The Wolf Of All Streets - First Steps In Crypto | Caitlin Cook, Hxro Network

Starting point is 00:00:00 We have a tendency on these podcasts and when we're talking to our audience to go way over their heads and be way too complicated. But a lot of people who are watching probably just want to know how to get started in crypto. I spoke with Caitlin Cook, who is the head of marketing and comms at Hero Labs, about practical steps that people can take who are just looking for that first bit of exposure to this asset class. If you're a beginner, you do not want to miss this conversation. What's up, everybody? We're back, obviously, once again with another Fireside Chat. This was slated to be a masterclass, but we figured it would serve everyone better if we just had a conversation. Caitlin is the head of marketing and comms at Hero and has a ton of insight as to what the journey is like when you

Starting point is 00:00:51 first get into crypto. And we really want to present that because a lot of people here and a lot of people that will be watching are really looking to figure out what those first steps are. How do you get into this very intimidating market in the beginning? Where do you start? So I guess we just start from the very beginning. I mean, what advice do you give to people who are just saying, listen, I have some interest in crypto. I want to buy some. What do I do first? I think the biggest thing is to not get caught up in the headlines, because if you view the industry as what you're seeing in the headlines every day, it's totally understandable

Starting point is 00:01:25 why no one would know where to start. And I think keeping it simple is best. You eat an elephant one bite at a time, so you can't really tackle everything all at once. And I think that a really understated part of what people have started building in crypto and DeFi are these on-ramps into the space that make it a lot easier for people that we sort of take for granted being in the space for a little bit longer time than a lot of people. And the first thing I think of is on the centralized exchange side. So when you think about trying to onboard the masses, and that is kind of hard to step back and think about when you've been in the space for a while, kind of operate in a bubble where it all seems very easy

Starting point is 00:02:05 to be working with kind of like different DeFi protocols and decentralized exchanges and how to work within those and how to use them. For most people, you have to make it look familiar to the experience that they've already

Starting point is 00:02:15 interacted with in the traditional side of things. There's a reason that an FTX app or a Coinbase app mimics what a brokerage app that you'd use in the traditional side looks like. It's because people need to feel a level of familiarity or they won't, you know, dip their toes in. They'll push it off for longer. So that's definitely a big component of it.

Starting point is 00:02:37 And we don't really, you know, I think on the crypto side of things, people like to say, you know, we're moving towards decentralization and, you know, rallying around kind of managing your assets on your own. But there's such, there's like a lot of merit to having these bridges that make people more comfortable. And once they have assets on, say, an FTX app or on Coinbase, then once you already have some of your assets in that ecosystem, you're going to be more inclined to start using decentralized exchanges and interacting with protocols because you took the first step. Yeah. I think that there's an ethos, obviously, not your keys, not your coins in crypto, but over time, there's a hot take, but you could argue that that's become less compelling as centralized exchanges have become more secure. Because I remember in the early days,

Starting point is 00:03:25 you would just get SIM swapped. Someone would hack your Coinbase account and steal your assets. Now, you can use a hardware key or something. There's a lot of ways to make sure that nobody has access to your assets. I think that being your own bank is extremely daunting. To your point, that's not a good place for most people to start. Your average person isn't going to get a ledger and write down their seed phrases and figure that out, whether we want them to or not, right? Exactly. And I think that we tend to kind of get into this loop of what you think the most compelling narrative is for trying to get people into crypto. And a lot of people talk about the decentralization aspect of it.

Starting point is 00:04:03 And that's obviously very important, but for the masses, and this is kind of a hot take as well, a lot of people aren't trying to buy crypto for that reason. And they will settle for the convenience and maybe added fees and the fact that they're not managing their own assets directly using a centralized exchange because it's easiest. So it really just comes down to what's the most convenient because a lot of people, especially on the retail side, as much as we like to kind of romanticize the idea of decentralization, just want access or exposure to the asset and its price and hoping line go up and to the right. Yeah. So how can a beginner decide which assets to buy and how to look at the market in general? It used to very

Starting point is 00:04:45 much be, I think, that people bought Bitcoin and that was sort of the gateway drug. And then they discovered everything else through that. And that was largely because the only way you could buy these other assets in 2017 was with Bitcoin. There were no stable coins and there were really no USD pairs. Now you can pretty much come in from any angle. It could be dog coins and memes or Bitcoin and Ethereum. How does a person identify what they want to buy first? I think it's different for everyone. Just depending on what your background is, who your relationships are with. For me, I had a lot of friends that were building in the crypto space. If I have exposure to learning about what they're building and if I can get access to, you know, sharing in that in some small way, if that's via a token or something like that, then I'd be more inclined to go that way.

