Jan 2, 2019 · 45m · a16z
a16z Podcast | Blockchain vs/and Bitcoin
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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 episode of the a16z Podcast, Chain co-founder Adam Ludwin discusses the operational and strategic distinctions between Bitcoin and enterprise blockchain networks, explaining how cryptographic ledger technology is transforming global financial architecture and legacy institution operations.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 9% of the talking time here. How this is scored →
The host as informed peer 4.1 Guest teaching 4.7 Guest disagreement 1.2 The host pushing back 2.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 33:54 Refuting Dogecoin's economic value
When Sonal playfully claims Dogecoin is valuable, Adam firmly disagrees and corrects her by stating that Dogecoin is empirically not valuable.
Hardest push from the host ▶ 29:47 Challenging permissioned blockchains as traditional databasesSonal directly pushes back against industry terminology, questioning whether private and permissioned blockchains are just traditional databases under a new name.
Biggest teaching moment ▶ 14:22 Explaining T+3 settlement vs cryptographic instantaneous transfersAdam provides a masterclass on capital markets settlement, contrasting modern messaging and multi-day settlement risks with instant cryptographic asset swaps via private keys.
The host holds their own ▶ 8:15 Insisting mining incentives tie Bitcoin inextricably to blockchainSonal demonstrates deep domain expertise by challenging the separation of Bitcoin from blockchain, arguing that mining economic incentives are the indispensable engine of network consensus.
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 |
|---|---|---|---|---|---|---|
| Bitcoin as a Digital Bearer Token and Voice Over IP Analogy | 2 | 5 | 1 | 0 | The host opens by introducing Chain and setting up the distinction between Bitcoin and broader blockchain applications. Adam dominates the segment explaining bearer tokens and the Voice over IP analogy, while hosts merely listen and offer brief verbal nods. | |
| Applying Blockchain Beyond Bitcoin to Corporate Assets | 3 | 5 | 1 | 1 | Adam uses Starbucks gift cards as an example of merchant-issued digital currencies, explaining why Bitcoin's architecture isn't ideal for that use case. The host provides a simple clarifying summary that Chain delivers 'blockchain without Bitcoin'. | |
| The Debate on Separating Bitcoin from Blockchain | 6 | 4 | 2 | 5 | Sonal pushes back on Adam's nuance, arguing that Bitcoin's mining economic incentives are the fundamental mechanism keeping blockchain networks secure. Adam validates her point and expands into macro economic use cases like Chinese capital controls. | |
| Institutional Adoption and the Disintermediation Threat | 5 | 3 | 1 | 2 | Sonal raises a sharp strategic question asking why incumbents like NASDAQ would willingly disrupt their own business models. Adam explains how incumbents aim to capture early mover network effects rather than face disintermediation. | |
| How Capital Markets Function on Digital Asset Networks | 3 | 6 | 0 | 1 | Adam walks through the step-by-step process of trading Apple stock on a digital asset network compared to current T+3 settlement delay risks. The hosts ask for basic clarification on regulatory terms like KYC/AML while Adam leads the explanation. | |
| Enterprise Selling and Executive Strategy in Financial Institutions | 4 | 4 | 1 | 2 | The hosts guide the interview on enterprise sales dynamics and whether institutions pursued Chain or vice versa. Adam explains the strategy of bypassing innovation labs to secure C-level sponsorship and dealing with enterprise friction. | |
| The Hype Cycle and Private vs. Permissioned Blockchains | 6 | 5 | 2 | 6 | Sonal kicks off a lightning round by challenging permissioned blockchains, questioning if they are just glorified traditional databases. Adam clarifies that unlike traditional databases, blockchain asset ownership remains cryptographically held by asset owners. | |
| Interoperability and Network Effects Across Blockchains | 5 | 5 | 3 | 3 | Sonal asks about network effects across multiple chains and lightheartedly defends Dogecoin. Adam directly refutes her framing, asserting that while Dogecoin is fun, it is empirically not valuable. | |
| Understanding Colored Coins and Sidechains | 4 | 6 | 1 | 1 | Sonal references sidechain research papers to prompt a discussion on technical definitions. Adam provides a detailed explanation of sidechains as pegged sandboxes attached to the main Bitcoin network. | |
| Promising Native Applications and Implementation Timelines | 3 | 4 | 0 | 0 | Sonal asks about native killer apps and ecosystem gaps, leading Adam to discuss tipping, cross-border remittances, and brand currencies. Adam predicts network deployment timelines for 2016-2017 before the host wraps up the episode. |
Statements from this episode (24)
Adam Ludwin: Bitcoin was the first fully functioning digital asset
“Well, Bitcoin was the first fully functioning digital asset the world has ever seen.”
Ludwin: Digital bearer tokens are as significant as Voice over IP
“It's as big a deal as voice over IP.”
Adam Ludwin predicts financial services will adopt IP-based architecture
“So we are going to see a shift to a totally IP based internet based architecture for all sorts of financial services.”
