Crypto has had a lively year. Decentralized exchanges and platforms that let users trade, lend, or borrow cryptocurrency have climbed sharply in volume. Developers are capitalizing on the flexible, interconnected structure of blockchains to build new applications that stack on top of one another.
Prices — the part of crypto that usually draws the most mainstream attention — have also risen sharply this year, with Bitcoin reaching its all-time high this month.
Although price movements can and do shift, such rallies do tend to attract more users, more developers, more attention, and, in turn, more innovation (as we’ve previously written about in connection to crypto’s “price-innovation” cycle).
All this fresh interest and activity increases the need to make crypto less mysterious, so that all of us can more easily start to assemble the implications of what is a complex new computing paradigm.
We’ve gathered fourteen videos from this year’s Crypto Startup School — together with summaries, show notes, and key quotes — to support that effort. The collection provides not only a playbook for entrepreneurs building companies, but also an introduction for anyone who wants to learn more about crypto. (And be sure to watch our bonus video — a documentary tracking the progress of several Crypto Startup School participants — at the end of the course videos.)
We hope it serves as a helpful resource for anyone wanting to take a deep dive — or simply to test the waters in crypto, in 2021 and beyond.
Crypto NetworksCrypto Networks and Why They Matter
See all the slides
This is a broad look at the crypto space, the disruptive effects of its technology, and the ability of crypto networks to spark a new wave of innovation. Blockchains are a new kind of computer — a virtual machine operating across a network of physical computers, with built-in assurances that it will keep running as intended. Just as the growth of mobile phones opened up a surge of innovation on top of that new computing platform, crypto offers a chance for the next such “idea maze.”
Show Notes:
Crypto’s “price-innovation” loop: Crypto cycles may appear chaotic, but they follow an underlying pattern. Asset prices draw more people into the space, which then triggers successive rounds of innovation that build on the prior ones.
Blockchain in a new type of computer: The hardware is controlled by software rather than the software being controlled by hardware. And that allows the software to offer guarantees that users and developers and other network participants can rely on in a way they couldn’t trust a traditional computer.
The idea maze: “Every once in a while, a new part of the maze just kind of opens up, like mobile phones. Our feeling is there’s just very rich, new maze, the blockchain maze. … What can you do in this design space? Our feeling is this is incredible new maze, and there’s very few people running around that maze right now.”
Scalability. “Moore’s law is, I think, better thought of more broadly as an economic principle that when a lot of really smart people who know computer science start thinking about computer science problems and have an economic incentive to do so, those computers tend to get a lot better. And I think we’re experiencing that right now around these kinds of blockchain designs. I think it’s gonna unlock all sorts of new things.”
The pattern of technological evolution: “Once you have the right killer platform, I think it takes three to five years for application-level entrepreneurs to fully explore the design space and figure out what is the best thing to do with GPS, what is the best thing to do with a camera in your pocket.”
The current landscape of crypto investing: “The video game world is a nice entry point. Historically, video games have been early adopters of new technology and new business models. …Youth gamers are just very familiar with kind of these concepts, like digital currency.”
Cryptography & ConsensusBlockchain Primitives: Cryptography and Consensus
This lecture covers the layers of crypto, including the consensus layer, and how Satoshi Nakamoto’s bitcoin whitepaper outlined a system that allows an unlimited number of participants to contribute to a blockchain without permission and still reach verifiable consensus. He also discusses cryptographic primitives, how mining works, how blocks are added to the blockchain, public and private keys, and zero-knowledge proofs. These distinctive features create fertile ground for open-source developers.
Show Notes:
The four layers of the blockchain. “The consensus layer is getting pretty well understood. There’s still a lot of work here, but this is kind of not where the most exciting action is. Most of the exciting action actually is in building applications.”
The “state machine replication” problem. “There’s an impossibility proof that says you cannot achieve consensus if you don’t have authentication, or you don’t know how many participants are in the network. [This] innovation is a way to get around this impossibility result.”
How blocks get added to the blockchain.
Sybil attacks. “The impossibility result said, if you don’t have authentication, consensus is impossible because you’re going to be vulnerable to a Sybil attack. And the beauty of Nakamoto’s innovation is that we can prevent Sybil attacks by forcing some sort of commitments to resources.”
Running applications on the blockchain. “The beauty of running applications on the blockchain is all the code is open source. …And then we have also public verifiability, where I can look on the blockchain and see exactly that all the rules are being followed correctly, that the code is actually being executed the way it’s supposed to execute, and no one is deviating from the rules.”
Cryptographic primitives (digital signatures, Merkle commitments, zero-knowledge proof systems).
