The Delphi Podcast

Host Tom Shaughnessy talks to Brooke Pollack, Founder and Managing Partner of Hutt Capital. They discuss the differences between traditional VC funds and VC within blockchain, how Hutt Capital chooses investments and more.   Episode Highlights: After a lot of work with investing and VC, Brooke steered Greenspring Associates into work with crypto and blockchain before eventually founding Hutt Capital. In his work with very wealthy families as clients, Brooke had trouble convincing them to invest in Bitcoin and digital currencies because they prefer something tangible, so he needed to do a lot of educating. Blockchain is growing its market share of VC deal activity. There were over 600 blockchain deals in 2019. Brooke thinks the tipping point for when larger firms will have to stop ignoring crypto is when they’re forced to pay attention to the returns they see happening that they want to have a part of. Hutt’s goal is to provide diversified exposure to blockchain in a low-risk, low-volatility way. They invest in startup funds and then use that revenue to directly invest in the best companies. When deciding what to invest in, Brooke looks for insight from his network and the reputation of the companies. Hutt has a global outlook. In choosing what to invest in, in the blockchain space, you don’t have the track record or long-term reputation to look at because most of these companies haven’t existed for very long, and if they have, the market has changed massively in that time. All of this decision making is done through relationship building, which can take years. One of the biggest structural changes to venture funds has been the advent of hybrid funds that call themselves venture funds, but are actually just less liquid versions of hedge funds. Most people will simply not invest in your first fund, so take a long view of those relationships. It’s hard to prove your qualifications to invest in this space without having done it.   Key Points: There is a high level of self-educating that is required to enter into the blockchain space. Hutt Capital seeks to provide an entry point to blockchain investing that is low-risk and low-volatility. Choosing funds is all about relationship building.   Quotes “I think it’ll happen sooner than later. I think the education process a lot of these groups are going through over the next year or two will lead to meaningfully more institutional capital coming into the space.” –Brooke Pollack   “Looking at funds in this space versus general venture investing, you don’t have the breadth of a track record to go off of… Most of these funds haven’t been around for more than a couple of years.” –Brooke Pollack    “It’s hard to prove that you can be successful as an investor in this space if you have not yet been an investor in this space.” –Brooke Pollack   Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15.

Host Tom Shaughnessy talks to Omer Ozden and Kevin O’Brien, CEO and Managing Director of Rocktree Capital, respectively. They discuss the China blockchain market versus the US, tech innovation, the move to cashless economies, and more.  Key Points US tech innovation is stifled by regulatory restrictions as compared to China. It’s of the utmost importance to be sure you’re legally compliant from the beginning to avoid huge problems later. China is at the forefront of a global movement towards cashless economies.   Episode Highlights Rocktree Capital’s biggest presence is in China. Presence in China is important for liquidity and capital. If New York is the fastest market in the US, China moves even faster. Rocktree Capital aims to be a bridge to unite the US and China blockchain markets. All Western companies need to have a China strategy. The best innovators come from the US but our regulatory systems are prohibitive and are making us lose to China in tech. Analysts in the US get very little of their research and analysis from China; maybe only 15% is reliable information. Bitcoin is just as important in Asian countries as it is in the US. DCP is the legal digital currency of China with P2P settlement, and Omer doesn’t predict it will take long for widespread adoption because China is already a primarily cashless economy. Other Asian and African countries will move in the cashless direction over the next few years. There will likely be some government investment in blockchain but there will be more private investing. What does coronavirus mean for crypto in China? Quotes “You’re talking about a population unlike the West [that is] fragmented across other channels, whereas in the greater China market, people are unified across one social channel called WeChat, so you have 1.3 billion people across a single social platform.” –Kevin O’Brien   “Everybody focuses on the tech, but if a company doesn’t pay attention to legal compliance, first of all from an investor standpoint, it’s not gonna hit the valuation, there’s a lot of risk and it could even go to zero.” –Omer Ozden   “A day in the life of somebody in crypto is a year for anybody else.” –Omer Ozden   In China, we say 币圈一天，人间一年 or “Bi Quan Yi Tian, Ren Jian Yi Nian” - Which means: “A day in the life of someone in cryptocurrency is a year for anyone  else” - Omer Ozden    In China, RockTree calls this investment theme “Hua Er Jie Er Dian Ling: “Wall Street 2.0” - Omer Ozden   Support The Show   ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15. https://bit.ly/3bundEl Check out eToro t

