Alyse Killeen (06:47):
So as an example, one of my grandfathers did large-scale sheet metal and plumbing in San Francisco. So very blue-collar, entrepreneurial work. But through that, I got to see his impact and good work on the city. So I would feel like a building would go up, and that we would have partially contributed to that. And that the sort of integrity that he had in his work contributed to the health of the spaces that we participated in.

Alyse Killeen (07:19):
So you can imagine that in academia, there was a break from that. So I was producing work that would be maybe read by 20 folks. And hopefully, the goal was to have people cite that work. But then the actual application of it felt really distant.

Alyse Killeen (07:37):
So I dropped out after getting my master’s and thought that I was dropping out to be an entrepreneur like my grandfathers. So went into an MBA program to sort of acquiring the financial tools. So I had the math background, or the stats background, but not a background in finance. So that was the intention of doing an MBA program.

Alyse Killeen (07:59):
And in the course of that, I started doing meet and greet sorts of coffees with VCs off-campus. And I thought I need to build my network to be able to raise money. And very early into that process, one of those folks just said, “Hey, at least with your background in math and writing, it makes sense for you to try the other side of the table.” So I did. And that 10-week internship that I agreed to, I’m 10 years past that now. So a 10-week internship turned into what’s now almost a decade in venture capital.

Preston Pysh (08:32):
Wow. That’s awesome. I’m curious what some of your thoughts are just on the macro landscape, as far as from a financial standpoint. We’ve got interest rates, and we have inflation happening that is looking like it’s getting out of control. So how are you kind of tying some of that into the way that you’re also viewing Bitcoin, kind of tying it into Bitcoin? Talk to us about some of those ideas.

Alyse Killeen (08:58):
That’s a good question. So I suppose that the impact we see of that is on the opportunities for growth with the consumer tech companies that we back. So as an example, one of the companies that StillMark is invested in is Casa, which is a company that provides easy, simple security for folks that are holding Bitcoin, Bitcoin hodlers. And we will see through Casa that as the macro environment creates sort of an unfriendly space for folks or that as monetary policy becomes overly complex or kind of muddled. Or as Paul Tudor Jones said recently, crazy. That folks will escape into Bitcoin. And they’ll then be thinking about their security, for example. And Casa will see that first.

Alyse Killeen (09:51):
One of the things that Casa saw as an example of that in the recent money printing episodes is that folks would come to Casa and say, “Listen, I want to enter Bitcoin, but I want to do it in a safe and secure way. I want to set up Casa first.” So that’s the sort of thing that we’ll see as a result of the macro environment.

Alyse Killeen (10:13):
But I suppose that my work is less driven by the traditional macro environment, and more really driven by what’s possible in Bitcoin as it relates to Bitcoin’s maturation as a stored value, and then Bitcoin’s growth or advancement as a technology.

Preston Pysh (10:30):
So let’s plow into that. So first, the store of value piece. I heard your comments down in Miami, and it seems like you’re of the opinion that it’s kind of unmatched in the store of value space.

Alyse Killeen (10:42):
Bitcoin is amongst cryptocurrencies singularly established as a store of value. And there are multiple reasons for that. But really, I think that the primary credit for that goes to the soundness of the tech that underlies Bitcoin, the digital currency. So I think that the opportunity for companies in this space and then for folks deploying capital in this space like myself, is that there’ll be an ecosystem of tools, services, applications that are built around what it means for a first true digital currency to exist, a first true digital store of value to exist. We’re quite heads down on that and making sure that we’re supporting the founders that have a vision for the world post this new framework.

Preston Pysh (11:33):
So I’m sure I have new listeners that are listening to the show for the first, or second, or third time, or whatever. And they’re just getting their feet wet in Bitcoin, and they’re immediately looking at well, there’s all these other coins like Ethereum, whatnot. Why can’t those other coins become the store of value that Bitcoin is?

Alyse Killeen (11:53):
So the first necessary piece for a digital currency to be established as a store of value is that the network should be decentralized and secure. At the very least, it should be secure, and it should be historically secure. So the security model of the blockchain should be long established. There should be a record of there being a lack of hack or breach at the core protocol level, and in any sort of intermediary pieces that are relevant to folks’ engagement at the core protocol level.

Alyse Killeen (12:27):
So Bitcoin is kind of uniquely that. We know that since 2009, Bitcoin has had 99.9%+ percent uptime. There’s been zero hacks or breaches at the core protocol. The security model has been stable. So we have proof of work as a security model. That creates a sort of known incentive system for the stakeholders that contribute to Bitcoin and to the security of the network. And it’s proven. We have over a decade, well over a decade behind us with this security model. That’s different, right, from Ethereum. That for the past I’m not sure, five, six years has been planning and plotting a switch from proof of work to proof of stake. My understanding is that some point over the next 18 months, there should be a switch from proof of work to proof of stake.