Ludwin: Bitcoin network design is ill-suited for merchant-issued gift cards
“Bitcoin doesn't actually fit quite well there, perfectly there, because the only way to leverage the Bitcoin network for Starbucks would be to kind of hack the network and layer a Starbucks dollar into the Bitcoin network, which is an approach called a colored…”
Ludwin: Bitcoin will never go away as long as the internet exists
“Bitcoin is never going to go away. It will, Bitcoin will never go away. It will live on for as long as the internet lives on.”
Ludwin: Chinese investors buying Bitcoin to bypass capital controls caused 2015 rally
“The demand in this case is coming from the Chinese, who are anticipating a currency devaluation, which has been announced and in China, and are using Bitcoin as a means to circumvent capital controls.”
Ludwin: Post-trade clearing and settlement functions will disappear
“So if money moves over IP and all assets move over IP, we don't actually need as many of the clearing and settlement functions that we currently use today. Because they exist For the fact that we're just, you know, today we send digital messages, but then ther…”
Ludwin: Cryptographic networks replacing financial intermediaries exhibit winner-takes-most dynamics
“But you know, there, there's a notion of network effects. Winner takes most. And the same is going to be true here because ultimately the solution we're talking about is substituting intermediaries with cryptographic networks.”
Ludwin: Capital market securities will be natively issued as digital assets
“What you'll see in the case of the capital markets is that securities and other financial products or assets will be issued at the outset as a digital asset”
Ludwin: Blockchain will shrink the overall size of the financial system
“I think most in general, what we envision, you know, over time is a much smaller financial system, actually, because many of the players in that in the financial ecosystem are there because they are helping to clear and settle, helping to Ensure there's no fra…”
Ludwin predicts central governments will mint currency as digital tokens
“The very long term, and this is sort of controversial, but I don't, I think some, but I don't think is, is that central governments will be minting currency this way. So we already have three different forms of a dollar bill today. We have a literally like a d…”
Ludwin: Enterprise blockchain sales fail in innovation labs without CEO buy-in
“So we found that when we start in the innovation lab, it never actually gets us to the point of a decision to go do this. So we found that where the CEO invited us in at the beginning, or where we were able to get to the CEO or C-level executive early We've be…”
Ludwin: Financial institutions can no longer exist without a blockchain strategy
“So the notion that you don't have a blockchain strategy, if you're a financial institution now is no longer possible. You have to know what you're going to do and how, or if you don't want to do something, you better know why you're not doing something.”
Ludwin: Half-measure blockchain projects will fail over next 18 months
“There will be a over the next year, year and a half, a lot of people that Take half measures and they just don't get all the, they don't do it what we would consider the right way. And they won't have great results and they'll kind of be like, ah, we tried tha…”
Ludwin: Blockchains differ from databases by giving asset owners direct control
“So a blockchain is a database, so we shouldn't overthink it, but it's different from a traditional database in two critical ways. First of all, it's shared. So in other words, it's distributed to every participant who is participating in the network. And then …”
Ludwin: Interoperable specialized networks will win over a single Bitcoin network
“I think we'll have I think the future will be many, many different networks. The Bitcoin network will be one. I think you'll have networks around prepaid and gift and loyalty. I think you'll have networks for capital markets, networks in the mobile market and …”
Ludwin: Altcoins like Dogecoin are empirically not valuable
“Dogecoin is fun, but it's empirically not valuable.”
Ludwin: Cross-chain asset swaps will be easier than legacy data center integration
“So even if we have a world with many different networks, it won't be hard to exchange across those networks because ultimately we're talking about cryptographically issued and transferred assets. So it's going to be much easier than integrating two data center…”
Ludwin: Only a few blockchain companies will survive serving financial institutions
“Like not, there will not be 50 different blockchain companies serving financial companies. Like there will be a few, and there will be a healthy amount of competition, and that's fine.”
Ludwin: Crypto is moving from colored coins to dedicated networks
“What we're seeing is a shift away from that approach toward building networks from the ground up that are designed for a particular asset.”
Ludwin: $7B of value is transmitting on the Bitcoin network
“There's five billion or today, seven billion dollars of value transmitting on the Bitcoin network.”
Ludwin: Sidechains won't drive innovation in capital markets or payments
“So side chains, I think are going to be very, very powerful with respect to innovating the Bitcoin network, less so with respect to Innovating in capital markets, in payments and other areas.”
Ludwin: Blockchain will unlock isolated corporate reward and loyalty points
“Well what the blockchain is going to do is unlock those And make it very fluid to move them around, to have them on your smartphone, to use them in new ways.”
Ludwin: First enterprise blockchain networks will launch in 2016
“You'll see the first few networks going live next year. And then I think by 2017, you'll start to see some of the first winners. In other words, you'll see that if you, by 2017, in a particular market, if you don't have a network running, then you're behind. Y…”