An Intro to Crypto for Chiefs of Staff

Posted by

*The following is an essay of a presentation I did for On Deck as a fellow in their ODCoS program.

So you’re a Chief of Staff. The generalist, the advisor, the operator, the eyes and ears. And one way or another, you’ve been hearing more and more about crypto. Maybe you have a background in finance, and you’ve read about this “DeFi” thing. Or maybe you’ve been on Twitter, and you’re wondering why every other profile picture looks like an 80s video game character. Or an ape. You know there’s something going on in this space, but you’re not sure what to pay attention to. Or how to break in.

Bitcoin is now more than a decade old, but this past year has been a tipping point for the crypto industry. It’s not just the prices of tokens – there’s more information than ever before and more institutional investment than ever before. Pretty soon, crypto’s job market will be just as hot as finance or tech. There might always be an opportunity out there in crypto for engineers, but how often do you see “Chief of Staff” roles being advertised?

Timing is everything. So I’d like to share my thoughts on why you should be paying attention to crypto if you aren’t already, an overview of the areas I’ve found most interesting, and how to break into the industry based on what’s worked for me. 

By the end of this, you’ll have a high level understanding of:

I’ll sprinkle in some resources here and there if you want to go further down the rabbit hole. It’s hard not to find at least one area of crypto that really resonates. That’s probably why I’m involved in several.

Who Am I

I’m a Chief of Staff to the CEO and Co-Founder of a Series B bitcoin mining company. We have about 18 or so people and will probably 2-3x that in the next year (it’s a really good time to be a US bitcoin miner). Prior to this, I wrote a short-lived newsletter on crypto called Moolah and now contribute to the Membership team at a DAO. I really like crypto, and I’ve gone down many rabbit holes to learn about it. 

Why Crypto

I’ll give three big reasons for why crypto deserves more of your attention – and the first is brainpower. I’m a big believer in going where the brainpower is going. A lot of smart people—developers, investors, and creators—are getting involved in the industry. When you’re NOT the smartest person in the room, that’s often a good thing. Crypto is attracting a lot of A-level talent you can expose yourself to. 

No shortage of brain power in crypto. Clockwise from left-to-right: Vitalik Buterin, Elizabeth Stark, Cathie Wood, Jack Dorsey.

Another reason to get into crypto is to “follow the money”. Not necessarily because you’ll make a lot of money in this space, but because that’s where a lot of investment money is going. VC funds and hedge funds are made up of pretty smart people whose full time jobs are thinking about what’s going to be the next big thing, and right now a lot of them are investing in crypto. 

VC invested $17 billion into crypto companies in the first half of 2021.

Finally, crypto is so exciting because a lot of innovation is happening in this space right now.  That means a lot of opportunities to work at a startup or fast growing company, which often need people that can wear many hats. Chiefs of Staff are used to wearing many hats already, which makes them a perfect fit to contribute from Day 1. 

Map of the Ethereum Ecosystem – lots of exciting opportunities to be a part of!

Information moves fast in crypto. There’s a lot going on. If you really want to go deep, you have to pick an area of interest and stick to it – unless crypto investing is your full time job. To get a broad overview of crypto, it’s best to start from the beginning, which was Bitcoin.

Bitcoin

Bitcoin is a decentralized, digitally native currency. It’s decentralized because it wasn’t issued by a central bank – it was issued through a computer program that got adopted by other computer programmers which eventually got adopted by people around the world. There was never any physical creation of bitcoin – it was made for the internet. This makes it digitally native. 

The first tweet on Bitcoin from the late cryptographer Hal Finney, in which he refers to running the Bitcoin software.

One of the biggest reasons bitcoin survived, whereas previous digital currencies didn’t, is because of its underlying blockchain technology. You can think of blockchain in three parts: (1) as an open accounting ledger on the internet, that (2) is kept up to date by anyone with a computer + internet connection that wants to participate as a bookkeeper, using (3) complicated math from the field of cryptography to secure the ledger. The more bookkeepers, the stronger the security of the ledger. 

