#74 - Linda Xie and Avichal Garg

**Craig Cannon** (0:00)
Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinator's Podcast. Today's episode is with Linda Xie and Avichal Garg. Linda is the co-founder of Scalar Capital, which is a crypto asset fund, and before that, she was a product manager at Coinbase, which was part of the Summer 2012 YC batch.
Avichal, who's been on the podcast before, is a managing partner at Electric Capital. They're a value fund for digital assets. He's also an expert here at YC, and prior to that, he was the director of product management at Facebook.
All right, here we go. Let's just start with a quick intro. So Linda, after you.

**Linda Xie** (0:36)
Hi, I'm Linda. I'm co-founder of a crypto hedge fund called Scalar Capital.
We focus on long-term investing in this space with a strong emphasis on privacy coins. And then before that, I was a product manager at Coinbase, I joined pretty early on and just been passionate about cryptocurrencies for a very long time.

**Avichal Garg** (0:54)
Hey, I'm Avichal, serial entrepreneur, part-time at YC. I've been in crypto since 2013, actively invest in currencies and various companies.
And this is where I spend a lot of my time thinking about the way things are going and what the future holds and where we'll end up in the next 10 years because I think this is a pretty fascinating area.

**Craig Cannon** (1:14)
Well, it sounds like you guys are the right people because we have a ton of crypto questions. And let's start with definitions. I know a lot of the listeners probably know or have a loose understanding of what blockchain, what Bitcoin, all of this stuff is.
But just so we establish kind of a ground truth, Linda, why don't we start with you? What is a blockchain?

**Linda Xie** (1:34)
A blockchain is essentially a decentralized public ledger where you can have a recording of all the transactions that have happened on it without having a centralized entity that's kind of dictating what happens or someone that can manipulate the data. And all of this is just done in a decentralized fashion. So you don't have to trust who's actually controlling this data.

**Craig Cannon** (1:51)
What are the other things that people ought to know?

**Linda Xie** (1:54)
I think that it's important to separate a cryptocurrency from new coins that have come out that are essentially, people refer to them as crypto assets, because it's essentially more than just money at this point. So Ethereum is a smart contracts platform. And smart contracts are essentially, you can think of it just like a contract that is essentially just programmable logic where you essentially have a decentralized network of computers that's executing this logic without having to rely on a centralized source that can get shut down or manipulate the information or data.
So smart contract in itself is just really important. And you can kind of, if you want to compare it to Bitcoin, just think of it as a bit more powerful than Bitcoin and that you can be a little bit more programmable.

**Craig Cannon** (2:34)
Anything to add?

**Avichal Garg** (2:35)
Yeah, the way, I think that's great. I agree with everything Linda said so far. I think the way I think about it, there's like four core concepts. There's blockchain, which is, I think Linda covered well, is distributed ledger.
And it has a bunch of properties around who can read it and how you write to the ledger and so on. I think there's this notion of consensus, which is how do we all agree on what gets written to the blockchain and what the universal truth is, and there are different mechanisms to agree on the truth.
There's the idea of a token or token economics, which is how do we align the incentives of all the actors in the space, and there are different mechanisms to aligning the incentives. And then I think there's the smart contracting layer, which is assume you have a ledger and you have tokens and people who are agreeing on the state of the universe, what degree of control and programmability do we give on top of that to the users of the blockchain or the programmers to do interesting things on top of that, which is I think where things like programmable money or distributed compute get really interesting. Those are kind of like the four things that I think about in this universe, and you can kind of mash them together in different ways and different chains mash them together in different ways.

**Craig Cannon** (3:34)
Yeah, absolutely. So we should explain those. There are many use cases for distributed ledgers, for programmable money, all of these things can we let's break those apart.