Crypto conversation part 2: how to find the kernel of a kajillion dollar idea & more...

🎧 Listen to this conversation on the S3T Podcast!

Happy Friday! We are continuing our crypto conversation with Russell Castagnaro and here is what you'll learn about today:

• 🔐 Why Blockchain-based architectures change personal data ownership
• 🛡️ Safe ways for companies to experiment and learn about crypto now
• 🚀 On-ramps for crypto careers and learning
• 🏗️ How Blockchain merges previously separate system software categories
• 🤝 Community-based vs extraction-based venture capital networks
• 💡 How to find the kernel of a kajillion-dollar idea

This is a compressed master class filled with practical ready-to-use insights - a refreshing departure from the apocalyptic all or nothing hype we often hear from some players in the crypto space.

Russell Castagnaro is the founder of Wampei, one of the first Bitcoin payments companies, as well as the founding partner of Bufficorn Ventures, a web3 venture portfolio. Russell's background in software, government, privacy, security and crypto gives him a unique clear-eyed ability to sort the wheat from the chaff in the emerging crypto and web3 industry.

To aid readability I've lightly edited the audio transcript and added topical headers. I've also added a handy "What you learned" recap at the end.

Last week we left off talking about financial use cases for individual payments. This week we continue that thread and branch out to some other topics.

Ralph: So Russell, I think you have a view about the coexistence between crypto and traditional finance - that maybe there's more coexistence than many would suspect

Russell: Yeah this won't replace it because people like using credit cards. They like being able to you know, first of all, it's a debt instrument if you're not in trouble then it costs you nothing to get a 30-day float for payments. It gives you some security and stuff like that so this isn't saying that like crypto replaces all of that.

But when you're talking about your data and your information...

Ralph: Oh gosh, there's so much we could talk about there right? Like there are things you've achieved, things you own, your memberships your credentials, education...

Russell: The fact that you have certain skills, verifiable credentials. I think we've talked about before how back in the day Harvard was looking at LinkedIn and they found that there are more people with Harvard degrees on LinkedIn than had ever been issued in the history of Harvard!

They had this Harvard at home program so what they did is they went and contacted these individuals saying, it seems like you you really like Harvard. Would you like to actually get a degree from Harvard by taking these online classes?

And when you look at a resume how do you know to trust this, you know?

And so if you can do that electronically and you're the one who owns that piece of information, you can share it when you want to prove things. That's a game-changer!

Blockchain based architectures change the equation for personal data ownership

Ralph: okay, so let's zoom out just a bit to talk about how privacy and personal data ownership might be impacted by Blockchain based architectures. How do you see that?

Russell: Think about how people's information is mined, right? Like looking at YouTube, right? They're getting information about their customers. They're pushing out ads. What if instead you could just pick the ads that you wanted to watch because you were interested in those products and you could just get paid directly.

So instead of paying like three cents per eyeball that looks at the video, they're now paying 15 cents to people who actually might be interested.

Now that the technology exists that enables this kind of behavior, businesses need to catch up. It's a substantially different business model.

Find a way to experiment safely

Ralph: Yeah I think that's exactly what some companies are curious about - like what should we be doing in 2025? It's annual planning season, for a lot of companies believe it or not it's already starting and for them, it's like what should we be doing in this space?

How do companies get started?

Russell: I think that the first thing is: your creative teams and your marketing teams are going to come up with ideas for using new technology. The key is to make sure that it's a safe enough approach where a little marketing experiment doesn't turn into a complete nightmare.

I think there's an Office episode about a guy who does something like that and it all goes wrong. You need to experiment, but you need a safe way to do it. What you don't want to do is make experimenting with this technology a potentially career-limiting experience.

Ralph: Right

Russell: I think we're well on our way to that - you've got teams like the team at Unicorn Wallet who are making a wallet for brand - that's safe. You've got other things that that replace vehicles people are already used to using with something that is more robust.

There's a lot of static to signal as we were saying earlier, but there are clear ways to lower your cost of doing business so you have to have you know, a technologist that can look and say, okay what is your business and can this help you or not?

This is not something to do just because you want to say you're in the blockchain space. This is something to do to make sure that you are more competitive as a company or you provide a better service or you do better things. The payment space is easy and if anybody's doing anything with international payments where its very expensive and hard to follow I think they're gonna find that that leveraging something as simple as stablecoins on one of the Layer 2 blockchains is going to be a knock it out of the park solution.

There's also the use of like a web3 wallet. Now, what's funny is that people who've never used a real web3 wallet - only gone through an exchange - won't know there are a lot of business use cases where you have multiple signers and different people approve things... They use these workflows that are created with custom software. In blockchain wallets that's that's all built in!

