WhoBuilt

Crypto Investors

May 2, 2018· 50 min· 7.3K views·Watch on YouTube

Speakers

Crypto investors Linda Xie, Scalar Capital co-founder and former Coinbase product manager, and Avichal Garg, serial entrepreneur and part-time YC participant, discuss crypto’s uses, risks, and opportunities with Y Combinator.

How blockchains and crypto fit together

Linda describes a blockchain as a decentralized public ledger, while Avichal breaks the space into ledgers, consensus, token incentives, and smart contracts. They group crypto applications into programmable money, distributed computing, and distributed apps. Linda says smart contracts can automate tasks that currently rely on intermediaries.

Early uses and the scaling challenge

Linda points to decentralized exchanges and digital collectibles such as CryptoKitties as promising early uses, while Avichal also expects payment networks to develop. They say high fees and slow transactions limit adoption, citing Bitcoin fees that at times averaged about $30. They discuss state channels, Plasma, and Truebit as approaches to scaling or moving computation off-chain.

Where adoption and companies may emerge

Avichal expects early crypto applications to resemble familiar products before developers find uses that are native to the technology. Linda sees stronger needs in places with limited banking access, unstable currencies, or censorship, while Avichal says underserved markets can inspire ideas even if companies scale from hubs such as Silicon Valley. They also discuss how regulation, taxes, and electricity costs can influence where projects and miners operate.

Fundraising, regulation, and founder choices

Linda says security tokens should follow applicable regulation and advises founders that most projects do not need an ICO. She recommends expert legal counsel, raising money in stages, and using vesting schedules to align teams and investors. Avichal emphasizes choosing investors who can help build the company, while both describe fraud, speculation, and excess token-sale proceeds as risks.

Privacy, government, and onboarding

Linda and Avichal favor default privacy for transactions, with selective transparency through tools such as view keys when users need to share records. They discuss practical reasons for privacy, including protecting salaries, donations, and activity from unwanted surveillance. Linda sees decentralized oracles and prediction markets as possible inputs to policy decisions, while Avichal expects many people to use blockchain products without realizing crypto is underneath.

Takeaways

  • Treat a token sale as an unusual financing choice; first ask whether the product actually needs a token.
  • Raise capital in stages and use vesting to keep team and investor incentives aligned.
  • Build for a specific underserved market where crypto offers a clear practical benefit.
  • Plan for scaling limits such as transaction fees and delays before expecting broad use.
  • Make privacy a default product feature, with controlled ways to disclose information when needed.

Mentioned in this talk

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What was claimed 15

  • feature
    Scalar Capital: Focuses on long-term investing in crypto, with an emphasis on privacy coins
    “We focus on long-term investing in this space, with a strong emphasis on privacy coins.”
    YouTube
    Unverified1 source· Talk
  • founded
    co-founder
    “I'm co-founder of a crypto hedge fund called Scalar Capital.”
    YouTube
    Unverified1 source· Talk
  • previously at
    Linda Xie previously at Coinbase
    product manager
    “Before that, I was a product manager at Coinbase.”
    YouTube
    Unverified1 source· Talk
  • role at
    Avichal Garg is part-time at Y Combinator
    “I'm Avichal, a serial entrepreneur and part-time at YC.”
    YouTube
    Unverified1 source· Talk
  • feature
    Linda Xie: Describes a blockchain as a decentralized public ledger for recording transactions
    “A blockchain is essentially a decentralized public ledger where you can record all the transactions that have happened on it.”
    YouTube
    Unverified1 source· Talk
  • feature
    Smart contracts: Execute programmable logic on a decentralized network of computers
    “a decentralized network of computers executes the logic”
    YouTube
    Unverified1 source· Talk
  • feature
    Ethereum: Smart contract platform
    “Ethereum is a smart contract platform.”
    YouTube
    Unverified1 source· Talk
  • feature
    CryptoKitties: Lets users collect, breed, and trade unique digital cats on the blockchain
    “You can breed them together and produce new, unique cats”
    YouTube
    Unverified1 source· Talk
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