Looking ahead: Private data on a public blockchain. “Rather than putting the application code out in the open and the application state out in the open, what we can do is we can place commitments to the application code and commitments to the states on the blockchain. So we’re committed to what the data is, to what the application code is, it’s just nobody knows what the application code is. It’s inside of a hiding commitment.”
A blockchain is not a database. “Centralized systems are a million times easier to build than decentralized ones. They’re a million times faster. If you can centralize, centralize. It’s just when you cannot centralize, that’s when you decentralize.”
Scaling Crypto CompaniesSetting Up and Scaling a Crypto Company
Crypto can support startups in raising capital, finding customers and building a worldwide reputation. The downsides of crypto that founders need to keep in mind include regulatory uncertainty. Overall, crypto is where the internet was in its early years.
Show Notes:
The advantages of a crypto startup: “[There] are actually three really big problems in traditional startups. A lot of traditional startups actually die encountering one of these problems, and I think crypto offers a unique and novel solution to each of these.”
The drawbacks of a crypto startup: “There certainly is a lot of legal risk. This is a new area where people are still trying to figure out how to work with securities laws.”
The steps to starting a crypto company: “[Crypto] can help you hopefully at some point raise money more easily, get your early customers, expand globally. But the hard thing in startups is you gotta make something people want. And that’s the part where you have to go actually and build your product.”
Case study of a company using crypto concepts: “There’s thousands of ideas like this out there. You can imagine any kind of startup where you’re trying to build some kind of community, have some kind of a marketplace.”
Smart Contracts & SecuritySecure Smart Contract Development
The rise of that open ecosystem of interdependent “smart contracts,” or self-executing design programs, created an entirely new attack surface that makes it necessary for successful organizations to put security-minded culture first. Potential coding risks include memory safety, input validation, privilege escalation flaws, fundamental design flaws, side channel attacks and cryptographic vulnerabilities such as insecure key storage. Security is not just code, however — it’s also people, operational procedures, and life cycle management of applications.
There is no single fix for any of these vulnerabilities. Mitigation depends on a collection of measures that are not perfect but can be used to build an overall system that is very hard to break into.
Show Notes:
Security is not just code. “It’s the people in the organization. It’s the operational procedures. It’s the life cycle management of the application. But there’s also a lot of things that might be totally out of your control.”
Threat modeling. “Having a really thorough understanding of the potential threats, the actors, their motivations, all the different vectors and how you can attack. … That’s a very fundamental thing you should always do, and it’s actually quite fun to do when you start doing that.“
Smart contracts and inflexibility. “Smart contract development is the opposite from agile. It’s the opposite from how software development happens today. It’s very costly because the only way to get additional insurances is basically by contracting external consultants in the form of audits, and they are really costly.“
Best security practices. “So what you want to do is compartmentalize what you do and separate it from everything else that’s happening in your organization. … Embed all dependencies to ensure you’re always in control of what you’re doing.”
“Rolling your own crypto” — building your own chain. “If you start from scratch, not only is that costly, it’s also from a security perspective not a good idea.“
Sharing security among different chains. “When it comes to the interoperability between the chains, you get much stronger guarantees and you can actually rely on the messages, transactions that you receive from the different chains. And thus, get strong assurances around what you’re hearing from the other chains.“
Applications: Today & 2025Applications: Today and 2025
Srinivasan follows the path of crypto from Bitcoin and Ethereum to today. He points to the crypto applications that have already found momentum — infrastructure providers such as exchanges, wallets and miners; decentralized finance (DeFi) apps; and stablecoins that remove the volatility of early cryptocurrencies — and then looks toward the ones most likely to appear in the next five years. These include personal tokenization, new financial instruments, decentralized autonomous organizations and gaming.
Show Notes:
Quick history — why Bitcoin was invented. “This is the magic of Bitcoin — it replaced the centralized actor, a bank, with a bunch of competing entities called miners that carry out the same transaction approval process and also the money generation process.”
Ethereum and smart-contract development.
The ICO boom’s technological importance. “An ICO is like the simultaneous disruption of venture capital, SWIFT, crowdfunding, and cap tables … So it’s actually very important technologically, even if not all of these companies are successful.”
Crypto compared with the internet. “II would compare the present moment to roughly 2000 in the internet. Because in the 90s, there was this infrastructure phase, and you had Yahoo, and you had AOL. And everybody had heard of the internet, but not everybody used the internet in, you know, 2000 on a daily basis. And that’s very similar to kind of where crypto is.”
