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Source: Equity Mates
Original title: What's next for crypto? | w/ Brian Armstrong, Co-founder CEO of Coinbase
Brian Amstrong is the co-founder and CEO of Coinbase. He founded Coinbase in 2012 as a platform for investors to trade Bitcoin and other digital currencies .
Ten years later Coinbase is a $20 billion company, listed on Nasdaq and has over 43 million users worldwide, so Equity Mates is excited to invite Brian to join us to unravel the story behind Coinbase, its expansion and encryption future. Why is
built? Coinbase
Equity Mates: When you decided to build Coinbase, Bitcoin only had a few years of history, and Ethereum was even only in preparation. What opportunities did you see?
Brian Armstrong: I have been paying attention to the development of the encryption ecosystem. I first saw the white paper for Bitcoin in 2010, when I worked as a software engineer at Airbnb. I happened to see the Bitcoin white paper, which shocked me, and it was a very powerful idea to talk about a global decentralized network that could move money and all types of value.
In my opinion, the flow of money around the world is very limited, and each country has its own cross-border payment rules. I tried to start a business before I joined Airbnb, but I had difficulties in this regard. At that time, there was no great innovation in this regard. At that time we had WhatsApp, which allowed you to send free information to all over the world, and it was just sending some data. And every time we refresh our credit card or electronic payment, we just send some data, so why can't we be free, even, global?
So over the next six and twelve months, I was very excited about the idea. At that time, I attended several Bitcoin gatherings near , San Francisco Bay Area, where there were many early participants, and I worked with them on cryptographic algorithms. There were already several crypto companies like Mount gox at that time, and I thought it might be too late to hesitate, so I decided to act quickly, so Coinbase was born.
is regulated
Equity Mates: You have established standards for working with regulators and try to get Legacy Financial participants and regulators to embrace cryptocurrencies. What has changed from the beginning to the present?
Brian Amstrong: In the beginning, few people have heard of Bitcoin or any cryptocurrency, so we want to be able to build something like a bank, set up an account, and exchange it. At first people didn’t know what we were doing, so they avoided us. I called countless banks at that time, hoping to cooperate with them, but no bank gave me a positive reply at that time. We have started to make efforts in compliance very early on in order to find ways to get compliant partners.
This industry will eventually be regulated and treated like any other type of financial services, which of course will take some time. But let's do something reasonable during this time and show a sincere effort to build the system we think ultimately needs, and that will help us get started. We negotiated with every state in the United States and eventually started doing this internationally. Compliance has allowed us to build the most trusted cryptocurrency brand, where we can safely store users’ cryptocurrencies, and we deal with and trust each other with the world’s largest financial companies, such as BlackRock.
We hope that future cryptographic products will be as easy to use as ours, designed to make encryption easy for everyone to understand without having the knowledge like a PhD in Computer Science to become a mature quantitative trader.
cryptographic market and Coinbase layout
Equity Mates: What do you think of central bank digital currency?
Brian Amstrong: I think this is an important step for more people to buy, to dispel people's skepticism about cryptocurrencies. But honestly, I think decentralized cryptocurrencies are more important, and here we can have more room for innovation. CBDC may be a currency that helps people correctly understand crypto, but there will not be much chance.
Equity Mates: What do you think of the metaverse?
Brian Amstrong: I think meta universe is a professional technology to be precise. I think technology is one of the best ways to improve the world, so I know the metaverse will surely explode in the end.
By the way, metaverse works well with cryptocurrency, and I think that's because if you're going to last for a virtual world, then you definitely want you to be able to actually own your items, not controlled by a centralized company. This is naturally in line with NFT and cryptocurrency. So I think the last meta-universe platform in the future will definitely be inseparable from NFT, whether it is a spacecraft, a house or your virtual image.
I think Coinbase should do more here to integrate with some early metacosmic platforms like I don't know if you guys have played any of the latest Oculus products or something like the Horizon world, but I think there are some good opportunities here and we'll be building here.
Equity Mates: We are now experiencing an encrypted winter. How do you treat your portfolio?
Brian Amstrong: Become an investor in cryptocurrency and even try to use cryptocurrency for all kinds of things, you must have a strong heart.
This is still an early stage industry and I have experienced four of the bear markets. So this cycle is normal for me, but every cycle is very difficult. I remember in 2011, I wasn't rich at the time, but I bought a few hundred dollars in Bitcoin for $11, and then I had my first cold winter, and the price of Bitcoin fell to $2.00. I thought I was the stupidest investor at the time, but I persisted, and later you can imagine that it worked very well, and that's the lesson.
I tell a lot of people that if you plan to invest in cryptocurrencies or something like that, start with the smallest amount, so that even if you get zero, you can accept it. Cryptocurrencies often have a drawdown of more than 70%. If you are not a professional, it is unrealistic to trade every day, so it is correct to take out a small part of your savings to invest.
Equity Mates: We have indeed experienced multiple bear markets, but this round seems a little different. The collapse of Celsius, Sanjiang Capital, and Terra has hit people's confidence.
Brian Amstrong: You mentioned some of the leveraged fund that failed to stick to this cold winter. I want to say from this perspective, this is not much different from the traditional financial system in the sluggish market. Some hedge funds are highly leveraged to get a lot of money, but these things tend to explode It is actually no different from the traditional financial system. The difference in the crypto world I guess is that it doesn't require any kind of government intervention or bailout or anything, and that's what's amazing about cryptocurrencies. It has built this truly decentralized global crypto economy, and even if it drops by 80%, cryptocurrencies continue to operate. Even in the broader macro environment , can you tell me a few high-leverage companies that do better than them?