Alyse Killeen (13:20):
And at that point, once there is a switch, then Ethereum will start accumulating years, right? Years of historical proof. That proof of stake is a valid security model for their network. But until that point, we’re in this halfway place where we understand what the roadmap promises. Actually not how effective proof of stake will be at securing a multi billion dollar network. So I think that to even guess at Ethereum’s ability to establish ether as a store of value, to even guess at that ahead of proof of stake being instituted and having a couple of years of historical performance behind it is challenging.

Preston Pysh (14:07):
So here’s something that I think you have access to that pretty much everyone in our audience probably doesn’t. And that’s kind of the conversations that are happening in boardrooms across America. What are they saying? Is this something that’s being taking seriously in a majority of tech boardrooms? And the other thing I would ask is I know Michael Saylor had his Bitcoin conference for the corporate boards back I think it was in January of this year in 2021. And I’m kind of curious if you think that that had much of an impact.

Alyse Killeen (14:36):
Well, my understanding, my second-hand understanding is that Michael Saylor has been very effective at communicating with other folks, other corporate leaders that have an appetite to learn about something new. You at least have to have somebody that is open-minded enough to consider frontier tech and the introduction of a new store of value. And for those folks, my understanding is that Michael Saylor has been very effective.

Alyse Killeen (15:04):
Now I think separate from his ability to teach is his ability to be an example. And I think that’s effective not only for folks that are open and curious, but for folks that have kind of taken a pessimistic view of the space. So the example that he’ll set, even without saying much about it, will carry as much weight if not more as what he’s doing to educate other sorts of corporate executives.

Preston Pysh (15:34):
How about just the conversations? Is this a topic that’s brought up in most boardrooms today? Or would you say it’s still on the fringes?

Alyse Killeen (15:43):
So I think that folks are certainly keen to understand what’s happening with Bitcoin. Here’s what has been most surprising to me in this market cycle? Is that those folks, even folks that haven’t been public about their interest in Bitcoin, have learned almost through osmosis how to really start listening to signal rather than noise.

Alyse Killeen (16:07):
So an example of that is that when we’ve seen some of the loud energy FUD around Bitcoin mining, that’s been something that actually hasn’t been as distracting to corporate executives as I would have otherwise expected it to be, or as it was four years ago. So there’s been this ability to filter messaging that’s taken place in folks, even though they haven’t been actively engaged in the Bitcoin community. And it’s been surprising to me. But every year, I’ve been surprised at how quickly folks have ramped up.

Alyse Killeen (16:47):
So as an example, in 2014 and 2015, I was a mentor in a Bitcoin accelerator program that had many corporate participants. And there was broad participation from financial institutions. And that was surprising then. Folks were leaning in on first test cases with companies that were very early and that were really still in R&D stage. Folks had an appetite for that then. And each progressive year, that’s continued to mature. So I think the conversations you’re seeing now are around how to engage with Bitcoin as a store value, and how to engage in the opportunity that Bitcoin, blockchain, the protocol itself can offer. And I think in 2013, it would have been hard to imagine that eight years later that Bitcoin would be on the balance sheet of an S&P 500 company. But I expect that by the end of the cycle, that won’t just be one company, but it could multiple.

Preston Pysh (17:50):
This was the most common question that people wanted me to ask you whenever I put it out on Twitter, that we were going to be talking. And it really revolves around smart contracts and decentralized finance or DeFi. And because people know that you really don’t put up with the whole ‘shitcoin’ or altcoin being in the space or all the narratives that are around it. And as a VC, I think that that’s given you a lot of credence in the space. But when we look at DeFi and we look at smart contracts, it almost seems like every single entity that is trying to do something in this space is issuing some type of token. And you have Rootstock that is happening in coordination with Bitcoin. You have Sovryn that’s happening in coordination with Bitcoin. You have Stacking that’s happening in coordination with Bitcoin, but they all have an inherent token that’s associated with them. So what are your thoughts on is this something that has to take place in order for smart contracts to be a thing on top of Bitcoin? Or is there going to be something else that’s a little bit different than that, that you think kind of wins out in the end?

Alyse Killeen (18:59):
Well, they certainly don’t all have association with a token, right? Because you know that I’m on the board of directors at Blockstream. And Blockstream has Liquid Network, which is a side chain to Bitcoin. And Liquid Network of course doesn’t have a token. I’m not sure that a token is necessary, but you’re right that some of the most exciting activity in the Bitcoin space right now is certainly around smart contracting. And I would say multiplex smart contracting, so greater capabilities of smart contracts. Of course that’s related to DeFi. So maybe, you’ll give me the opportunity to elaborate on some ideas that I would have wanted to discuss earlier at Bitcoin Miami on my panel. We sort of ran out of time. But I think that the Bitcoin space right now is kind of so dynamic, that it’s hard to fit it all into a 20 minute panel. Especially hard if the moderator’s not trying to fit it into a 20-minute panel. But frankly, it’s just as shiny and sexy as any of the activity happening in other spaces. So it’s fortunate to have the opportunity to talk about that today. So maybe if I could just mention a few.

