From the US Army to Founding Tech Startups - Alex Pruden | ATC #500

In this engaging conversation, Stephen Sargeant and Alex Pruden, CEO of Aleo, a leading zero-knowledge-proof L1. He is a prominent voice in the privacy and blockchain industries and regularly works with organizations to continue scaling these technologies. Alex is also the Co-Founder and CEO of ZPrize, a cross-collaborative, cross-industry competition focused on making digital privacy a reality and incentivizing the development of ZK technology.

Prior to joining Aleo and founding ZPrize, Alex worked for a16z, Coinbase and is currently an advisor to Stanford University School of Engineering and Tioga Capital Partners. He is a former US Army Green Beret and attended both Westpoint and Stanford University.

Host: Stephen Sargeant

Guest: Alex Pruden

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Episode Transcript

Stephen: Welcome back. This is your host Stephen Sargeant of the Around The Coin Podcast. Today we have Alex Pruden. He's the CEO of Aleo. They're a layer one privacy focused blockchain where companies, developers can come build on top of. He's actually formerly worked at A16Z in the cryptocurrency department working on deals and he's a former special ops in the U.S. Army Infantry. This is an amazing episode because we talk privacy, we talk blockchains, we talk a little bit about regulations and the impact of the U.S. government on things like Tornado Cash, but also we talk a little bit about entrepreneurship. He's seen the deals, he knows about fundraising, including fundraising he's done for his own company.

So we cover a wide spectrum of things, anyone building or looking to raise money or entrepreneurs in the crypto blockchain space, especially those focused on privacy. This is one you want to listen to. Enjoy the show.

Stephen: This is Stephen Sargeant, host of the Around The Coin Podcast. We're here with Alex Pruden.

Stephen: Alex, tell us a little bit about yourself, and then we're going to dive into it because I got a ton of questions for you.

Alex: Yeah, Stephen, thank you so much for hosting me. I'm happy to be here. Yeah, so my name's Alex.

I'm the former CEO of Aleo Systems Incorporated and now the new Executive Director of the Aleo Network Foundation, which is the epinomin epinomin ep oh, man. That's the name of the network that we're about to launch. I can't say that word, epinominimus. But anyway, before I was at Aleo, I was at A16Z.

I was an investor for two years. Before that, I was at Stanford Business School, where I was really interested. Getting my MBA, but really interested in crypto and, kind of going down the rabbit hole there. And I actually had first gotten interested in crypto during my time in the U. S. Army.

So before all of what I just mentioned, I had a nine year career as a U. S. Army officer, first in the infantry and then in special forces. And I, I learned about crypto working in the Middle East in particular. We can talk about that.

Stephen: And that's actually where I wanted to start. I wanted to see like, what were the discussions?

Usually when you're working in the specialty units, they hear about technology, maybe before the average person. Even maybe some of those computer science nerds that are on their computer in their parents basement, really in the, the chats that would bring them to the exposure to Bitcoin. Can you tell me about your first foray, whether it was cryptography, cryptocurrency, or even Bitcoin, back in your time at the special ops?

Alex: Yeah, of course. So, yeah, I learned about the technology working in my, it was my last appointment. Working in in special operations. I was a Green Beret, so U. S. Army Special Forces. And at the time, there was a program to train Syrian resistance forces for to fight ISIS, and also the the Assad regime, right?

So there was there were U. S. forces in Turkey, which is where I was, as well as Jordan, and and some other surrounding countries that took Syrian Basically, Moderate Syrian Army is what we call them, so moderate rebels who are against the regime, also against ISIS. And we would take them out of the country, and then we'd train them, and then we would send them back to fight, and we would kind of advise and assist them from across the border.

So that was, this is all public knowledge. You can read about it. The New York Times covered it all extensively about five or ten years ago now. One practical problem with this model is you give folks so much training, you give them some weapons, give them some ammunition and they go back across the board with the reality of like running effectively a military unit is, there's all kinds of expenses that come up and, typically you need to pay for those in some way, food, fuel, stuff like that.

And so, I first learned about cryptocurrency because, we, in general, as our unit was kind of thinking about, how to solve this problem. I appreciate, your nod to all of us as potentially being a bunch of smart computer science nerds. None of us were, at least I wasn't. And so we were all like, well, here's some cash.

And they were like, yeah, we don't want to drive around with cash in this lawless, northern Syria. And so we had it was a, it was a Turkish intelligence guy that I remember first mentioning, like, hey, you guys should use Bitcoin or something. He just kind of said it offhand. None of us had really knew anything about it, I didn't at least, and so, and, and that suggestion never went anywhere because right after we were looking at it there was a Russian, the Russian government intervened on behalf of the, of the Assad regime in Syria and more or less ended the rebellion with their, with their air support for, for Assad's fighters or Assad's forces, so it all be kind of, kind of became moot.

But I, my interest, I, I kind of stayed interested in this technology, particularly because a lot of the people that we were working with were themselves refugees from the Syrian civil war. And, one of the things that I had not appreciated about a conflict like that is that, obviously it results in, in a lot of people being displaced, but when you displace from one country to another, oftentimes that comes with a massive amount of destruction of wealth, right?

So if you just think about, I think it's something we take for granted oftentimes in the US, particularly because the dollar, where you can take a dollar and basically go anywhere and spend it. But if you're a Syrian whose savings is in Syrian pounds in a bank account in Syria, in Damascus or Aleppo.

It's not trivial to, like, go to Turkey and make that your new home and then get that money out. And especially if you have real property, like, that physically is in Syria, like, you have to risk your life to go back and get it and potentially lose your identity documents. Like, there's basically just an enormous number of ways that wealth is destroyed.

And people, many of whom we worked with, had played by the rules their whole lives and actually weren't really militant, but they were just on the wrong side and they were fighting for their homes and their families. And when it all was said and done, they had, they had lost their entire life savings in the process of like fleeing a country.

And so thinking as I was leaving that deployment, I was just in the process of transitioning out of the military. And this idea of Bitcoin, because Bitcoin is all I knew about at the time, was like, where you, it was, it was effectively like a bank account in your head, right? Where it's like, I worked my whole life as a dentist, or a doctor, or a teacher, or whatever, and like, I'm saving money in this Bitcoin account, and I, and only I, know the private key or the seed phrase, I can just go somewhere else, and now I can just like, enter that in, and now I have all my wealth.

Like, that was kind of the simplistic way I viewed it in the beginning, but I was like, wow, this is really cool, because I hadn't appreciated how actually in practice difficult that is for, populations, like refugee populations the world over. So that's how I got interested in the space to begin with.

Stephen: I love it. And I think to your point about comparison to the United States or North America, I mean, Canada most of our wealth is in our house, right? So if you're being displaced and all your wealth is in your house, or even if you do get the money out, that money essentially usually when it's an unstable ecosystem, unstable political situation.

That money becomes, I don't want to say worthless but we saw, after World War II, they're shoveling, they have to weigh the money because it's so worthless. So I think a lot of those important factors, I think we're seeing a lot here after the pandemic namely when we want to send aid to places like, Ukraine like GoFundMe's not going to allow you to fund military equipment.

So now, and I'm in Canada, so we saw it with the Freedom Convoy. If you want to donate to the Freedom Convoy. You had to do it through cryptocurrency because, once again, the government can influence centralized authorities like GoFundMe. So I think you bring up some really great use cases. I guess you saw it on the ground.

It probably made sense, but even if you're coming from the UK to Canada, it's not the easiest to move around money, as you've probably seen in your career.

Alex: Totally. Well, there's two things you said that I think are going to preview stuff we're going to talk about later. One is like, if you, you mentioned if you want to fund the Freedom Convoy, you had to use crypto.