Even though anyone can participate as a bookkeeper, the process of actually updating the ledger uses up a lot of computing power and therefore electricity. You’re basically running a computer program 24/7, 365. To incentivize people to become bookkeepers, the computer program awards bitcoin to anyone that can successfully update the ledger. This process that I’ve described is what’s called mining, and anyone that chooses to participate as a bookkeeper and update the ledger is a miner. 

As long as (1) miners are incentivized to mine bitcoin, (2) there is demand for bitcoin, and (3) bitcoin is not illegal, then bitcoin can exist in parallel to any government-issued currency or investable asset. We’re seeing bitcoin enter more and more investment portfolios as global adoption continues. We’re also seeing bitcoin adopted as a currency, with El Salvador making it a legal tender alongside the US dollar. 

So, why does the world need bitcoin? I’ll let legendary Bitcoin analyst Nic Carter explain:

“[Bitcoin] may not seem as compelling to some individuals who believe they live in stable monetary and financial settings, or under a government that respects property rights and the rule of law – but it becomes starkly relevant in their absence.”

Nic Carter, Bitcoin Net Zero

To drive this point home, consider this statistic: the top 10 most crypto-active countries in the world, on average, score below the global average on measures of democracy and government integrity (Chainanalysis’ 2021 Global Crypto Adoption Index).

Image taken from Bitcoin Net Zero

Taking a step back and looking at the top 20 most crypto-active countries, one can see that crypto adoption is largely dominated by emerging, frontier, and politically unstable markets. In other words, there is clearly value in having a decentralized currency like bitcoin that cannot be tampered with by any politically unstable or corrupt regime. Bitcoin offers anyone around the world an unbiased, transparent economic alternative. 

Image taken from Bitcoin Net Zero

Personally, I like bitcoin because it’s a scarce, secure, digitally native asset. These are characteristics that also apply to NFTs, which we’ll cover later on. But you don’t have to listen to me or Nic Carter – do your own research and draw your own conclusions. 

Here are some additional resources to learn about Bitcoin:

Next, let’s look at Ethereum. 

Ethereum

Ethereum was founded in 2013 by Vitalik Buterin. He saw a lot of potential for a decentralized blockchain platform that went beyond Bitcoin’s limited use cases. You can think of Bitcoin like a payments application that can only really be used to send bitcoin from Point A to Point B.  Ethereum, on the other hand, is more like an application platform that lets developers build other applications on top of it. 

Ethereum’s applications, also known as decentralized applications or DApps, are forms of smart contracts. A commonly used analogy for smart contracts is a vending machine. There’s no middleman involved in a vending machine – you pay the vending machine, and it takes your money and gives you a soda. All the logic is built into the machine itself. Similarly on Ethereum, all the logic is programmed into a smart contract, so it can take your money and execute whatever action it is prompted for. It doesn’t even have to be money – it can be anything “tokenized” on a blockchain (this will make more sense with NFTs later on). 

Where smart contracts go even further is the ability to track the money being taken and the money going out – this is all recorded on the blockchain. With a vending machine, you still need an employee to collect the cash, or a back office to track the payments. The Ethereum blockchain is your back office. 

This has two big implications: (1) anyone building on Ethereum can create a smart contract version of any existing app, and (2) smart contracts will slowly replace the need to hold a bank account. If smart contracts can hold their own balance and track their own payments, why use a financial intermediary? 

Similar to Bitcoin, Ethereum still needs miners to secure its blockchain. Nearly any transaction on Ethereum involves a fee that goes to miners for updating the ledger. Fees are paid in ether, Ethereum’s native currency. As of the time of this writing, ether is the second largest cryptocurrency behind bitcoin, with a ~$400B market cap. 

To learn more about Ethereum, here are some resources for learning:

Next, we’ll cover some innovative use cases that were only made possible through Ethereum: NFTs, DeFi, and DAOs. 

Non-Fungible Tokens (NFTs)

NFTs are traded and secured on a blockchain, similar to bitcoin and ether. But they also contain a media component, like a JPEG or MP4 file. One NFT is not the same as another NFT. That’s why they’re called non-fungible: they’re mostly unique and can’t be replaced with something else.  They can be digital photos, images, videos, songs, and more.

Here’s an example of an NFT from NBA Top Shot. It’s a highlight video of Lebron James dunking the ball during a game. As of the time of this writing, this NFT sold for as high as $210,000!