Alyse Killeen (20:11):
But I don’t want to get ahead of myself. So I want to start by saying that I’m focused on Bitcoin versus altcoin spaces really because Bitcoin is where there’s sound tech, and because Bitcoin is where there’s a stable and secure protocol that can be built upon. So of course as a VC, my job is to deploy capital into companies that are building in a sound tech state. We don’t have control over open-source development in a decentralized blockchain system. So because of that, we have to acknowledge the state of the system without thinking that we will have influence on it, undue influence on it. And given those dynamics, the options are pretty limited, right? It’s Bitcoin. So now, we’ll talk a little bit about smart contracting opportunities that exist in the Bitcoin space. And please feel free to cut me off. I’d be happy to dig in anywhere.

Alyse Killeen (21:08):
Something that I’ve been looking at since really 2014 is the concept of automated rev share. So in 2014, 2015, something like this, there was a company called Stem out of Los Angeles. The company is still in existence today. But in 2015 or 2014, they were focused on automating rev share through programmable Bitcoin basically. And what that meant to them was that collaborative contributors in the music space specifically could sort of establish a smart contract that they would agree to in advance, and that would automate the sharing of payments that happened on platforms like a Spotify.

Alyse Killeen (21:52):
So of course, this company was just sort of ahead of their time really, right? So the capability for that was rough then, but it exists now. So that’s a space that I’m quite interested in. So that’s automated revenue share space, which can today be done on Liquid.

Alyse Killeen (22:11):
We see that with a company like LNbits for example, and their split payment extension. And I think that that will be a space that continues to develop in 2021 and 2022. So maybe let me stop there to see if what I just said made sense.

Preston Pysh (22:27):
It sounds a little bit like the buzzword NFTs, where you’ve got these non-fungible tokens. Let’s say you have a song that you create, and then it’s generating revenue because it’s being streamed on whatever platform. And then some of that revenue is coming back to the owner of that non-fungible token that’s associated with the song. Is that what you’re getting at? And I think you’re suggesting that on Liquid, which doesn’t have its own innate token, that something like this could take place without there having to be some type of gas fee most people equate to Ethereum.

Alyse Killeen (23:04):
So for automated rev share, the protocol that I’m particularly excited about seeing that develop on is actually Lightning Network. And it’s possible today through PTLCs. So that is point time-locked contracts. And I believe that’s what LNbits is using for their split payments extension.

Alyse Killeen (23:24):
My job as a VC is just to acknowledge that tech that exists, and be open to the capabilities that unlocks. And then to help founders quickly actualize the vision they have to provide consumer enterprise value given the state of the tech. And then at the same time, my is to also kind of acknowledge the flip side of that. So given the state of the tech at the protocol level, at Bitcoin Core, at Lightning Network protocol, Liquid protocol, etc. is to acknowledge the state of the tech and what can’t be done so that founders don’t get in a position of raising a financing based on metrics that aren’t achievable, simply given the state of the open-source technology that they depend on.

Alyse Killeen (24:11):
An example of that going wrong you might be familiar with is the investment that went into Bitcoin payment processors in 2014, 2015ish. So you knew if you had studied Satoshi’s dialogue in the cypherpunk forums, you knew if you had studied that space, his conversations with Hal and others, that in order to get MasterCard or Visa scale transaction volume, you would need a second layer protocol like a Lightning Network. However, if you didn’t have that context in 2014, it might have made sense to back a Bitcoin payments processing company, even though the open-source protocol that facilitated that sort of application wasn’t ready for it. So my primary job is to know the protocols well enough so I understand what’s possible and what’s not possible. And one of the things that’s possible today through smart contracts is something like an automated rev share.

Alyse Killeen (25:11):
Another possibility that we’re just beginning to explore is escrow contracts. So of course, that can happen on Bitcoin Core protocol, but it can also happen on the Lightning Network and on side chains. We’re also looking at things like DLCs, which can be used for option contracts or other forms of escrowed trades.

Preston Pysh (25:34):
Yeah. And for anybody that’s interested on the DLCs, we did an entire episode with Pierre Rochard and Ben. So if people were interested in that, I’ll have a link to that episode in our show notes if people are wanting to learn more about discrete log contracts. And this also enables a form of smart contracting that takes place right on the base layer of Bitcoin, which is something correct me if I’m wrong, I believe this was just being kind of uncovered in the past 12 to 24 months that encryption experts have discovered that we can do these types of things. So it’s just getting to the maturation level as this discovery is kind of taking place.