Ironically In some ways, that actually makes you a target, a very easy target for, for a regime that doesn't want you to do that, right? And this is like the reality of most cryptocurrencies out there, is they actually kind of In many ways, a better surveillance tool than the traditional financial system.

But we'll get to that. I think the other, but the other piece is look, I think one of the interesting things about cryptocurrency is like people view it as like a technology thing and they're like, Oh, this is tech. I don't really understand. But when you dig into it and actually ask kind of like some of the fundamental questions, what you realize that the understanding gap is actually not the technology, it's the concept of money.

Like, what is money, right? It's like, you don't usually think about it. You're like, okay, I have a dollar. I just buy a coffee. But like, back in the day, a dollar represented a goal, like a bit of gold that you get out of a bank. And then at one point, that was no longer true. And now everyone's like, okay, well, we all believe it says that.

But like, it's very like amorphous. When you dig into it pretty deeply, you realize people actually, most people have no idea what money is. And they just take it for granted, just like they take breathing oxygen for granted, you know what I mean? Or breathing air for granted.

Stephen: Yeah, I think we're gonna get in to jump into it, but, using privacy coins or mixers or privacy protocols, seemed, before 2019, seemed like only illicit actors were doing it.

I think people got real shocked, especially in first world countries.

They're like, Oh, as you said, it may be a lot more easier to surveil than we even thought, but you kind of, just lightly brushed on A16Z that you worked there, which is, I think a big deal in most tech communities and to most of the listeners.

What about your time at A16Z? Was there a lot of discussion around cryptocurrency? You were obviously leading those deals. What was that environment like? Cause that was only a few years ago.

Alex: Yeah, so I was part of the first crypto funder. And so I was hired to be a part of that. So I was only part of the first crypto fund.

I think they're on their fourth now, and the team has grown up, to be a lot larger. But yeah, A16Z was also special in the sense that it was the first, I guess it was the first major Silicon Valley venture fund that had a dedicated crypto fund. And, we actually had to do a fair amount of work to set it up because there was like, it was just very much a first and it was a cool experience just both because of the people that I was able to work with and I got to work with, Ben Horowitz and Chris Dixon, some of the people who kind of, but some of the people who like I guess talked about some of the funnel of fundamental ideas, which inspired a lot of products to come further down the line and themselves had amazing experience with the history of the internet.

So, yeah. Let alone like let alone crypto. I mean, one of the things that inspires me a lot is, is, Ben and Mark both worked at the company Netscape back in the nineties. And for those, for your listeners who may not remember, I'm a dinosaur, so I do remember, but Netscape was the first web browser.

Like when the internet was first a thing, like actually the original way you went, like, I remember my dad would like basically read message boards online. It was all through DOS. It was like. command line based and there was like no visual, there was no like UI browser. So Netscape, that was their big product because they have a browser for the internet.

And they were essential actually in promoting the use of encryption. And encryption was seen as an essential part of growing the relevance of the web because if you could encrypt messages between two parties, you could securely exchange credit card information and like, but there was a time in the early 90s where many of those encryption algorithms were still considered to be weapons under export controls, right?

And so there's actually a significant battle, maybe you call it the crypto wars, you can like read about it on Wikipedia, around how they basically You know, many people, including the Netscape folks and Ben and Mark, advocated to, like, make that consumer technology to enable all of the use cases we see online today.

So anyway, it was the ability to work with them closely was really special. And then also just get to see a lot of the protocols that now we, that are just kind of amazing and like have grown into these huge things. From, from the, from very early beginnings. Like, for example, my first day, it was my first day at the fund.

We saw Solana. It was like Solana's seed round. So I remember Anatoli coming in and presenting and I, I saw the, the pitches for like, Uniswap and like many others in the beginning. I personally was, was focused on file storage. So I looked, so I led the investment in Arweave. So I don't know if folks are familiar with Arweave and, and listeners of your show, but it's a decentralized file storage network.

Similar in some ways to Filecoin, but I think it's got kind of some clever mechanisms. And that was my area that I was really excited about. And then I

Stephen: think Deepin is picking up a little bit, dude, a little bit. And we're, we're definitely on some other podcasts that I work on behind the scenes.

Was this a dream job for you? I think a lot of people are like, Oh my God, A16Z, was this a dream job? Or, you're on the battlefields, life or death situations, and now you're working behind the desk. Did it feel like, Oh, this is a great entrance into the more of the space I wanted to be in, or did it just feel like, okay, this is maybe not a hundred percent where I want it to be.

I'd love to kind of hear your thought process of going from like the public sector, law enforcement or military side to the private sector, jumping into a huge juggernaut, like A16Z. Yeah,

Alex: it was a dream job. I mean, it was, it was, the answer is yes to both. Right. So it was a dream job in the sense that like.

I mean, I could not have asked for a better opportunity to transition into the space. I mean, there's so many people that like, didn't get the lucky break that I did, which was like, I kind of, through a series of good fortune and circumstance, I met people who were hiring at A16D and they're like, Oh, okay, you seem smart.

Actually, the woman I worked for had come from the government, Katie Hahn, who now runs her own fund. And she was like, okay, you have a similar background, you know a little bit about crypto, you should come work for me. Right. And that's just like, it was a very lucky break. And so in that sense, it was a dream job.

Being at A16Z, you get to have a conversation with anybody you want in the industry. So that was amazing. I will say, I didn't love being an investor, candidly. I just, I think it's a different, it's a different skill set and it requires a different kind of person than what I think I'm good at and what I like, which is, I just like being I like being all in on something.

I like the first order work of like building the thing. And I think being an investor gives you a chance to like step one, step back, do the second order thing of like enable the people to build the thing. But that always felt derivative to me. It felt less satisfying. For some people that's very satisfying.

For me, it was less satisfying. So I really, that's what inspired me to jump from that to the startup where I am now.

Stephen: You're like in the operational meetings, like telling people what to do. They're like, no, you're in the wrong boardroom.

Alex: But then you jump into, from a Oh, sorry, I was just gonna say, it wasn't even so much that as much as like, I feel like this technology is something I really believe in. And I want to make a difference directly. So.

Stephen: Right. I love it that you're betting on yourself. And many people would say, that's great that you left A16Z and started your own thing. But why a layer one privacy focused blockchain? There must be something more behind that from your thought process.

Did you see maybe there wasn't a lot of these protocols coming through A16Z? Did you, did you notice like, Oh, everyone had it figured out, but there was still this issue of maybe too much transparency, not enough privacy. Or did you feel like that kind of privacy movement was coming, even though people are giving up their privacy every day to save 10 percent at Bed, Bath Beyond?

Alex: Yeah. So look, I think I'm going to start answering that question with like, maybe we could even say instead of like, why did Alex go, maybe like, why Aleo, why a new layer one in general? Right. And the start I would, I guess the way I would start answering that is, is I would say crypto today has no real use cases outside of speculation.

That may be a controversial statement, but I think it's actually true. If you look at most transaction activity on Ethereum, what you will see is USDC anda Uniswap are 90 of it. And if you dig into what that is, it's Project announces airdrop, money gets traded on Uniswap for the token, hold the token, maybe transfer it around to try and game the airdrop, and then transfer airdrop tokens to USDC to cash out.

That is what 95 of activity on Ethereum is, and I will bet money to anyone who argues with me on that. And I think that is also true of Solana, it's also true of most ecosystems. The reality is, most of what crypto is used for today is speculative. Not all, but most. And I think the missing piece here there's a couple of missing pieces.

