Brian Armstrong: Coinbase, Cryptocurrency, and Government Regulation | Lex Fridman Podcast #307

the following is a conversation with. brian armstrong co-founder and ceo of. coinbase the largest cryptocurrency. exchange platform with 98 million users. in 100 countries listing bitcoin. ethereum cardano and over 100 popular. cryptocurrencies. i recorded this conversation with brian. before this week's sec probe into. whether some of the crypto listings are. securities and thus need to be regulated. as such. as always with conversations that. involve cryptocurrency i try to make it.

timeless so that the price soaring high. or crashing down low doesn't distract. from the fundamental. technological economic social and. philosophical ideas underlying this new. form of money energy and information. our world runs on money. the exchange and store of value. and cryptocurrency seeks to build the. next chapter of how money works and what. it can do. coinbase and brian are trying to do this.

by working together with regulators and. governments which is a long and. difficult road. bureaucracies resist change for better. and for worse. the latest sec probe is a good. representation of this. it is a serious attempt to limit fraud. but one that also runs the risk of. limiting innovation. and limiting financial freedom of. individuals. this is a complicated mess and i applaud. everyone involved for trying to work. through it. i hope in the end the interest of the.

individual wins. decentralization after all is a hedge. against the corrupting nature of. centralized power. this is the lex friedman podcast to. support it please check out our sponsors. in the description and now dear friends. here's brian. armstrong. let's start with the fact that you're a. programmer what was the first program. you've ever written or the first one. that you remember. the first memory i have of programming. was probably in middle school and i. remember it was recess.

and they had this like this time period. where you could read books and the other. kids were like reading comic books and. stuff and for some reason i had gotten. into decide yet i wanted to get into. computers and i was playing with. computers at home. and so i got this book i think from the. library it was called like how to learn. java in 30 days. so i was. i was reading this book at like you know. the recess. and i didn't understand anything and i. remember i went home and i tried to get. this. thing working and you know if you've.

ever written a java program the first. lines are like public static void main. string args or whatever and it's just. like it's so foreign and it's so. difficult to get started and so i was. kind of frustrated i was like i don't. understand anything that's happening in. this book so the first the first thing i. wrote was probably just like a hello. world app in java. but it was so i felt like i was so. confused about what was actually. happening that i later. learned a bit of php and php was like. more fun for me because it was like oh. just print out what you want you know it.

didn't have all this complexity around. it so then i got more into php i started. building like some simple websites i. think. learned some html so i think that was my. introduction to programming at least the. very beginning part yeah. you know java has a lot of uh. out of all the hello worlds you can. possibly write java is the one where i. think it's the longest yeah it's just. which is quite interesting because java. is often at least for a long time was. used as the primary programming language. to teach people how to program or at.

least about object-oriented programming. i think most universities have now. switched in high school switched to. python. i'm not sure if that's the case probably. better it's easier to learn it lowers. the it makes it less scary there's like. less of a hurdle and certainly none of. them use php i love php and i feel like. it's a dirty secret i have to keep. private to myself like it's somebody i'm. seeing on the side or something like. that because uh it's just not a. respected programming language because i. think there's so many ways you can write. poor code with php yeah which is why.

it's not respected yeah it's a scripting. language more so although of course. facebook built like a huge stack on top. of it and valuable company but. i still love ruby to this day ruby is. probably my favorite language python is. great too but i just love. the idea behind ruby that it's like. let's make it easier for the human. harder for the computer and make it a. joy to be expressive and all these. things so. i was never the best computer scientist. but i was a good i was good hacker i. could rapidly prototype products and. using languages like ruby do a lot of.

computer science programs still use like. lisp and scheme and things like that no. no they do for that's like that's if. you're hardcore if you're legit you're. gonna do some of the functional. languages yeah i think there's a there's. a few others that popped up but. lisp is a distant memory for a lot of. people that's like somebody has to like. you go to library. you dust off the book yeah but uh scheme. a little bit i think if you're starting. i mean there's courses about languages. themselves like programming languages.

yeah this might be one of those you know. how there's languages that nobody uses. anymore like ancient languages yeah. you might have to go to school in that. same way for programming languages yeah. back in the day we used to use. parentheses i of course still use emacs. as the editor for most things that i do. and emacs is is um you know a lot of the. customization you can do is in lisp. and that's the language probably when i. first. really fell in love with programming is. lisp because for.

a long time throughout the earlier. history of artificial intelligence list. was the primary language but. it still had a life. in the 90s and the arts where some. people would use it. such a beautiful functional language. but it just somehow didn't pick up. um. that said i should say sort of push back. php i feel like. it's still true that most of the. web runs on php most of the back end is. still is still php.

so if you look at. you know it's like the stuff that people. don't talk about it's like what what. runs most systems in the world what runs. the most. uh back end what runs most front end. yeah javascript. you know html script i think the stack. exchange surveys show javascript's most. popular language in the world i think. right oh yeah in terms of programmers. and numbers of i wonder. by survey of number of programmers on. stack. stack overflow yeah but that's also the.

cutting edge right those are the people. that are just like excitedly writing. code i wonder if there's. there's people that are just like. maintaining gigantic code bases yeah. i feel like the amount of java out there. just running industrial systems has got. to be enormous and then of course in the. banking industry. finance it's like. even older stuff cobalt and whatnot but. i've been actually looking for somebody. uh to interview. who who represents uh cobalt.

unfortunately like who's the figure. still. still there that holds the flag i did. you know with java founder of java. creator of java creator python creator. of c plus plus but nobody wants to hold. the flag for cobalt unfortunately even. though some of the most important. systems in the world still run on those. yeah uh like power systems and. infrastructure systems which is. fascinating which and atms and stuff. like that like a lot of stuff. that we rely on that just works and the.

reason we don't change it because it. works well yeah it's written in. languages that people don't use anymore. yeah. that'd be a cool series of interviews. get get the stuff that's like tech that. was invented. 40 50 years ago but still is being used. widely i mean emacs is an example of. that let me ask the big question of uh. what are cryptocurrency exchanges and. what's coinbase how does it work before. i'll ask even bigger questions but it's. just a nice kind of. pilot cleansing question of what is.

coinbase. coinbase is a cryptocurrency exchange. brokerage custodian basically. we're the primary financial account for. people in the crypto economy. how they buy crypto how they store it. how they use it increasingly in. different ways we can talk about that. um so yeah we want to be the way that a. billion people hopefully access the open. financial system globally how does it. work. what uh. what's cryptocurrency. you know there's uh there's bitcoin.

there's ethereum. um what does it mean to be an exchange. what does it mean to store what does it. mean to transact how does it what does. coinbase actually do. okay so you know basically in any given. market there's some people want to buy. some people who want to sell. and there's you keep an order book of. all those prices. and then um. you know if someone's willing to buy for. more than the lowest price someone's. willing to sell then you know you get a.

trade to execute that's kind of how an. exchange works underneath and a. brokerage is kind of simpler than that. even you don't have to know look at the. whole order book and everything but you. just go in there and you say i want to. buy 100 of bitcoin or whatever. cryptocurrency you get a quote and if. you like it you can hit accept and you. know. the core things that we do to make all. that kind of just work make it seamless. it sounds simple on the surface. is we gotta we have to do payment. integrations you know in a variety of. places around the world to make it easy. for people to get fiat currency into. this ecosystem.

we have to work on cyber security a lot. there's lots of hackers out there trying. to break into our systems and steal. crypto or to put stolen credit cards and. bank accounts and things like that into. these systems. um we have to integrate with the. blockchains themselves right which are. periodically getting updated and. having various airdrops and all kinds of. things so we're integrated with lots of. different blockchains and then we have. to store the crypto that people buy. securely as well so crypto is kind of. like storing. you store the private keys essentially.