Starting point is 00:05:30 I think for a lot of people, their first step, and we often overlook this in addition to, you know, starting out with a centralized exchange and then, you know, kind of making your way from there is stable coins. That is one of the most important onboarding tools for anyone trying to get into crypto, because the first thing that you have to do other than figuring out how to get a wallet is how do you get your assets from the traditional system into this decentralized side to be able to use it to buy Bitcoin or Solana or anything else that you're looking at. You have to get your assets into the ecosystem first. So it's a very underrated innovation that we've seen from DeFi that's super, super important. Yeah, that's been a repeated theme here is that stable coins have really been the killer app so far for crypto, much probably to the chagrin of Bitcoin maximalists, but that happens to just be the reality and to be the case. And I think in the last year, we've also seen a lot of new entrance to the space

Starting point is 00:06:25 via less expected routes like NFTs. Yeah, I think one of the biggest, it's such an important point to talk about like the social side of this and the communities that get built around NFTs in particular are super important. And you also kind of have this embedded, you know, not just the financial aspect of crypto, but also a cultural aspect as well. And that's kind of a narrative that I think will drive people in more so than just a financial asset itself. So you see a lot of people rallying around specific NFT projects. You're getting into these communities and you feel like you're really a part of something bigger than yourself, which is such an important part of building a sustainable project. You want to have people feel like they're a part of something. They want to feel like they're around people who have shared

Starting point is 00:07:12 interests with them. And NFTs have been a huge driver, especially on the retail side of getting people involved in the space to begin with. I agree with that. But community is very challenging because I think a lot of those NFT communities started passionate and then the price went down and all of a sudden those communities disappeared, right? No matter how much people say I'm in it for the art or I'm in it for the community, a lot of that's tied to price. So how can a new person identify a lasting community versus one that's likely a flash in the pan and just tied to the price of the asset of that community? That's a question I'm still trying to figure the answer out to myself. Me too. That's why I asked you.

Starting point is 00:07:51 It's difficult, right? Because I think it requires a lot of due diligence that a lot of people don't take the time to do, specifically looking at the teams that are building it as well. And in crypto, there's often an added layer of complexity with, you know, a lot of people in crypto being anonymous. I think there's a lot of merit to having teams that are docs that you can do some research into to see, you know, where they're coming from, why they're building, what they're building, and what the value prop really is. Because more often than not, I mean, as much as I'd like to think that a lot of these NFT projects are going to succeed over the long run, I bet 95% plus don't do that.

Starting point is 00:08:25 I think that's generous. At least, yeah. So it's, you know, it really is hard to tell off the bat because hype as a marketing strategy seems to work really, really well in crypto and really well with NFTs in particular, but that doesn't make it sustainable. Yeah. I mean, unfortunately we have a, you know, we're having a chat, first steps in crypto could almost be rebranded how to avoid scams. Right. Right. Because I think that the unfortunately, a lot of people's first experiences are either an outright scam of some sort, or something that they just believed the hype that had no actual value. Right. And so how do we avoid those pitfalls? I think the first part of it is talking about them. There are a lot of people in the space that I find shy away from talking about a lot of these rug pulls and headlines that you see in the news, but that's not how you bring

Starting point is 00:09:14 new people into the space. It actually makes them want to stay away from it more because you're not addressing the issue. And that is what a lot of people see from the outside. And at least in my experience with a lot of conversations on, you know, 101 crypto education is why a lot of people see from the outside. And at least in my experience with a lot of conversations on, you know, one-on-one crypto education is why a lot of people continue to stay away. So the first part of it is just open dialogue. And then, of course, I mean, there's always going to be people who are trying to take