And I think if you actually go all the way back to Bitcoin, I think Bitcoin is amazing in many ways because it kind of pioneered this concept of permissionlessness, right? That's what inspired me to begin with. And I think Ethereum was similarly pioneering in that like, like, Hey, permissionlessness is great, but like, you're kind of limited in what you can do here.

Cause like, I don't know if you've ever tried writing Bitcoin script, but it's like. Not really that functional, right? So, people are like, okay, well, let's like kind of take like the world of software and like open up the world of permissionless, permissionlessness more with programmability.

Okay, so that, that was a great statement. I think Ethereum was hugely forward. But still, I think the missing piece is particularly when we talk about financial implicate, applications is privacy. Why do I say that? I mean, it's my favorite question to ask at any panel when I'm ever on at a conference. Like, how many people in this audience get paid in cryptocurrency?

And inevitably I get like one or two smarmy people who are like, I get paid in USDC. I'm like, yeah, okay, like 5 percent of your salary or whatever. You're like, there's inevitably people who say they're like, get a little bit, whatever, right? But like, you just, you can just look and poll the industry and the 99 percent of people get paid through the banking system, right?

It tells you almost all you need to know. About the utility of the, of crypto as it stands today. Now, and this is an example of privacy. You mentioned, like, people are willing to give up their privacy to save 10%. But that's actually not true for a lot of things. People are still pretty reticent to share their salary.

Not all people, but, like, they're still, like, Generally, it's feeling like people don't publicize how much money they make in a year, generally, right? There are things that people do care about protecting. And particularly when you move from the individual level. To the business level or particularly when you move from like simple small scale financial transactions to like life savings or even like beyond financial like medical history.

People are definitely not down to just share everything openly. Like, like you, you have to in crypto, right, as part of the fundamental architecture. So that was the missing piece for me, why I thought Aleo made sense, because it added privacy to what already where I think breakthroughs on permissionlessness and programmability.

And to me, the three things are essential for real world utility.

Stephen: That's awesome. That's not the first time I really heard that, to be quite honest, and there is a lot of use cases when it comes to remittances, transfer funds, especially in places like Latin America, Africa, but to your point, it's not the majority of the, if you look at the majority of the usage that is definitely not there.

But then, if people are hearing privacy, they're like, okay, you're, you're basing, it looks like you're betting on zero knowledge proof or protocols. But people are going to say like, hey, Monero, Zcash, we've kind of had privacy. Tell me what you're doing that's a little bit different because we're seeing this renewed interest in zero knowledge proofs.

That I guess technically an industry that's always been there, but it seems like it's coming more mainstream as to like actual user experience or customer consumer adoption.

Alex: Yeah. And first, let's define for your audience, make sure that everyone understand zero knowledge proof. It's a cryptographic technique to prove that a fact is true without revealing why. Right, so like the real world example I like to give a lot of times is like, imagine you're like going to a bar, you want to get in, it's, you have to be over 21, imagine you could just like prove you were over 21 without showing your driver's license, right, because if I show you my driver's license, you like, See my name and my actual birthdate.

I mean, it's kind of a toy example.

Stephen: And your address in a lot of places. And your assets, right? Which isn't great for bouncers and women that may be, intoxicated. And there's been situations like that where is that too much information being shared?

Alex: Exactly. So that's, and it's kind of a toy example, cause most people don't think about that, but it shows you kind of like what the technology can do.

And it's kind of, it's unique because there's not a. Physical analog, right? If we're playing poker and I say, I have a full house, I have to show you. 'cause otherwise you're not gonna believe me. Right? But in, in, in the cryptographic world, you have this technique which allows you to prove something is true without revealing it.

Right? It's very special. And I think there's a lot of applications, not only in Web3, but in web two around use cases like identity, which we can come back to. But I think to your question of like, hey, we've tried this before, no one really cares, what's missing? I think what's missing here is like, look, I think Ethereum, I mean, if you look at the total, the relative adoption of cryptocurrencies across all layer one networks you've seen over the past eight years.

a smaller share of the pie with like kind of the legacy systems like Bitcoin. And you've seen more growth in like this kind of the systems that enable smart contracts and programmability, right? And one of the biggest areas of growth that you see is like stable coins, right? You mentioned a minute ago remittances is a use case for crypto that's not just speculative.

And I agree there is, there is some limited use cases for remittances. But most of that happens actually denominated in USDT or USDC. Now, I know technically you can do USDT on Bitcoin before anyone comes at me for that. I know technically it's possible. But most people Yeah,

Stephen: But you're right. Mostly stablecoins because they don't want to lose any They can't handle the They can't afford the fluctuation.

Alex: And if you want to do anything more than just a very trivial stablecoin implementation like USDC has some compliance policies around it like you kind of need a smart contract blockchain. Right? So What's missing from Monero and Zcash is the programmability aspect. Actually, up to this point, up until Aleo, there has not been a zero knowledge privacy preserving protocol that gave you the same programmability as Ethereum.

And in fact, even all of the ZK rollups, like the ZK and ZK rollup is actually a little bit of a misnomer because all of those don't really use the zero knowledge aspect of zero knowledge proofs. They kind of take advantage of the fact that the zero knowledge proof succinctly proves that something is true.

So they basically use it to pack a bunch of transactions into a single one. But all those transactions are actually still public on the Ethereum blockchain. Hmm. And

Stephen: can you walk me through? Because you just don't have a blockchain, you have a whole infrastructure. Maybe give a little bit of high level.

It's like, what are you building here? What are the use cases you're seeing being used? Because you're not only, building your own privacy blockchain. Developers can now build on top of you, I'm assuming, with their own application. So, give us a little bit of high level view maybe the Aleo suite, if you will.

Alex: Yeah, of course. So, look, and yeah. So, I, it, maybe just I'll say it this way. Aleo's building a new layer 1 from the ground up because to, it's, you need to build a system from the ground up. To be able to achieve the three properties that we wanted, which are permissionlessness, privacy, and programmability.

So, starting at the bottom, like the base layer, we have an, a consensus algorithm called SnarkOS, which is actually our consensus algorithm is a variant of Narwhal Bullshark, which is what Sui and Aptos use, but it's a proof of stake consensus, and the basic point of this is like, there's a ledger, And there's a bunch of nodes that all come to consensus about what's on the ledger, right?

This is a basic blockchain thing. But, it's nuanced in this case because what is on the ledger? Well, what's on the ledger in this case is a bunch of encrypted records, right? Unlike every other blockchain where everything is just like public. Like on Ethereum, for example, you tell me your ENS name, I can just look you up and see what you own, right?

So in this case, the state is a little bit special because it's encrypted. And so dealing with that and making sure that consensus is dealt with appropriately requires something a little bit bespoke. So that's the consensus protocol. So that's like the blockchain part in the traditional sense. Then we have a smart contract platform on top of it.

In the similar, so the analogy here is like the Ethereum blockchain and the EVM, right? So we have SnarkOS, which is the Aleo blockchain, and then Our Snark VM is like, what do you do on top of it? You kind of mentioned this is like, developers can deploy applications. So this is all our VM and the logic by which like, hey, I want to deploy a program written in our language, Leo, which we'll get back to in a minute.

I want to deploy that program. Then I want to like, do a state transition, or I want to like, send money based on, the logic of that program. And, so that, that requires, from the ground up, a new language and compiler to let you do that. So the VM actually processes those state transitions, but you need a new language and compiler.

And you can ask yourself, why do you need a new language and compiler?

Stephen: That would be my next question, is because I think people are familiar, maybe, with Solidity on Ethereum. Definitely. Why a new language? And what were people using before Leo?

Alex: It's a great question. There was a, there was a language called CIRCOM, which if you wanted to do circuits, actually some old CIRCOM circuits were deployed as EVM smart contracts.