and we've invented a lot of cool. technology about how to do that securely. that helps me sleep at night. as one of the largest crypto custodians. out there. so those are some of the pieces that had. to come together to get that early. simple buy sell experience to work. and. yeah i mean coinbase actually has a lot. of different products now so we have. like an institutional product uh we we. have coinbase commerce which is like. merchant payments like stripe for crypto. we've got a self-custodial wallet which. we can talk about there's all kinds of. cool applications people are building.

with web3 and they can access it through. that we just just launched an nft. product. um i've gone down the list we have we so. we're sort of like a portfolio of crypto. products now we're big enough where we. can do multiple things but yeah the core. thing we got started with and still the. majority of our revenue today is people. just want to come in and buy and sell. some crypto and we help them do that. make it simple and easy to use uh and. i'll ask you about wallet nft is about. what is it called the stripe type. coinbase commerce coinbase commerce yeah. i'll ask about all that but uh order.

books and exchange what's the difference. between. that and stocks for example which. there's also order books yes i mean. stocks trade through order books too uh. sort of commodities it's all similar. type of situation so when i want to buy. one bitcoin and i see coinbase say the. price of that bitcoin. is say forty thousand dollars. and i. press buy what happens. um yeah okay so you've gotten a lot. like. you know when you press the button on.

your keyboard like the electrical signal. goes up the wire on your keyboard. well that's also important the timing. right because it's not pricing. yeah it's true it's giving you a quote. right that's that's um you know some. there's a whole concept of like slippage. and like by the time the quote is. executed. um if the price has moved too much like. we may reject it and you know there's. there's various things like that but how. do i i mean what's the simple version i. can give you so we you know we'll we'll. basically check the order book give you. a quote. it's good for some period of time or for.

some amount of slippage and then. what's happening is we're initiating a. debit to your payment method whether. that's a credit card or a bank account. or. you know you're storing dollars or euros. or something on our platform there's. various payment methods so we're. basically debiting that and then we're. crediting you the crypto and uh we're. taking a fee for it too so um. that's fundamentally what's happening. underneath and then there's some. interesting slippage how do you how do. you calculate the uh how much slippage. is allowed like how do you how do you.

know these things. you know because order books are. fascinating. you know the dynamics of that is pretty. interesting yeah and the little i know. about it yeah so. there's a lot of people like traders who. get super into this and like high. frequency traders and arbitrage and all. kinds of interesting topics flash boys. was like an interesting book on this. whole thing you want like access to. information the fastest sometimes even. putting your. you know your thing in the data center. right next to the thing we don't allow. that colo stuff because we want it to be.

more democratized. but you know basically you give a let's. say we wanted to just keep it math. simple we want to charge a one percent. fee so if you're buying a hundred. dollars of bitcoin and we'll charge you. 101. you know we've presented you the amount. of bitcoin you're going to get for 100. now let's say 10 seconds later you hit. accept we go to we go to fill the order. so it's going to be. some error bound around that one percent. fee right and if we think we're actually. losing money on the trade i think we'll. often reject it so some part of the fee.

the slippage is incorporated into that. averaged over. a large number of people they just just. it's fascinating because like even just. like that little detail probably. requires a lot of experimentation yeah. and it's kind of like a giant bug bounty. out there because if you get it wrong. there's people who are going to. arbitrage that and we've we've had. people sort of pen test our systems in. you know really creative ways where like. um. they'll just fire like programmatically.

with apis they'll fire off like a. million different quotes and look for. one of them that's out of bounds and. then actually take that money right. there and you know we get people doing. all kinds of crazy stuff but so how do. you protect against that how do you. protect so we'll talk about cyber. security in interesting ways but there's. a lot of clever people. trying to do clever things to earn. not even just to break into the system. but to earn an edge of some kind yeah in. the system. how do you uh how do you stay one step. ahead there's no silver bullet there's a. bunch of lead bullets right so it's it's.

like. you know one thing we do is we just have. good test suites right so you're testing. every piece of code that goes out that's. like just common good best practice but. it's particularly important in financial. services. another thing we do is we hire. third-party firms to try to audit this. stuff and break in another one we do is. we have a bug bounty program. so. we. basically pay white hat hackers to find. this stuff before the black hats do and. we've paid out lots of good bug bounties. so.

you know. try all the above and occasionally you. don't get it right you lose some money. and then you fix it and you keep going. so. yeah let's talk about sebastian security. a little bit more yeah you mentioned. using stolen bank accounts. yeah so that's another one that's. another interesting one how do you. protect against that. okay so fraud prevention. yeah is a big topic so one of the. there's a lot of things people do but. one of the things they do is that. you use machine learning right so you. look at. protector to attack to protect against.

it so. um what you want to do is kind of build. up a labeled data set of. all the different people who have turned. out to be fraudulent and good good. actors and hopefully collect as much. data as you can and then you'll you know. you might feed hundreds or thousands of. these factors into your machine learning. model it'll come back with a risk score. so you know an example of like the kinds. of factors people create or put in there. you know obviously i don't want to. disclose too many of them because it's. it's it's a cat and mouse game but just.

kind of i don't know relatively well. known stuff might be. um. you know you have device fingerprints. right so like what kind of device are. you on and what fonts do you have. installed a lot of people who are. farming lots of these accounts they're. using emulators and like virtual. machines and stuff they're not like you. know an average person on that device. um and then you'll see sometimes like. one of my favorite metrics we tracked. for for this was called like improbable. travel velocity so we would we're. tracking people's ips right and you. might see someone um.

who was one day in austin texas and then. like an hour later they were in london. or something it's like well that's very. improbable i mean sometimes people are. using vpns so you got to be careful with. that because like there's legitimate. people who use vpns too but. if it's not possible for them to have. gotten on a plane and gotten there that. quickly then that's usually they're like. spoofing a device or ip sometimes those. are interesting factors but yeah if you. feed enough of these in um. you will oh oh the another fun one is. like. you know real users will type their.

credit card like one number at a time. yeah scammers have a list of them and. they'll just paste in a whole a whole. number. um so you can look at like the the. number of milliseconds between. keystrokes like there's all kinds of. stuff people have come up with you for. travel velocity you could probably. incorporate vpns too because there's. probably. a. travel velocity for vpn switching too. that's human-like like if you're using. legitimately vpn for something else yeah. um that that might be there's like. legitimate uses too actually you know i.

feel embarrassed that i don't know this. probably should but the i'm not a robot. capture thing capture thing yeah so that. probably works in the same way like how. do you move your mouse maybe or how the. dynamics of the clicking totally. but how does that even work that well. then and why can't it be fake i need to. look into this because it's it's such a. trivial captcha it feels like should be. very crackable and yet a lot of high.

security places use that yeah it's. really interesting it's another cat and. mouse game so i think they've yeah but. it's using a lot of similar signals like. mouse movements um keystrokes and then. obviously all the stuff that comes over. the. the wire with your browser so like. what operating system what fonts you. know what headers are being sent over. and yeah um there's actually there's an. old website a camera was called it was. kind of like panoptix click or. panopticon or something but it basically. was like a proof of concept site that um. they would just show you all the data.

that was kind of getting sent over with. your your request and like. say that there's only one person in the. world who has this exact set of data. it's you and so it's almost like um. a work around a clever workaround to. track somebody. um make identify a unique person even if. like there wasn't a cookie involved or. something yeah this is a fascinating. world where you can't see anybody you're. in the dark. and yet you have a lot of signal you. have to figure out who's the real person. who's not who's a robot who's not yeah. uh let me step back we're gonna jump. around all over the place step back.

that's why i like your interviews you. get into like technical topics. so so uh just let's use bitcoin as a. measure of time. you started coinbase when bitcoin was. ten dollars. yeah um. and you just mentioned an incredible. system with security with transactions. everything is thought through there's a. lot going on but what was version one. back in those early days the first. prototype of coinbase what did that look. like yeah like what what did it take to. write it.

