Interview Series Part 3 of 3: Co-Founder Lily Liu on How to Invest in a Speculative Market; Bitcoin and Facebook

Interview Series Part 3 of 3: Co-Founder Lily Liu on How to Invest in a Speculative Market; Bitcoin and Facebook

Thanksgiving is a time to be grateful and to think about all the special people…who have touched our lives.

We at GCR are so grateful for your ongoing support, and we wish you a Happy Thanksgiving to you and your family. Co-Founder Lily Liu on China’s Blockchain Strategy, How Blockchain is Evolving in the East and West, and Lily’s Investing Approach 

In this interview, host Joyce Yang is joined by Lily Liu, co-founder and CFO of was sold to Coinbase in early 2018 in a deal worth more than $120mn, Coinbase’s largest acquisition to date. The company allowed users to send and receive digital currency for replying to emails and completing tasks. Prior to working at, Lily was the CFO of the first foreign-funded, private, mass market hospital in China. Prior to that, she spent time working at Mckinsey and then later KKR Capstone. Lily graduated from Stanford and Harvard.

In this conversation, Joyce and Lily talk about Lily’s past experience working in China and her outlook on the blockchain industry on a global level. Lily shares her views on how the crypto industry is evolving between the East and West, what China may be doing with Crypto and Blockchain, and also how she thinks about investing in blockchain globally. You can follow Lily’s Twitter here


Part 1 here with Lily’s observations on blockchain trends in the East and West

Part 2 here on with Lily’s thoughts on China’s Blockchain Strategy

1# How Lily thinks about a Crypto project’s monetization and distribution strategy

But most of that stuff [protocols] is open source, and if it’s open source, then it means that you can…. If it’s an open source repo, let’s say on GitHub, you can literally clone it in seconds; you just type in “Gitclone” and then put in the URL of the repo and there you go.

And so that’s not…. I mean, you can’t just do that and then hit production and then sort of have an app running in like seconds necessarily, but that gets you a lot of the way there. And so for funding all of this really cool research, but it’s largely open-source. I just wondered how defensible that is for value creation, and value captured by the folks who funded it when folks in other teams say that’s a really great idea, why don’t I take this idea through these snippets and integrated, and thanks…

[…] And I think the most likely way to monetize [for blockchain companies] that is to basically have a for-profit services company around the open-source technology, or applications which may you know, AWS, for example, uses a lot of open source technology but then it provides an incredibly valuable service on top of that, which is the business. I think eventually, something like Consensys is probably going to migrate into a services and consulting type of an application.

[…] So I actually think a lot of this [blockchain companies] is going to converge upon existing business models, and then I think that folks whether in Asia or elsewhere, they’re just going to look around and be like okay, well here is some really interesting aspects of Blockchain technology other people have built, let me put it together and make it my own.

And to an extent, it’s not even just easier that’s doing that I mean, even if you look in Silicon Valley, there’s one part of Silicon Valley, which is investing very actively in the fat protocol thesis. And there’s the other half that did the Telegram ICO. And to an extent, they can’t really both be right.

Essentially the story behind Telegram is: ‘we’ve got 200 million users and growing, many of them really really love crypto, and we’ll figure out exactly what technology we’re going to put behind TON. Because we’ll look around and see what works really well, and then kind of tailor it to fit us. And it’s all open source anyways.’ To an extent, like the fat protocol thesis and then the sort of the telegram ICO has value type of thesis, I think are kind of mutually exclusive. So it’s not just in Asia where people have this kind of, you know, we’ll go for adoption first before we build full technology. published here ”

2#  How Lily invests in a largely speculative market

“But in terms of investing, I think that most of the stuff that happens in this space is especially driven by speculation today. There are billions of dollars of transaction volume every day and there are probably thousands of transactions. You just look at the volume of transactions on Ethereum, and then if you take out of that the number of transactions which are going between exchanges, it’s really not significant in terms of real use. 

[…] And there’s nothing wrong with speculation; trading is a perfectly fine business, it’s very profitable business, people do gain value out of it, but I think that’s really where most of the kind of use, if you will, be going on today. If it’s all speculation no use or very little use, without use, I think there is limited value which is being created. If there’s limited value which is being created, it’s hard to say you’re investing, really what you’re doing is trading.

And I think that that’s the most kind of substantial business, which is actually happening in crypto today, which is trading. And so therefore, I think there’s a number of…. I can see there being a need for a number of Blockchain specific services that the non-blockchain tech companies and certainly other incumbents are not well placed to provide. So for example, Blockchain simulation is something, which is very specific of Blockchain and kind of got to build it blockchain native first.

I can see a need for things like that, I can see a need for a number of different sort of trading tools, and so I there’s a number of people who are building portfolio management systems (OMS), and also word execution a kind of routing solutions, and I think that makes a lot of sense because when you look at just the fragmentation like ever-increasing fragmentation of different markets as well as different asset pairs, that you don’t have in the world of crypto trading, there just need to be new in different ways to marshal all of that and to make those markets more efficient.”

On Bitcoin and Facebook

“Now, the question for me is sometimes people think or are asking: what’s the next like Google or Facebook of Blockchain. I mean frankly, to me, it’s just Bitcoin. Like, we already have it, it is called Bitcoin. 

So the next sort of network effect killer, obviously can’t call it a company, in the system, it’s already here, it’s Bitcoin.”

Joyce: So my takeaway from this conversation is that, is who will win the Blockchain [distribution] war? Would it be a Bitcoin, Facebook or China?

Lily: “I think that people are going to engage in different types of Blockchain. I don’t think there’s just going to be one Blockchain. I think so many different blockchains for different purposes. I think that if you just look at it in terms of like pure numbers, a country chain, or a Facebook chain, is probably, might have more people on it, but there’s always going to be a need for something like Bitcoin or ZCash or a Grin eventually, private scalable and self-custody, self-sovereign coin. You know, I don’t think it’s for everyone because I don’t think self-custody is for everyone necessarily; obviously not, but I think that that’s just always going to be very important option for people to have, and it’s probably going to become more valuable over time.”

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