But basically it was like, they, they call these things circuits because that's kind of like mathematically how you're representing logic. And it sounds as complicated as it is. Like you're literally thinking of a program, you're representing it as like, think of it like an electrical circuit is kind of how you think about it.

And you're basically like making sure the output matches what you expect at the input. It's complicated, right? That's why, and that's how people used to do it before languages like Leo. Now with Leo, you basically write, it's sort of like Solidity, where you're like, Okay, I don't care how the EVM works, I just like, write some words, and then it like, does a thing.

So Solidity, but you know, back to the question of like, why a new language, Solidity compiles instructions into, EVM opcodes, right?

So it's like your high level code goes to EVM opcodes, which like all the nodes in the, in the ecosystem process simultaneously. It's like similar to how your computer works at like a distributed level, but here we're like what is being computed in the case of Aleo are, it's synthesizing and generating zero knowledge proofs, right?

So it's a fundamentally different kind of domain. Now, actually, this is a good point to linger. Technically, you can do this on Ethereum. You can. And there's, like, there are examples of zero knowledge applications on Ethereum. The drawback is that Ethereum is not purpose built for that. And there are significant limitations, especially the cost.

And there is, in fact, as every Ethereum block has what's called a gas limit, which effectively limits the amount of computation that you can do in that block. And because Ethereum wasn't purpose built for ZK, A lot of the cryptographic primitives that you have to use that are the EVM opcodes are very inefficient and therefore very expensive.

So by building a new Layer 1, you can basically hand pick the most efficient cryptographic primitives to be able to then give yourself a zero knowledge smart contract platform. This is actually Like, efficient from a, from a financial or economic point of view. So that's the reason.

Stephen: I think that's the thing I hear most about Ethereum is it's for everything and whether it's fan tokens or what you're saying is privacy, you have to almost build a new blockchain in order to focus just on that purpose.

Otherwise this is not really functional on Ethereum. There's too many factors involving in exactly what you're saying is price and expense and cost.

Alex: Yeah, and you can measure this yourself. I mean, this is like, I guess, the beauty of a public smart contract blockchain. You can go to Etherscan and you can look at a ZKrollup contract that's deployed, or a ZKML contract, and you can literally just price the gas that's paid to it.

And you can see it's significant. So, that's, that's one reason why, that we, why we chose to specialize. And there's a couple other advantages too. I mean, we can get back into this, but I think if the, the model of Ethereum accounts, the way they represent state, it's like account, state, account, state, makes it very difficult to have privacy.

And this is why you see, like, projects like ZK. Money or Tornado Cash that try to do that. They basically have a layer, too, that you bridge into that represents state differently to actually try and give you a real sense of privacy, so.

Stephen: And we're definitely going to get into tornado cash, I think, in the discussion, but you mentioned identification, and I think, the word identification and privacy doesn't seem to go hand in hand for a lot of people, especially those from the traditional financial institutions, but you recently partnered with ZPass, which is a protocol focused on age verification, almost goes back to our probably to your biggest use case of giving information like age at a bar.

Stephen: Can you tell me, to talk a little bit about that partnership and where you saw a huge gap that you think you're going to fill with there?

Alex: Yeah, sure. So we actually launched ZPass. I, I think we are partners, but it's a product manager in our on our team who actually kind of came up with and ran with that idea.

And we partnered with the partnership we had is with a non profit called Common Sense Media. To, help roll out the age verification use case specifically. And there's a joint venture there that takes, basically takes and implements ZPASS for age verification for kids, especially, right? And so we can kind of come back to that.

But I guess at a higher level I think identity is, is like the obvious killer use case for privacy preserving, permissionless, programmable watch ins. Like, and from, and why is that? Like, take something as simple as like applying for a visa. To your point around people like may or may not care about privacy.

Like, if you apply for a visa to go to like A career or something like that, or wherever has a visa requirement. Typically like you have to scan your passport and like send it as a JPEG, right? I'm like, hopefully that never gets lost. Whoever's storing it, you know what I mean? And like, I, again, I used to work for the government as and I was part of the OPM hack, which is 2013, which like.

Everyone's classified everybody who had like a security clearance, like lost their entire record, like fingerprints. So, I guess what I'm saying is like, whenever you have a huge database of valuable information, it's basically just a matter of time before it gets hacked, as we've seen a million times, right?

So actually you have this model where you have, if you have a blockchain and you have zero knowledge, you could basically create this kind of different paradigm for cybersecurity. Whereas instead of you have one giant bank vault, you have a bunch of individual lockers. that are like much less lucrative to attack as a hacker, right?

And also for you as an individual, you have very fine grained control over what you share and with who. Right? And so I think this enables a whole different mechanism for authentication. An immediate use case of this for Web3 particularly is like on chain KYC, would be the obvious use case. So like age verification is another great use case for Web2, where it's like, hey, like how do you access age restricted content online?

How do we do it today? How do I download a video game that's like rated M? I just click, I'm over 18. Of course, as everyone can tell who looks at this video, I am over 18. Certainly don't look under 18. But like, the reality is like, it's just on your word. And actually a lot of states now are requiring there be like, specific biometric requirements to prove your age for various content online, right?

It's a big problem. But most people don't want A tech company to just maintain their passport data on a database, right? So now with that identity use case, then I think you unlock a bunch of other financial use cases too because the reality is like you want there to be compliant financial use cases, but identities are prerequisite to that.

Stephen: Yeah. And is there a reason why we haven't solved for this before? I know Circle was working on something with Verite. It seems like they backed away from that project. It seems like Decentralize or even Digital ID is really tricky to solve for. Is it a thing that you believe that the regulators aren't accepting what's being, the protocols being provided?

Or is the companies just haven't found a way to kind of make it interoperable with all the existing infrastructure in place that needs this identification?

Alex: It's, it has, there has never been a platform that has let you have permissionlessness. Programmability, and privacy. There never has been. That's like, if you look at a lot of these other digital identity providers, really what it is in the back end is just someone's database, right?

So it's like, you're still trusting someone and it's just they're trying to sell themselves as the most trustworthy, right? But it's just like, I just talked about the OPM, but go back to like the credit bureau. What was it? Equifax, right? Equifax, yeah. They were like kind of the trusted database for identity information, quite literally, and they got hacked, right?

So it's like, and this is why governments and institutions are kind of like, eh, a little bit low to go with that. Now, the advantage of an approach like ZPass, for example, is like, You don't need the buy in of the U.S government or the Canadian government or any government, but you can bootstrap on their, on the trust that you have in them.

For example, ZPass implements a protocol called ZK CREBS. And what that is, is basically like, you take your passport, scan the NFC chip, upload, like, verify that the passport is valid, verify that you are the owner of the passport in zero knowledge or prove rather, in zero knowledge, and then that data is then on the blockchain in digital form, and then you can prove facts about it.

And as you, every time you're proving a fact, you're saying like, A, I have a valid credential, B, I'm the owner of that credential, and C, the answer to your question is yes or no, and that's all you know, right? And so I think like, and that is just a much, that, like, that paradigm is, has never been able to exist before.

Because typically before this, it's the same reason why Bitcoin was revolutionary, right? Where it's like, you needed a third party to say like, okay, Yes, Alex paid Steven, or no, he didn't pay Steven, right? And now we replace that with cryptography in the same way that like, the Aleo blockchain and the Aleo srcvm is replacing that process in the identity stack.

Stephen: And do you think now is a great time for it? Just because of maybe the lack of trust we have in governments around the world, including some of ours here in North America, do you think now is like, Oh, people are really seeing why it's necessary not to trust maybe mathematics? Versus trusting essential authority like a government.