Alyse Killeen (26:12):
Exactly. And that’s one of the exciting things that Taproot unlocks as well as the ability to have DLCs in a Lightning Network environment so that they can be quickly treated peer-to-peer. So it’s not just Taproot that needs to exist for that. But my understanding is that one of the exciting things about Taproot is that it enables DLCs in a Lightning Network environment so that they can be traded peer-to-peer and quickly. So it’s not just Taproot that’s necessary for that to happen in a Lightning environment, but also for barrier escrow to exist in a lightning implementation. So we’re maybe a couple steps away, but yet much closer than we were prior to Taproot locking in.

Preston Pysh (26:57):
You know what’s interesting about how I’m understanding your thesis is that you’re starting off with we have to have sound money at the base layer. It’s non-negotiable. And we have to have something that’s proven. Like you’re building a house, right? The foundation on the house has to be rock solid. And then we can go on and do all these other things. And the technology can get there. It’s not nearly as mature as maybe trying to do it on the base layer. Call it Ethereum or whatever else. But when we look at trying to do it on the base layer like they’ve done to date, it’s not scalable. Which means they have to transition and pivot into these other changing and morphing proof of stake, which is the engine of the entire protocol. And they’re happening to do these open heart surgeries on the protocol in order to potentially allow them to scale. Am I characterizing that correctly? Is your overall kind of thesis for how this is going to move forward?

Alyse Killeen (27:56):
Well, I think that’s exactly right. So if you don’t start with a decentralized and sound-based layer, then you sort of have to try to hack it together in other ways. And I think the other thing though that you have to do is obfuscate the fact that you don’t have a sound and stable base layer by naming a different truth into existence. And I think we see that a lot in other spaces. So Bitcoin to me feels really like folks that are heads down on the science and the technology, and then promote what they’ve achieved, what they have proved they can do in current day. Other spaces market what they expect to be able to do in the future. So that can feel more exciting. But what I think the mission of Bitcoiners really should be in 2021 and maybe going forward is to be maybe more publicly excited about how active the space actually is, and less hesitant to talk about what’s on the roadmap and what that enables.

Preston Pysh (29:02):
So Alyse, talk to us a little bit more about the Lightning Network and maybe some of the things that maybe you’re excited about most in that space right now.

Alyse Killeen (29:12):
Smart contracts and the Lightning space starts to really press the boundaries of our imagination. So when you see an opportunity like that, you know that the world’s best entrepreneurs are going to be paying attention to it. So I am also paying attention to it.

Alyse Killeen (29:29):
Specifically, an example that has really sort of hooked me is the ability to denominate Lightning channels in a currency other than Bitcoin, through the existence of smart contracts in the Lightning Network space.

Alyse Killeen (29:45):
So as an example, you can have a USD denominated Lightning channel through smart contracts on Lightning Network. So that would be a Bitcoin collateralized USD Lightning channel. Then we have the ability to transact peer to peer instantly and almost for free in USD without relying on an external stable coin.

Alyse Killeen (30:08):
So the possibilities of that I think are kind of endless. And really what it looks like is the promise that Facebook’s Diem came to the market with. So we start to see how we can really unlock a breadth of utility on Bitcoin in a Bitcoin native environment, without needing the existence of other tokens, even including stable coins.

Preston Pysh (30:33):
Wow. So I was going to go with my next question about stable coins. I’m not understanding how something like that would be possible. Because my understanding is that with a stable coin, you get immediate clearance for if you’re doing a two-way atomic swap kind of peg. Is this not requiring something like that? Help me understand how this would be put into application I guess.

Alyse Killeen (30:53):
So you would have a smart contract that relied on an external oracle or a set of oracles that said when the exchange rate of Bitcoin to USD changes, so does the balance held in this channel. So in that way, one side of the channel would be holding the value of that channel in USD. And the other side of the channel would be essentially a long Bitcoin position.

Preston Pysh (31:20):
Interesting. Now for people that are hearing that and maybe didn’t hear my conversation with Ben and Pierre on the DLCs, the discreet log contracts, they’re going to hear oracles, and then they’re going to immediately think, “Well, now you’re needing a token like LINK or some other oracle token in order to get the data to say what the price of the dollar is.” And you’re nodding your head, and I can see it. And I know where you’re going to go with this. So explain to people why that’s not true.

Alyse Killeen (31:49):
It’s hard for me to understand the argument that that is true. So of course you don’t need a token. All you really need is a variable in the contract that says, “This is how we define the oracle that we will rely on.” And it could look something like for instance, what BitMEX does or what other exchanges do where there are multiple sources of the exchange rate that are pulled in. The outliers are dropped. And then the median of the rest of the range is considered the truth on the exchange rate for purposes of that contract.

