Brian Armstrong of Coinbase on Good Time (Clubhouse)

Podcasts · Technology

This summary was largely done for my own note-taking, sharing it just in case it adds more value to other people.

I have no affiliation whatsoever with anyone in this note. This is a summary largely taken for my own reference, and may contain errors :)

Context

Source URL: Clubhouse URL

Why is it important: Contains an overview of Crypto technologies and crypto wallets

Keywords: Crypto, Bitcoin, Coinbase, Defi, Ethereum, Stablecoin

Highlights

Background

Brian studied Computer Science and Economics. Had the sense that the financial system was broken. Lived a year living in Argentina and saw a lack of delayed gratification, because they had seen the consequences of hyperinflation

Was an early AirBnB employee and saw how difficult it was to move money around the world

Origin Story and Beginnings

Bitcoin emerged after the financial collapse of 2008 — there was a significant cultural moment pushing it

In 2010, read about the Bitcoin whitepaper on Hacker News which had come out a couple of years earlier

Started to go to a bunch of bitcoin meetups in SF over the next 6 months

Analogies he had was Git and SMTP, which were distributed technologies. Git → Github. That was the intuition for Bitcoin → Coinbase. He started building a prototype and applied to YC with it. That eventually became Coinbase

You want to keep the upside of your labour and not have it be squirreled away by poor fiat currency choices by monetary policy makers. Wanted to have a global decentralized currency that could function as a store of value

Early concerns included how to avoid getting hacked and cybersecurity

Got a lot of snarky comments on Hacker News at the start. None of his friends (incl those in tech) didn't get it at the beginning or thought it was a dumb idea. Had a lot of self doubt about whether he should start the company at first

Early bitcoin meetups had a weird crew — from comp sci PhDs to homeless people. Had a lot of really curious characters. Had doubts about being known as the Bitcoin guy

Was willing to believe in Crypto, but wanted to build a lasting company. Proactively tried to comply with regulations and to shape them. Early Bitcoin people looked at them with a bit of suspicion because of this. Had to bridge the divide between regulators and bitcoin adopters

How do you manage the cycles in Crypto?

Is more stoic about crypto. Doesn't get too excited when it's going high and doesn't get too down in the dumps when it's low

What happened in Crypto over the last decade?

A lot more people found out about Bitcoin. It was a series of bubbles and corrections, but overall in an upwards channel. Had massive volatility, though. Everytime it hit a new peak, an order of magnitude more people found out about it

The community also broke into factions, and new coins came into the scene. Ethereum came onto the scene. The ICO bubble happened. Bitcoin split into factions, too

The beginnings of applications (like remittances and financial services) began to emerge here. But it took a long time. Things like Stablecoins and Defi are very recent

Blockchains are not very scalable right now — that may likely be a task that starts to happen in the next decade

Personalities matter a lot. In Ethereum with Vittalik, he doesn't have absolute power. But he's kind of a spiritual leader who can help break ties and help guide it

Had to really figure out regulation. You're always trying to strike the right balance. Paypal and Square went through something similar. Companies eventually have to get licenses, which requires a lot of capital and VC funding. Like money transfer licenses in the US. You don't want to ever break the law, but as a startup — you first want to get something out, and then figure out the regulation later

Intrinsic value about Bitcoin doesn't exist. It's the same as the US dollar. It's all about believing in shared myths. Same point as Harari's point about human's shared belief in the myth of money being a useful and self-replicating belief

Next 10 years in Crypto: what's exciting

Blockchains are finally beginning to get a bit more scalable. We need to get to 10K+ transactions per second. With things like optimistic rollup on Ethereum and Ethereum 2, we are beginning to go from dialup to broadband in crypto terms

Central bank digital currencies and stablecoins are also an interesting trends

Defi is a bunch of protocols and smart contracts running on Ethereum, and in a totally decentralized manner. It's replicating the financial markets in a totally decentralized way. It's gotten a bunch of traction – around $25B has gone into the system. Shows product-market fit outside of just trading coins

Breakthrough in bitcoin was that the bits inside your computer are now money. It's a bearing instrument. How you assert ownership over the money is with a private key

You can now hand money to a piece of software, and that can be your counterparty. Wills, trusts, escrows, contracts — all are just a pile of money with some rules around it. We are now moving all of this stuff onto digital with Defi

Defi grown around 60x in the last year [!]

For the first 10 years of Crypto, we were building an interface between the fiat and digital currency systems (coinbase)

Defi is all digital. We have smart contracts that do not interact with fiat money at all. All of these protocols are starting to benefit one another

Company building

You want people to come join you on your mission. That's super important if you want to go far. Have to attract people who believe in the mission. Only way you can do that is by having focus. People who are not aligned with the mission should be let go with an attractive severance package

Decided to make the company remote first. It's a little harder to built cultural relationships and you don't have water-cooler talk. But productivity is generally going up with remote. People like having less commute, and spending more time with family and friends. They're more productive while getting more time to do things outside of work

People still can come into the office if they want, but you're not expected to come to the office or have to come to office. The exec team is not going into any one office every day

Stablecoins and Centralized Crypto by nation states

Stablecoins make sense if you want to use it as a medium of exchange in the fiat world

There's decentralized stablecoins like DAI. But there are not stablecoins that are now being issued by central banks. China is the furthest ahead on this, and started invested in this in 2016. They wanted to digitize the Yuan, and see if it could be used by a bunch of people

Expects to see more banks starting to have their own central currencies in the form of stablecoins. We may not have the fiat US Dollar as the source of reserve currency in the world in the future. The Fed may create its own stablecoin on the blockchain in the future

The US embraced the internet and the biggest internet companies were built in America. But the US hasn't embraced crypto the way other countries have

Non-Fungible Tokens (NFTs)

With crypto, you can have a provably unique digital item. Bitcoin is provably scarce. NFTs extend that idea into other digitally unique items, like art, memorabilia, domain names, concert tickets, the metaverse, and other things

NFTs are having a moment right now, though it's fairly early. It can really take off when some of the metaverse stuff starts to work (specially with VR) or once artists come into the market for this

NFTs kind of break the internet – which was built on copy-paste. It breaks the whole copy-paste model

Creators are internet native businesses. With NFTs, you can eliminate platform risk and completely own the transaction with your fans

NFT sales have been over $100B just in the last 30 days [to verify]

Etherium 2.0

Etherium is a blockchain that allows people to run smart contracts. It has an interesting developer community around it. Ethereum 2 is the next generation of Ethereum, and is working on scalability and sharding. It's making a bunch of improvements around the platform that can take it to the next level