Alex: Yeah, and I think so yes, definitely. And I've worked in places where their governments are a lot less trustworthy than they are in the West. And so there certainly is true that that's true. But I also think from the perspective of like governments and big companies, like a lot of these companies don't want to store your data because it's a huge liability.

They lose it, it costs a ton of money, and inevitably they'll lose it eventually, right? And like, it's, it's, so it's actually, if they had an alternative to the existing system, like, I think they would really leap at it. In fact, the conversations we've had with like some big players in the fintech space are like, like, they don't care even about the financial use cases.

They're like, wow, the identity piece is so great because it saves us money, solves a business problem. And even for governments, it's like, again, like governments are not businesses in the same sense, but like, they also have like, like CBDCs. One of the big holdups of the CBDC, at least in the U. S. is like, Who in God's name is going to custody all this data about everyone and their bank account, and where is that going to live, right?

Like, and I think this paradigm, I actually think you could have a CBDC on Aleo that completely sidesteps that problem, but still is able to bootstrap off the existing identity infrastructure. You don't need anything new.

Stephen: Speaking of governments, we talked a little bit about identity, and we touched on Tornado Cash.

What are your thoughts? You're building a privacy focused blockchain. What are your thoughts on the U. S. approach and international authorities, I think when it comes to decentralized protocols themselves? So we saw TornadoCash, they not only went after the, the addresses to place them on the SDN list or the OFAC list.

They also went after the developer and the rest of the developer. What are your thoughts? Are developers off limits? Or if what you develop interacts somehow with ransomware proceeds or hacked funds from North Korea's Lazarus you're as much responsible as the players that are funneling those stolen funds.

Alex: Yeah. So, first, the first caveat I have to give before answering this question is not a lawyer. So, lawyers probably have a more like, kind of Yeah, I would give you a better legal answer, but I'll give you, I'll give you my take. And maybe before I give that take, the second caveat I'll make is like, look, hopefully it's implicit in my background.

I don't think anyone in this industry has put more. physically on the line than me when it comes to preventing bad actors from doing bad things. And this is my case. I was a soldier fighting in Afghanistan, Iraq, and working with Syrian rebels to like prevent these organizations from achieving their goals.

And I lost friends in that, in the course of that, right? So like no one wants the bad people to not use this more than me. That said, hopefully you can tell by the course of the conversation up to this point. How passionate I am about how important some level of privacy is, and how, like, and how critical it really is when you think about how the plumbing of our modern financial system works and how our expectations of society even work, right, and the liberties that we all take for granted in the West oftentimes.

And so I think, like, the question of, like, Tornado Cash specifically, I think it's very hard for me to comment because I think the way that organization was run, I just don't know enough about.

Alex: I think it's, it's, it's very possible, I think, for people to build software that I would consider irresponsible.

And I think it seems likely, from what I know, from like what's been reported in the media, that the Tornado Cash developers were probably at a minimum irresponsible with what they were doing and what they were not doing, more importantly. But, and I, but I also think, like, look, the reality is, like, yes, the, these developers were arrested, but I think, like, the case in the US is not over.

Like, these guys could still be proven innocent because the crime, I mean, it's an interesting legal question here, right?

Alex: Because this, it touches this, like, code is speech. It's free speech. And so I think, there's been many people including like, Aleo Advisor, Matthew Green, who is a cryptographer at Johns Hopkins, who's like, kind of took a stand on this and said, Hey, like the TornadoCash library, like we're forking it and open sourcing it and just making sure like the world still has access to this as much as many people may think it's bad.

Like it's important from a speech perspective that like we protect this principle of speech as code. Now, how that plays out in the context of money. And privacy and all that stuff I think still remains to be seen. But I personally believe that you can, that there are plenty of ways you can walk the line in the middle.

It doesn't have to be all or nothing. It doesn't have to be like darknet currency for criminals, or like straight up Panopticon. Like there doesn't, it doesn't have to be that either or. We can have a sensible system in the middle that both protects individual privacy, gives consumers more choice, Saves businesses money and runs more efficiently on blockchain rails. I absolutely think that's possible.

Stephen: Does that impact the way you build at all? Do you see that impact in the way you build? Or how do you balance that when you're having these conversations after something like Tornado Cash happens? Or are you pretty confident with the way you're building that you're kind of walking that middle balance?

Alex: Yeah, absolutely. Look, I mean, the thing we do is we do absolutely everything in our power individually and as a collective, like, at this point, now we're at a foundation where, like, the foundation is the steward of this network. We are not the owners of the network because, I mean, we walk the walk when it comes to decentralization.

Like, I wanted to turn this thing off. I can't, right? It's just the nature of blockchains. In the same way, no one can turn off Bitcoin. But look, we, we can. Loudly advocate for what we believe are, the right things to do here. And I think there's a bunch of compliance policies and there's a bunch of things that you can do.

That, that other, other, teams have adopted, like USDC, for example, has a blacklist of like, okay, people on the OFAC sanction list, like Kim Jong un can't send money. It seems very straightforward that like something like that is a sensible policy. And so we can advocate for things like that and, encourage using the leverage that we have people to adopt those things.

Right. But at the end of the day. It's, again, it's a public blockchain. This is a public network.

Alex: People generally, this is kind of an interesting question that blockchain's introduced, right? Because it kind of takes sovereignty out of the hands in some sense of like nation states and like brings it to a global community.

Like, people generally have to agree, at least the people running the nodes, I'm like, what is permissible activity? What is not? And I think we're just in the early stages of that dialogue. Cause I think it's kind of when we, when we frame it in like the North American sense or like EU North America, you're like, Oh, Russia's bad or North Korea is bad.

Like you got to realize that Russia can turn around and do the same thing. Right. And they were like, Alex is bad. Alex funded a Ukrainian nonprofit. He's now on the blacklist. Right. And so it's, it actually like, we kind of take it for granted because the dollar is the center of the globe, the financial system.

Alex: Will that be true forever? Most likely not, right? And you just kind of, I actually think from an American standpoint, it would be better to try and encode a financial system worldwide that was trustless based on cryptography that protected the liberties that we kind of value and fight for without necessarily like having to like hold up this dollar based system, which has all kinds of disadvantages.

But that's more like my personal view, I guess, the last piece, so.

Stephen: I understand that. With more people going over to BRICS, this seems like a conversation of that as well.

Stephen: Recently Vitalik Buterin and Jacob from Chainalysis, which is a partner of ours or mine, they recently published a paper about privacy pools, kind of talking exactly what you're talking about, how you can remain both private and compliant with government relations.

How do privacy pools differ or maybe are they similar to your layer one blockchain at Aleo?

Alex: Yeah, great question. Actually, I love that paper. I wrote an article for Forbes about it. I can send you the link later if people are interested. But the paper's great. I encourage everybody to read the paper.

It's great and it's pretty honestly digestible. Look, the difference on the technical level is that this is what we call, what we consider like an application layer privacy. Right? This is not a platform layer. So the idea of Privacy Pools is you can effectively do a compliant version of Tornado Cash, right?

Which is like, Tornado Cash is kind of like, just payments, and you kind of put some extra compliance mechanisms in there, similar to USDC. So you kind of make sure bad things don't happen. But the point is, like, That's just an application. And once it's baked, it's not baked. You can't do like a new thing over here, right?

And that's the advantage of something like Aleo. It's a platform based approach, right? So you can like define whatever program you want. You could actually, privacy pools in Aleo are not contradictory. You could Hopefully people do implement privacy pools in 50 ways on Aleo, right? And we give you all the tools to do that.

