In this episode of The Room Podcast, we had the pleasure of sitting down with Kathleen Breitman, the co-founder of Tezos, a revolutionary blockchain-based smart contract platform with an on-chain governance mechanism to coordinate and push upgrades to its network. The platform aims to play a crucial role in the Web3 revolution by focusing on user participation and governance.
Kathleen was born and raised in New York. From a young age, Kathleen was exposed to entrepreneurship. Her dad’s side of the family immigrated from Ireland, and found that one of the better ways to make a living for themselves and establish themselves in a new country was starting their own businesses. Kathleen’s father became a contractor, and her grandfather worked in the restaurant industry. Because of this, Kathleen was inadvertently exposed to the stressors that came with being a founder and was uncertain if that was the lifestyle she wanted.
However, this later changed and Kathleen’s journey into entrepreneurship began when she got inspired by the concept of blockchain and bitcoin. She was introduced to the crypto world largely through her husband and became particularly intrigued by the idea of seamless decentralized transactions. Yet, she noticed that existing players in the blockchain space lacked certain features that would ideally be required for digital and stateless money. This realization served as the foundation for Tezos, a platform designed to allow cryptocurrencies to be upgradable.
In this episode, we discuss three key themes: security in the early blockchain landscape, approaches to funding startups in the crypto space, and self-governance in Web3 and the current regulatory environment.
Let’s open the door.
Theme 1: Security in the early blockchain landscape
During the early stages of blockchain development, the prevailing consensus mechanism of choice was Proof of Work. This method relied on miners engaging in competitive validation processes to confirm transactions and add new blocks to the blockchain. However, this approach had its share of security-related issues.
Tezos’ innovative shift toward Proof of Stake signaled a strong commitment to enhancing security within the blockchain ecosystem. Proof of Stake, in contrast to Proof of Work, operates by randomly selecting validators to confirm transactions and create new blocks, which inherently mitigates some of the security concerns associated with POW.
The transition to Proof of Stake, however, was not without its own set of challenges. Coordination emerged as a critical issue, as participants needed to synchronize their actions and have a stake in the network, adding a layer of complexity beyond the technical aspects. Ultimately, Tezos’ embrace of Proof of Stake exemplified a commitment to enhancing security in the ever-evolving blockchain landscape.
Theme 2: Approaches to funding startups in the crypto space
In the realm of crypto startups, there are various approaches to funding. Entrepreneurs have explored a range of options, from collaborating with crypto-native funds and established venture capitalists with crypto arms to fundraising initiatives led by CEOs.
Kathleen shares how Tezos’ funding journey took shape with the establishment of the Tezos Foundation. She explains that “the idea of having a sort of nonprofit for an open source piece of software is extremely common because it is convenient to have places to house trademarks and other things like this.”
Later, the Tezos team decided to conduct a fundraising event, commonly referred to as an Initial Coin Offering (ICO) to establish proof of stake. Over a span of two weeks and approximately 2,000 Bitcoin blocks, the Tezos Foundation successfully raised a remarkable $232 million from a diverse group of over 30,000 contributors hailing from more than 60 countries worldwide. This fundraising exercise served as a pivotal coordination point for the project. About a year later, the Tezos network was officially launched, and participants were able to claim tokens based on their proportional contributions to the Tezos Foundation.
Tezos’ unique funding journey highlights the multitude of avenues available for launching a company. While many early-stage founders may assume that venture capital is the only route to success, it is important to remember that there are other ways to fund your company. .
Theme 3: Self-governance in Web3 and the current regulatory environment
Amidst the backdrop of prominent macro headlines surrounding Web3 and the cryptocurrency space, particularly in light of the past events with FTX, Kathleen offers her insights on the intricate relationship between self-governance and the prevailing regulatory environment.
Kathleen starts by emphasizing the fundamental nature of cryptocurrencies as entities designed to be censorship-resistant. She acknowledges the challenges posed by regulatory environments in various parts of the world, citing examples like China’s recurring bans on Bitcoin. However, despite such efforts by authoritarian regimes to stifle cryptocurrencies, they persist. The resilience of cryptocurrencies in the face of regulatory hurdles serves as a testament to their core principles.
In the context of Tezos, Kathleen delves into the concept of decentralization. She and her co-founder hold tokens within the Tezos ecosystem, yet their opinions are not regularly sought in matters related to protocol upgrades. This, in her view, is an indication of a truly decentralized network. While Kathleen’s journey with Tezos has had its challenges, she has genuinely aimed to empower the community and not centralize decision-making power.
Kathleen’s perspective highlights the delicate balance between self-governance, decentralization, and the evolving regulatory landscape in the cryptocurrency space.