Starting point is 00:09:36 advantage of information asymmetries and take advantage of people who know less and are just getting started. But we have to talk about how these issues come up to begin with and how we can fix them. They talk about the information asymmetry, which is a huge pitfall, obviously in this market, where can a new person go and get reliable information on the space? Because it seems like it's extremely disjointed and often coming from someone who has a vested interest in the information that they're providing. That's the difficult part too, right? Because a lot of the time I would recommend even, you know, controversial maybe, but even Coindesk or Gemini, they all have educational resources,

Starting point is 00:10:14 but you always have to consider the source, which is a lot of the problem with the content that you get for most of those larger outfits. The content itself may be accurate. It's just knowing, you know, where you're getting it from and knowing that they'll be positioning accordingly to get you to act a certain way or hopefully engage with their actual service rather than just the content itself. So where do you think crypto fits into a person's general investment portfolio then? Because if you go on Twitter and you read the hype, you'd think that everybody should have 100% of their money in crypto. But I don't think that everybody should have 100% of their money in crypto. But I don't think that's realistic for your average person, especially if they're just

Starting point is 00:10:48 looking to gain exposure. So what's a reasonable target to start, not financial advice, but for an average person? Oh, boy. It differs so much from person to person. And you see a lot of research around even, I come from a traditional finance background as well. So like working with financial advisors and institutional allocators. There's a lot of research around even, I come from a traditional finance background as well. So like working with financial advisors and institutional allocators. There's a lot of research around even showing the difference that a 1% allocation to crypto can make in a portfolio. So something even as small as that.

Starting point is 00:11:15 I'd say around risk tolerance though, everyone when crypto is going up thinks that they want to have a higher allocation, put their money in, be irresponsibly long crypto, as I like to call it. But as soon as that goes down, they realize they don't have the stomach for it. So for most people, except for the people crazy enough to be working in this space, I don't know if it makes a lot of sense, at least at this point, to have more than, I mean, 5% to 10% is a lot, but I would say probably less than that for most.

Starting point is 00:11:45 Yeah. You talk about being irresponsibly long. And I think that that, to your point, was exactly what everybody was and most of them paid the price. But you said you're talking to allocators, institutional investors. What are they looking for as they first enter the space? Because I think it probably mirrors retail's experience to some degree. It definitely does. And I think looking at why they even want exposure to begin with, I mean, there are some people working in that space who have experience in crypto themselves, probably own it. But also the boards that these institutional allocators are reporting to are more in line for the information that they're seeing and where they're getting it from with a retail crowd. They're seeing crypto everywhere. They're seeing the space continue to grow. And they're asking

Starting point is 00:12:28 the people investing their money that they're helping to guide to at least look into it. So I think there's a lot of reasons that people would want to get in. People like to say they're in it for the tech. But when you're looking from an investment perspective, you're looking for the long bet and seeing where you can actually generate a decent return without taking too much risk. And I think a lot of where those teams are starting out is a little bit more on the basic side of things. And this isn't a catch-all, but Bitcoin, Ethereum, looking into staking a bit. There's obviously package products where you can get exposure as well, rather than owning directly. And I've seen or I've seen some of the larger teams start to at least do that to dip their toes in. But it's going to take a while to get, you know,

Starting point is 00:13:10 to see how they're doing it at scale because it's still a pretty small percentage. You've been doing this for quite a while. Are the questions that they're asking changing? Like, is there at least a general awareness or are you still really going back to the very basics when you're trying to explain to them why this is important? It's definitely still a little bit more on the introductory side. The questions are getting more sophisticated and the tone has definitely changed, which I think is probably the most important part that I've gauged from talking to people over the past few years. It's gotten a lot less argumentative and more so I've seen that this space isn't going away and I want to learn something about it. I'm open-minded. And even if I don't believe it now, I'm open to hearing what

Starting point is 00:13:51 you have to say. And I think the questions have also changed from just asking about Bitcoin, just asking about Ethereum to opportunities in staking and opportunities in farming and opportunities in DeFi and different specific projects and protocols that are being built, people are starting to do a little bit more research, which is obviously positive. And the questions have gotten more specific because of that. Yeah, it's interesting because I think three or four years ago, if you were the guy at an institution who walked in and mentioned crypto, you got booed out of the room and they thought you were nuts. And now if you walk in the room and you're a fiduciary, have a fiduciary responsibility, you have to have an opinion, whether negative or positive, because