to think through it. and and uh make it work enough to at. least make you believe that it's gonna. work. well i definitely didn't know if it was. gonna work i mean it was kind of i felt. like i was just. following my gut so. i mean i was working at airbnb i was a. software engineer there. project manager i was working on some. fraud prevention stuff for instance. and um i read the bitcoin white paper in. kind of december of 2010. i started going to some bitcoin meetups. in the bay area.

met lots of interesting people there. like crazy people anarchists you know. like really brilliant people all the. above and. so i started nights and weekends trying. to hack put together a prototype and my. initial thought was. well you know smtp is a protocol that. runs email and. you know git is is a protocol for. version control that and but people made. like gmail and github they don't most. people don't want to run their own email. server or even their own git server they. just want to like use a hosted thing. that you know will do all the security.

and backups for them. so the thought in my head at that time. was bitcoin's this new protocol there's. probably going to be somebody who makes. a hosted service that does all the. security and backups for you makes. bitcoin as a protocol easy to use. so maybe i should. maybe i should make like a hosted. bitcoin wallet or something that would. that was my it was going to make gmail. for bitcoin or something. and a bunch of people told me that was a. bad idea like bunch most of my smart. friends who i told about it they were. like. well first of all i don't really get. what you're doing at all like bitcoin.

sounds like a scam or something you got. you've gotten involved in um. but then other people who understood. what bitcoin was told me i thought it. was a dumb idea because they're like. dude if you store all this bitcoin. you're just gonna get hacked like nobody. you know. why would you why would you do that and. so i i kind of had this thought like you. know what i'm not gonna go all in and. like make a story everyone's bitcoin. that would be too much right now i have. a job i have a day job you know um but. let me just make a prototype and i'll. tell people this is like a beta thing. like don't put any real money in it and. just see if there's interest and if i.

feel like i'm onto something maybe i'll. go do this as a company because i did i. really wanted to be an entrepreneur at. that time i was like. i was 29 i was almost turning 30 and i. was i always wanted to like start a. company but. i was. i was you know i wasn't yet i was an. employee at a company that was great but. so anyway i had this prototype i was. hacking together nice and weekends i. actually wrote a whole bitcoin node in. ruby which turned out to be a maybe a. weird decision in hindsight because ruby. wasn't the most performant language. we've subsequently had to rebuild that. many times but.

yeah i had this hosted bitcoin wallet. and the thing that i didn't have any. users for it by the way i applied to y. combinator because i was like maybe if. somebody there writes me a check this. will like make it feel like a real. company and i was trying to find i was. trying to find a co-founder at that time. unsuccessfully. so i was basically just wandering in the. desert i had a lot of self-doubt about. this because i i was like i don't know. all my friends don't think's just kind. of dumb and. maybe bitcoin is just going to get shut. down and like this all be some stupid. thing so.

there was definitely a feeling of just. wandering lost in the desert lots of. self-doubt. um paul graham and the y combinator. group kind of wrote me the first check. after i went and interviewed and stuff. and they they wrote me a check for like. 150k and that was the first time. somebody who i really looked up to kind. of said this is this is worth pursuing. like maybe maybe you're onto something. maybe or not but like let's at least try. it. and so i that was kind of what gave me. the confidence to quit my job and try it. and. um i'll wrap the story here by saying. that like we i you know i found the.

right co-founder after y combinator. we still didn't have any customers the. thing that you know i basically launched. the hosted bitcoin wallet. there were people signing up um i just. posted on reddit and places like that. and you know maybe like 100 people would. sign up and then nobody would come back. and so i was like i just in y comment do. they often tell you like. you know talk to your customers and. improve your product talk to your. customers improve your product that's. all you're supposed to be doing try to. find product market fit so i emailed. like five of the users that had signed. up. and i was like hey i worked on this app.

i saw you signed up can i get on the. phone with you i get on the phone with. like five of these folks. and i was like you know why didn't you. come back and the guy was like well the. app was okay for a for a beta but um. like i don't have any bitcoins so i. didn't really know what to do with it. and i remember this light bulb kind of. went off my head i was like well if i. put a buy bitcoin button in there. uh would you have used it and he was. like yeah maybe. so then i had this we went about the. process my co-founder at that time we. like got. basically had to get like a bank. partnership payment rails you know an. exchange basic exchange functionality.

all that stuff i was mentioning earlier. in place. and the minute we launched that feature. where you could just click buy put in. your bank counter credit card buy it buy. bitcoin it showed up in your account. from that day forward like the number of. users started go up like this and so we. finally had found product market fit. after two years of laundering in the. desert so you weren't even thinking. about to buy the. on-ramps you would think it would be. just a wall a place to store bitcoin. you've already gotten. yeah okay this is i mean uh because. that's such a pain to do.

to have to work with others. to convert dollars of any fiat currency. into. into bitcoin yeah so did you. i mean were you uh. overwhelmed by the immensity of the task. here or were you just. um. sort of not allowing yourself to think. too deeply through this whole thing and. just letting the optimism take over here. you know i was really looking forward to.

like doing something crazy and like a. big challenge and um i wanted to. i i love kind of. crisis moments like that where you know. i'm very determined right especially. when i i get like very set on something. and i'm just like you know what i'm. gonna figure out a way to make this. fucking thing work like no matter what. and so. i i reveled in that i i was sort of i. had i had read all these books about. startups and like every startup has. these like you know major setbacks and. just like nothing works and so.

that was a sign that you're doing. something right i had no idea if i was. doing anything right at all but i was. like i was kind of loving the experience. of it in a weird way it felt. it felt stressful at the time like you. know nothing was working and. but i was just i felt like i was. on the right path somehow and so i just. kept going i don't know. um. what was the darkest moment that you've. gone to in your mind during that time. what was what were some of the tougher. moments you said self-doubt.

yeah. have you uh yeah where where'd you go. where'd you go in your mind. [Laughter]. is there a moment where you're just like. laying there this is this is hopeless. well. there's a couple moments i'm remembering. i mean. so. for whatever reason i had this like big. chip on my shoulder at that time and i. was like. i really want to do something important. in the world like. you know i could have a good life and. like work for some good companies and. write some software and i'm.

for some reason i never wanted that for. myself that probably would have been. healthier honestly just to like that as. an expected value outcome that's. probably. a better thing in life but i was like. i was like man i really want to do. something important and have a bigger. impact and i was like. i was willing to sacrifice a lot for. that i was like. sleep and not going out with friends and. stuff i remember one of the just for. like years working on this stuff. remember. one of the darker moments was um. we probably had like maybe five. employees at that time.

and. i remember like a bunch of bad things. happened like all at once and it was so. first of all. you have to remember at this time. we were all very sleep deprived which. kind of exacerbates everything if you. look at like the exxon valdez spell. spill and all these like natural. disasters like sleep deprivation is. often involved. so because the reason why we're so sleep. deprived is not just because we were. working so much but. like the site would go offline in the. middle of the night and we'd get i get. paged i was like on pager duty so i'd. get woken up sometimes like two or three. times a night like have to try to fix.

something go back to sleep. so. in that environment you can kind of get. you can get discouraged. so one bad thing that happened was. we had a bug on the website and. there were thousands of people on reddit. and twitter who were all. like pissed at coinbase because like the. balances were showing wrong and they. were just like. you know fuck this company it's over. like i hate these guys and so. that was i'd never had this feeling of a. thousand people mad at me at the same. time you know i feel like i'm a pretty. chill guy like most time people don't. get mad at me so that was one another.