But that's the point. Aleo gives you these tools generally for the platform, whereas privacy pools are more about a specific implementation on like the Ethereum blockchain, for example. And so that's interesting. That's right. I consider like application level is Privacy Pools, and then protocol level is Aleo, right?

The two are not necessarily like in conflict, but it's just I would say Aleo's approach is more general.

Stephen: And the toolkit you're giving out kind of have that base. They have the base tools of privacy that people can use those tools to build exactly what they want.

Alex: Exactly. And in some, and again, like we didn't, we haven't touched on this yet, but Aleo's model by virtue of doing Things in the zero knowledge way, like, you, again, I, I hinted earlier at the conversation about the fact that proof generally, like, zero knowledge proofs are succinct in some sense, which means that, like, hey, I can verify that what you said is true, even though, like, what you said is, like, 50 pages long, but I can verify it in, like, 2 seconds, right?

That's like a silly example, a cryptographer would probably slap me across the face if I said it to them. But like, it gets the point of like, hey, I can do a lot in a little space, right? And that's the power of a zero knowledge proof. And so same thing here, and you can do it for cheaply, right? Like on Ethereum Great, again, pioneering work, groundbreaking, general model, doesn't quite let you do that as efficiently, so it's costlier.

Right, so if you're doing privacy pools, in many ways, Aleo is better, because the cryptography is all kind of purpose built for that use case specifically.

Stephen: Right, that makes sense. I think that's kind of how like Bitcoin, if you think about Bitcoin miners Same thing, right? Really hard to fight to win a Bitcoin, a mining reward, and solve that ba basically what I call Sudoku Sudoku on steroids.

But it's really easy for the other miners to validate if you did in fact solve the pro the puzzle. So I think it's a very similar concept there. Totally. And it's great that you wrote a paper on that and it sounds like how do you, when you know, it's funny that at the start of the conversation, the first thing we mentioned is compliance.

That's my background.

Stephen: How do you kind of educate, I think educate is the best word, naysayers or maybe even regulators that, without even reading into it, understanding the technology, they just automatically say, well, privacy won't meet regulatory requirements or compliance. How do you kind of educate them?

Because I think that's in the headlines, we're seeing more and more people get educated, but there's still that group that would rather not have to learn anything and just disregard the whole privacy conversation altogether.

Alex: Yeah, first thing I would say is like, look, the government, first off, governments generally are not a monolith, right?

Like The Chinese government, the PRC and the U. S. government have very different views about privacy and what's permissible, right? And then within, even just take one, take like the U. S. government, that's also not a monolith. Like the, you know, like, the, like agencies that focus on consumer protection.

Right? Like, have a different agenda than, like, the SEC or, like, FinCEN, right? And, like, so, in some sense, like, there's a big heterogeneity around when we say regulators, right? Typically, when people talk about regulators in the context of privacy, they're talking about, like, FinCEN, right? And that's, like, when you're thinking about Treasury and, like, okay, we have sanctions, we're trying to apply to, like, Iran and rogue states.

And and I, and I think, and that's, that's how people think of it. I think that the question that I would ask to them and I have when in conversations is like, first off, acknowledge that these are people that are doing their jobs and believe in what they're doing is right. And I actually think what a lot of what they do is great.

I think, I think the, to me, it's just a starting point of like, Hey, what are we trying to accomplish? And at what cost does it come, right? And if we think about the system we have, let's just forget crypto for a second. Let's like go back to like 2007, before Bitcoin even existed, right? North Korea, by then, had had a nuclear program that existed for 10 years, right?

And it only was great, like, no matter how many sanctions were applied, it continued to grow, right? And like, and how did they, how did they fund that? Some way, shape, or form, they used the financial system, right? They evaded the sanctions somehow, right? The financial system consisting of like big banks. In fact, if you look at like the stats around money laundering, I think even still today, like with crypto existing, 98 percent of money laundering happens through banks.

So what is Treasury's response to that? Well, they're like, well, look, banks are a good thing for society generally, so we don't want to just crush them. We need to mitigate the bad things. And I think that's the attitude that I would encourage regulators to have towards this technology. Now, we, I think the responsibility, a big part of responsibility is on us as an industry to prove real utility.

And this is something that I really have a bone to pick with a lot of people in this industry because there's too many people that are satisfied. With launching a meme coin and getting rich. And that shit is what makes, sorry to curse, but like, that's what makes regulators being like, This is just full of scams and criminals, right?

And like, and despite all the big talk that many people have made through the years about all the use cases, there are very, very few to show for it, right? And I think we, as an industry, need to step up and not just educate, not just tell people what can be done, but like, Here's a product, and this is what I hope ZPass becomes like.

Here's a product that solves a problem that cannot be solved in the other way. So now, of course, there's implications of this technology. Like any technology, it can be abused. But in my opinion, the mature approach to that is let's keep as much of the good as we can and minimize as much of the bad as we can.

And I think to me, that's, that is where I'm sure the space will get to. And I think, but I think it will require kind of both sides to continue to, like, learn and evolve and then work together to build that future. I think

Stephen: you said such a great point there. That can't be done any other way. I've been in the industry, working in the industry since 2018, but definitely prior to that in 2015, just learning about it.

And everything was this, but on the blockchain, right? Just like how now it's like, Oh, it's scooters. It's Uber, but for scooters. Or, and I think that's really what we saw in the blockchain. It's like, you can put this on the blockchain and people are like, yeah, but that's kind of risky. And we could just put this as a database and pretty much the blockchain you're building is a private centralized blockchain.

We don't really need all this technology to construct it. And then, yeah, you're getting into the speculative trading, which I think has hit most, I think this is why regulators are getting more involved in because there's no barrier to entry, right? If I want to buy, as you said, a meme coin, NFT, 500, I can jump in.

Without anyone saying, Hey, when you buy, why are you purchasing it? Let's take a look at your, your risk adversity. How much funds do you have? Is this disposable income? Some of the things that you would see if I want to do the same thing with a mutual fund or an index fund for the most part.

Right. So I think you raised a good point. A hundred percent. One interesting

Alex: thing is for, sorry, go ahead. Sorry. There's one thing I could say, like, I, I actually wrote this in in another recent article I wrote before is, this is a point that I make it to a lot of people is like, crypto is so groundbreaking 'cause it's the marriage of two of the most important ideas humanity has ever come up with the internet and money.

Money. And like, these are just alone. You could spend life a lifetime studying like the implications of them, right? And then together, like the potential is. Unimaginable. What's the problem with, like, so there's like huge potential. What's the problem? The first logical thing that many people do in the space is they're like, this is the perfect thing to make a Ponzi scheme, right?

Because that's like kind of the obvious thing, right? And that reflex is just, and to me, it's a, it's a, that, that fact is it's like, it just shows how young this technology is, right? And we remember like, it's easy to sometimes like get depressed. I'm like, oh, we got SPF and like all these bad things are happening in the industry.

We're like. And like, why aren't we farther along? But you got to remember, even the history of the internet, I mean, the ARPANET started in the sixties, the first browser didn't come around until the nineties and like the ubiquitousness, ubiquity of the internet today is really like only been with us for the last 15 years, but largely speaking, right.

Facebook came out in like early two thousands. Right. So I think like it's still very early in the journey and we've come an enormously long way forward. I mean, we're literally talking about, like. Nation states own Bitcoin now for their central bank. Like, it's unimaginable. It's legal tender.

Stephen: That's created in any country. It doesn't matter what country. The fact that it's legal tender.

Alex: Exactly. The fact there's like BlackRock is even talking about an ETF. The fact that people accept this as tender. It's like, it's incredible how far we've come. But it's still very early days. Now,

Stephen: did you have any trouble?