Host Tom Shaughnessy talks to Alex Mashinsky, CEO of Celsius Network. Alex discusses the impetus for creating MOIP (Money over IP) and Celsius Network, what has prevented blockchain from becoming mainstream thus far, and his predictions for the future of MOIP technology. Key Points: There is a high barrier to entry for new users of crypto and blockchain technology. The shift for crypto becoming mainstream will be generational. 2020 will be a defining year for crypto adoption. Quotes “The main thing that I think is the killer app is the idea that you can do something that you could not do any other way with any other platform.” –Alex Mashinsky   “We need to grow the crypto community first before there’s enough demand for all of these products to start migrating from the traditional Wall Street and Main Street services to the crypto rails.” –Alex Mashinsky Support The Show ZenLedger is the official tax software of Chain Reaction for crypto investors and accountants. Get a 15% discount when you use code Chain15.  Check out eToro to Create Your Perfect Crypto Portfolio Episode Highlights: Alex has raised over $1 billion in capital for several startups over the past 30 years and is one of the developers of VOIP technology. It’s easy to get people to use VOIP, but much harder to get people to trust you with their money for new banking technology and MOIP. Celsius Network creates interest-bearing accounts for people who hold crypto and lending with crypto. There’s a high bar for involvement with Celsius Network because you have to understand crypto first. The banking industry will not survive as is if crypto becomes mainstream; they would have to evolve their entire business structure dramatically. When VOIP came about, it massively disrupted phone companies, who made most of their money off long distance call charges. Children today don’t see digital currency as foreign because they already play games that use tokens as currency; what’s foreign to them is their parents writing checks. The blockchain community has thus far failed to convince the average person that it’s something more than just a toy for techies. Celsius has now raised the bar for other crypto and blockchain companies and many of them have started to offer interest on deposits, but none has better rates than Celsius does, on every service they offer. What Celsius does is make services that in the mainstream are only available to the top 1%, available to everybody. Celsius created their own token that they treat essentially as airline miles—something that incentivizes them to continue using the platform. You can choose whether you want to earn interest in your stable currency or in the Cel token. Resources Mentioned:  Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaughnessy Twitter: https://twitter.com/Shaughnessy119

Galen Wolfe-Pauly, CEO of Tlon, talks about his vision for Urbit as a personal operating system. Urbit functions as an operating system, provides a better user experience, and works in cooperation with the blockchain. Developers own pieces of the system through address blocks, incentivizing them to improve it. Urbit is designed for digital communities and has an authenticated digital identity. The podcast also discusses the rising backlash against social media and big tech, and the potential adoption of Urbit by digital communities.

Host Tom Shaughnessy talks to Ria Bhutoria, Director of Research at Fidelity Digital Assets. Ria discusses her recent article about Omnibus model, the importance of proof of solvency, technological developments in crypto and DeFi in financial institutions, and more.   Key Points The omnibus account model has been important to large financial institutions as the cryptocurrency market has grown. Using omnibus accounts with digital assets means some value is stored online and some is stored offline. Large financial institutions are buying into digital assets and developing new technology for it slowly, but surely.   Tweetable Quotes “It’s easy to get lost in the day-to-day, and we’re so used to seeing constant news flow and announcements that it really takes taking a step back to realize how much progress we’ve actually made.” –Ria Bhutoria   “There’s a lot of development going on, and a lot of it is just seemingly small improvements, but in aggregate I think it’s making the whole ecosystem more robust and stronger.” –Ria Bhutoria Episode Highlights: What is Ria’s background and how did she end up at Fidelity Digital Assets? The Omnibus model means that assets of multiple parties are combined and service providers establish segregation between clients in their books and records. Omnibus accounts came into existence after a paperwork backlog crisis in the 1960s and 1970s. The omnibus model helps improve liquidity for the account custodian. The ratio of what you have stored in cold offline storage vs hot online storage matters. Ria explains why ‘proof of solvency’ is important. Ria and Tom are excited by the increase in major financial institutions developing technology and increasing their understanding of digital assets to embrace cryptocurrency. There’s a lot of high-level development happening in the crypto tech space, but it takes a long time to implement changes the average user can see. Ria is most excited to see the kinds of services that institutions are going to offer to extend beyond what’s offered for traditional asset classes. There’s a range of experience and interest in DeFi, given that many people still don’t even understand Bitcoin. Fidelity has been doing research in digital assets by mining Bitcoin for years. Support The Show Check out eToro to Create Your Perfect Crypto Portfolio Resources Mentioned:  “The Omnibus Model for Custody” by Ria Bhutoria: https://medium.com/@FidelityDigitalAssets/the-omnibus-model-for-custody-96b69710f92d Fidelity Digital Assets Website: https://www.fidelitydigitalassets.com/overview Ria Bhutoria Medium: https://medium.com/@riabhutoria Ria Bhutoria Twitter: https://twitter.com/riabhutoria Ch