one was that um can we pause on that. that's so interesting so you you were. saying like here's a dream i'm trying to. create something and now forever the. reputation of this dream is ruined. it will never it's irrecoverable it's. over that kind of feeling yeah well i. didn't you're right i didn't know at. that time i was like is this is this the. end like. everybody we're so we're so tiny now. everybody hates us so is it over yeah um. yeah nobody told me this before starting.

a company that like you're a bunch of. people hate you for this which is like a. very counterintuitive thing because. you know if most companies i think are. doing good things in the world at least. you're trying right and so even if. someone's like trying but they're not. they're failing i'm generally rooting. for them at least you're trying right. yeah but. that's not the case at all and most. founders i've known. have gone through this too where um. they're very surprised at the amount of. hate that they get and if it's i think. it's actually like a muscle you can. build your tolerance to it like. because. you know you go talk to somebody who's.

like for you it feels terrible because. you're at the center of this storm and. like but if you go then you go talk to. like you know your family or some other. person like dude i didn't even hear. about that like my they're just busy in. their own life and so they. they have no idea that you had all this. negative press or like whatever it was. can i. once again put lingard on that yeah. there's an interesting. person i'd like to bring up just as an. example. uh bill gates yeah. so he gets a very large amount of hate.

on the internet yeah and. there's something about him this is me. talking that you that he seems out of. touch about that hate. he i i believe at least in my. understanding that uh with the resources. he has. he's trying and is actually doing a lot. of good. and yet there's a gigantic amount of. hate conspiracy theories and stuff like. that right and it feels like that's the. case. because he's somehow out of touch.

with with people so i wonder how you. stay in touch with the voice of the. people without being destroyed. by the outrage is there is there any. wisdom you have to that or not. i don't know about wisdom but i've. thought about this too because. yeah you want to always be. open to feedback especially from people. who have like your best interests at. heart right and if you can become. isolated from it and just like you know. surrounded by yes people and um. i mean who knows maybe maybe like.

she and putin and people like that are. in situations i have no idea. but if you listen to too much of it and. you just try to please everyone you'll. never get anything done and i mean most. of the best leaders. are people. who. they can act when they believe that they. they're doing something net positive for. the world and humanity and they actually. don't really care if they piss off some. proportion of the people. almost anything you're going to do of. significance in the world today is going. to piss off five percent of people maybe.

maybe 49 of people or whatever maybe 60. i don't know so. you never want to become so surrounded. by people who just work for you and will. say yes and then you think like well i'm. a genius and i'm like i'm a that's how. you become a dictator or whatever. um but you also can't care so much about. what people think because then you'll. never do anything that's truly authentic. to yourself. one other thought on that by the way i. think it's a really good question. so i've thought about this a lot like. why. you know people generally kind of hate. on zuck and they hate on bill gates and.

they hate on um. they don't really hate on elon actually. has a lot of haters too but it's a. different thing this is measured this is. measured i was looking at some surveys. so i think. uh zuck is the most so loved and hated. right yeah uh zuckerberg is the most. both uh loved and hated he's the most. hated and then i think it's bill gates. and elon is down there i think it's like. uh 40 percent. hey zuck people asked and then elon is.

in the double digits but low double. digits and so it's interesting you you. just look at this ask yourself why. right so i ask myself this sometimes too. because. i don't claim to know any of these. people well but like i've i've met them. briefly and i my impression is that. they're actually all smart people trying. to do good things in the world so. there's not too much difference there. despite public presumption perception so. why is it that some are really hated. some aren't i mean. it's a complicated question um obviously. you know zuck and his facebook got.

blamed for the whole election thing and. all that didn't help um social media has. gotten a lot of pressure just from like. you know hey why aren't you solving all. of society's tough problems it's like. well they're just one company. but one thing i've noticed is that. you know a lot of these people they're a. little they have like asperger's right a. little bit and um sometimes. you know people with aspergers don't. really emote in the same way and so i. think it's almost a form of like um. um. like.

bias against um. their cognitive. type or something which is like that. person doesn't emote right i don't trust. their in their intentions. and um. the other thing i've thought about too. is that sometimes i think some leaders. you know um like maybe zak or bill gates. they can come across as like a little. bit. pr rehearsed like they're basically um. they're giving the pr approved answers. as where elon just says whatever he. thinks like to a fault so even if people.

hate what he says they're like at least. i believe it's authentic. so i've always thought about that too. for myself i'm like how do i. you can you can fuck it up on both sides. right like if you just come out and. you're like saying whatever's stream of. consciousness. you'll often end up like pissing off. people on your team or like saying. tripping over some like regulation that. you you know. um there's all kinds of things about. running a public company you know you. can't say certain stuff. but if you're too pr approved and your. answer is like nobody trusts you what. you're saying and so anyway this is. something i think about a lot i don't.

think i have the right answer but i'm. trying to i'm trying to find that yeah. and more and more with the internet. there's a premium on authenticity just. like you're saying yeah people really. really appreciate that so for leaders. it's a challenge to be how do i. uh make sure i'm authentic but also. um don't say stupid shit yeah and so. that's an interesting thing i've noticed. that um just having interacted with the. with a bunch of leaders. that. you have to be careful how much you. surround yourself with pr folks.

because the best i would say let me just. say a nice thing about marketing and pr. folks the best. marketing folks are extremely good yeah. so they understand exactly what great. marketing is and get great pr it's. authenticity it's showing revealing the. beauty as opposed to uh pr and marketing. out of fear oh don't say that don't say. this don't that. because then you you start living in. this kind of that pushes you towards a. bubble where you can't express the we. your your beautiful quirks and weirdness.

and all that kind of stuff and also. the cool the beautiful things about what. you're doing i find like um especially. with the tech thing like even like. coinbase. the way to reveal the beauty of it. is not only by showing all the things. you could do with it but showing that. there's great engineering going on. underneath so letting the nerds shine. too it doesn't have to be like. uh. these kind of commercials where it's. like uh.

a happy family using uh coinbase to send. a transaction about uh flowers for mom. or something like that like it could be. also like gritty stuff and real stuff so. um. that's a general just observation i made. but you said you were talking about dark. moments and that there's people on the. internet yeah they were pissed off that. the site was down and you said there. might be something else. yeah so sleep deprived like a bunch of. people on the internet were pissed at me. the balances were fucked up like people. were tweeting the company's over just.

give the money back. whatever. and then um. oh yeah somebody posted. so we had all this we didn't we started. all these customer support inquiries and. like we only had. like a few people at the company and so. we were backed up maybe like 20 20 000. support requests so people couldn't get. a hold of us. so somebody posted my cell phone number. on. reddit and they were like they're like. if you need to get a hold of the ceo. whatever because everyone's upset about. where their money is. so i remember we're in the office it's.

like it's like late at night we've been. working like 12 hours we're all sleep. deprived i'm trying to i'm trying to. hack and like get this bug fixed. and we all need like food at the office. and so my phone my phone has been. blowing up all day because someone. posted my phone number on the internet. and there's like a guy um. there was a guy like trying to deliver. food and i needed to answer my phone to. like get the food from downstairs so i. was like shit i gotta just see who if. that's him so i start answering the call. and it's like. is this brian i'm like no wrong number. click you know and i you know i the next. i pick up the next call it's like every.

every when i finish the call another. call is like coming in so i was like. this i'm a reporter from japan like. asking about a security nope wrong. number click and i like finally get the. delivery guy downstairs bring the food. up we were all like you know surviving. to like fix this bug. um. i remember there was just basically a. point that night where i was like fuck i. need to just i basically just curled up. on a and like a ball on the floor. and i i just like cried for a little bit. um i think i let myself just kind of. wallow and self-pity kind of took a nap.

for about five minutes and i was like. let's fucking solve this and i like you. know stop being like a little whatever. and like got back up. deprivation combined with just the. stress and the pressure of the site. going down and everybody wants you the. site to be up just the pressure from. people and the number of users is. growing and growing and growing so that. pressure is just mentally mentally tough. yeah. what was your source of strength during. that time. like what like uh.

