hands-on and getting your hands dirty — that's always been the way with coding. And as coding moves deeper into business and digital experiences, that becomes even more true.

Charles Adams (00:35:25):Absolutely. One of the most common questions I get is "what books do you recommend?" And I always say — don't bother with the books. Just set up a wallet. I'll send you $10 of whatever it may be — Ethereum, Polygon — and just start using it. You'll probably lose it all, either intentionally or unintentionally. But that's how you learn. Technology is no different from learning to swim — you can't learn without getting wet. And I don't think you can learn about technology without actually using it.

Adi Ben-Ari (00:35:56):I was going to ask that question — you jumped the gun!

Charles Adams (00:35:57):Find me on LinkedIn, message me — I will send you $10 of ETH on Base. Just get stuck in. That's the best and only way to learn.

Adi Ben-Ari (00:36:11):I'll create multiple fake profiles and message you over and over again.

Charles Adams (00:36:19):Please, yes — limiting the pitches might be a good idea though!

Adi Ben-Ari (00:36:24):Thank you so much. As I say to most of my guests — come back in one to three years. The space changes all the time. I'll send you a message in a couple of years and we'll see where we are.

Charles Adams (00:36:39):Very much looking forward to it. Thank you.

Narrator (00:36:42):Thanks for tuning in. Catch every episode wherever you get your podcasts, follow Applied Blockchain on socials for the latest insights, and explore Silent Data at silentdata.com.