Blockchain-first is the new mobile-first. “Blockchain competitors are rising for many legacy businesses … it’s a technology that gives you balances, it gives you encryption, it gives you a number of primitives to work with.”
How crypto strengthens network effects. “Now you’ve got a new tool, which is you can issue your users tokens, and the tokens have upside, which declines as the network gets larger. So now you actually give a financial upside to early adopters.”
How crypto aligns currency holders’ incentives. “[This] turns us from the slippery slope, where one individual’s rights can be abrogated at a time, to the crypto cliff, where to seize one person’s crypto is to seize everybody’s. And that’s a pretty big deal.”
Blockchain monetary policies as experimental science. “With blockchains, any sufficiently large group of people can now choose a monetary policy, choose an economic policy that suits them. And so I think we’re seeing this really amazing thing where rule of law is being actually encoded.”
Crypto applications today — exchanges, miners, issuance, hardware wallets, stable coins, DeFi.
What applications could be big in 2025 — privacy coins, scaling tools, insurance apps, new financial instruments, gaming, automated market makers, decentralized identity, personal tokenization, DAOs (decentralized autonomous organizations).
Building Crypto ProductsProtocol to Product
Product building differs in blockchain compared with more conventional centralized products. The main question for builders: What need am I serving, and who are the users?
For projects that want control of the end-user experience, such as cryptocurrency wallets, the usual aim is to construct the full stack so every layer can be altered to fit new use cases and discover product-market fit.
For products made for developers, such as decentralized lending protocols, the emphasis should be on finding a set of goals that draws developers to your platform while still letting them customize and innovate.
Whatever the end user, the strict focus should always be on what will attract people to your product and on avoiding a “build it and they will come” mentality.
Show Notes:
What makes a good product.
Building in crypto: How it’s different. “Traditionally when you build for an end-user, you have maybe your own database. You have a back-end service or several services, and you have a front-end or you have an application layer, and you own all the layers of this stack. … What’s different about the blockchain space is that you may build a dApp on top of already existing infrastructure.”
Thinking about your users. “If there is one thing we know about devs, it’s that they have a great ability to take what is defined and really expand on it and push it forward. You don’t want to stop people from continuing to innovate on your platform. So, having the flexibility to do kind of more custom things with what you’re building is something that is also really important to consider.“
Crypto in GamingOpportunities for Crypto in Gaming
Blockchain technology could affect gaming even more than the internet because it does more than connect people; it may also shift business models by bringing developers’ and players’ incentives into alignment. It can do that by letting players genuinely own in-game assets and confirm their provenance, and by allowing developers to program deep incentive systems and rewards into games.
Show Notes:
Overview of how blockchain will change gaming. “It’s not just interconnecting people, but changing potentially the business model of games, and creating the potential for a lot better game economies that align developers and players and work much better for both of them.”
True ownership of in-game assets by gamers. “The thing about these assets being stored on blockchains is, no one can take the asset away from the player. The player truly owns it, and they don’t have to trust a third party, including the game developer themselves, that they truly own the asset.”
Provenance of digital assets. “If someone was trying to sell you a basketball jersey, and they said “Hey, this is the jersey that Steph Curry wore at the final game of the 2015 NBA championships when they won, and so it’s going to cost $1,000.” You would just have to trust them that that’s true. … If they’re stored on a blockchain, you don’t have to trust anyone.”
Building fresh marketplaces inside games. “The richness of marketplaces can come not just from letting players trade and move assets and value among themselves, but also from fairly intricate economic structures that decide how that value is divided up.”
Creating incentive systems in games. “As a developer, you can create smart contracts that basically motivate or compensate players with grants of currencies, assets, and items when they do things that help the game and help other players.”
Matching incentives between players and developers. “As a developer (you) can build a larger economy without needing to produce new content constantly. If you let players trade, as a basic example, you can generate a revenue stream from those trades as they happen over time.”
Business Models & Value CaptureBusiness Models and Value Capture
None of the elements that help companies build moats in traditional sectors — trade secrets, intellectual property, or control over a scarce resource — carry over to crypto. That creates the “value-capture paradox” — how can open-source code that is simple to copy still be defensible in a competitive market? The answer is that network effects are every bit as strong, and perhaps stronger, in crypto than in traditional sectors, because of the economic flywheel that tokens make possible.
Show Notes:
The layers of the crypto stack. “There are a number of different challenges at every level. And there are many startups that have been launched to solve the different challenges at each next level.”