somebody that patted you on the back and. said we got this yeah well it definitely. helped to have a co-founder so. you know there's like that old saying. about it's better to be in a great. relationship than to be single but it's. better to be single than a bad. relationship so. co-founders actually blow up a lot of. companies too but when you find the. right co-founder which i was lucky to. find with with fred ursum. that was very important there was. definitely moments where. you know i was like. kind of you know. at the wit's end or whatever and he was. like. it's like dude let's rally like and he.

basically carried the team you know a. couple times like in really key moments. what advice would you give to startup. founders about this particular stage. about surviving it. to the five and through the five. employee stage where you yeah well if. your pre-product market fit. the best advice that i have from that. period is. um action produces information so just. just like keep doing stuff you know i. remember like um.

paul. is a good life yeah paul graham had this. great line like that i think that's his. line and he he was like startups are. like sharks if they stop swimming. swimming they die you know so even if. you're like not sure what to do like. just do anything because when you do it. it'll like it'll produce some. information like people liked it they. didn't this was very true for me there. was times where. i just did something. um. instead of debating it endlessly and. like just try it you know like all right. so we shipped it and like there was a. couple times where like the minute i. shipped it. and i was like i knew i know we we built.

this wrong but now i have an idea of. what to do next and it wasn't i only. would have had that idea if we had. actually gone through the exercise of. going to build it it's like. my other favorite analogy for this is. that. you're like at the base of a mountain. that's shrouded in fog. and you're looking up at the mountain. and you're trying to think like okay how. do i get up there but you can only see. like three or four steps ahead because. the fog is so thick. so you have to just take steps into the. unknown. and. when you take three steps another three. steps will be revealed ahead of you and. sometimes you'll end up on some local.

maximum you'll have to retrace your. steps or whatever but or come up to a. cliff you know but um. most people in life don't take the steps. into the fog into the unknown because. it's scary or they're like i don't know. what if i fail or like i don't know how. that's gonna work or i might run out of. money or i won't be able to get a job. after or. i don't know whatever reason but that. that is like one of the things that. separates i think entrepreneurial people. with that kind of inclination is that. they have sort of a comfort with this.

risk tolerance but it's actually not. really risky if you think about it it's. not like. you know in at least in most um places. like you know if you go to if you go to. a startup and it fails like you're gonna. you're even more valuable to your next. employer right or you can go raise a. seed round pay yourself a salary. try it for like two years or three years. if it doesn't work go get another job. it's not like you're you weren't paying. yourself a salary during that time so i. think i think people overestimate the. risk of doing a startup and they just. never they never start because. it seems crazy and all your friends.

think it's silly like that's sort of the. default nature of every big startup idea. it's just basic fear it's the same kind. of fear that if you see a if you're a. guy see a cute girl at a bar it's the. fear associated with coming up to her. yeah you like her asking her it's like. what's the actual risk exactly right um. she'll say i'm no thanks i'm not no. thanks and i i guess the risk is like. that's going to be mentally difficult. to deal with rejection so just like it's. mentally difficult to deal with failure.

if you if you had a bunch of ideas and. you were excited about them and you. implement them and you realize. they're not good that could be difficult. to to keep pushing through that but i. suppose that's life you're supposed to. you know perseverance through the. failures yeah and then the risk is low. so that's and then the whole time. through the fog up the mountain you're. looking for product market fit yeah. that's right so you know you have it. when the usage of your product keeps. growing without any marketing dollars or. anything like that it's just like more. people keep coming back every week or.

month so you're kind of keep you're. basically watching your stats. nothing is working. you see these little wiggles of false. hope in your metrics. and you basically just keep talking to. customers fixing the improving the. product talk to customers improve the. product talk to customers. you know and trying to run out of money. so be really scrappy. and then if you're lucky you hit some. kind of threshold where like okay the. thing is good enough now or we hit on. some use case and then it'll. organically start to grow a bit. and then then you have a whole different.

set of problems once you hit product. market fit which is. how do we scale this thing how do we. hire people. how do we. you know. hire an executive team or raise more. money and like so the problems totally. change but um. you're. there through the whole thing so that's. the other question that's fascinating. again back to the girl at the bar how do. you hire people it's like. how do you find good friends. how do you find good relationships. and in this specific case how do you. hire good people engineers.

executive. all of it one thing is i've done a lot. of reps on hiring at this point so um. coinbase has about 5 000 people. um probably the first 500 people or. something maybe in that range um you. know i i interviewed every single one of. those but you have to remember there's. probably like. i don't know on average maybe 10 people. that we. went in the process for every one we. hired or something so it was like. by the time that we had 500 employees i. had done like 5 000 interviews or.

something i was like very burned out in. interviews i had been doing. i had some days i did like seven. interviews in a day or maybe um. you know you've been you would do lots. of interviews maybe you wouldn't get. burned out but different kind of. interviews uh very different very. different yeah very different because. you're. uh. so first of all most of your interviews. lead to rejection yeah. which is also exhausting. yeah and there's a whole there's a whole. part of the interview which is about. candidate experience right sometimes you. know it's not the right person but you.

want to make sure they have a good. experience like if you're just exhausted. and you're on your sixth interview and. you're like well thanks for coming in. and you wrap and you just and then like. you're gonna create a detractor someone. is out there like fuck that company or. brian was rude to me or whatever so i. had to honestly i had to work on that a. little bit in the early days i was doing. so many interviews like i needed to make. sure that. um when people came in i was like you. know made them feel comfortable. um. asked him a couple of like warm-up. questions just like how how was it. getting in the office like did you find. it okay and like what have you been up. to this week and not just like.

you know like a factory assembly line. like boom boom boom like. yeah but also there's a moment because. i've interviewed a bunch of people for. like teams and stuff yeah there's also a. moment when you early on no it's not. gonna be a good fit yeah and you still. have to land that plane and yeah and all. that kind of stuff and that could get. really really really exhausting so yeah. anyway sorry so. yeah so basically we tried all we've. tried so many things over the years to. make interviews more efficient because. it's a huge time sync for um the team. so. you know we we basically will usually.

get them down to like 25 minutes. i've seen if you're trying to hire like. a big team let's say. um. you know of people who are like. contractors or something not necessarily. full-time employees i've seen people. actually do 10-minute interviews. you can even interview like a thousand. people almost like in a week or. something i'm not sure if that quite. works out but let me a little less than. that but you can basically get six and. six done in an hour if you're just i. need to get a team of 30 contractors for. whatever purpose but if you're talking. about full-time employees i usually do. like 25 minute.

you know you're oftentimes like. one one thing we've done is we'll put. like a. um. like a google form online and it's like. put some basic hurdles in there like you. know ask them. um. to put in an answer which you can check. in a spreadsheet if it was correct or. not and like there were some funny. examples in the early days of coinbase. where we put in like brain teasers and. stuff but we don't do that anymore we do. like normal interviews we do references. the kinds of things i ask in interviews. um. you know it's usually like. i like to think about what what do we. need this person to accomplish in this.

role right. and. get really specific about that it's like. usually something pretty hard and then. i'll ask them a question it's like tell. me about a time you did x. and um. or tell me about the hardest the hardest. kind of problem you've had to solve in. why. and what did you do specifically to. overcome it right. so i'm asking to see if they can. actually do the stuff we need to get. done but then i'm also kind of asking. inter like culture questions if i'm. interviewing for that. and so i'm trying to see like are they. concise communicators can they just give.

