From Product Manager to Blockchain & Cryptocurrency Investor – Linda Xie, Co-Founder and Managing Director of Scalar CapitalFeatured

I’m Linda Xie – Co-founder and Managing Director of Scalar Capital, a crypto fund, and advisor to 0x, a protocol for decentralized exchange of Ethereum tokens. I previously worked at Coinbase as a product manager where I worked with regulators and law enforcement on compliance for digital assets. I have been following cryptocurrencies since 2011. I have a B.A. in Economics from the University of California, San Diego.Ask me anything!
Thanks for making the time Linda. I’m a blockchain startup founder building a service on ethereum. As more women consider the crypto space, do you recommend that they primarily focus on currency products or solutions and services leveraging the technology. Of course anything built on a Blockchain can be tokenized. But where do you see the most opportunity long term as the space evolves?
There aren’t enough people working on infrastructure right now so I’d always love to see more efforts there. However we’ll need both currency and infrastructure so I recommend people work on whichever they are most passionate about.Long term I think there’s massive potential for projects working towards an open financial system so the billions of people around the world without access can be included e.g. cryptocurrency where you don't need to have a bank account in order to access your money, decentralized exchange so you can trade without having to trust a centralized intermediary, etc. In my opinion this market will eventually be in the trillions.I've also been searching for teams that are working on identity and reputation systems in crypto. I think the potential there is really exciting. For example right now our system in the US relies so heavily on credit bureaus to determine someone's creditworthiness but many people are put at a disadvantage because they don't have a strong credit history. With crypto, you can have an easier time getting a loan by building up a reputation through different applications. You'll also be able to control when you want to share this information.I'm looking forward to use cases that are uniquely enabled by crypto. That would include experimenting with new governance and economic systems at a much faster pace to see what works best and implement those.
Thank you for your insights. This is helpful guidance for those considering the crypto space.
What do you think about Bloom Credit? (I participated in a small way in their ICO but don't know much about the blockchain space... but I work in the identity space in financial services).
Given that there is a long-running historical/cultural stereotype of women being "bad with money," what do you think is the most important thing women should understand about money, both fiat and crypto?
I've never understood that stereotype because it's not true at all.I think the most important thing would be to really understand your personal finances and risk tolerance for investing. It's never too late to get familiar with your monthly income and expenses to know how much you're saving, if you should be making any adjustments to spending, and if/how much you want to set aside for investing (this includes investing in cryptocurrencies). I've really liked Mint as a tool which links up to all of my accounts so I can easily keep track of everything.
Hi All – as a reminder, this is our second AMA in an ongoing series with experts from our community.
Thanks for having me! Those were great questions :)
Thank you for the great replies! We really appreciate your expertise :)
Say you had $5k and decided to invest in crypto. What would you do with the money? (i.e. Where does one start?) Same question, but with $25k. If your answers are different for each amount - why?
I want to preface this isn't investment advice but rather what I would do personally. With $5k I would stick with more familiar cryptoassets like bitcoin and ethereum. It's easy to get started by creating a Coinbase account. If you're comfortable storing your own crypto I highly recommend getting a hardware wallet like a Ledger or Trezor. If you're truly not comfortable then I would use something like Coinbase Vault and make sure to have a strong password and 2FA set up (make sure it's attached to your actual device and not phone number since a phone number can be ported - more info here At $25k I would probably do the same and maybe add 1-2 other coins/tokens I think are compelling since there's a higher risk tolerance for investing.
What inspired you to take the leap to start your own fund? What advice to you have for other woman considering taking the "leap" (pun intended)?
I knew I wanted to be an investor so I could spend my time learning about exciting projects and trends in crypto. Coinbase actually inspired me to start my own fund. I never had considered starting something before but I really enjoyed the autonomy I had at Coinbase and was excited to be able to have control over my own schedule and what I wanted to work on.My advice would be to reach out to others who have already gone through something similar to what you're about to do. I wish I had spent more time talking to people who had already started their own fund to get their advice and lessons learned. It would have saved me a lot of headache in the beginning. I also can't emphasize enough how important it is to have a strong support network because it's definitely going to be a rewarding, but challenging process.
I have interested in joining a Blockchain VC to help identify new company. What is the best way to join a VC and are you hiring?
Thanks for the interest! We aren't hiring right now but there are a number of crypto funds that are hiring (e.g. Polychain) so I recommend taking a look at their careers page directly. Crypto investors love to see examples of previous research so if you have any writing/research on blockchain you could share I'm sure that would be very helpful.
Bunch of crypto projects in 2017 seemed to have raised assuming the SAFT was all they needed to do, but many of them probably didn’t comply strictly with securities laws. how do you see this playing out over the next few years, and implications for the ecosystem?