Starting point is 00:14:29 investors are going to be asking, right? I think that's been sort of a huge paradigm shift is whether you like it or not. If you work at an institution, you have to have an opinion on crypto. It's too big not to now, especially when, again, it is everywhere. You see it every single day. And obviously I'm biased with who I follow on social media for my job and everything, but you're looking on the news. Crypto is always in it, whether it's the latest rug, whether it's, you know, price go down, people are freaking out every single day. And as you know, an advisor or anyone working in like a professional capacity from an investment standpoint, it's too big to miss. And you have to have an opinion on it that's educated. And the people who are trying to do their jobs thoroughly understand that it's not just a, no, I'm staying away from it. The entire space is a Ponzi to

Starting point is 00:15:15 whether you agree with it or not, here's my educated stance as to why, and I've done the research. So doing the homework is super important there. And we're starting to see people do that more, which for the space as a whole is positive because people are at least taking the time to learn. In your capacity at Hero Labs as the head of marketing and comms, it's a really challenging job, right? We're obviously talking about what should a new person do when they first come in. But a lot of that is going to be a result of the education that's provided by platforms that are marketing. So talk a little bit more about your role and how you eliminate some of the noise and give people real signal and the information that they actually need to make informed decisions and to be interested in Hero. Definitely. I think educational content is the best marketing

Starting point is 00:16:01 because you're showing that you have a vested interest in the people you want to work with rather than just trying to take their money and run. Specific to Hero, it's interesting for content because we're catering to multiple groups. You're catering to developers who want to build on the Hero primitive for anything having to do with derivatives markets, applications. You're talking to retail traders who want to use those applications that are being built. So it's definitely multifaceted. I think that really one of the biggest difficulties in terms of content in the space is the realization that what's simple to people who have been working in crypto for a long time is not equivalent to what's simple to someone who's just getting started. And we'll stay off of my soapbox here, but that's one of my biggest pet peeves with a lot of the content you see.

Starting point is 00:16:49 There is jargon everywhere, and it goes a very long way, especially for a business to take the extra step to back it up, say, I realize this is a lot of language that you probably haven't seen. Let me take it an extra step to really make it simple for you. Because a lot of what I've seen is quote unquote 101 content, but realistically, someone who's just seeing it for the first time and just trying to absorb, it's not going to stick with them. So how do we create that two minute obvious pitch for any of this that anyone can understand? Because That's really the big challenge here.

Starting point is 00:17:26 101 turns into 20 minutes of talk about validators and blockchains and nodes. Those words might as well be in Chinese to the average person. Definitely. It's a space built by developers. These are not marketing and communications professionals that know that in order to get the masses on board, you have to make it really simple, right? So there's definitely an adjustment there, trying to take it from point A to point B on what most people will be able to understand. I think when you start out trying to teach people about crypto, I've seen a lot of people try to dig into blockchain technology and kind of the nuances of that. Obviously really important. And you get to that point with a lot of the content that you need to provide people with to get them to where they want to go.

Starting point is 00:18:09 But I think you need to paint a bigger picture first on why the space came about to begin with. Everyone's self-serving as well. So how it can benefit them and why they should take the time to start learning about blockchain tech, start learning about different projects, different chains and go from there. I think a lot of the time people get a little bit ahead of themselves diving in on it from a technical perspective when you don't have people sold on the vision. Okay. So what's the elevator pitch then for you when you're having that first meeting with someone? First of all, Hero is a complicated platform by any definition, right? So you have to somewhat dumb that down or at least explain it in a language I understand.