me a clear. answer. and stop talking some people like ramble. on for like five ten minutes if you ask. the first question some people are you. know their interrupter like church of. interruption so like they won't stop. talking until you interrupt them which. for me i know i'm always patient and i. wait so yeah that's weird. i'm looking to see for humility too like. you know i'll tell ask people well tell. me about a time something went really. wrong like you had conflict or someone. on a team or. um and what i'm kind of looking for is. were they part of the solution or are.

they still holding on to like blame and. criticism about that and be like well i. told them it shouldn't do that way but. they didn't listen to me you know these. are all like bad signs so i'm looking. for yeah can they get the job done will. they work together on a team. can they communicate effectively. do they fit into our cultural values and. you know those kind of things yeah i. mean there's uh because i've. uh even even for help with this this. podcast here but also at mit and so on. i've done a bunch of hiring and uh i was. always looking for you said brain. teasers all kinds of simple questions.

that can. that can reveal a lot of information. and it's always been challenging i used. to i still asked this question but. uh. do you think it's better to work hard or. work smart. and. you know i had this idea. that. i've that i think i've matured about. which is i kind of believe that people. who say work smart on that question.

don't actually work smart so the right. textbook answers what it's better to. work smart. but the reality is it's. it's people that haven't actually ever. done anything that. say work smart they're like. they haven't really struggled because my. general belief at the time. was in order to discover. what it means to. work smart to be efficient to you have. to work your ass off so you have to. really fail a lot and failure feels like.

hard work. and so i was always suspicious of people. that would say work smart i would want. to interrogate that question. um but then i also you know have have. learned that there is. people that are just exceptionally um. exceptionally efficient. they really do know what it means to. work smart even at a young age. and so like you can't just disqualify. based on that you have to dig in deeper.

but some of the most interesting people. i've ever worked with would say work. hard unapologetically and they're. usually the ones that know how to be. efficient which is it's just an. interesting thing like that and and i've. always searched for questions of that. nature to see. can i can i get. can i get a person to reveal something. profound about them. in as brief of a question as possible. and i you know and then of course. there's basic attention to detail and.

brain teasers and stuff like that. depending on the role programming and so. on to see can they can they solve a. tricky puzzle. and do so like one that doesn't require. a lot of effort but requires a certain. um non-linear way of thinking is there. is there some. i mean maybe you don't want to reveal. but is there some questions. that you sometimes find yourself leaning. on. you said like how did you solve. a hard problem in your past. and have them talk through it that's one.

you know we started with brain teasers. periodically at coinbase and i we got we. got away from that relatively quickly. and i think. one i it's a tough one because i. actually think. it does show how somebody. kind of performs under pressure but it's. i don't think it's a super reliable. indicator because there's some people. who are really. good. in what the typical work situation but. that's not a typical work situation. where somebody puts you on the spot like. in a live interview and sometimes people. get nervous and they can't think clearly.

and like they don't have their computer. in front of them or whatever they. normally use. so. yeah i i'm a little skeptical now of the. of the brain teaser thing um. there is a whole. yeah. there is a whole question about like a. lot of universities are getting rid of. you know entrance exams so if you're. hiring right out of universities um. sometimes it's becoming a less reliable. indicator of like are they in that. university and i've heard some companies. we haven't done this yet but i've heard. some companies are actually creating. their own like for college grads like.

their own um basically. exams like standardized testing almost. to get people in the door because the. degree almost like doesn't mean what it. used to which is the whole topic but. yeah that's fascinating because um. it's fascinating both for that because. it's not just about you trying to hire a. great team it's also to help them find. the right place to work at yeah. just like it's like a two-way street. um. all right so once you found the.

the product market fit. how did coinbase become what it is today. so. let me ask on an engineering question. actually sort of. uh from the the ruby wallet days. what are some of the interesting. challenges there or are they not. engineering just the the things that had. to be solved uh what were they. engineering. regulation. um.

financial hiring lawyers. what was it. so post product market fit yeah a lot of. it's scaling and you got to build up. build out an actual company so. i remember i was still writing a lot of. code there for a while and we were we. were hiring in we had like maybe 25. people or something i remember one of. our investors came by one day and he was. like brian how much your time are you. spending writing code i was like. maybe maybe 50 or something he was like. how much time are you spending hiring. people i was like probably 20.

and he was like. i think you need to flip those numbers. like this company's not gonna scale. you're the ceo you don't need to be. writing code every day. you're gonna have to transition that. stuff like even if people can't all that. stuff's locked in your head so maybe. they're not gonna do it as well as you. for the first six months or something. but like if you don't start to. transition it you're never gonna build a. real company it's just gonna be. you're gonna be the bottleneck. so you know like a lot of founders. that took me a while to like really. internalize that lesson i'd always heard. people say that and you know. but i still was holding on too much to.

decision making and i probably still am. by the way like even to this day at. coinbase where. we uh continually have to push down. decision making in the org like even. with 5000 people like who are the owners. of each of these things and so the. temptation is people to push it up and. you become a bottleneck and anyway. um so yeah you want you basically need. to make sure you have enough money where. you don't die. if there's in some some kind of a. downturn or hit break even profitability. we were in a position where we were. periodically profitable during up. periods but then crypto would go down. and we were unprofitable and so we had.

to kind of manage our own psychology and. the balance sheet to make sure we didn't. like die in the downturn which a lot of. crypto companies did. um we had to basically professionalize a. whole bunch of services that had been. just very quickly thrown together by. like 20 year olds right. whether that was cyber security it's. like okay how do you get like a really. senior experienced cyber security person. but not someone who's so senior that. they can't get their hands dirty and. they can come into a company with 25 50. people how do you get a finance person. to come and do that our finances were. a mess like we didn't even really know.

how much money we had at certain times. and stuff i mean this was it's. embarrassing to say but it was true like. i remember. there was a point where um. we had raised i think like. our series c or something like that and. i think we had our bank accounts i just. put like 25 million dollars like in a. different bank account that none of this. stuff was touched to the actual. operation the business because i was. like. you know our operations were so messy. and we needed to hire a new finance. person and i was like this i heard. horror stories of actually startups. where they thought they had x amount of.

money. and then it turned out they had way less. and then the whole thing was insolvent. in like three weeks so you wanted to. have some padding until yes like all. right i can't at least count on this to. save us if we go to like super negative. right i mean it was like a cheap hack. but that was like the only thing they. could come up with and you know until we. could hire like a real cfo and financial. team who like. okay now we got our arms around how much. cash we have it sounds silly but we had. such high. volume of money coming in and out anyway. what was the ordering of hiring by the. way. like uh.

how many engineers was it early on you. said cfo was not did you even have a cfo. for a bit yeah like what was the. the landscape of hiring as you building. up this company. was it engineering focused. well let's see i mean so the first. person we hired was just like. we need we need to solve customer. support so we brought someone to do that. because we were all staying up till. midnight every night trying to do. customer support and then. we got more engineers and then i think. maybe the sixth hire or something like. that was a recruiter because that that. turned out to be you you need to build.

hire the person who can hire more people. yeah that turned out to be a great. forced multiplier and then. man you go on down the list eventually. you want to hire some more senior people. um we needed legal and compliance we. needed that really badly because we you. know there's all kinds of questions. about what the legality of it was was it. hard to find legal people that work with. crypto like serious adults. because it's such a cutting-edge new. world yeah i mean there was nobody who. had like more than.

nobody had three years of experience. with it because it had only been around. a year so yeah we were finding people. from adjacent fields. there's a certain personality type of. people who are willing to join early. companies because they have no structure. you can't really commit to them about. you're going to have this team or this. boss or whatever like everything's in. chaos and flux. so. it takes. yeah hiring is one of the hardest things. in the early stage for sure you got to. find people crazy enough to join you on. this journey. so one of the interesting things about. coinbase and you've written we've talked. we'll talk about it a bit you're very.

