From AI to Bitcoin Evangelists: The Future of Self-Custody Bitcoin Investing

Written by Joy Chen and Evan Lu

Produced by Waterdrip CapitalcryptocurrencyandBlockchainThe third episode of the talk show "DripEcho" invited serial entrepreneur Aki Balogh, the founder of the dlcBTC project. Aki once founded AI In 2023, he started a new business, focusing on building a decentralized andSafetyToday, we will take a deep look at Aki’s entrepreneurial journey, dlcBTC’s technological innovation and future development.

在科技的巅峰，创业者们也面临转型的抉择。对于所有的科技创业者来说，都必须面对一个问题——如何迎接未来的挑战？于是，他没有选择停留在熟悉的领域，而是投身于加密货币的浪潮中，开始了另一段旅程。Aki 的创业之路源于他科学的家庭背景。出生于匈牙利的他，父亲是一位纳米技术专家，1991 年全家迁至波士顿。Aki 自述，他的创业精神源于孩提时代，那时他在学校出售泡泡糖，埋下了创业的种子。2011 年，Aki 加入波士顿的 OpenView 风险投资公司，逐渐对大数据、AI 和机器学习产生浓厚兴趣。2013 年，他首次创业，结合 AI 与市场营销，创建了 Market News——一家优化 SEO 内容的公司，很快获得了市场的认可。但 Aki 并没有止步于此，2011 年首次接触比特币的那一刻，种下了他对加密世界的好奇。他清晰地意识到，加密货币不仅仅是金融科技的革命，更是对传统银行体系的挑战。他相信，未来将会有越来越多的人能够通过这一技术获得机会。

AI or Crypto?

As AI becomes increasingly popular, Aki Balogh chose the field of cryptocurrency. For Aki, this seems to be a natural choice. He recalled: "I heard about Bitcoin as early as 2011, but I didn't study it in depth at that time. When I really entered the field of cryptocurrency, I realized that it has great potential in combination with financial technology." As an early AI practitioner, Aki admitted that he has invested a lot of energy in the field of AI, but he gradually felt that the AI market is becoming increasingly concentrated and monopolized, especially large companies are increasingly controlling computing resources and data.

Talking about the reason, Aki explained: "The threshold of the AI industry is getting higher and higher. Only companies with huge computing resources and data can gain a foothold in this field, while small and medium-sized startups are finding it increasingly difficult to compete." In contrast, the decentralized nature of Crypto attracted his attention. In his opinion, the cryptocurrency market provides more opportunities for entrepreneurs because it does not have a resource monopoly like AI. In the world of Crypto, even a small company can find its place because it does not rely on centralized infrastructure.

DLCBTC, founded by Aki, is based on this decentralized concept. DLCBTC solves the centralization risks brought by the use of a single custodian and bridge technology in the current market by using self-custody technology on the Bitcoin chain. Aki pointed out that this technology not only improves the use of Bitcoin in DeFi, but also improves the use of Bitcoin in DeFi.SafetyIt also provides institutional investors with a more reliable Bitcoin liquidity solution. He firmly believes that DLCBTC will pave the way for decentralized finance in the future.

Despite the explosive growth of AI in recent years, Aki does not regret turning to Crypto. He said: "Both have their own charms, but in my opinion, the decentralized nature of Crypto makes me more interested in exploring. I no longer need to rely on computing resources provided by those large companies, but can innovate in a more open and fair environment." For young entrepreneurs, his advice is: "Keep an open mind, try different fields, and don't be too rigid in one path, because future opportunities are often unexpected."

Value creation and expectations

In the entrepreneurial journey, obtaining funds and resources is often seen as the key to success. However, Aki Balogh deeply understands that entrepreneurs think very differently from investors. He pointed out that some entrepreneurs see the company as a business, while others see it as a mission, which means that they pursue not only profit, but also push the boundaries of technology and the pace of innovation.

Pure imitation is meaningless, and the real value lies in creating unique products. Although countless similar companies and products have emerged on the market, Aki believes that he has always adhered to the belief of innovation. In the field of cryptocurrency, his product is the only Ramp Bitcoin product that adopts a self-custody mechanism.

It is easy for people to fall into the trap of some inertial thinking. In the early stages of entrepreneurship, obtaining funds can easily overwhelm a project. Aki believes that obtaining funds is not the only factor. He shared that in the early days of his first and second companies, he raised almost no funds and relied on consulting projects and grants to support research and development. This approach allowed him to focus on verifying business ideas and customer needs without external pressure. Once there is initial product and market feedback, he recommends considering venture capital.