Starting point is 00:18:47 But first, they have to care about crypto in general. So you say talking about the ethos or those first things, what are those very important things that really will put the hooks in people so that they can go deeper down the rabbit hole? One important thing is tying it back to things that we've seen in the past. So I was a little young for this, but when the internet came around. I was not. So I tie it back to that just because you think of kind of the most earth shattering societal and like tech innovations that we've seen that have changed things for the long run, the internet

Starting point is 00:19:17 being a huge one. First it was the internet itself. Then people continue to iterate and iterate and develop on top of that for things that were more, you know, user facing for various purposes that were bigger than what they initially ever imagined, probably when it came about to begin with. And I equate what the Internet did for communication, opening it up globally, allowing people to interact directly with each other instantaneously at any point if they have internet connection, obviously. I equate what the internet did for communication to what crypto is doing for value storage and value transfer. Online, instantaneous, peer-to-peer. And I start that way just because a lot of people tend to get in the weeds on how crypto and DeFi are so different and blockchain technology is different. But I think to guide people to a point of wanting to understand, you have to tie it back to what they're familiar with. Again, the familiarity thing is really, really important.

Starting point is 00:20:14 So it makes it a lot less daunting to say, this is really just the latest in a long line of technological innovations that we've seen throughout the course of history. And that is the one thing that is a constant. Yeah. To some degree, I think people just need to be compelled to use it. I can speak only anecdotally, but I mean, I pay my employees and USDT and USDC. I can make micro payments around the world. These are things people don't think about until they actually do it. You have to get someone to open a wallet, send them 10 bucks, tell them to send five bucks to a friend. And then you realize how far superior it is to other platforms. But I feel like new users just kind of go to Coinbase. They buy, they never interact with it. They never use it. So they don't really get a feel for how compelling it really is for the actual use case. That part is so important because there's only so much that you can learn from reading articles

Starting point is 00:21:08 and watching YouTube videos. You have to really experience it for yourself. And one of the most kind of mind-blowing things for a lot of people that I've tried to teach about crypto is exactly what you said. I'll help you open a wallet. I'm going to send you money right now. You can take that money that I just sent you. And without having to wait the one to three business days, three to five business days, use that in any way that you want. You can spend it on things. You can send it to another person. And I think people seeing the flow of it and how seamless it is really opens their minds. And I think we all have to get past that first terrifying moment when you send Bitcoin to someone and wait 30 minutes and have no idea if you did it right and assume that your money is completely lost and gone.

Starting point is 00:21:47 We've all done that, right? I've been doing this for five or six years and I still sweat a little bit every time I send crypto. And maybe that's another thing that needs to be eliminated from the process where you don't have that even inkling of a fear that your assets might get lost or that you're the worst single point of failure and are going to make some unforgivable mistake. Yeah, that part would be nice if we didn't have to sweat every time we tried to send money to each other. I always do test transactions because of that, just because you never know. But there's, to be sure, there's a lot from a user experience standpoint that still needs to be worked out. That's for sure. Whether that's like the interface that you're actually working with

Starting point is 00:22:25 for different applications to interact in DeFi and what other people are building, that has a long way to go for sure. I think the interoperability of different projects and different chains obviously being worked on as well. And it's far from seamless now, but I think people need to see at least the potential that's there,

Starting point is 00:22:43 which going back to what we were talking about starts with actually getting involved and trying it for yourself. I think a lot of those things are being built or it's only a matter of time. Crypto's clearly had it zero to one moment and now the entrepreneurs and innovators flood in and fix all the small problems, which is to some degree what you guys are doing. Give you the opportunity to talk about what's happening at Hero, what it is for those who might not know and why it's important. Sure. I'll try to keep it high level. I know I'm talking to Dan on this as well, on chain derivatives. So really what Hero is doing, Hero Network is decentralized, building out really the underlying plumbing, or we'll call

Starting point is 00:23:21 the primitive, but trying to take away jargon here, the underlying infrastructure that allows different teams of developers to easily build applications that have to do with anything around derivatives markets. Anything with a defined payout function, so really anything, options, perpetuals, futures, can be built on top of Hero Network. And what you get from building with Hero specifically is underlying liquidity that anyone building an app on that network can tap into, which is obviously a really important component of derivatives markets having liquidity, especially from the start, which can often be hard when you're kind of building out what you've built at the forefront. And also, the clearing risk management functions also through the smart contracts that Hero has built out, helps facilitate that. You guys have come a long way from Moonwrecked.