I'm not a securities lawyer so I'm sure many others would have a better perspective on this but I see a number of projects who were clearly violating securities laws getting in trouble with the SEC. I don't think this will be a surprise to many in the industry though. There's already been a major shift of projects raising in private rounds now versus a public sale so I think you'll continue to see that over the next few years.
Thanks for the AMA Linda! I'm San Diegan as well :) What kind of startups do you wish to see more from the blockchain ladies - more platform/tech sides or real-world application sides?
I would love to see more real-world applications. I think there's some really exciting work being done on the platform/tech side but the entire reason I was drawn to the crypto space was how it could directly help people. We could work on improving the technology all we want but if there's little real world applications of it then it's not really going to be used on a large global scale. I think there's still massive potential in creating financial applications that can be used by people who don't have access to traditional financial services.
How do you explain what you do to your grandma? :) I'm curious what the simplest version is of explaining the world you work in!
My grandparents actually understood bitcoin because of their own experiences with transferring money. China limits how much money can be moved out of the country so I explained to them that bitcoin is a global internet money that anyone can send to anyone else in the world without limits. My job is to invest in things like bitcoin because people value this ability.
What do you think are some ways we can learn from tech's earlier mistakes and diversify crypto? In other words, how do we make sure the crypto space doesn't end up overwhelmingly white, cisgender, and upper/middle+ class?
From the start we need to have discussions in the crypto space about why diversity is important. We are building entirely new global systems and the only way this will be successful is if we make them effective and accessible to everyone which requires input from people of diverse backgrounds. Educational content on crypto needs to be equally accessible. Crypto should first be explained in a way that is easy for newcomers to understand and doesn't need to include unnecessarily complex industry jargon.
What is the first crypto transaction you ever made?
I think my first crypto transaction was paying a friend back for coffee because it was my way of getting them to own some bitcoin :)
What would you say your professional values are? Have they changed over time? How/why?
Our values at Scalar were borrowed directly from Coinbase because my co-founder Jordan and I really liked them when we were working there - efficient execution, continuous learning, clear communication, and positive energy. I've always valued these but with my first job out of college at AIG I was so focused on "work hard" and that only changed when I started working in Silicon Valley where it's more about efficiency not hours worked. I'm a lot happier with this mentality and encourage my team at Scalar to take unlimited vacation and work remotely any time as long as the work gets done.
How did you first decide to join the Coinbase team? How did you get interested in cryptocurrencies?
Thanks for having me here! I first got interested in bitcoin in 2011. I was excited about this idea of unseizable global money. My parents grew up in China and had to deal with asset seizure by the government during the Cultural Revolution. It was fascinating to me that bitcoin was a currency that no government could take away from someone or control. Growing up in the US I also saw my parents sending money back to their family in China and felt the process was unnecessarily complicated and expensive. Bitcoin seemed like a great solution to those problems but the industry was not legitimate back in 2011 (e.g. Mt. Gox and Silk Road) so I didn’t end up working in the space then. I decided to join Coinbase in 2014 once I saw they were actively trying to work with regulators and onboard legitimate merchants to accept bitcoin. I didn't want bitcoin to be this niche currency that was only associated with illicit activity. In order to take it mainstream I believed there needed to be a trusted and regulated company in the space.
Security tokens v. tokenized securities - what do you think about the regulatory “free space” and risks associated with each?
The terms "security tokens" and "tokenized securities" are often used interchangeably in the blockchain industry. The premise is that these will be digital representations of securities (e.g. public stocks, private shares, etc). I think security tokens will make the finance industry more efficient, cost effective, and liquid. It'll be easier for people to have fractional ownership over things that have historically been difficult to own a part of such as commercial real estate. You'll also be able to program conditions into the token to have it plug into different applications, be automatically compliant, and/or have specialized terms that automatically execute. I think one of the biggest risks is making sure that any security token someone invests in actually has legal rights to the underlying security that they are buying. If it's not legally enforceable then there's a chance the person won't actually have ownership over it.Security tokens are often compared with utility tokens in which the tokens are used to access an application or platform (not too different than something like gift card points or in-game currencies). A major risk is that many of the utility tokens out there may be deemed to be security tokens based on how the token functions or is set up and potentially violate securities laws if it's sold to or owned by individuals that should not have had access. There's no 100% clear guidelines yet of when a token is deemed to be a security or utility token so always proceed with caution.
Linda, thank you so much for all your generosity and the wonderful answers! We very much appreciate having you here. I hope that you had a little fun in the process as well!!
Hello Linda, am trying to be the coinbase of Africa, and as a woman i often come across some difficulty when interacting with people because am a woman. Have you ever dealt with a situation like that? Also is your crypto fund available for African Crypto Companies?