"In the early stages, you can choose to work part-time or arrange your time flexibly to start a business." Aki believes that finding the right venture capital partner can accelerate the company's growth. Perhaps the help brought by venture capital is not limited to the funds themselves, and its positioning and value also need to be verified again. In his opinion, the initial success depends more on the in-depth understanding of the idea and the keen grasp of the market. Although the role of funds is important, it is not the only one.

The balance between founders and investors

We have to admit that in the relationship between entrepreneurship and investment, founders and investors often face different challenges and pressures. Aki Balogh shared his real experience as an entrepreneur, emphasizing that as a founder, the first priority is to create value for customers. He knows that investors focus on financial returns, but he values customer success and long-term business sustainability more. In his view, customer repeat purchases are the cornerstone of a company's success, so when making decisions, he often prioritizes how to provide customers with better services, even if it means making some choices that may not be recognized by investors in the short term.

Aki spoke candidly about the tensions with investors, arguing that as a founder you must find a delicate balance between pursuing long-term value and meeting short-term financial goals.

When talking about the goals of his project DLCBTC, Aki expressed his desire to build a moreSafetyThe asset wrapping mechanism enables Bitcoin users to participate in investment and lending without traditional risks. In this way, he hopes to enable more Bitcoin users to participate inBinanceThe entire land is used for investment, ultimately leading to wider financial applications.

Aki also analyzed the existing Bitcoin packaging model, pointing out that the traditional method often relies on centralized custody, while his project adopts a novel self-packaging mechanism. This mechanism uses the security of the Bitcoin chain to enable users to lock Bitcoin autonomously, ensuring the security of assets and avoiding the risks brought by centralized custody.

Excerpts from the interview:

JoyChen: From artificial intelligence toBlockchainWhat made you decide to focus on Bitcoin? How did you first become interested in cryptocurrencies?

Aki Balogh: I’ve actually been trading stocks since I was a kid, and I heard about Bitcoin in 2011, but I didn’t focus on it at the time. I heard about Ethereum in 2015, and I still didn’t focus on it. But I thought cryptocurrencies would be interesting because it involves fintech. As we all know, fintech has traditionally been difficult to get into because banks are heavily regulated, so I thought it was a very interesting industry.

I also think that this could really help a lot of people, especially in the United States. We are more privileged in the United States, but where I come from, for example, Hungary, their banking system is not that strong. So my experience in some countries and in many countries is that the financial system is not very good. If we can have something that runs on software, it will be much better. And then the process of me actually starting to build on Bitcoin was actually interesting. I worked with a Hungarian engineer to help him with some business development because I was new to the space and didn't have any ideas. I introduced him to my friend, and he ended up hiring him to build a Bitcoin for El Salvador.walletSo my friend developed thiswallet, which is now used by millions of Salvadorans. This was related to Bitcoin. Then I started thinking, if all Salvadorans can have Bitcoin, then everyone in the world can have Bitcoin. So what can you do when you have Bitcoin? Maybe you want to use it to take out a loan or invest. So I started to get involved in decentralized finance.

JoyChen: Why didn't you continue in the field of artificial intelligence? Do you regret shifting your focus to cryptocurrency, especially considering the explosive growth of artificial intelligence in recent years?

Aki Balogh: Yeah, actually my timing was not very good because I was supposed to do Bitcoin first and then AI. I was a little hesitant, but you never know. We actually did an NLP project in 2018, a few years before OpenAI. I invested a few million dollars in this project, but it was not enough to make a good model. We did have our own model though. So I may have been premature, but I think AI has a lot of promise and is here to stay and there are a lot of projects.

But I don't regret it. There's a lot to build in both. One of the reasons I left AI, or was a little disappointed, was because it was also very centralized. If you're a big company, you can buy a lot of servers, train AI, and you own all the power, or all the data. So there's a natural tendency to move toward centralization. And I actually think opportunities are more accessible in the cryptocurrency space because the focus here is on decentralization. If you find something, there will always be a place for you to stand, whereas the minimum requirements to start an AI company are only getting higher and higher.

JoyChen: As an investor, I will naturally pay more attention to the potential return on investment and evaluate most projects, but entrepreneurs and investors often have different mindsets. For many entrepreneurs, there are two ways to build a company: one is to treat it as a business, and the other is to treat it as a mission. So for you, what is more important about DLCBTC?make money, or push the boundaries of technology?

Aki Balogh: You can do both, probably depends on your personality and strengths. I have always wanted to build companies that use new science because I want to build something that is differentiated, so it is not a simple copycat. I think the value of creating a copycat product is very limited.