Blockchain collapses previously separate system software categories into a single architecture

Ralph: You raise a good point about the business functions already built in: if you think about it businesses rely on three classes of systems today:

• your forward-looking systems kind of your think of your Business planning sales and stuff like that
• your present business - transactions that are happening in the present and then
• your backward looking systems, like your record-keeping, enterprise data warehouse, compliance & audits systems and so on

...these three classes represent entirely different categories of software solutions that evolved separately and until now businesses had to buy them separately and then pay extra to have them integrated. This creates huge siloed data and processes and just drives up enterprise costs year after year. In contrast, Blockchain based architectures seem like they just collapse these functions into a single layer, right?

Russell: You can set up - its academic to set up a you know a five of nine wallet where you have to have five of the nine (execs) sign something before it can be executed and you've got great software out there that lets you run it. something like you go to safe calm or you go to on chain Like on chain calm though They have great tools that provide you with ways to do multi-sig stuff stuff that would stand up to a SOC2 audit.

Crypto wallets aren't just for individuals, they're for corporations too

Ralph: Yeah, there you go. So is this a is it a dumb idea to think about: Corporate wallets? We typically think a lot about individual wallets. Is there such a thing as a group wallet or should there be?

Russell: Oh, yeah Oh, yeah, and in fact like contract wallets are now really moving into the mainstream. And why this is important: Let's say so my company Worldchain, right? I've got an LLC and I have a contract wallet for Worldchain.

In the event that I ever sold Worldchain I could hand that wallet out and I don't hand it over to the company that bought me by giving them my keys, Right? A contract wallet is controlled by other wallet holders. So I know so I have my wallet and I'm the primary signer for Worldchain. If I sold it I could just switch it over to their corporate wallet. They're signing.

This also benefits people who are worried about like, oh, I've got all this Ethereum or tokens and what happens if I die? Well, you can actually have other people added to signers that after a certain amount of time they'll become the primary signers.

So you there's all this very sophisticated stuff that you can do that's built into contract wallets.

That changes how everything can work vs [current state] if you're running a company and you had this secret key that's the key to all the funds in your system And then you fired somebody who had that key, they could pull the funds out, right?

That's not a good way to run your business, right? Nobody would say that that's a good way to run it.

And so and that's where contract wallets have gone. Contract wallets are wallets for business and they enable corporate management of a wallet. They can also have execution from computers. So you can have a computer process running somewhere that queues up transactions, then the signers go in and poof done. You can even have it to where if it's under $250, it will automatically go through and you know, you have pretty robust rules or processing anything that comes in through.

Ralph: Corporate wallets ....I feel like we can do a whole other conversation just on that one.

Community based vs extraction based venture capital networks

Ralph: But I want to talk to you about Bufficorn Ventures...so I think I figured what the Bufficorn is...I couldn't figure out what it was until I was out there in Denver driving out towards the mountains I saw this group of buffalo - beautiful, it was March, there was snow - just a beautiful sunset scene.

Russell: Up at Lookout mountain. That's the most accessible place where they are.

Ralph: Yeah, this was yeah visible right from the highway. And as soon as I saw them I was like, okay, wait a minute I think I get it: it's a Buffalo and unicorn kind of right? So...what is Bufficorn Ventures up to (and all about)?

Russell: So, when EthDenver started, it was just this crazy experiment. After a couple years, it was growing and the whole [crypto] space was growing. We created a decentralized autonomous organization (DAO) call Spork DAO - because a spork is the single best utensil you can possibly have: you can use it as a spoon, or a fork etc.

So Spork DAO was created - and instead of having a token that gets sold, it has participation incentive for those who participate...for example you attended EthDenver so you should have like 52 in your wallet, right?

If you start a startup or you are on a panel or you give a talk or you're a hacker, you win something you get a certain amount of Spork allocated to you. You can then stake that spork and become a member of this co-op.

It's a Colorado co-op that has a board and everything. As a Spork holder, you can vote on board members and other things. After about three or four years, we're like, wait a minute: there's all these companies - essentially unicorns that are coming out of EthDenver why don't we set up a set up an investment club that can work with these early stage startups, identify the ones that have legs, and give them support all through the year, give them a chance to show their demos during EthDenver, bring them eyeballs (because we have more people than any other similar conference every year). So we started Bufficorn Ventures to do just that.

We focus on incredibly early stage companies and teams coming out of the hackathon. They have a good idea but are still relatively small and need bootstrapping. And then we try to seed them up so that their products are ready to go and then they can hit EthDenver the following year, pitch at the Pitch Fest, get a round of substantial funding and grow from there.

Instead of an extractive model like most venture capital funds are, it's much more of a community fund - and in fact the the community invests in it. Spork DAO is a big investor in EthDenver so anytime we get returns they go into Spork DAO those get redistributed to members based on how much spork they have staked!

Ralph: Okay, yeah, you're building a community!

Russell: Exactly! the idea is that we're in a regenerative model: the same people who are coming and contributing to the ecosystem are getting the rewards. It's a nice virtuous cycle.

