Founding Stories: Anchorage | Summary and Q&A

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June 23, 2019
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a16z
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Founding Stories: Anchorage

TL;DR

Anchorage, a crypto custody company, discusses their background in security, their involvement with the Facebook Libra project, and the importance of custody in unlocking broader adoption of crypto assets.

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Key Insights

  • 👶 Anchorage aims to provide secure and reliable custody services that support the active participation and governance requirements of new proof-of-stake networks.
  • 👾 Institutions are already involved in the crypto space, and Anchorage provides the necessary infrastructure to meet their custodial needs.
  • 😖 The Facebook Libra project, in which Anchorage is a founding member, has the potential to revolutionize the concept of global currency, offer stability through reserve backing, and provide scalability for thousands of transactions per second.

Transcript

hi my name is Chris Dixon this is the a 16 Z video series today I'm here with Nathan and Diego from Anchorage a crypto custody company that were investors in and so we're going to talk a little bit about how you guys got into custody what is custody there's also was recently an announcement that you're involved with the Facebook blockchain project ... Read More

Questions & Answers

Q: How did Nathan and Diego get into security and what led them to create Anchorage?

Nathan and Diego both have backgrounds in security and met while working at Square. Their experiences in developing secure systems and hardware led them to recognize the need for improved custody solutions in the crypto industry, which led to the creation of Anchorage.

Q: What is the current state of custody in the crypto space?

The current state of custody in the crypto space is often referred to as "pirate custody," where private keys are stored in offline wallets or safety deposit boxes. This model poses challenges for active participation and governance requirements of new proof-of-stake networks.

Q: How does Anchorage address the limitations of cold storage solutions?

Anchorage recognizes that cold storage is not sufficient for organizations that require immediate access to their assets. They provide a secure and reliable custody solution that allows for active participation in new networks while ensuring the safety of assets. They also prioritize usability and aim to make participation as easy as tapping a button on a phone.

Q: What role does custody play in unlocking broader adoption of crypto assets?

Custody plays a crucial role in unlocking broader adoption as institutions and mainstream investors require secure and regulated custodians to hold their assets. Anchorage's focus on providing comprehensive custody services satisfies the expectations of institutional investors and creates confidence in the crypto space.

Summary

In this video, Chris Dixon interviews Nathan and Diego from Anchorage, a crypto custody company, to discuss their background in security, their time at Square, and how it led them to start Anchorage. They also talk about the concept of custody in the cryptocurrency world, the recent announcement of their involvement in the Facebook blockchain project called Libra, and the potential impact of custody on the broader adoption of crypto assets.

Questions & Answers

Q: How did Nathan and Diego get into security and how did it lead them to start Anchorage?

Nathan and Diego met at a company called Square, where they both joined as security engineers. They worked together for four years, leading the security team and working on various security projects. After leaving Square, they had the opportunity to grow the security team at Docker, which allowed them to focus on security at scale. They learned about embedding security engineering practices within organizations, which led them to recognize the need for a more secure and reliable custody solution in the crypto space. They started Anchorage to address this need.

Q: What is custody in the crypto world and why is it important?

In the crypto world, custody refers to the secure storage and protection of crypto assets, such as private keys. It is important because investors need a safe and reliable way to generate and store their private keys, as well as protect them against intrusion and loss. Custody also plays a crucial role in enabling investors to actively participate in crypto networks that require on-chain governance and other advanced features.

Q: How does Anchorage aim to provide a more secure and usable custody solution?

Anchorage aims to provide a more secure and usable custody solution by offering a fully regulated institution that meets the needs of institutional investors. They focus on integrating security and engineering teams to align incentives and ensure a deep understanding of the infrastructure and operational security. They also emphasize creating a culture of security awareness within the organization. Additionally, Anchorage strives to make the custody experience as easy and intuitive as possible, enabling investors to participate in on-chain governance and other network activities with a simple tap of a button on their smartphones.

Q: Why did Anchorage decide to get involved with the Facebook blockchain project, Libra?

Anchorage has been involved in the initiative even before it was called Libra. They have been working with Facebook for about a year and a half. The decision to get involved was driven by the belief in creating open financial networks and the potential of a global currency that can cross borders and bring financial inclusion to those who currently lack access. Anchorage sees Libra as an opportunity to solve problems related to volatility, scalability, and usability in the crypto space. They view it as a complementary addition to the existing crypto assets, rather than a replacement.

Q: What role does custody play in the broader adoption of crypto assets?

Custody plays a critical role in unlocking the broader adoption of crypto assets. Institutions have certain expectations and fiduciary obligations, which require a qualified custodian for holding their assets. The current custody solutions often lack the necessary features and regulatory compliance to meet these expectations. By providing a secure and regulated custody solution, Anchorage aims to instill confidence in institutions and make crypto assets more accessible to a wider range of investors. This, in turn, can help legitimize the entire crypto space and drive its mainstream adoption.

Takeaways

Anchorage, a crypto custody company, aims to provide a secure and usable custody solution for institutional investors. Their experience in security engineering and their focus on aligning security and engineering teams allow them to offer a deep understanding of infrastructure and operational security. Anchorage's involvement in the Libra Association, the Facebook blockchain project, demonstrates their commitment to creating open financial networks and solving common problems in the crypto space, such as volatility, scalability, and usability. Their participation in running nodes and governance decisions within the association further showcases their expertise and dedication to the crypto industry. The broader adoption of crypto assets relies on accessible and reliable custody solutions that meet institutional expectations and regulatory compliance. Anchorage's role as a qualified custodian helps legitimize the entire crypto space and drives its mainstream adoption.

Summary & Key Takeaways

  • Nathan and Diego, co-founders of Anchorage, have backgrounds in security and have worked together at Square and Docker.

  • They joined forces to address the need for improved custody solutions in the crypto space.

  • Anchorage aims to provide secure and reliable custody services that support the active participation and governance requirements of new proof-of-stake networks.

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