On this episode, Host Tom Shaughnessy is joined by Camila Russo, founder of the Ethereum based newsletter The Defiant and author of the coming book on the birth of Ethereum titled, The Infinite Machine: How an Army of Crypto-hackers Is Building the Next Internet with Ethereum. We dive into why Camila decided to research Ethereum's early life, how she has been tirelessly researching the protocol for months and what to expect from her new book. Pre-order here while you're listening.  About The Book Everyone has heard of Bitcoin, but few know about the second largest cryptocurrency, Ethereum, which has been heralded as the "next internet." The story of Ethereum begins with Vitalik Buterin, a supremely gifted nineteen-year-old autodidact who saw the promise of blockchain when the technology was in its earliest stages. He convinced a crack  group of coders to join him in his quest to make a super-charged, global computer. The Infinite Machine introduces Vitalik’s ingenious idea and unfolds Ethereum’s chaotic beginnings. It then explores the brilliant innovation and reckless greed the platform—an infinitely adaptable foundation for experimentation and new applications—has unleashed and the consequences that resulted as the frenzy surrounding it grew: increased regulatory scrutiny, incipient Wall Street interest, and the founding team’s effort to get the Ethereum platform to scale so it can eventually be  accessible to the masses. Financial journalist and cryptocurrency expert Camila Russo details the wild and often hapless adventures of a team of hippy-anarchists, reluctantly led by an ambivalent visionary, and lays out how this new foundation for the internet will spur both transformation and fraud—turning some into millionaires and others into felons—and revolutionize our ideas about money. Resources Mentioned:  Pre-order The Infinite Machine The Defiant Newsletter Camila's Twitter Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaughnessy Twitter: https://twitter.com/Shaughnessy119 eToro Offer: b.tc/etororeaction  Support The Show Check out eToro to Create Your Perfect Crypto Portfolio Delphi Digital's Research Disclosures: This podcast is strictly informational and educational and is not investment advice or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host may personally own tokens that are mentioned on the podcast. Tom Shaughnessy owns tokens in ETH, BTC, XTZ, STX, SNX, RUNE, sUSD and HNT. Lets Talk Bitcoin is a distribution partner for the Chain Reaction Podcast, and our current show features paid sponsorships which may be featured at the start, middle and/or the end of the episode. These sponsorships are for informational purposes only and are not a solicitation to use any product or service.    Advertisers: To be a sponsor