Starting point is 00:24:10 Yes. I remember the early days. For those of you who don't know, it was basically a binary trading product. You just guessed on any time frame whether it was going to go up or down. And that was it. That was the only bet you had to make. Will it be higher in an hour or lower in an hour? And it was called Moonwrecked.

Starting point is 00:24:23 You literally pushed a green button or a red button. And now you're building the plumbing for an entire financial system in DeFi. And why are derivatives so important for the market? Why is that what you would focus on? I know, obviously, Dan is a good friend of mine, old options trader, and has a lot of experience in this. But why does it matter? Why do we need those products in the crypto space? Well, I can answer that from two different parts. I think that within any system, you have to build out a whole robust ecosystem. It's not just the assets itself. It's the derivative investments that you can make off of those as well. There's a lot of ways that you can do that. When you're talking about why derivatives would benefit from a decentralized network or a decentralized kind of setup.

Starting point is 00:25:12 I think one of the most important things that we've seen play out recently is the disintermediation of systemic risk. Not having too much, not too many assets or too much responsibility put on one central party and rather having it dispersed. That's the whole ethos of crypto as a whole, right, is part of having it not necessarily all one group of people driving things. It's, you know, kind of the collective. So that's the same thing with what Hero is building as well for the derivatives markets is just making sure that, you know, anyone who wants to build on this can build. The fall is not going to fall on one player and that lowers the risk of having market-wide catastrophic meltdowns as well. Is the ultimate goal creating a replacement for the existing systems or is this a parallel rail for those

Starting point is 00:25:57 who are interested in crypto and DeFi? It's a parallel rail. And I think that we too often get into these polarizing conversations of entirely replacing the systems that we have now, which really, when you're stepping back and looking at the size of it and how deeply rooted it is in every single thing we do today. And by that, I mean the traditional financial system to take that out and completely eliminate it really isn't realistic or practical for what's actually going to happen. I think Hero is really building out the DeFi rails for people who want to build derivatives protocols and allow people to trade on derivatives markets in a decentralized way using crypto assets. But there's always going to be a place talking about bridges and trying to connect the decentralized and traditional financial systems. There will always be a place in the middle for bridges and for more centralized solutions as well. It's never going to be one or the other. People like to have the optionality to be able to interact in the space

Starting point is 00:26:52 in the way that they choose, not just one option. Even if it's not a replacement, is there a viable chance that it could become the underlying infrastructure for those legacy systems? I think that there's a lot of tokenize everything talk, especially when you're at a Web3 conference, but this is a superior way to transact. Yeah. And I think it's definitely a possibility. I think in terms of timelines, things never move as quickly as we'd like them to. But once you see that there is a better solution available, why would you look away from that? And why would you steer away from that? You want to run towards innovation that'll make the space better for everyone. And if a decentralized derivatives marketplace does that, then the market will demand that. And you'll see the flows and the

Starting point is 00:27:35 technology integrations go move in its favor. Do you have any final thoughts, advice for brand new people into the space that are looking to take that first step? Try not to get easily overwhelmed. And I say that as an easily overwhelmed person myself, it's a lot to take in and it's very, um, there's a lot of technological jargon. Don't let that scare you. It can all be broken down by people who are capable of doing so. And that's why educational content that really does that and has that as like the core purpose of why you're building it out is so important to getting the masses onboarded.

Starting point is 00:28:10 Because when you look at a lot of the things that are being built, you look at, it looks like another language. And that's one of the biggest barriers to entry for most people who want to get started. So hang in there. The content itself can be very easily overwhelming. There's some complex solutions being built, but when you break it down, interpatient with yourself, and again, take it

Starting point is 00:28:29 one step at a time, starting with a centralized exchange, opening a wallet, trying to send Bitcoin to a friend. If you break it down step by step, it gets a lot less overwhelming very quickly, hopefully. Well, thank you so much. That's great advice. And I think the consensus there is that the onus is really on us to provide better education and make people more comfortable coming into the space and really not believing that everything is going to blow up or be a scam or go wrong the minute that they get here. Because really, we are reinventing the wheel here to some degree in creating a superior financial system. So thank you for everything that you do and for this chat. Thank you. Thank you, everyone.

The Wolf Of All Streets - First Steps In Crypto | Caitlin Cook, Hxro Network

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