But they could have done better, such as letting customers know what they are doing, and customers need to understand how their funds are used. Now all of this is resolved in court.
Overall, I think this shows that the crypto economy is very resilient, and luckily coinbase has not been exposed to these special companies, and in the long run we have taken a pretty conservative approach, so I think it's been around 10 years.It provides us with a good perspective on how to get through these storms, and that's what we'll continue to do.
Equity Mates: What is Coinbase’s future product plan?
Brian Amstrong: I will describe something to you that already exists today, and then something that is about to appear.
Just like people are now able to earn money from pledged crypto assets, a traditional world savings wallet can make long-term deposits to earn money. But in encryption, this kind of staking has a more advanced effect, and you can help encrypt the network reach a consensus. Coinbase makes it very easy to touch the button, start staking your crypto assets, and you can then earn money from it, and you can earn money from it weekly or monthly
We also have a self-hosted wallet called coinbase wallet, the name can be a bit confusing. When people buy cryptocurrencies for the first time, they may store them in a custodial wallet on the exchange, after which they may want to store themselves and use their cryptocurrencies in more and more ways, including in web 3. We made it easy for people to convert their cryptocurrency into something called a Coinbase wallet, and now they can interact with all dapps.
We also have a product called Coinbase Cloud, which is essentially a bit like Amazon 's encrypted network service, so any enterprise or startup that wants to integrate encryption, we can provide a set of APIs to do this easily.
We even have something called Coinbase Commerce that allows people to accept online crypto payments. But it hasn't expanded to physical stores yet, there are still a lot of cool things on the
crypto horizon, and we're just starting to see decentralized identities in cryptocurrencies. Traditionally people have an online identity that requires Google or Facebook or any big tech company you know. But in the crypto world, you can actually have your own identity, and it uses a public-private key cryptography that allows you to make sure it is not under any big tech company’s control.
There is no limit on our investment in encryption.
The biggest gains of starting a business
Equity Mates: From a software engineer to the CEO of a company with more than 5,000 employees, what is your biggest gain?
Brian Amstrong: I have learned a lot in the past decade, but let's talk about entrepreneurship.
The first thing you learn about building a company may be that you have to be determined and resilient. I'm not the smartest person in this field and I'm not good at raising funds. I even think I may not be able to have the smartest ideas or something like that, only 99% sweat and firm execution.
Starting any company will continue to encounter setbacks. If you just want to make money or any similar returns, it's hard for you to stick with it. It must be a career you truly love so that you can still be full of enthusiasm on the road full of setbacks.
The next thing is to take action to get the right information. People often argue endlessly about certain things, just like you are looking at a mountain covered in fog from afar, and you are at the foot of the mountain, constantly imagining the scenery on the mountain. You have to take a step in the fog and enter the unknown to see that there are still a few steps ahead. Maybe there is a cliff ahead, then you have to go back the same way; or maybe you will see there is a road ahead, then you can go further
I do see this, just like most people in the world, you know they have ideas, they will think if that's the case. There are a lot of times in my life in Coinbase that I really don’t know what to do, so I just start doing random things or anything I can think of, most of them are not the right thing, but usually when I finish it.
Key metrics for encryption
Equity Mates: We are very interested in your online cryptocurrency exchange. Can you tell me what do you think of the real key metrics for cryptocurrency and your exchange as CEO?
Brian Amstrong: Let’s talk about investors first, and then consider Coinbase.
As an investor, the easiest thing people see is the right price and the large trading volume. Many people analyze prices on social media, but this makes me feel that it is a very short-term mentality and will not have much meaning. What I've never focused on is how the price is, and while this is good and has attracted a lot of interest, I'm more interested in whether people are using cryptocurrencies correctly. So I started looking at transactions like happening on these networks every day, monthly or annually, and since 2018, DeFi started taking off, and then you see ICO and NFT, as well as a lot of applications and startups building in this space. This makes me feel that every day transactions happening on these networks start to behave like a truly meaningful application.
As for Coinbase, we have many traditional indicators, such as monthly active trading users and trading volume. But our most important indicators are not actually these indicators. We want to see what people do with cryptocurrencies in addition to trading. For example, doing staking, doing peer-to-peer payment, such as interacting with Dapp. The
indicator reflects how many people actually participate in the crypto economy, not just viewing exchange pages, buying and selling tokens and refreshing balances. The indicator was only about 5% in the past few years, but now it has risen to 50%, which means our active users are doing things other than trading in addition to their usual trading, which is really exciting for me because it shows that Coinbase is already well beyond the scope of the exchange and now it is starting to become a true economy .
Equity Mates: The last question, looking at Coinbase from a 10 or 20 year perspective, what are the criteria for success?
Brian Amstrong: I want us to have at least 1 billion people accessing open financial systems through our products every day, and I think success lies in our more global economy at that time, where there is more economic freedom and fairness, and more freedom for ordinary people. Encryption unlocks a lot of innovations Encryption, which, given this new global reserve currency, can ease and reduce friction in global economy and liberate innovation, which is what I think is successful in 10 years.
Editor: Lynn
