A Russian national flag atop the Russian Central Bank headquarters in March 2019.
Elena Nadolinski grew up in Volgograd, Russia playing on the shells of abandoned tanks and decommissioned battleships, following the collapse of the Soviet Union. When she returned there on a recent trip from her new home in Silicon Valley, she says she was struck by how Russia’s growing authoritarian surveillance continues to impact the very nature of innovation.
“Lack of privacy, and having this expectation that I am surveilled and I need to hide what I have because I don’t actually have privacy guarantees, has evolved the culture in a way that I think negatively impacts innovation and entrepreneurship in the country,” says Nadolinski, speaking from her offices in San Francisco.
To help combat this chilling effect, the 29-year-old founder of anonymous cryptocurrency startup Iron Fish raised $27.6 million in a Series A led by Andreessen Horowitz to help ensure the next generations of Russians and citizens of the growing number of authoritarian states around the world can continue to have a private life, even if all the world’s transactions move to a shared, distributed ledger.
What’s at stake with her work and that of a rising tide of other privacy innovators building with blockchain goes far beyond just what happens in the once-niche world of cryptocurrencies. In fact, it could have ripple effects reaching into the very nature of money, and whether or not online payments of all sorts—crypto or fiat—retain any sense of offline privacy when paying for goods with cash.
“The reason why I’m working on Iron Fish is because right now we’re headed in a direction where payments are totally transparent,” says Nadolinski. “If you are a surveillance-happy state, this is the future you want. And for us, it’s kind of a scary future.”
With other investors in the Series A including Sequoia Capital, LinkedIn executive chairman Jeff Weiner, billionaire Met’s owner, Alan Howard, and more, the firm plans to spend the capital to nearly double its team size, establish a treasury for assigning grants to companies building on the platform and paying legal fees to help assure the process is as compliant as possible.
What they’re not doing though is adding anyone to the board, something, Nadolinski says, is increasingly par-for-the-course with crypto startups relying on a governance model built into the very fabric of the code. “If there’s an update [network participants] like or don’t like, they will either run or not run the updated software,” she says. “There is, as with any cryptocurrency project, governance by action.”
Born to software engineer parents in Volgograd, Russia, Nadolinski remembers her grandmother pointing out the only two buildings that survived World War II in what …….