Some industries can indeed create copycat products and may still be able tomake money, for example, CRM systems, Salesforce is a big company, but there are many different CRM systems. For example, electronic signatures with DocuSign, there are also areas where you can keep creating new things, but after a while, there will be consolidation. If you are doing exactly what others are doing, the probability of being swallowed up by a larger company is very high. So I found that both of my company's products have some unique aspects that are rooted in basic science and basic research in universities, which makes the products better. That's my approach. You know, some people, their business types are different, can also do business process outsourcing companies and do well. And for me, I always think that adding a little bit of scientific angle makes the product more defensible. Even now with this product, there are many Bitcoin pull-up products today, and there are new ones almost every month, but we are the only one that uses self-custody and uses Bitcoin L1 to pull up Bitcoin products, and the others use centralized custodians or bridges, and Bitcoin enthusiasts know that neither of them is secure, so I feel very confident even now, we just saw Coinbase's CBBTC launch, Coinbase is a very large company. But we still have an advantage over CBBTC because we are more decentralized, which is how we survive as a small venture capital firm.

JoyChen: Early financing is often one of the biggest problems in entrepreneurship. So for crypto projects like DLCBTC, do you think early capital is critical? In addition to funds, are the resources we bring important?

Aki Balogh: In the first two years, we didn't raise any money, I didn't raise any money in the first year of my first company, and in the second and third year, I raised a million. Then I raised venture capital for the second company, and we only got some grants for the first year and a half, and then got some venture capital, and then we started to grow. So let's say in the first year and a half, actually, if you don't raise any venture capital, it's okay. It's good to do consulting projects or get some grants, or have some kind of income to research an area. I call it R&D income, when you get a grant, let's say do a consulting project for someone, which is what we did in the beginning of both companies. And then once you start to have products, that's when you might want to raise venture capital. Actually, in the beginning you can be flexible, you can work part-time between work and companies, or you can have different flexible arrangements.

I think venture capital is good, I was a venture capitalist in both projects, and I always want to use venture capital, and it's good to find some good venture partners because they will push you and make you move faster and have more resources, so I think it's good. But I think in the beginning, you just have an idea, you need to do research and validate it, talk to customers, build prototypes and things like that. You don't need venture capital. You can go and find some customers, go to some meetings, find ways to use your time. And then once you start to see a pattern and think "Wait, I have an idea, it's very concrete now, I have these people telling me they want this, I have this engineer", once these things start to come together, that's when I would recommend going for pre-financing.

JoyChen: I'd like to get a little more insight into your personal experience as an entrepreneur. When faced with challenges, investors are usually very focused on financial performance. What are your gains and risks as a founder? I'm curious if you feel any pressure to ensure that investors don't lose money?

Aki Balogh: Being an entrepreneur, especially a venture-backed software entrepreneur, is really hard. It really sucks. I've been an entrepreneur for over a decade, venture-backed, and I still have doubts, fears, and worries every day. I'm just more used to it. It's normal, and most people don't want to start a business. You can guarantee that you're going to feel a lot of uncertainty, a lot of doubt, self-doubt, are we doing this right? Where am I spending my time? You know, but that's the downside. If you can make yourself comfortable with all of that, and you're the type of personality that doesn't get affected too much by it.

Then you get the benefit, which is learning. You're going to have a great adventure, learn a lot quickly, have an amazing experience. You know, it's a learning, and like you said, you're measured by the amount of value you create, the amount of money you make for your investors, the results you get for your clients. For us, the most important thing is getting good results for our clients, serving our clients well.

You see your team develop, and then you see your personality and personal development. I think that's really cool, and that's one of the reasons why I wanted to get into this field, personal development. If I get too focused on one thing, of course, we want investors to make money, but the most important thing is, I want customers to be successful, I want them to not just buy once, but to become repeat customers. Repeat customers are the only business model you can build on, so even inXiaobai NavigationIn the short term, if we make decisions that seem like, maybe not the right decision, or are a little questionable, if we're optimizing customer value, I think that's always going to work out in the long run.

So there's always a natural tension or dynamic between me as an investor and the entrepreneur, but I think my responsibility as a founder is to focus on creating the most value in the long term. Even if in the short term we're going to do things that maybe the investors don't like or agree with, you know? But that's one of the things that I learn from doing this job.

JoyChen: To sum it up in one sentence, what exactly is DLCBTC? What is your ultimate goal to achieve through this project?

Aki Balogh：我们正在构建一种更安全的包装，它使用整个比特币链来保护资产，确保比特币资产，然后将其包装到以太坊和不同的链中用于 DeFi。我们想要实现的目标是，任何拥有比特币的人都应该能够投资、借贷或参与金融，而不必面临桥接风险、保管风险或任何传统风险。因此，我们想要将一万亿美元的比特币安全地用于投资，以获得收益。这是我们的长期目标。我们通过在 DeFi 中推出，进入以太坊、Arbitrum、Solana 等链来实现这一目标。

The article comes from the Internet:From AI to Bitcoin Evangelists: The Future of Self-Custody Bitcoin Investing

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