focused on the mission yeah yeah you're. very kind of. i think that simplifies things that. makes. that makes hiring easier that makes. working a coinbase easier that makes. yeah i mean it's similar sort of elon. has the same thing it's pretty clear. it's pretty clear what we're here to do. yeah so. i suppose what's the mission. of coinbase. well it's to increase economic freedom. in the world and what is economic. freedom. yeah so economic freedom is this term.

kind of like gdp that economists use and. it's basically a measure of different. countries around the world it looks at. things like are there property rights in. forest is there free trade is the. currency stable can you start companies. that you want to start and can you join. the ones you want to join and you know. is there corruption and bribery. prevalent or is it relatively free of. that. and so. this there's several different. organizations that basically score. countries by economic freedom and the. really cool thing about economic freedom. is that.

basically it positively correlates with. things that we all want in society like. um not only higher growth of the economy. but also things like higher. self-reported happiness of citizens. better treatment of the environment. better income for the poorest ten. percent of people. and it negatively correlates with things. we don't want in society like corruption. and bribery and war even and things like. that and so it's this pretty pretty. crazy provocative idea which is that. if you give people good. property rights and rule of law and. allow them to trade.

it basically encourages them to do more. good stuff and the whole society. benefits like one of the things you know. you may have noticed this. growing up in various places you did or. you know i spent a year living in buenos. aires argentina that went through. hyperinflation and. there's a certain like pessimism that. can creep into. countries when they don't have. economic freedom which it's basically. like everyone has this bit of this vibe. which is like don't stick your head up. you know don't try too hard because it. could all be gone tomorrow like the. things that really are valuable in life.

are just. family and friends and the past was. better than the future will be and. and so you don't really people don't try. as many they don't try hard because. you're not really sure you can actually. keep the upside of your labor if you if. you try hard so you just don't try as. hard whereas in america historically um. you know or high economic freedom. countries. you know people. basically like they just try more stuff. because they're like if i do good for. other people i'll get to keep part of it. for myself and i can improve my lot in. life and for my children my community. whatever.

so. i realized when i read the bitcoin white. paper a long time ago. that at least i had a hunch at the time. i was like this might be a really. powerful piece of technology that can. inject. good financial infrastructure into all. these countries around the world that. don't have it basically good economic. freedom principles in like you know. property rights and things like that. into these countries all over the world. with just as long as you had a. smartphone and now crypto got invented. we could everybody could have economic. freedom and it's crypto is kind of. really well suited for economic freedom. because.

if you want property rights it's based. like crypto is if you can remember a 12. word phrase or. you know have an app on your phone you. can store as much wealth as you want and. it can't be taken away from you you can. even. you know there's like refugees who need. to flee and they want to take their. wealth with them and they can't do it. often in the traditional financial. system and so. crypto lets them do that right crypto's. inherently global so it allows free. trade and cross-border payments. um it makes it easy to accept payments. from people globally you know it's it. provides a stable currency to everyone. not only with bitcoin which is kind of.

like this new reserve currency but. um also with stable coins right which. are you know new new inventions there so. yeah i basically feel like crypto is. is this secret hiding in plain sight. that can create economic freedom for. people all over the world and a more. fair and free and global economy. well so the limit and by the way i. didn't know about argentina why'd you. end up in argentina. okay so i was basically um. you know i was living in houston texas. after college where i went to school and.

i had never studied abroad um. i kind of like. i don't know i felt like i needed some. adventure or something in my life and i. was like i was running this other. startup that i was trying at the time a. tutoring company and i could i could. work from anywhere so my plan was you. know what i'm just gonna go. do like a month in every city around. south america just be like almost like. to force myself out of my comfort zone. because i. i had never traveled by myself to a. foreign country or whatever and where i. didn't really speak the language and. anyway i i landed in buenos aires.

thinking i'd go all around south america. where i had never been there but i. basically once i was set up in south in. in buenos aires with an apartment and a. cell phone and stuff then i was like i. want to do that all again next month so. i just stayed there for most of the time. and took some day trips but. but yeah it was kind of a formative. experience in that regard you got a. chance sort of unexpectedly to. experience the the social effects of. hyperinflation which is interesting but. i also i've i've never been i really. really want to go as a person who likes. tango as a person who likes. the argentinian national team in soccer.

yeah and uh. and and steak. all right uh. and all the other things that argentina. is known for okay so um. economic freedom one of the limits on. economic freedom comes from government. and government regulations and all those. kinds of things throughout the world. um so how does cryptocurrency help. resist that so can you sort of elaborate. a little bit further. what are the things that limit economic. freedom and how does. crypto help.

ease that. you know. today the world like traditional. financial system is basically every. country of the world for the most part. has their own currency. and so there's a group of people or. institutions in each of those countries. that's controlling. that economic policy or that money. supply. and. you know it can be. it can be manipulated right so. it's not like many of these currencies. are not linked to gold standard you know. the u.s kind of famously came off that. in the 1970s for instance but if you.

read ray dalio and all this stuff like. he talks about there's thousands of fiat. currencies that have been in existence. over time. and. basically all of them eventually get. disconnected from um backing of like. hard commodities. and then they get over inflated and. printed and so. in times of stress. um you know with nixon i guess it was. like in the u.s it was the vietnam war. or something like that it kind of drove. government spending and so under times. of stress they say hey it's a temporary. measure we need to break the peg um.

temporary was like you know famous words. that he used and um. and they go they go like they go print. and so the bad thing about that of. course is that it sort of erodes. people's like wealth if they can only. hold their assets in cash which. basically like poor people tend to do. that. you know if you're wealthy you can hold. um stocks or like real estate and things. like that but so it's a really attacks. on the poorest people in society. inflation so anyway crypto in in a way. is a little bit of like um a return to. the gold standard in this digital era.

right bitcoin there's guaranteed. scarcity of it it's deflationary there's. never going to be more than 21 million. bitcoin. and so that's that's a really. important principle. um. i also think bic you know not just. bitcoin but like cryptocurrency. generally. it's really important in terms of this. um you asked about regulation right so. think about like. if you wanted to make a global um. borrowing and lending marketplace or a. global exchange. you would have to go to all 200.

countries in the world sometimes like. maybe 50 states in the u.s and get. lending licenses or an. operating exchange or whatever. and. you know. they're not gonna that's just an. incredible amount of work and you can't. even do business in many of these. countries because like you know you have. to bribe somebody or it's corrupt or. whatever. and so. but with defy with decentralized finance. people have published um you know like. uniswap is a decentralized exchange. everybody in the world no matter what. country you're in what jurisdiction can. i can interface with that decentralized.

exchange because it and there's no. central. um company operating it it's it's a it's. a it's a smart contract on the ethereum. blockchain which is globally. decentralized so there's no throat to. choke there's no one person you can or a. company you can go to to like hey shut. this thing down even if everybody who's. working on unit swap today stopped. the us the unit swap smart contract. would continue to operate on the. ethereum blockchain um similarly for. like a borrowing lending marketplace you. know like. it's. you know if you want somebody in india.

wants to borrow from somebody in the u.s. or whatever like there's very difficult. to do that in the traditional financial. world. but in a smart contract that's. decentralized. you can enable anybody to access it so. it's it's really kind of this great. democratizing force. that is creating a new financial system. that is more fair and more free. um. yeah and in some ways it is um. it's a it's a clever it's a clever way. that's. not yeah it's it's enabling people to do. that in a novel way so is unit swap in. some sense a competitor coinbase in.

which way is it and which way is it not. so because. for people who don't know. coinbase is centralized. so let me ask uh. doesn't that go against the spirit of. crypto since kryptos is is decentralized. what are the pros and cons of being. centralized as an exchange. so i don't think coinbase is fully. centralized there we have many different. products and the way that i think about. it is that. our exchange.