Obviously, you come from a VC background. Talking to your investors and you've invested, you've received a huge fundraising rounds I think almost 230, 230 million just for this project, was it hard to discuss with the investors that kind of show them the way that you can balance privacy and things like regulations, or are they right on it?

They understand that they have their own crypto departments that you are a part of. It was pretty easy to explain to them exactly what your motives were and how this was going to be used a lot more efficiently.

Stephen: As let's say the Ethereum or the blockchain.

Alex: I, I would say, first off, like I got to give credit to not only the team, but especially the founders and especially Howard Wu, who's the C, now CEO of the company.

Now, now rebranded as Provable and formerly the CTO of Aleo Systems, which was like the joint entity before we split into a foundation company. He came up with these ideas almost a decade ago. He's a Berkeley PhD or Berkeley master student studying under some of the foremost people in the ZK space who founded Zcash.

They wrote a paper together called Zexy, which came out in 2018, which basically described this, like, it basically describes Zcash plus smart contracts, right? And so he came up with all these days, these ideas and was really passionate about like, Hey, this is the future of permissionless programmable privacy that I now subscribe to.

And I think, so why do I say all that? Well, it's because people heard his background are like, wow, this guy's smart. We should, we want to be a part of this. And similarly, I think like people, I think it's pretty easy to get people excited about the potential for zero knowledge cryptography. Because it really is something pretty cool when you think about it.

Like it doesn't have a physical analog. And then I think like, yeah, so I think that, that to me is what people were excited about is they view Aleo as like the first real expression of the potential of this technology in the permissionless setting. And I think that, that, that fact, that novelty, I think helps explain a lot of how we were able to raise the money that we were able to.

Stephen: Was it a little easier for you because the whole entire process, like, I think a lot of founders, entrepreneurs are listening to this podcast. And they're like, 230 million in any market is a good day. They're having trouble getting good terms on maybe 2. 18 months. Now, the landscape, you have connections, I'm sure your background and, working at A16Z opens up a lot more conversations.

Did you find out in the process a little earlier, easier, maybe speaking to other partners that you had

Alex: on your team? Yeah, so I would say, first off, the experience of being at a company and fundraising gives me a huge appreciation for every single founder out there. The appreciation that I didn't have as an investor, to put it that way, on how hard it is, right?

And is it easier for me, how much of it was me versus how much of it was like the team and how much of it was the timing? And that's the one thing I think most. Most founders are pretty familiar with, it's like, really depends on the timing. It can sway a lot of things. And I think that was a big part of, of, of our success too, at least on the fundraising side.

But to be clear, I think fundraising and raising lots of money is a double edged sword. And this is actually the thing I would tell all the founders out there, all the entrepreneurs is like, with money come expectations. With expectations come the potential for disappointment. With the potential for disappointment comes like momentum, potentially slowing down, harder to get part, harder to go to the next level.

And I think It's definitely, I think you even see crypto projects that have kind of fallen prey to this where it's like they generate a bunch of hype and then it's over and then they got to generate the next thing of hype and there's a huge incentive to try and do that the wrong way and then I think ultimately it blows up in your face at the end of the day.

And I think in the same way like building a company It's just hard work, there's no way around it, and it takes a lot of luck to not only just succeed at the product level, but raise money, and I wish there were, I wish that weren't true, and I saw firsthand plenty of great entrepreneurs that we ended up not funding for a variety of valid investment reasons, but were nonetheless building cool stuff but at the end of the day all you can do as a founder, all you can do as an entrepreneur is Trust your gut, follow the vision, and believe in yourself, right?

Because it's as much about faith as anything else. You have to believe the path you're on is right. And the second you stop, you kind of just have to stop, all right, doing your starting. Because it really is, there's not enough money you could make. To make it worth it. Like, I love the, I, I encourage everyone to listen to I don't know if you've listened to it, but like, Jensen Huang is the founder of NVIDIA, gave a podcast.

He never, he like, never does podcasts, but he gave one recently. And NVIDIA now, like, does all these chips, and it's like, one of the most valuable companies. And they, they asked him this question, cause he, he's been the CEO the whole time, 30 years. And they asked him this question, like, Hey.

With all the success, all the fame, like, isn't this great? Like, would you do it again? And he was just flat out, no, he's like, no, I would not. Right. Again, that's just goes to show that like, even for someone who's at the pinnacle of success, it's a hard path. And I just have a huge amount of respect for anyone that walks it.

And I think I, I, I want every investor that's out there to listen to that too. And just also think about that. Like, this is a space that requires all of us to kind of build together, but also I think we just need to appreciate, the difficulty of building. In all this uncertainty, a lot of which we've talked about in the course of the show.

Stephen: And I think it's very cyclical, right? You think of like stock markets, like maybe there's. Huge ups and downs every 10 years, every 20 years, I think is the last time we had something big, 2008 ish. So crypto is like every four years, right? So you have to really be able, so in that four years, there's only going to be like maybe 18 months, which is the right time to strike.

We also have to build two or three years before that right time. So it's really hard to kind of find, hit the ground running or as you say, really believe it and be able to maintain it to maybe the next bull market or the next time the cycle goes up. But to your point, I don't think a lot of companies have that kind of funding that they can do it for, an extended period of time.

Alex: Totally. And it depends on like, it depends on like the product you're building, right? So like, I'm an L1, so like a big part of that is like, okay, this is a new platform. There's a huge potential value for a platform. And so that kind of requires like, first off, it takes, requires years of work to even get that to work, here to tell you.

Second off, like, it's, it's, it's There's a huge potential though, right? So like people, investors are like, okay, well this, if this works, it's great. It's a big venture investment. But I think there's plenty of opportunities, especially in crypto, like we've talked about earlier in this call. Like just build products people want, right?

We actually like, it's not actually any different than web too. It's like build something, get people who want it, get some usage around it. And honestly, if you get that, if you just, if you always remember that at the product level, like you're going to raise money. There's enough capital out there and there's enough people who are excited about potentially big things out there that like.

Build what people want, get feedback from users, do actual product management, which surprisingly for the number of engineers that are on crypto, there are very few people that have a product mindset. There are a lot of people that want to build new, cool protocols. I get it. I'm saying this is a layer one protocol builder.

I get this. I'm not preaching what I I'm not walking I'm not doing what I'm saying. It's Zexy, right? It's Zexy. But like, but I think the crypto space would do well for more people with product mindset. And I think honestly, people who follow that philosophy, they'll find success in raising money in another place.

Stephen: What are some of the biggest challenges you kind of touched on? Like, Hey, building the L1 is probably monumental on its own. Are there other huge challenges that you get into, especially if it's privacy focused? Maybe Attracting Users, Attracting Developers, Attracting Applications. What are some of the things, and like, obviously working out the kinks while you're doing all that once you hit the

Alex: mainnet.

Yeah. No, I mean, I, I, yeah, all, all of the above. Yes. The answer. First off, maybe it's important to mention like, so we're building a layer one. So it's not actually live yet. Right. So Aleo is slated to launch here in the next month or so. And we're very excited about that. And like huge moment for us.

But you know, it's taken us four years to get to this point. And I'm sure when we launch, it won't be the story. There's gonna be something that breaks and something else, it's just so, and, and I think the first challenge I would say is just, marriage of the internet and money. The complexity of that space and the number of ways that weird, unexpected things can happen just means that, like, it takes a huge amount of engineering effort and time to kind of control for all those edge cases, right?

So it's just a technical challenge first and foremost. I think most other layer one founders would say the same thing. The second is users and adoption, right? And I think that's, like, making this relevant. Sure, we've got the technology, but there's Countless examples of technologies that have been invented in the past that are irrelevant, right?