Multi-sided platforms. “The multi-sided platform is the main template for value creation and value capture in crypto. The important point is that this applies to both layer 1 and layer 2.“
The Layer 1 flywheel. “Once token value is present, that creates a strong incentive for miners or validators to contribute some of the computational resources and hardware that actually provide the platform with its security and its functionality.“
The value-capture paradox. “The fact that you’ve got these virtuous feedback loops, these network effects, the fact that you get defensibility from integration between a protocol, which is driven economically by the token at its heart and everything else outside of it, tends to result in winner-take-all dynamics which is the opposite of what you might think given that everything’s open-source and copyable.“
Smart contracts. “Smart contracts can get people to trust one another, to interact with each other in ways they previously couldn’t. Because of their sovereignty, they’re able to create a sort of common ground with enforceable rules that everyone can trust in.”
Cryptoeconomics 101
This is an introduction to “Mechanism Design,” a field of study that has become newly important with the emergence of Bitcoin and later blockchains that depend on carefully structured incentives for network participants. Economic incentives, when set up well, can lead self-interested people to show useful behaviors at fair market value with little central planning. This offers a new way to bootstrap decentralized networks. Poorly designed incentive systems can override moral frameworks in ways that can be dangerous. This could be harmful, he says, in decentralized protocols, since self-executing code may not be easy to change in order to stop unintended consequences.
Show Notes:
The principles of mechanism design. “By designing … economic games appropriately, we can push selfish humans, who are essentially playing the strategy that is most effective inside the game you’ve created, to exhibit useful behaviors.“
Bitcoin’s incentive system. “We have proof of work as a mechanism to reward people for securing the network and also processing transactions. … just another simple mechanism design [that] was able to do something that was previously impossible.“
The moral hazard of incentive systems. “[They] can overpower the moral frameworks that most people live by in ways that are dangerous and fundamentally disconcerting.“
Case study: Decentralized storage.
Decentralizing Your ProjectHow and Why to Decentralize Your Project: A Deep Dive
Progressive decentralization is the process by which crypto project creators develop a useful product, form a community around that product, and then slowly pass control of the maturing network to the community. This helps spur rapid, compounding innovation through stronger incentive alignment and open participation.
Compound, one of the first crypto projects to go through the full progressive decentralization model, built a vibrant community of third-party application developers, who have set up shop on top of Compound’s smart-contract protocol for lending and borrowing.
Show Notes:
The typical pattern of internet platforms. “As platforms expand, they follow a predictable pattern where they gradually begin to alter their behavior. Rather than cooperating with their communities, they start to extract value from them.”
Crypto’s new model: Progressive decentralization. “It’s now possible to financially reward independent users all over the world for their contributions to a network. And the result is that crypto networks can have a more cooperative economic model.“
Step one: Establishing product-market fit. “At this point, there should be no illusion of decentralization, because a core team is, by necessity, making all product choices. “
Step two: Involving the community. “It may make sense to begin considering how to remove reliance on the core team in order to strengthen trust with the community.”
Step three: Spreading ownership across the community. “Crypto tokens are a new tool for distributing value, including a fee stream to community and stakeholders. And what I mean by this is I mean actually giving that community tokens.”
Case study with Robert Leshner: Collaborating with the developer community. “At this stage, 100% of our effort is centered on helping developers build on top of Compound. For us, that means viewing the product as holistic and covering everything developers require.”
Why community ownership matters. “At the moment, our team is required to keep the protocol running. But if we can spread the responsibility and ownership of the protocol across a broad audience, there’s the expectation that it can operate forever.”
Advice for founders. “Maintain an extreme laser focus and tunnel vision on the goal you’re pursuing. I’ve seen many teams and many founders attempt to do too much, trying to spread themselves across many different areas.“
Building Dev CommunitiesBuilding a Community of Developers
In a conversation with Chris Dixon, GitHub and Chatterbug Co-founder Tom Preston-Werner describes how the open-source ethos is an excellent way to create social virality among developers, and how GitHub’s clean, developer-centered interface drove its broad adoption and prompted developers to push for it within their own organizations.
He also shares marketing lessons from GitHub’s early days, when the company relied on informal community-building tactics in an effort to create “superfans.”
Show Notes:
Appealing to the open-source community. “We wanted to give back to the open source universe. And so we thought, hey, what if we made this free for open source that would be great for community and also great for marketing.”
Simplicity as a community driver. “We were trying to cut the barrier to entry as much as possible. Just remove every possible thing we could think of to make it easy for you to get code online. And the social elements came from that.“
The first big milestone. “It was only maybe six or eight months after we launched publicly that [Ruby on Rails] moved over. And that was amazing.“
How to market to developers. “We talked a lot about super fans, and how we create super fans, and how do we serve super fans. What can we do to surprise and delight our users and turn them into super fans?“
Managing a globally distributed team. “You have to be able to work asynchronously where they’re doing work, and then they’re putting it online, and then asking things or making comments. And then you come in and do the same thing asynchronously. Afterwards, once they’re done for the day…And so things like GitHub, things like Slack, things like Zoom become really critical.”
