Jun 24, 2019 · 30m · a16z
Founding Stories: Anchorage
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this a16z interview, general partner Chris Dixon speaks with Anchorage co-founders Diogo Mónica and Nathan McCauley about the evolution of institutional crypto custody, their background in security engineering at Square and Docker, and Anchorage's founding role in Facebook's Libra Association.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 4.7 Guest teaching 3.6 Guest disagreement 0.4 The host pushing back 0.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 19:14 Reframing Facebook's ownership of Libra
Diogo directly reframes the host's framing that Facebook is launching Libra, emphasizing that it is an independent association headquartered in Geneva.
Hardest push from the host ▶ 23:06 Host adds condition on open-source audibilityChris asserts that users do not need to trust Facebook only if the underlying code is open-source, auditable, and properly architected.
Biggest teaching moment ▶ 10:43 The 'Pirate Custody' analogy and cold storage flawsDiogo educates the host on the absurdities of traditional cold storage, comparing buried USB keys and safety deposit boxes to 1700s pirate treasure maps.
The host holds their own ▶ 25:39 AOL historical analogy for crypto mainstream adoptionChris demonstrates deep tech industry knowledge by explaining how AOL CD-ROMs acted as an onboarding gateway to the early web, drawing a direct parallel to Libra.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Security Experience at Square | 3 | 4 | 0 | 0 | Chris asks foundational background questions about Square's early days and security architecture. Diogo explains their work on encrypted card readers and security culture, while Chris summarizes their integrated engineering approach. | |
| Security at Scale at Docker | 4 | 3 | 0 | 0 | Nathan details Docker's security expansion and the Indy 500 analogy. Chris demonstrates domain knowledge by noting that security fails if a single door or software bug is left exposed. | |
| Founding Anchorage and the Limits of Cold Storage | 5 | 4 | 0 | 0 | Diogo describes how crypto funds struggled with key management in 2017. Chris specifically cites the Glacier Protocol and explains cold storage air-gapping mechanisms, showing solid domain familiarity. | |
| Active Custody vs Pirate Custody | 6 | 3 | 1 | 0 | Diogo re-labels traditional cold storage as 'pirate custody.' Chris steps in to elaborate on proof-of-stake governance mechanics, including Maker voting and Tezos validator rewards. | |
| Institutional Custody and Participation | 5 | 4 | 0 | 0 | Chris contrasts traditional venture capital timelines with crypto's bottom-up adoption curve. Nathan and Diogo detail qualified custodianship and smart contract locking requirements. | |
| The Libra Association and Mainstream Adoption | 6 | 4 | 2 | 1 | Diogo gently reframes Chris's statement that Facebook is launching Libra, pointing to the independent association. Chris adds analysis on open-source trustlessness and offers an analogy to AOL's role in mainstreaming the 1990s internet. | |
| Anchorage's Role in Libra | 4 | 3 | 0 | 0 | Diogo explains Anchorage's technical duties running a Libra node. Chris adds perspective by listing the diverse types of association stakeholders, emphasizing balanced governance. |
Statements from this episode (12)
Mónica: Non-engineering security teams create cultural rifts in tech companies
“Sometimes what people tend to do is they have a security team. And the security team is somehow isolated from the engineering team. And so what do you have is you don't have alignment of incentives because if you have security engineers or if you have security…”
McCauley: Indy 500 cars provide the ideal model for software security
“In software engineering organizations, you want to be able to go fast, but you also want to go safely, and so one of the things we've done in the past is we've gone to the Indy 500, and we think that the Indy 500 cars provide a really good model for that. Thei…”
Mónica: Glacier Protocol is the gold standard for individual Bitcoin custody
“We became maintainers of the Glacier Protocol, which is the golden standard for individual custody of Bitcoin.”
Mónica: Cold storage fails institutional investors due to 48-hour latency
“Cold storage itself was not sufficient for organizations. So organizations cannot wait 48 hours To actually access their vaults to go somewhere in Switzerland and fly around and collect these USB keys to move their assets. Because the volatility of the assets …”
Mónica: Traditional crypto cold storage is primitive 'pirate custody'
“The status quo is people invest in crypto assets, and then they do what we call pirate, we call it pirate custody. And we call it pirate custody because if you think about it is the same technology that the pirates used in the 1700 to protect their gold coins.”
Dixon: Mainstream crypto adoption will force demand for active custody
“As this stuff goes mainstream, presumably people want kind of a more secure and reliable type of storage but also they'll want to Use these more advanced features of the new proof of state networks.”
Mónica: Failing to stake crypto tokens violates VC fiduciary duty
“Their LPs expect them to actively participate in this protocol. Imagine that you're investing in Ford, but somehow you're dropping the dividends of Ford on the floor. Or you're participating in some decision of the network. You're not actually voting on who's …”
Mónica: Anchorage worked with Facebook on Libra for 1.5 years pre-launch
“We've been involved in the initiative even before it was called Libra. So, we've been Talking to Facebook about it for about a year and a half now.”
Mónica: Permissionless blockchains in 2019 top out at dozens of TPS
“So number of transactions that the current blockchains that are completely permissionless can do is on the dozens of transactions a second.”
Mónica: Libra Association solves crypto's merchant and user bootstrapping problem
“The third thing that is incredibly exciting, and might be the most exciting thing about Libra, is that the players that are coming to the association around the table already have billions of users. They already have the relationships with billions of users. T…”