I won't list them, but there's many examples, right? And we need to make sure we're relevant. I, I think for me, that's a huge challenge that's still in front of us. I think we've done a good job of like telling our story in a way that people think is interesting, but now we gotta prove that this is useful, right?

And I think, again, I actually think this isn't just our challenge though. This is still the challenge of The industry, right? Like there's not really a killer use case aside from maybe a few, a few remittances. I actually think NFTs is a good use case. I think it got kind of overhyped. And now I think that the expectation and the crashing of that, like kind of makes people a little bearish on it.

I think there's good use cases, but we need to build them. And we need to show people that there is value here, right? Beyond just like the, the, hey, Aleo, is going to be a huge thing someday. Or Ethereum is going to be worth 2, 000 someday, whatever, or whatever, 20, 000 someday, right? Like, it needs to go beyond that for this thing to, in my, in my opinion, reach its true potential.

Stephen: I remember buying NFTs when Ethereum unluckily was, I think it was around 5, 000, to be quite honest at the, the height of the NFT market. Yeah, the heady days. Yeah, yeah, yeah. There was that time where it's like, you just, you just had to keep on pressing. Gas fees were rising. Everything was a mess. Like, I need this camel with a top hat smoking a cigar to make my life whole.

You mentioned NFTs. Is there anything else that you're seeing that's really interesting? Whether it's to do with Aleo or your personal interests. Like, a lot of people are talking about real world asset tokenization. Fan tokens for those that are, I love Premier League Soccer, Socios and Chili's has come up with some things.

Stephen: Is there anything that's caught your eye that's like, oh, this is really interesting. And if I wasn't working here, I would definitely love to spend more of my time looking in under the hood of those projects.

Alex: Yeah. I have a, I have a wide range of interests and I think a lot of things in crypto are cool.

Like I said, I, I was, I was really interested in like this concept of decentralized storage at at A16Z. So I think that, that space is really interesting. I still, one of the things it's been tried multiple times, but it's never taken off, but I still think there's huge potential for something is like very basic tickets.

Thanks. For concerts, right? Like, and you could kind of implement this as an NFT, but like, the fact that like Ticketmaster sells you a Taylor Swift ticket and like, you actually don't have it in 2023 is unbelievable to me. And like, honestly, a blockchain and NFTs is like kind of the obvious solution, frankly.

And I just, I don't know. So I think there's like things that have utility. That's why I love Identity. Right, like, NFTs generally, like, if it's just art, I mean, people pay a lot of money for, I guess, like, art on my wall, right? What is that worth? Who knows, right? But it is, like, people like it, and I think there is utility there.

So things with utility is what I would definitely spend my time on it. I think like governance too, like DAO stuff, and this is sort of what fan tokens are a little bit, right? It's kind of like basically a team DAO where you get to participate in it. It's kind of cool, right?

Stephen: It's more of like, Hey, we're buying the constitution.

I haven't heard anyone mention that since, right? What happened to all those people? That were part of that vow. They're no longer posting on Twitter. That's for sure.

Alex: They're actually building on Aleo, believe it or not. So anyway, yeah, but like that, like, it's just, these are things are advice for all the the budding entrepreneurs out there.

Best way to come up with a product that isn't crypto is go back 5 years, find the good ideas that just didn't take off, and like, reboot them. Because that is a, like, fan tokens, like I said, I just call them DAOs, right? Kind of are DAOs, right? So it's like, you can definitely, there's, there's plenty of good ideas out there, and honestly, it's a lot about the timing of them.

And and I, I, but to me, it's, it's also about, like, the technology becoming more and more practical. The infrastructure being there, and the educated, like, people being knowledgeable about, like, What these things are useful for and we're, we're

Stephen: making progress. We were speaking on the Chainalysis podcast with somebody from a fan token provider and they're saying, the U.S. pretty much crushed their opportunity. They thought there was going to be regulation that they could work around. There is no kind of, the regulation is still vague. They don't want to build and be penalized later, which it seems like sometimes the U. S. approach has more of an enforcement action. But before we get off this call, I want to talk about, obviously, the launch and what are some of the features, like, what are you expecting here?

You're probably going to be heads down, and maybe you can tell people where they can get in touch with you before you go into

Alex: hibernation. Haha, well, I'm on Twitter apruden08 yeah, so that's one, that's that's one place. You can also join our Discord so we have, or AleoHQ is like our vanity link.

You can also just go to our website, And you have all the links in there. I, like I said, I'm a Forbes author, so I've, I've written a few pieces for Forbes. I'm a contributor, I guess, technically. And I'll, I'll send the links to the story that I mentioned in here about pricing. Yeah, I would include those in the show notes.

So yeah, but I'm, I'm, my DMs are open on Twitter, so if people are interested or hear this podcast and want to learn more, feel free and reach out. And yeah, in general, I really like participating in these discussions with the broader community and and, and being, yeah, having convos with people from all over the world in all walks of life.

That's one of my favorite parts about this industry is it brings so many different people together. So, and to your, back to your question about Aleo yes, Aleo’s launching, this quarter, very excited about our launch and it's gonna be a big moment for us. Again, it's very much the beginning.

And so there'll be a lot more information to come out about that and the specifics around it.

Alex: I'm being very vague here on purpose because I've I've learned the hard way that being too specific too early is a way to disappoint people. But definitely like it's, we're definitely launching this quarter and we're going to have a lot more information for how people can participate, the ways that they can like, deploy applications and build things and do stuff.

And that's really what we want our focus to be is around the builders and the users of real applications on the network. And so,, best place to get the latest and greatest on the discord there, follow us on Twitter, AleoHQ, and yeah, that's what I would say.

Stephen: Love it. Question, before the launch, is it kind of like all heads down?

Is it a stressful environment? Or do you take maybe the opposite approach? Like professional basketball teams where they're kicking around the soccer or a hacky sack before the big NBA finals. How do you approach something like a launch?

Alex: Well, to be clear, I'm not an engineer, so I'm not the guy working on all the

Stephen: You're not the one sweating bullets every day.

Alex: I mean, I am the one sweating bullets every day. I'm also, there's like, it's almost like, Yeah. Kicking around a hacky sack, I don't think would make me any saner, right? Like, so I think, yeah, I, yeah, I, I don't think we have the luxury of of being able to like kind of chill. So it's definitely all heads, all systems go all heads down to get this thing, not only to the launch, but through the launch, because again, like that's a moment in time, but just that's the beginning, not the end.

And so we gotta, we gotta make sure at least we get through the beginning and we kind of get like. All the basics right at the gate, and I think we'll have a good chance of success if we do that.

Alex, it is great to talk to you. You are a reasonable voice in this industry. I love the way you kind of, you know, really strong on some of your opinions about use cases, but not just talking about, it's trying to build something that actually solves for it, which I think is more important.

I think a lot of people on Twitter talk about the problems, not many are actually working on and spending the time and life's work, basically, been doing this. For over three years building solutions. So we really appreciate you coming on the podcast and I'm definitely going to make sure you've been on twice now, but we have to get you back on after launch and really talk about, we can get into some of those features, talk about, post launch, maybe do a synopsis or post launch breach a brief about how everything went.

And, I think maybe six, seven months. Prices are going up and down a little bit now. We'll have a lot more conversation after the, the having to discuss all the things happening in crypto and in the privacies too, especially with regulation

emerging this year. Yeah, totally. I'm very thankful for the opportunity to come and speak to the audience today and and to have this conversation with you.

Thank you for inviting me and definitely looking forward to coming back on and giving everyone an update on how things are going.

Stephen: Absolute pleasure. Thank you so much.