On the Rocks with Daniel Chong, Co-Founder of Harpie: Meet the Man Who’s Protecting your Crypto

By Matthew Brune (Duke ’23) and Luiza Wolf (Duke ‘22)

Daniel Chong is a self-classified crypto boomer. Back when many of his peers were on coolmathgames.com, Daniel took his gaming experiences one step further. At a mere twelve years old, he got his first taste of the crypto world through MMORPG games, including World of Warcraft and Runescape. He began trading bitcoin for in-game items, but, flash forward a few years, and Daniel lost his bitcoin wallet, rendering the ten bitcoin he had back in 2012 (~$500,000 today) worthless. Along the journey, Daniel’s been hacked, scammed, and burnt.

It seems that this is a tale we hear more and more as web3 grows. Crypto has boomed over the last few years. Many have lamented over their lost wallets, equivalent to the loss of hundreds of thousands of dollars. The difference with Daniel is that, instead of taking those bad experiences and running in the other direction, Daniel invested the time to learn more about cryptocurrency and decentralized finance. Nine years later, Harpie was born out of Daniel’s second semester at Duke University. The following semester, he took the plunge to commit to Harpie full-time.

Crypto Interest Over Time

From his experiences using bitcoin in gaming, Daniel became invested in the idea of self-custody. He points out that there’s always been an issue of security when it comes to bitcoin and cryptocurrencies. These security concerns, as well as Daniel’s own anxiety about his keys, inspired Daniel to create Harpie in March of 2021 with his brother, Noah.

Before we get into what Harpie actually does, we need some preliminary information. Sitting down with Daniel, we used the time to get this background from his perspective.

Q & A

What is a blockchain?

Most importantly, a blockchain is a visible, traceable entity. Daniel said, “people make it way more complicated than it actually is. The analogy I give is that the blockchain is just a whiteboard where everyone’s writing down what’s happening, and everyone’s watching the person who’s writing it down.” Simply, the blockchain is a record of decentralized cryptocurrency transactions, a legitimizing third-party ledger which instills trust in the process of transactions.

Daniel continued, “people know what’s happening, everything on a blockchain is guaranteed to be true, bar some exceptions. People can prove where their assets have been and where their assets are going because of how a data structure like the blockchain works.” Well, you may ask, how does “a data structure like the blockchain work?” Many of us are familiar with spreadsheets and tables, structured in mutable cells. However, the blockchain data exists in individual immutable blocks chained together in a time-sequential manner. New data is encoded into a new block, timestamped, and then chained (via cryptography) to the previous blocks. The immutability of the blocks allows for more credibility in transaction records.

What is decentralized finance?

In short, personal ownership. Daniel defines it as: “the concept that you don’t need a bank or a middle man or exchange just to be a custodian of your funds during transit. For example, when you’re putting money into a bank, the bank is lending out your money to other entities… In DeFi, you are your own bank. You can lend your money out in a peer-to-peer system.” Along with the clout of becoming your own bank, you stand to make money off of lending your own assets, with no centralized body looking to skim off a percentage.

One such lending marketplace is Aave, a personal favorite of Daniel. “With Aave, I can lend out the tokens and currencies in my wallet out to other people on the blockchain and I get paid back through guaranteed algorithmic yield. But, the cool part about that, is that there’s no person in between taking a cut… I have the ability to do what I want with my money.” This new avenue provides an alternative to the 0.000001% or so of interest we get in our savings account, and instead gives us autonomy over where and how our assets are lent out.

So is this movement towards DeFi a move away from governments, or a move towards personal liberties, or something else entirely?

Before, there has never been an option to be the custodian of your own funds.

Daniel’s position is that it is moreso autonomy than anarchy: “I don’t think the idea is to undermine the government or banks or anything like that, I think they’ll always be there. And they’re participating in web3 nowadays, but I would say the goal of people that are moving the space forward is just to give people the option of self-ownership.” DeFi is a novel route — “If I have real assets that I want to keep on myself, it gives us the option where before there has never been an option to be the custodian of your own funds.”

Since you are your own custodian, what happens when something goes wrong?

There’s an inherent risk of keeping hold of your own assets. For example, if you’re carrying cash in your wallet and you lose it or someone takes it, that cash is forever gone from your ownership. Now, there is a chance that you can prevent any further damage by canceling your credit cards

“The corollary of being your own custodian is that you have to deal with the issues of self custody. There’s no chargebacks in the blockchain, like you can’t contact Visa and say my identity was stolen.”

“[If you are taking responsibility for your funds], you are obviously responsible for your own security as well. That’s part of why I’m building the company that I’m building.”

What does Harpie actually do?

If something goes bad with your crypto, we want to be the button that you click to get it back.

Harpie wants to be the failsafe for crypto. This means protecting people from losing their crypto due to phishing attacks, scams, key losses, and more. Daniel expresses that “if something goes bad with your crypto, we want to be the button that you click to get it back.”

Harpie has two key products. The first, completed one relates to key recovery. If a customer ever loses their crypto, they’re able to use Harpie to transfer the crypto from their lost wallet into a new one. The second one, still in development, is for key protection. “If a hacker steals your key and tries to send your assets back to their address, it essentially squashes that transaction in transit, meaning that hack will stop and hackers can never actually move your funds to their wallets”

Given that the space is booming, how do you address competitors? Is there anyone else out there trying to do what you’re doing?

Web3 is getting to a point where there has to be other ways to keep your money protected.

Daniel explains that the biggest competition for Harpie lies in how customers choose to hold their crypto in the first place. Given that Harpie offers protection for people with wallets, the service isn’t valuable to people that instead hold their crypto in exchanges like Coinbase (another Duke-founded company), so these customers are outside Harpie’s market. “The biggest issue for us is not really corporate competition… [it’s that] we’re innovating on something traditional. We’re trying to show people that there needs to be something else… web3 is getting to a point where there has to be other ways to keep your money protected”

What have been your biggest challenges?

When it comes to money, it’s no surprise that people want to make sure that it stays safe. Even though that’s part of Harpie’s whole goal, the customer needs to trust that Harpie is good on their promise. Daniel identifies this as the biggest business challenge he’s encountered while trying to build Harpie. Noah and he have done a lot of math to make it trustworthy, and go to lengths to affirm that Harpie can never take your money and it has no administrative access to it. If you want to dig into the technical details, you can visit their published whitepaper. However, Daniel points out that “trust is more than math, trust is also like a social credit… It’s always a struggle, even for the most established companies to establish and maintain trust.”

What you’re doing seems pretty complex and likely way out of the scope of what you were learning while at Duke. Where did you learn how to do all of this?

Daniel’s been in this world for a while but, like many other founders, learns on the job. “No one in the world knows how to do all of that, no matter what they want you to think… I read this one thing about how being a startup founder is like being an investigator in an environment that has no prior knowledge… You just have to learn how to learn.”

What are some trends in the tech industry that excite you?

The golden handcuffs are not working anymore.

In a not-all-that-surprising fashion, Daniel looks forward to seeing how decentralization progresses in the tech industry.

“I think things are changing — the developers that work in silicon valley are getting hungrier. People are not satisfied just working anymore… they want to start startups, they want to do cool stuff… I want to see more talented engineers go and do their own things. The golden handcuffs are not working anymore”

Keep an eye out for the After Hours with Daniel, where we take a deeper dive into his personal journey with Harpie.