Preston Pysh (32:22):
And do you see for the incentive for an exchange to publish this information and this data that then would be consumed in this contract, do you find that some of these exchanges might be requiring some type of fee or payment in Bitcoin, or dollars, or whatever, whenever the contract is being established? Or do you think that there’s going to be some type of standard that stood up? Because it really kind of comes down to the fidelity of that data and then how many other sources you’re pinging in order to receive it. So what are some of your thoughts on that?

Alyse Killeen (32:52):
I think that’s a great question. So frankly to give you transparency on my process, that’s the sort of question that I would ask founders building in the space to understand their business model and the scale that they needed to achieve in order to be a company that grows to be of significant size with this sort of business model.

Alyse Killeen (33:13):
But what I expect to happen, my null hypothesis would be that exchanges would ultimately be competing to be a source of truth around this data point. And that the fee for provision of this data would be very small, not present. That’s my null hypothesis. And we’ll see how this space shapes up. But like I said earlier in the conversation, my job is really to understand what’s possible with the tech, and then to sort of identify the founders that are going to actualize the utility, the value that it can bring to consumers and companies, and then to help them accelerate their work.

Preston Pysh (33:54):
I think that if you would talk to people that are tracking this space quite closely, I think many of them would be really surprised to hear your opinion, which I completely agree with. Which is you don’t need a token for the oracle to ping and retrieve some of that data in order to confirm or deny what the contract value is when you’re comparing these two. So I really liked that point. And again, I’ll have the link to the DLC conversation, because I think it’s really important to kind of augment what you’re saying here Alyse.

Alyse Killeen (34:23):
That would be great. Frankly, I’m confounded by why you would need a token for that. So maybe one piece of context that I can add here is to say that I come to this state of focus on Bitcoin after having been early in what’s now known as ICO space. So in fact in 2014, we did diligence at the firm I was at, at the time, which was Clearstone Venture Partners, I think we were the second or third VC firm to do diligence in the token sales space. And that was for the token sale for MaidSafe. I say that just to note that it’s not that I was closed to the potential for tokens to be necessary to incentivize software participation. We did explore it. We explored it very early. We looked at the first token sales. We looked at the processes behind those token sales. Frankly, they were more responsible than what we saw happen in later years. There was an opportunity for best practices to be established in those early years, 2014, 2015. And it’s just the what I found from my research and time in the space is that it just wasn’t necessary.

Alyse Killeen (35:41):
And there wasn’t utility unlocked by that token incentivized software that wouldn’t be possible on Bitcoin. That frankly, I expected that Bitcoin would win. And the reason why it would win is there’s many reasons. But one reason that’s relevant to me is that founders, the best founders are looking to build on a stable and secure tech. So as utility was unlocked in the Bitcoin environment, founders would gravitate towards Bitcoin and away from other protocols. And we’re seeing that happen today with companies for instance like Atomic Finance, who started in the Ethereum space and came over to the Bitcoin space once DLCs allowed them to provide the same value that they had imagined being able to provide in the Ethereum space.

Alyse Killeen (36:29):
But then Bitcoin, we know that they can offer that in an environment where the tech is stable, it’s dependable. And there won’t be a need for instance, a deep refactor of their own infrastructure once the security mechanism has changed, which is true in the Ethereum space. I think Atomic Finance is a first mover, and I expect and have been seeing more leading entrepreneurs switching from other protocols and into the Bitcoin space as utility is unlocked through advancements like Taproot.

Preston Pysh (37:06):
So one of the things that I’m personally most excited about is this idea that positive capital will become a free and open market once again. So when we look at interest rates today and we compare them to just the inflation rate that’s actually being published, let alone the inflation rate that I think many of us expect are real, it’s a pittance. I mean, you can go out and you can borrow money for next to nothing with no collateral. And then you’re looking at this space where people are overcollateralized, aggressively overcollateralized in something that settles immediately 24/7/365 days a year. And you’re collecting interest rates of close to 10% on the U.S. Dollar. When I think about what that might mean moving forward, do you see decentralized finance, peer-to-peer potentially becoming risk-free rates in the overall economy? Do you see things like BlockFi serving a purpose in the future? Do you really kind of see decentralized finance where peer-to-peer lending and borrowing is kind of the main driving factor. And I’m talking five, 10, maybe even 15 years from now. How do you see that space evolving?

