Meet the trans, anarchist founder who just made $25 million to reshape how crypto is stored – Vidak For Congress

Tux Pacific is not your average tech founder. They are a self-taught cryptographer who dropped out of college, a proud member of and advocate for the transgender community, and a self-proclaimed anti-capitalist anarchist who believes in free market principles that were deeply rooted in the early days of crypto, when Bitcoin reigned and banks did not. were interested in the sector.

Pacific’s radically different background compared to other entrepreneurs is exactly what informs their unique mindset, they told Vidak For Congress in an interview. Pacific founded and serves as CEO of Entropy, a decentralized crypto custodian that says it has raised $25 million for its starting round led by Andreessen Horowitz (a16z) alongside Coinbase Ventures, Robot Ventures, Dragonfly Capital, Ethereal Ventures, Variant and Inflection. Prominent angel investors from the tech community including: Naval Ravikant, Sabrina Hahn and James Prestwich also entered the round, Entropy said. This last round follows the company’s $1.95 million pre-seed raise in January.

According to Pacific, the Brooklyn, New York-based startup wants to disrupt the way digital assets are stored through its decentralized self-custody solution. Before founding Entropy last year, Pacific worked at cryptography network NuCypher while living in Berlin, Germany, learning advanced cryptographic techniques.

In the status quo, major crypto custodians, including Fireblocks, Coinbase, and Anchorage Digital, which hold assets for crypto users, are fundamentally centralized and function similarly to banks. In some cases, keeping users’ private keys in a central location has made these custodians vulnerable to hacks, and their users can’t always manage their money as they please.

“We’ve heard some stories that were always like, we’ve used people like Coinbase, or we’ve used all these other custodial solutions. They call them up, and they say, hey – we need to move money. And [the custodian repsonds]”Oh, sorry, we have to wait to get someone to do that,” Pacific said. They shared an anecdote they heard about a fund that was about to lose several billion dollars on an OTC transfer because their contact at the custodial company was on vacation.

Entropy, on the other hand, uses cryptographic techniques based on multi-party computation to give users a way to deposit and use cryptocurrencies on any blockchain, at any time, Pacific explained. Using the Entropy protocol, users can implement their own rules for interacting with the funds, such as time-limited restrictions — a particularly useful feature for groups like DAOs trying to make decisions around a collectively determined set of rules, Pacific said.

Pacific describes Entropy’s solution as similar to Google Authenticator in that it doesn’t offer its own wallet or user-facing products – it simply handles the process of cryptographically “signing” their data. Other groups, including corporations and DAOs, can then use Entropy to deposit user funds for safekeeping, but are not bound by the restrictions of a centralized custodian.

Most cryptographers start with a protocol and then envision a user experience to fit around it, Pacific said. In the case of Entropy, Pacific came up with the idea by reversing that process — thinking about what the ideal custody experience would look like for a crypto user, then designing the Entropy protocol to fit that.

“I approach the problem so differently than a lot of other people… There are competitors who are just building wallets and just trying to fit their cryptographic protocols that they’ve come up with to do this. [My perspective is that] all the other people who built these cryptographic protocols before me, there is nothing super new about it. I’m just going to put it together radically different from what they are and just make it super easy to use,” said Pacific.

Pacific also attributes Entropy’s lead to their own willingness to deviate from the traditional custodian business model, where users pay them a fee to hold funds, and to work on finding a model that can generate revenue, not only for the custodian but also for the protocol itself, as well as crypto users. They readily admit that Entropy’s team of 9 people hasn’t worked out the details of that model yet, but the company’s financiers don’t seem to mind.

“When we started raising money, one of the main things I started telling people was that we don’t have a business model,” Pacific said. They are, as is typical for early stage startups, focused on building a great product before thinking about monetization, Pacific said.

Entropy also goes after a different audience than typical custodians, Pacific added.

“This is not like a corporate blockchain like Qredo,” Pacific said of the other decentralized digital asset manager, which unlike Entropy offers users a wallet. “We are building a product that is unique to crypto indigenous people and decentralized institutions. We don’t expect JPMorgan to use us,” Pacific said.

Entropy’s focus on serving individual, crypto-native users in some ways stems from Pacific’s personal connection to the crypto community. While they said they encountered some backlash for the most part for being a trans founder, they found crypto to be an unusually supportive environment.

In fact, I’ve never felt like I’ve been in a space where it was more acceptable for people to be so different. If you go to a [crypto] conference, it’s just filled with weird, weird people,” Pacific said.

Pacific is used to forging their own paths, they said, telling how they didn’t have role models to relate to growing up. Today, there is still almost no research on LGBTQ+ founders and how they are funded, although VC firm Backstage Capital estimates that they receive less than 1% of the venture dollars in total.

“It would have been a wonderful thing for me as a kid to see trans entrepreneurs, especially trans people who are entrepreneurs with similar political values,” Pacific said.

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