Host Tom Shaughnessy talks to Aleks Larsen, part of the Investment team at Blockchain Capital. Aleks discusses issues with decentralization, DeFi growth and opportunities, what place security tokens hold in the DeFi space, and more. This episode builds on a recent episode we hosted with Blockchain Capital's Spencer Bogart.  Key Points Nothing is entirely decentralized yet because we’re still learning best practices for blockchain and DeFi tech. The user experience on DeFi is generally lacking, and to grow the user base that will have to change. There are a lot of opportunities with blockchain and DeFi in financial services to address global disparities in access to banking. Tweetable Quotes “If your token doesn’t accrue value, it’s going to be really hard long-term to align incentives within your ecosystem. No one’s gonna want to hold it. So the most attractive tokens are going to attract people to use it for reasons other than the service itself.” –Aleks Larsen   “Over time, we’re going to figure out some things that work, and over time, the points of failure that exist today, or the points of centralization, will hopefully become less of an issue.” –Aleks Larsen  Episode Highlights Aleks was working in traditional investments, but became interested in DeFi as he casually researched Bitcoin and Ethereum on his own. Choosing new projects to invest in comes down to intangibles; Aleks doesn’t have a strict framework or methodology around choosing. Right now, there’s a lot of experimentation and testing in DeFi tech, trying to find a model that will work more broadly. Most DeFi platforms aren’t entirely decentralized yet. In the early days of a chain, it’s safest to have a point of centralization so that there’s a failsafe as the tech develops and loopholes or bugs are discovered. Aleks doesn’t see faster transaction speeds as a significant enough advantage over secure transaction settlement, so if you have to wait a few minutes for space on a chain, that should be okay. Some of the most interesting new tokens from Aleks’s perspective are ones that give you voting rights, feel like equity, or outright gives dividends. Tokens now often have use cases beyond just raising money, including as collateral for other tokens. The amount of assets you have locked in DeFi is not the best metric to use for value because it really comes down to volume of transactions. Aleks believes the DeFi space is ambitious and optimistic, but launching new products usually takes 2-3x longer than predicted. New applications either need to address a market that has been experiencing significant pain, or it needs to create a big market that hasn’t existed before. Adding open source applications to your stack, like a savings account that you can access anywhere, is of huge value for use cases like developing countries where millions of people do not have access to basic banking. Facebook’s move into crypto with Libra is an interesting way to make financial services available to people who don’t otherwise have access to banking. Security tokens have unexplored potential to redefine what it means to own something in the digital age. Security tokens simply aren’t a good way to raise money. Aleks thinks at least for the for

Host Tom Shaughnessy talks to Kyle Samani, Founder and Managing Partner of Multicoin Capital. Kyle discusses his predictions for the middle layer and full-stack development, attracting developers to the crypto space, how competition in the industry will develop, and a complete discussion on the Web3 Stack.  Key Points While there are a lot of opportunities higher up the stack, there is the most money in layer one because that’s what has been proven stable over time. The next few years will see an explosion of Web3 experimentation. In crypto, like with everything in technology, developments will happen very slowly, then suddenly very quickly. Quotes “When I think about opportunities for investing in the middle layer, they are generally less competitive as a function of market size, and not as many developers recognize that those markets exist.” –Kyle Samani “As these services continue to mature, we’re going to start to see people build world-class applications—we’re going to start to see new things come out over the next 12 months or so.” –Kyle Samani Episode Highlights Kyle recently published his 2019 update to the Web3 stack, which is about inverting the data model that powers the internet so that users own their own data. Kyle predicts that what we will increasingly see over the next few years will be more heterogeneity in investments, which will lead to more consolidation. Tech companies and teams that don’t pivot the right way will likely go down with their last dollar. Kyle thinks companies that are forced to run on a chain other than Ethereum or choose to explore that will choose chains that are very good at one specific thing. It’s difficult to attract new developers into crypto because the business models to make money are not yet understood. People are not good at having an historical sense of technology and understanding that once the basic idea for something arises, it takes many more years for the first iteration of the thing that will make those core ideas work. There are a lot of opportunities right now in the middle layers. There is the most money in layer ones. Developers typically want to know what will be possible in 12-24 months so they can build better applications upfront. There are structural issues with pushing complexity up the stack; the whole purpose of layer one is to abstract the complexity. Kyle agrees with Spencer Bogart of Blockchain Capital that most competition will eventually happen vertically, on one or a small number of chains. Kyle predicts that Polkadot will attack Ethereum this year, based on their recent behavior. Full-stack integrated approaches are great, but no one team can pull off all that complexity in any reasonable timeframe. Resources Mentioned:  Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaughnessy Twitter: https://twitter.com/Shaughnessy119 Multicoin Capital Website: https://multicoin.capital/ Kyle Samani Twitter: https://twitter.com/K