Distributed WorkforcesManaging a Distributed Workforce
Because crypto is built on a decentralized mindset and changing business models, founders and managers encounter distinct challenges. In a space this fast-moving, for example, it’s important to hire someone who has the right skills now and will also adapt to what’s required in 12-18 months. This also makes it essential for companies to create processes to onboard and support their teams.
Show Notes:
Case study: Growing from 5 to 20 employees. “When you’re building an organization or thinking about building networks, people are your most important resource … it’s about hiring the right people at the right time at the right place.”
The importance of onboarding. “It’s really important to help people understand what other teams are working on, not just for them to be performing well at their job. It’s really instrumental for the trust you’re building in your organization.“
Clarifying job roles and structure. “We wanted to understand what motivated people in their roles so that we could embed that as they were working on their teams but also thinking of it from [the perspective] of their development.“
Tips for success. Commit to giving (and accepting) honest feedback; define the decision-making process; set up systems for sharing information; build processes that support structure
Tokens & RegulationCrypto Regulators and Token Securities
Crypto is the “most perfect intersection of tech and finance,” but crypto builders have to work through traditional regulatory structures for financial services. This is especially important because tokens, the native assets of crypto networks, can be classified as securities by regulators, making them illegal to list on exchanges and subject to disclosures and other legal requirements. Because crypto is still relatively new, the road to legality is still taking shape.
Meanwhile, the crypto sector has formed the Crypto Rating Council, a new system meant to rate tokens objectively and measure how likely they are to be treated as securities. It points to possible new regulatory routes for crypto, including membership models — akin to cooperatives or mutuals — where token holders agree to sell only to other network members, bypassing a secondary sales market and thereby avoiding securities problems.
Show Notes:
Digital asset regulation: What the agencies do. Treasury (FinCEN, OFAC, and IRS); Securities and Exchange Commission; Commodity Futures Trading Commission; international jurisdictions
Securities law. “It’s the heaviest-weighted part of any legal analysis you’re going to do because it affects both the kind of token you can offer and the way you distribute that token.”
The “Howey” test. “[It] set out a four-part test. Every one of those parts has to be met for something to qualify as a security.“
The Crypto Rating Council. “We created an objective, numerically based rating scale that can be used for any token to show where you stand in terms of your risk of an SEC investigation.“
Assessing risk based on company’s goals/stage. “Many of you have great ideas and you’ve written compelling white papers, but the network is not yet live. You’re still in testnet mode or maybe you haven’t even built the network. That is a little riskier. And you have to be a little bit more careful if you’re going to be raising money.”
The membership model. “The clearest example of a membership model that doesn’t break securities laws would be mutual insurance companies … [this model] hasn’t been tested with the SEC in our industry but has a long enough track record elsewhere that we feel comfortable exploring it.”
Hot-button topics. Gambling tokens, privacy tokens, Financial Action Task Force (FATF) regulations, tax reporting
Fundraising and Deal Structure
In the early stages of product development, crypto startups can still raise conventional venture capital through equity, which creates the strongest alignment between founders and investors. Later, unlike a traditional startup, a crypto startup can bring its user base into ownership and operation through token distribution once the core founding team has achieved product-market fit and built a workable network. That aligns incentives across the network, its users, the core team, and venture investors.
Show Notes:
How fundraising is different in crypto. “In the early stages they look similar [to traditional startups] — build a product, build a community — but at the point you’ve done that, you start to move into community ownership and operation mode.“
Tokens as an equity instrument. “Especially in the earliest stages of a startup, equity is the best way to achieve that alignment and flexibility that founders need. But if the goal of a crypto startup is to produce a network that’s owned and operated by a large community of users all over the world, then the token being natively digital is likely the best instrument to coordinate it once a team is ready.“
Dilution in crypto deals. “By giving community members a stake in the network, early founders and investors have a new tool to fuel growth and network effects that grow the pie.“
Monetary policy for crypto networks. “There’s no one-size-fits-all monetary policy in crypto networks that dictates what the supply of tokens or ownership stakes will be.”
The evolution of financial capital for crypto. “Specialization goes a long way to figuring out the appropriate valuation methodology, the appropriate deal structure to structure the unique sort of equity deal with token rights.”