Click here to see the actual NFT on NBA Top Shot

Where NFTs made a breakthrough is authenticity of digital ownership. Anyone can right-click and download a JPEG file similar to how anyone can buy a poster copy of the Mona Lisa, but only the people that paid for the NFT can say they own the true original. Original ownership is verified through the blockchain. It’s similar to a signed certificate stating that your artwork is the original piece.

Because NFTs are digitally native, there’s a much greater realm of possibility for authentic digital ownership; in theory, it can expand to anything that exists on the internet and for which there’s value in having an original copy. This includes art, music, tickets, videos, the list goes on. Here are some resources to get involved with NFTs:

Decentralized Finance (DeFi)

Decentralized Finance, or DeFi for short, refers to smart contracts that provide financial services typically offered by banks and other financial institutions. These financial services include loans, savings accounts, trading, and more. As long as you have a digital wallet and an internet connection, you can use DeFi. This provides greater opportunity for unbanked and underbanked individuals to access financial services they otherwise didn’t have access to. 

DeFi has typically been used to describe anything finance related in crypto, but here’s a stricter definition from crypto company Messari (Crypto Theses for 2021):

  • Explicitly geared towards financial applications. If it’s not finance related, it’s not DeFi.
  • Permissionless and open-source. If I need permission to build on top of it or view the code, it’s not DeFi.
  • Pseudonymous. If I have to put my real world info to use the app, it’s not DeFi.
  • Non-custodial. If a DeFi application needs to use a bank to hold its users’ assets, it’s not DeFi.
  • Decentralized governance. If the app is controlled by a single entity or there doesn’t exist a credible path towards decentralized governance (more on this later), it’s not DeFi.

As of the time of this writing, $88 billion in deposits are locked into DeFi smart contracts on Ethereum. The crypto term for these deposits is Total Value Locked, or TVL.

Source: DeFi Pulse

To put this in perspective – DeFi would be the 27th largest bank in the U.S. in terms of Total Deposits as of June 30, 2021 (FDIC). Not bad for a technology that’s under six years old. 

To start using DeFi, take a look at these popular DeFi apps:

Other resources for learning:

Decentralized Autonomous Organizations (DAOs)

If I haven’t lost you yet, get ready for the next innovation: Decentralized Autonomous Organizations (DAOs). DAOs are interesting because they operate as online communities that come together around shared incentives and interests. They can revolve around investing, skill sharing, an existing DApp, common interests, etc.

Founding members of a DAO must decide on three things: (1) how to communicate as a community, (2) how to operate as a community, and (3) how to recruit & incentivize the community. Many DAOs use Discord to communicate among members. They typically operate through smart contract based applications that provide members a way to vote on governance related issues. Finally, DAOs issue their own digital tokens to create shared incentives. After all the systems are in place, the idea is for the founding members to give control of the DAO to the community – i.e. let the community run itself.

DAOs are decentralized because there is no leadership team – every member decides on the future of the DAO.

The key piece to a DAO is the DAO’s token. These tokens typically give the holder certain rights, like the ability to vote through their digital wallet or be a member of the DAO’s Discord channel. Since these tokens are also trade-able, holders are incentivized to contribute to the DAO’s success. When the DAO is successful, token holders can benefit from the price appreciation of the token. It’s similar to companies issuing their employees equity to align the interests of Employer with Employee – except with DAOs, we are seeing this at the Community and Member level. 

DAOs can coordinate surprisingly fast due to these shared incentives. Online communities with shared incentives should not be overlooked – think about the impact r/WallStreetBets made on meme stocks. But whereas a bunch of Reddit traders got together and pooled their money into stocks, DAO members can pool their money into smart contracts, which can then be used to invest in crypto related projects, NFTs, tokens, and more. So DAOs not only have the potential to disrupt traditional corporate structures, but also venture capital, hedge funds, and possibly much more. 

Here are a few of the more popular DAOs if you’re interested:

Other resources for learning:

Web 3

DeFi, NFTs, and DAOs bring us to a broader, more overarching movement in crypto called Web 3. The definition of Web 3 is still up for interpretation, but it mostly revolves around decentralization. To better understand what this means, let’s compare it to Web 2.