Host Tom Shaughnessy talks to Jake Ryan, Founder and general partner of Tradecraft Capital and author of an upcoming book on crypto investing. Jake discusses his prediction for the Age of Autonomy, the challenges of predicting where crypto will go, and more. FYI: We're looking for long term show sponsors. To be considered as a sponsor this show, contact Tom@DelphiDigital.io  Key Points: Society is at the end of the Age of Information and is headed into what Jake calls the Age of Autonomy. Competition drives adoption of new technologies. Automation and human intervention, and centralized and decentralized currencies, will likely always need to coexist. Quotes “As we see these technologies converge, we’re going to see orgs & businesses start to build autonomous operations, & businesses that don't have autonomous operations simply won’t be able to compete with those that do bc autonomy is the ultimate competitive advantage.” –Jake Ryan “Humans do a great job at envisioning the future and they do a really terrible time at timing it. It’s just too complex.” –Jake Ryan Episode Highlights: Jake’s book on crypto investing is set to come out in the first quarter of 2021. He moved from app development into angel investing about 5 years ago, which is what led him to crypto. Jake calls this the “age of autonomy,” based on theories of short-wave and long-wave economic cycles driven by technological revolutions. By autonomy, Jake is referring to automation, artificial intelligence, the internet of things, robotics, and now crypto. Jake sees us as being in the mature phase of the Age of Information. Jake urges us not to view these changes with judgment, as right or wrong, but simply as fact. He sees a future intersection of these various technologies, with blockchain as the glue between them. Automation will not drive out humans if we make more complex and decentralized governance systems, but overall, over decades, human intervention will become less and less required. The economy needs a currency that will ride the economy through inflation and deflation, and a currency that stores value well over time, and those appear to be mutually exclusive. Jake believes we won’t go to full decentralization but that we’ll always have both centralized and decentralized currencies. Resources Mentioned:  Crypto’s Role in the Age of Autonomy - https://hackernoon.com/cryptos-role-in-the-age-of-autonomization-2bf414ceb5d2 Chain Reaction Twitter: https://twitter.com/chainpodcast Tom Shaughnessy Twitter: https://twitter.com/Shaughnessy119 Tradecraft Capital website: https://www.tradecraft.capital/  Jake Ryan’s Twitter: https://twitter.com/TradecraftJake Book recommendation: Technological Revolutions and Financial Capital by Carlota Perez Technolog

Host Tom Shaughnessy talks to Spencer Bogart, general partner with Blockchain Capital. Spencer discusses the current state of crypto, his predictions for its future, and more.  FYI: We're looking for long term show sponsors. To be considered as a sponsor this show, contact Tom@DelphiDigital.io Key Points: Crypto is becoming increasingly relevant to global macroeconomics. It’s difficult to pinpoint exactly where in the crypto development arc we are, so some believe it’s growing more slowly than expected and others believe it’s moving faster. There is an overall shift in crypto from horizontal competition to vertical construction.  Episode Highlights Blockchain Capital has over 300 million assets and 80 portfolio companies. Spencer got into crypto after buying some Bitcoin, which led to him getting more and more interested and eventually writing some research pieces on the crypto space. Bitcoin is just starting to become relevant on a macroeconomic scale. Political unrest globally could be a driver towards crypto to avoid government regulation and interference. Technological developments and the best tech are not what establish standards. Spencer predicts that rather than a new protocol launching and becoming number one, more success and better standards will be established by people building on top of existing protocols. People will build for the chains that have the most end-users, and those options are Bitcoin and Ethereum. Now that it has become easier to build up the stack, Spencer predicts we will see more innovative and creative solutions. Tom thinks given new involvement in crypto from China, Facebook, and other places, that we’re maybe moving slower than expected, but Spencer disagrees. Spencer points out that asset value is not the only way to assess a crypto’s success, but that you can also look at the transaction value. Spencer suggests when pitching to a VC, don’t overrepresent what you’re doing. Be cautious about assuming that what you see online, on crypto Twitter for example, is representative of everything that’s going on in the industry; some of the most knowledgeable and impactful people aren’t on crypto Twitter because they’re too busy building. Spencer’s long-term view of the industry is that there’s an overall shift from horizontal competition to vertical construction. Bitcoin probably does not need vertical construction to grow because it is focused on a specific market and specific use cases.  Quotes “Keep in mind that any kind of venture investor that you’re going to go and talk to, they just see a lot of opportunities, so they’re looking for reasons—as much as they’re looking for reasons to invest in something, they’re also looking for reasons not to invest.” –Spencer Bogart   “It’s only because of fee pressure that we started to get innovations on things like lightning. So the other option would have been to increase the block size to try to keep transaction fees low, but the reality is there’s unbounded demand for cheap block space.” –Spencer Bogart   “We’re seeing a shakeout in terms of trying to establish standards. So I think these standards are trying to basically create the foundation for programmable assets. And standards are almost never set by best tech.” –Spen