Alyse Killeen (38:20):
My preference is for decentralized finance to incur, occur in an environment that is not separated from the core values of Bitcoin. So what I mean by that specifically is that one of the core principles and opportunities of Bitcoin is the opportunity to be your own bank or be your own wallet, and to take responsibility for custody into your own hands. So when we think about opportunities like lending or other sorts of finance, replication of the traditional finance system in the Bitcoin space, what’s most interesting is when that capability is unlocked while not compromising on those values. So what does it look like to have lending where you’re not giving away control of your Bitcoin for a period? Can you do that? Those are the sorts of opportunities that we are most excited about. But frankly, I try to stay quite open. So I’m looking to hear how founders understand the opportunity. And then matching that like I said to the state of the tech, and also to what’s special about Bitcoin.

Preston Pysh (39:34):
When you’re receiving a pitch for a business, particularly in this space, in the Bitcoin space, what is something that really helps you get confidence or excitement in the project to just know that you think that it’s going to be something special?

Alyse Killeen (39:49):
Well, I think that there are a couple things. There are two things really. So we’re always looking for … when StillMark backs a company, that’s because we believe that the founders at the helm of that company are the best decision-makers in that space, in that category. So an example of that I’ve already mentioned is Casa. So Casa sees security as not just a technology challenge, but also as a UI challenge. And the way that Nick Neuman and Jameson Lopp are thinking about what it means to offer software that enables individuals to provide their own security, and have that be just as robust as you would get if you were dropping dollars at Bank of America, for instance. The leadership there is what’s most important.

Alyse Killeen (40:37):
So when evaluating a founder that’s new to me, there are really two things that I look at first. So one is the founder’s vision. And of course, it’s important when a VC is evaluating the opportunity to produce a return on that investment. That’s what we’re doing, right? So it’s not an altruistic pursuit, really. Although there’s some of that because of the space we work in. But we’re looking for companies that can create incredible value for the folks they serve. And it can capture a fraction of that so that they’re building billion-dollar businesses. So we’re looking at founders that have frankly, really massive visions. That’s the first thing. Is the market significant enough, and is the founder thinking aggressively enough?

Alyse Killeen (41:23):
And then we’re looking for a team that includes leadership that can really speak with protocol-level developers, in a toe-to-toe sort of fashion. So what that means practically for the company is that they can understand what’s happening at the protocol level today, and what the roadmap, what the near-term roadmap looks like, and how that’s relevant to their business.

Alyse Killeen (41:50):
So a good example of this, a great example of this is Paul Itoi with LND Work. And LND Work has two products. One is Sphinx Chat, and the other Stack Work. So what Paul is doing is he has this sort of incredible vision for how Lightning Network is relevant to the masses. And what that means to Paul is how can a Bitcoin native financial chat app be interesting to folks even outside of the Bitcoin space? So it’s interesting to us Bitcoiners, right?

Alyse Killeen (42:22):
I know Preston, that you have a tribe on Sphinx Chat. I’m a part of that tribe. I use Bitcoin every day through financial chat and calls on Sphinx Chat. But it’s not just about serving us. It’s about introducing a decentralized financial chat system. So can WeChat be decentralized? Can you use lightning nodes to allow folks to sort of have their own space where data is transacted so that you don’t get these sort of big data dumps or hacks where there’s a central server that all of our data sits on? And if that’s penetrated, then we’re all in trouble. So Paul’s thinking like that.

Alyse Killeen (43:01):
And then that links up with Stack Work, which is relevant for folks in emerging markets. And for those that don’t know what Stack Work, is it’s a mechanical [inaudible 00:43:10] marketplace where tasks are done on smartphones. And most of the workforce, most of the supply side of that is in emerging markets. And folks are earning their first ever smartphones by doing work and getting paid in stacks. So we’re looking for founders like that, that are really thinking big. So folks like Paul are thinking what does it mean for the world broadly, now that we have a trusted and secure digital currency? Something where scarcity can be assured and where we understand the monetary policies, and that those are fixed. And that they can’t be changed by five guys in a back room. Can that be powerful in emerging markets, can that be important in chat? So we’re looking for founders like that.

Alyse Killeen (43:54):
And then I also mentioned in that example how a financial chat can sort of be a safer environment in a lightning environment because of the architecture that exists to support it. So that shows his competency and somehow, native understanding of this new product you call. That sort of founder is the sort of founder that we really want to back and be partners with. And the hope is that our network that we bring to the table for them, our understanding of venture capital and building businesses, along with hopefully our understanding of Bitcoin can be in some way meaningful to the founders like that and can help move the needle. That’s the first look.

Preston Pysh (44:38):
What are your thoughts on the big news of El Salvador and what that might mean moving forward?

Alyse Killeen (44:44):
So that’s the reason why I’m in Bitcoin, right? So the reason why I’m in Bitcoin is because I think that everyone regardless of socioeconomic status, regardless of where you’re born, what your gender is, what your race is. I think everyone deserves to be at equal level when they’re participating in the financial space or in the global economy.