Of course, we're only three years old. It's relatively new but we have some great companies that are looking really good and you know, we've been through a couple of downturns in the in the ecosystem. It's great that we've had so many of our companies weather that so well.

It's something to see these companies that started at EthDenver, then got some funding from Bufficorn Ventures and are now like, kicking it!

Ralph: That's awesome SO, what if people want to get in touch with you either about Bufficorn Ventures, EthDenver or Spork DAO, What's a good way to to get in touch or follow you?

Russell: If you are interested in Bufficorn Ventures, go to the website Bufficorn Ventures and up in the top right corner there's a little "Get Money" link and you can apply.

If you want to just reach out to me, LinkedIn is fine

And then you can also get me on telegram at @egovguy on Telegram.

I'm always happy to talk to people about where the technology is going and what we are trying to build in the ecosystem.

On ramps to crypto careers

Ralph: Russell for people that are starting out their careers - coming out of college, looking for a job - or people already in a finance career, they keep hearing about crypto and wondering if they should make a shift over. Are there some good on ramps or ways to get into the crypto?

Russell: There are some great courses that you can take online that if you want to get in and be a developer OR you just want to understand the technology so you have a framework that you can talk about it.

There are seven years of EthDenver content that you can look at and see what technology is interesting to you!

As I mentioned, we have camp Buidl at EthDenver every year - We have it the two days before EthDenver starts. Last year we had 250 people come and they basically go from 0 to 1 as developers.

There are some great classes on YouTube and there are international conferences as well. There's a big international community around this so just you don't even have to be a native English speaker. I mean, El Salvador adopted Bitcoin as their national currency. You know, things are happening all over the world and it's really really exciting stuff.

How to find the kernel of a kajillion dollar idea

Russell: I think that where career seekers sometimes go wrong is in thinking "Oh, I'm gonna go learn to code and then I can become a founder."

You need to have the experience to know what kinds of problems that you want to solve. Be on a team, find a team. One of the greatest things about coming to EthDenver, is that you can join a hacking team and learn how to work with other people to solve a problem.

The way we win - the way anybody who's listening wins - is you find problems to solve.

Typically everybody starts with their own problems. If you look at people who come out of college, all of them do the same projects - because that's all they know.

When you start learning how to talk to people, listen to them and document what their issues are and find the friction points, you can find ways to eliminate friction and solve problems for them.

That's when you start to have the kernel of what could be a kajillion dollar idea.

Look at Craig Newmark, eBay etc - You know those started as really super simple implementations of technology. People coalesced to it. It is not about making a super technical obscure vague solution right? It is about solving problems, reducing the friction in people's lives and letting them get back to what they were trying to do!

If you can successfully do that really regardless of technology you'll be successful. Blockchain makes really cool stuff possible.

The world's financial architecture is evolving as we shift from a theory driven to a data driven economy

Ralph: One last question. Interesting to me how many different voices - from the World Economic Forum, Blackrock, Azeem Azhar different industries - all seem to have this sense that the world's financial architecture is evolving and shifting from a theory driven to a data driven economy.

How do you think about the evolution of the economy / finance / money? What are you most excited about?

Russell: The financial barriers in the world are coming down and this is an amazing time when people in South America, Africa, Southeast Asia or Australia, everywhere can can pay and interact almost immediately is mind-blowing.

It gets me really excited to think about the problems that can be solved - problems we need to solve like energy, environment, even carbon credits...These are all things that blockchain lends itself to very well. To being able to help us find us not to solve it for us, but to help us find a solution now you have drawn an interesting distinction between crypto versus traditional money issued by government the Government's, you know, you have to remember crypto is is basically a cash system And we have built everything around a debt based system

Ralph: Traditional finance is an elaborate system of IOUs basically

Russell: ...because that was the only way we could do it. Having crypto as a cash based system actually means you have far fewer risks associated with it.

It is a brave new world! And if we could just hang in there and not let the anti crypto army push the United States into the margins, we're gonna be really really in a great spot.

Ralph: Yeah exciting potential how things shape up over the next year or so.

Russell: We live in exciting times my friend.

Ralph: Yeah, we'd really do.

Russell: Yeah, you better come out the whole time for EthDenver this time - bring the whole family with you!

Ralph: So when is it?

Russell: It'll be February - I think 24th is when Biddle week starts. Eth Denver starts on the 29th ends March 3rd.

Ralph: It's the biggest Ethereum event?

Russell: Biggest web 3 event on the planet!

So this wraps up our 2 part conversation on crypto with Russell Castagnaro.

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Opinions expressed are those of the individuals and do not reflect the official positions of companies or organizations those individuals may be affiliated with. Not financial, investment or legal advice, and no offers for securities or investment opportunities are intended. Mentions should not be construed as endorsements. Authors or guests may hold assets discussed or may have interests in companies mentioned.