Web 2 is widely regarded as the social web. It’s when the Internet became more interactive, but it’s also when the Internet became more centralized. Large tech companies have dominated the majority of our online services, and therefore have accrued the majority of value from those online services. 

Web 3 is about the decentralization of the Internet. Web 3 builders and DAO members can earn cryptocurrencies or other tokens for the value they’re contributing online. Because of these new incentives, we’re going to see much more innovation at the individual or online community level, rather than at the large tech corporation level. Web 3 builders are creating video games, editorials, social media platforms, financial applications, and much more. 

For more reading on Web3, check out some of these articles:

Working in Crypto as a Chief of Staff

Working at a crypto startup provides the ambiguity of not just working for an early stage company, but also working for an early stage industry. It’s not as established as other fields – like IoT or AI. This is very exciting but also very challenging at times. Many crypto companies are navigating a regulatory grey area. Sometimes, the pace of the job can be influenced by the sentiment of the market. When bitcoin’s price is going up, more people are willing to deal with or invest in a bitcoin mining company. Moving quickly to capitalize on these opportunities is paramount. Those same opportunities might not be there in the future.

If you’re a CoS considering working in crypto – make the leap, especially if there’s an area that really resonates with you. Many crypto startups can use a CoS. The job market might not be as hot after the industry matures.

^ Not a real crypto company

Breaking Into the industry

If you do decide to make the leap, here are four things you can do to break into the industry. All of these played a part in me getting my current job:

  1. Network with people
  2. Build a portfolio
  3. Join a DAO or local organization
  4. Open a wallet and dabble in Web 3

As more companies embrace remote work, there are greater opportunities to network online. Crypto is broad, and it’s also up and coming. So now is an opportune time to build connections if you haven’t started already. Reach out to people working at companies that interest you. Learn what it’s really like to work at their organization, and whether your skills and background would be a good fit. 

You don’t have to sell yourself on the first coffee zoom. I had multiple conversations of just asking people questions to figure out whether it was a path worth pursuing. As a byproduct of that curiosity, I was putting my name out there and exposing myself to potential opportunities down the line. Even though I had already accepted an offer at my current company, I received an email from someone I chatted with inviting me to interview for a position that later opened up. This is what author Ramit Sethi calls the “shadow market” – unannounced jobs that are first available to those who network. 

The second thing that worked for me was building a portfolio. Start creating stuff. It doesn’t matter if it’s been done already – put your own spin on it. When the Co-Founder of my current company asked me for some work samples, I had a list of things ready to go that were all related to crypto: newsletter posts, long form essays, Twitter threads, a couple YouTube videos, even a podcast episode.

When he later offered me the job, he said it was the range of output that spurred him to open up the CoS role, a position he saw that “just gets things done”. Nothing better proves this than by actually getting things done that you can share with potential employers.

The third thing that can help is getting involved in a local blockchain organization, or a DAO.  I decided to join my university’s blockchain club as an alumni advisor which introduced me to a woman that had been working in blockchain for several years. At the time, I had been thinking about interviewing a Chief Communications Officer about what it’s like to manage an online crypto community. It turns out this woman and the executive were previously coworkers. Having her as a reference was huge in reaching out and eventually producing my first ever podcast episode.

Joining and regularly contributing to a DAO might be even better. DAOs are an integral component of the Web 3 movement, and you’ll also network with people from outside your local community. Depending on what the DAO does and how large its budget is, you may find yourself getting paid a handsome amount for the work you’re doing. I recently met a guy that quit his job to work full-time for a DAO, two months after being a regular contributor!

Finally, if you haven’t done so already – open a crypto wallet and start dabbling in Web 3. There’s no amount of reading or watching videos that can replace the experience of using a decentralized app or buying your first cryptocurrency. 

Crypto is one of the biggest paradigm shifts of the last decade. It’s forced us to radically change how we perceive digital value, and also how we think about governance, incentives, and decentralization. As money and goods continue to shift to the digital space, crypto will play a bigger role in storing, securing, and transferring value across the Internet. If you’re a Chief of Staff interested in joining this movement, don’t wait! Start networking, creating, and tinkering in the space. The best time is now.