Alyse Killeen (45:08):
So my hope is that what will happen in El Salvador is that because they are so early, they will accrue some sort of oversized advantage through Bitcoin. So I’m hoping to see things like mining introduced in a way that can be meaningful for the population. I’m hoping to see things like folks be empowered through the ability to accept remittances over the Lightning Network versus through Western Union. That’s the hope. We’re still quite early. So this is really a sort of wait and see kind of thing.

Alyse Killeen (45:43):
But what I’ve been really excited about frankly was that what I heard when I hear folks in government in El Salvador speak about the opportunity is I hear an acknowledgement of what Bitcoin can do for the population and an openness to provide that to the population.

Alyse Killeen (45:59):
So an example of that is that Alex Gladstein asked the question, “Will folks in El Salvador be able to have their own wallets, or will they need to use a government provided wallet?” And the answer to that was that folks can hold their own wallets. That still is a question mark in the U.S. Right? Can you self-custody your own Bitcoin? And in El Salvador, the answer has been yes, you can. And if that remains true, then there’s an opportunity for folks in the emerging market of El Salvador to really have unique access to a financial space that allows them to participate in the global economy in a way that I think wasn’t possible prior.

Preston Pysh (46:42):
Does this set off a chain reaction to other countries that are in a similar situation as El Salvador?

Alyse Killeen (46:49):
That’s what I’m hoping. And it seems as though folks are signaling that they want to be a fast follow, so a second mover. And that’s not surprising, right? We saw that a little bit with Miami. I think Mayor Suarez is doing a wonderful job in Miami. And we’ve seen that other sorts of city leaders are willing to learn from the lessons that have been accumulated in Miami and are ready to be a sort of second follow to what happens in Miami. I think we’ll see the same in El Salvador. And we’ve already seen countries publicly flag that they’re willing to do that.

Alyse Killeen (47:27):
And my hope is that in Latin America, that in South American, Central America, that we see a lot of quick follows. After that, my hope is that those will be Bitcoin follows, versus folks being sold a vision of a better Bitcoin. And we see that every altcoin community leader has boarded a plane, has their bags packed, and is ready to pitch their vision. And the work then for Bitcoiners is to make sure that the resources, educational resources are available both to country, government leadership, as well as to the population so that the signal can be filtered out from the noise.

Preston Pysh (48:11):
If we had elected officials listening to our conversation right now, what would be the message, the point blank message that you would have for them?

Alyse Killeen (48:22):
I think Bitcoin is not political. So it shouldn’t be a Republican, Democrat, libertarian sort of thing. It’s not that. Bitcoiners are not a monolith. And my hope is that it doesn’t become a sort of political U.S. versus them thing. Because I see Bitcoin as fintech for poor people. I understand that that’s not how it’s often spoken about on Bitcoin Twitter and social media spaces, but that’s how I see it. And my hope is that the United States doesn’t miss the opportunity here, or my hope is that folks don’t choose to politicize this.

Preston Pysh (49:04):
What would you say to an elected official who’s listening that as far as the speed and the way that they go about regulating Bitcoin? What would be your recommendation to them?

Alyse Killeen (49:16):
Well, my recommendation frankly would be to understand that Bitcoin is sort of a separate space than cryptocurrency. So I think to have Bitcoin forced into a bucket of cryptocurrency projects kind of confuses actually what’s happening here. Bitcoin as a decentralized network, as a store of value, as a digital money, that is software governed, is quite different from other cryptocurrencies, other protocols that are governed by a few guys that are good at memes. These are different things. So I think in recognizing and studying cryptocurrency and Bitcoin to the point of understanding that truth is what’s required to have an informed decision on this space broadly.

Alyse Killeen (50:04):
And then I think asking the questions about trade-offs is important. So one of the disappointments in some of the messaging that’s come out from folks in the Senate recently has been around a lack of curiosity about the trade-offs of the technology. And an example of that is the lack of curiosity about why proof of work versus proof of stake, and why these sorts of choices were made.

Alyse Killeen (50:32):
So I think that the Bitcoin space is really comprised of folks that could have made a lot more money in other ways by rolling their own token and introducing ICOs, and have chosen not to do that. So asking the question why and understanding the story behind that I think can lead people to a better understanding of really what’s happening and how Bitcoin’s differentiated.

Preston Pysh (51:00):
Who is somebody in the space that you pay particular, and you can name as many people as you want, or as few as you want. That you pay particular attention to because you just get so much signal out of anything that they say.

Alyse Killeen (51:13):
Well, this is so funny you asked me this. I was just thinking about that today. So I actually want to mention to people who have low, lower than they should follower accounts on Twitter. Which is AJ Towns, who is just incredibly brilliant, right? Including thinking through how to prioritize the next set of advancements at Bitcoin protocol level. And then there’s a new guy on the engineering team at Blockstream Sanket, who is just very lovely and very brilliant, and is all signal. So you’ll get very few tweets from him. But every tweet, including every reply tweet is going to be just pure signal basically.

Alyse Killeen (52:06):
So I met him actually in Blockstream’s office when he was still an undergrad at University of Chicago. And he was whiteboarding with Pieter Wuille for two days straight. And I think if you can hang with Pieter at the whiteboard for two days straight, then you’re certainly someone to pay attention to. And I pay attention to him.

Alyse Killeen (52:27):
There’s folks that are better known that I’m also paying attention to. And I balance that between three different groups. All were present at Bitcoin 2021, by the way. So let me mention each. First, of course I’m paying attention to protocol developers. So that’s those developing Bitcoin Core protocol, Lightning protocol, and side chain protocols. I pay attention to all of those sorts of folks. Of course that means people like Andrew Poelstra. That means people like Pieter, who I already mentioned. And then I’m paying attention to folks whose work necessarily proceeded Bitcoin. So the most important example of that is Adam Back, who is a forefather of Bitcoin of course. He has a really clear vision of the space and foresight on how the space is going to develop. I’ve known him since 2014. And what he said in 2014, it was like he was a time traveler. Because what he said in 2014 is kind of what’s unfolded in the years since then. I pay attention to all those folks.

Alyse Killeen (53:33):
Now, the next group of folks that I need to pay attention to of course are the folks leading startups in the private space, right? And so those are folks like Paul, I mentioned before. Nick Newman, Jameson Lopp, all of these sorts of folks. Let me mention a group outside of my portfolio as an example. I paid really close attention to folks like Brock and Andrew at Satoshi Energy who are really at the forefront of thinking about what it means if you can introduce mining to renewable energies and drop a profit center on wind and solar energy providers, and what that would mean both for the energy space and for miners. So I’m paying attention to folks like that.

Alyse Killeen (54:15):
People that are category leaders within their workspace, and that have established both that they understand the tech, and that then they have some sort of almost proprietary insight about how Bitcoin tech is relevant to their space of expertise like Brock and Andrew in the energy space.

Alyse Killeen (54:35):
Then the third group that I’m paying attention to is folks that their family and their work life exists outside of Bitcoin. So that was the most exciting thing to me about Bitcoin 2021. I don’t know if you would agree with this or not Preston. But to be surrounded by maybe 10,000 people that their work is not Bitcoin, right? Their family life exists outside of these crazy discussions that we have. And they are just there to learn about the tech and to commune with Bitcoiners. They’re there because they’re excited about the tech. I listen to those folks to understand how what we’re building at the protocol level, what core developers building at the protocol level, and then what founders are building hopefully in league with StillMark, how that impacts their life.

Preston Pysh (55:27):
Yeah. I agree. The conversations that you were able to have with just everybody who was down there was just fascinating. And everybody had a unique story of how they got into the space and what it meant to them. It was really a neat experience. A little overwhelming, but really neat for sure.

Preston Pysh (55:48):
Okay. Last question I have for you Alyse. Favorite book or books, however many you want to throw out there. And particularly if you can name at least one Bitcoin book or something that’s in the space that you think is a really valuable read for people that maybe are new.

Alyse Killeen (56:06):
What I’m reading now on the Bitcoin side is The Blocksize War by Johnny from BitMEX, and Layered Money by Nik Bhatia. That’s on my desk right now. In the non-Bitcoin space, my time favorite book is The Agony and the Ecstasy, which is a historical nonfiction basically about the imagined life of Michelangelo. And it’s just a really brilliant read. So anyone that’s also an art geek like myself will appreciate this book.

Preston Pysh (56:41):
Alyse, I just want to thank you for coming on the show. I know your time is very valuable and your insights are just amazing. Give people a handoff where they can learn more about you or else that you want to highlight.

Alyse Killeen (56:55):
Well, I’d love if founders would visit us at stillmark.com. So that’s the website for the venture firm that I lead. And then I’m present and active on Twitter @AlyseKilleen.

Preston Pysh (57:08):
All right. We’ll have links to that in the show notes. And many of the other things that we were talking about for the show. And Alyse, thanks for coming on.

Alyse Killeen (57:16):
Thank you, Preston.

Preston Pysh (57:18):
All right, guys. So thanks for listening to the show. If you’re enjoying the conversation, be sure to follow us on your favorite podcast app. And if you’re interested in having a conversation with me online, you can follow me at Twitter @PrestonPysh. All right. That’s all I have for this week. Thanks for joining us. And we’ll catch you again next week same time.

Outro (57:37):
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