or our brokerage is a. centralized regulated financial service. business and it's actually important for. the crypto ecosystem to have that. because you want to. allow a lot of the fiat money in the. world to flow into the crypto economy so. we. you know we're very proud of that and i. think we've helped a lot of that money. flow in. now once people have money in crypto. they can choose to hold it in a variety. of ways and they can choose to hold it. in a self-custodial wallet which is more. decentralized they can choose to use. decentralized exchanges which.

we we love and uniswap is not really i. don't think of them as like a direct. competitor to us we we basically have. integrated um unit swap into a number of. our products we we love d5 decentralized. exchanges all the whole thing. so. any coinbase wallet which is a. self-custodial wallet is more. decentralized and it allows people to. um hold their own crypto they don't have. to trust us can you explain what a. self-custodial wallet is what is the. wallet and what is the self-custodial. wallet yeah so it's confusing so um so a.

custodial wallet means you're trusting. coinbase to store. your crypto the private keys themselves. and you know for some people in. institutions and everything just meeting. them where they are today that's nice. because it's simpler you know. um they're not afraid of losing their. crypto if they make some accident. accidental mistake or so you know a. custodial. um crypto products are important to help. get a bunch of people into the ecosystem. but. i'm very supportive of self-custodial.

wallets and i think in some ways they. are the future because more and more. people are going to want to store their. own crypto not trust a third-party. institution do it and in some ways that. is much more authentic to the ethos of. crypto so. coinbase will help you convert the fiat. into crypto in a. frankly that's a more centralized thing. but once you have crypto you can then go. to the self custodial world store it. yourself in in a to get into the. technical details just for a second. it's basically saying um. you're going to store the keys on your. own device. and so um even if coinbase you know.

gets some court order to seize it we. actually can't like from an architecture. point of view we can't do it um or you. know if coinbase gets hacked or. something we can't lose your funds like. now you the thing is you have to take. the responsibility because we're not. taking it so the individual person could. get hacked right and. there's a whole bunch of really cool. research happening to make self. custodial wallets. more resilient to accidental loss. hacks and just user error like. you know. they're i don't know how much you've. looked at like various cryptography.

things but there's like basically um you. can have multiple key multi-sig. multiple signatures from different keys. on different devices where you need like. two of the three or three of the five. there's a whole um technology called. multi-party computation or threshold. signing signatures which is really cool. um but those are the things you would. run locally. like these are all security measures. like cryptography measures to protect. you. without a centralized component. right so like a simple example would be. let's say you had a two of three.

key signature and. you know one key might be sort of. coinbase but that's not a quorum so we. couldn't unilaterally move your funds. but another key is on your device on. your phone let's say oh cool um so that. so in a normal situation you have a key. on your phone we have one. um but you and so two out of three now. just you know it can all get signed very. quickly for day-to-day use but let's say. you lose your phone or something. now there has to be a third key and. that's where you know you could store it. in a backup somewhere um like in google.

drive or icloud you could trust a third. party that's not coinbase to also have. that one key and they can't do anything. unilaterally with that one key so that's. a simple example you can get you can get. way more complicated yeah that's an. awesome idea and so like yeah if your. funds get seized. coinbase can't can't do anything right. uh but you better not lose your phone. maybe in that case yeah. so yeah that's. but it provides a there is so even if. you lose your phone then there is a. recovery mechanism because you can get. the one key from coinbase the one from. your backup provider.

and recover. a new one back on your phone i know yeah. but but what if coinbase is no longer. but because of government because of. what say it's in north korea. government says you're no longer like. coinbase is shut down in that country or. something like that right then you can. get it even if you have access to those. too right. so uh again. perhaps a silly question but isn't a. self-custodial wallet. a competitor as a notion. to coinbase. no i mean we so we offer.

a self custodial wallet um we've built. one and it's like but doesn't it bleed. the like i guess i'm asking a sort of a. financial question. is uh like how does coinbase make money. on transactions so does this not does it. does not decrease the number or does not. significantly negatively affect. transactions or are you more focused on. growing the number of the pie of the. number of people that are using. cryptocurrency yeah like a traditional. financial service firm would probably. say.

well we should be storing let's keep. more of the custody with us because. that's how we prove to the world that. we're valuable or whatever. i don't really believe that like i think. that actually we kind of want to. encourage our users to move to. self-custody over time for those who are. ready and willing. and that technology needs to mature i'm. not trying to like force anybody to do. it who doesn't want to do it but. to me that's like the future of how we. get billions of people using crypto but. doesn't that mean they can go somewhere. else. easier yeah that's sort of the point is. like we're all using the same protocol.

so there's low switching costs which. keeps all the companies accountable. right like. if you. if you want to access the visa network. there's only one company in the world. you can go through to do that like visa. but if you want to access the bitcoin. network there's dozens or hundreds of. companies out there who can do that so. it's you know it's arguably you could. argue it's worse for us as a company but. i think it's better for it's what makes. bitcoin interesting and cryptocurrency. interesting is that nobody controls it. there is low switching cost for. customers it's better for customers and.

that means that all the companies in the. space are going to be held to a high. standard because the minute you lose. someone's trust they're going to move. their bitcoin to some other service. and that's good for the world do you. think of coinbase as uh so there's these. ideas of layer one layer two layer three. technologies yeah do you think of. coinbase. as layer one layer two layer three now. that. that said there's so many. um. products that are under the coinbase. umbrella that's hard to answer that. question but what do you think.

yeah do you acknowledge the existence of. layer three. so so you know usually when people are. using those terms layer one layer to. this so they're referring to like layer. one would be um the blockchain layer one. blockchain itself like like a bitcoin or. ethereum or something not like a a. centralized service like coinbase or. even our decentralized um self-custodial. wallet. so um. yeah i wouldn't consider us to be like a. layer one these are these are the. decentralized protocols that we're. integrating but we are coinbase itself.

is not those yes but layer two is the. thing that was basically doing. transactions without the settlement. on the blockchain. and so you you get to have some of the. benefits of faster transactions without. um. the the security associated with the. blockchain and. layer three. is i suppose. sort of apps built on top of that. so you know uh at least i think talking. to michael saylor he considers coinbase. a layer three technology. interesting.

okay i'm not really. particularly familiar with this kind of. distinctional there three and two i. don't see them as fundamentally. different. uh but. some of the okay i mean one way of. asking that. is there some layer two like of magic. happening in order to make transactions. associated with the blockchain happen. instant so that they're quick. so that coinbase on coinbase yeah. um is there some magic going on because.

you're okay we should say how many. cryptocurrencies are currently on. coinbase so it's more than two. yeah. it's a lot more than two yeah so you. have to understand they have to. incorporate all these technologies yeah. so how do you make that magic. of sort of universal transactions happen. across all of these different. cryptocurrencies. there's our centralized products and. decentralized products right the. centralized products. um we are storing. that crypto for you and so if you're.

moving from one of your accounts to. another account like. each one account to eth2 account or. um from my ether ethe coinbase. centralized account to your ether so we. can do that transaction off chain to. make it faster and it saves the customer. fees and it just confirms instantly but. it's not truly using the decentralized. blockchain right so you can also send to. any any bitcoin address or a theorem. address for instance and that is putting. the transaction on chain now our. decentralized products like coinbase. wallet the the self custodial wallet.

every transaction is happening on chain. with that and so basically what it just. shows a little bit of the evolution of. coinbase and the blockchains themselves. like in the early days um these you know. the we these networks were not scalable. and so there were no l2 solutions for. instance. and so we had to do sort of these hacks. like moving the crypto off chain if you. were moving between your own accounts. and stuff like that otherwise the miner. fees would have just eaten us alive as a. company right and we yeah but now that. like. the blockchains are starting to scale. there's a whole bunch more work that. needs to be done on that and we're.

getting l2 solutions so i think more and. more of the transactions are going on. chain whether it's l2 l1. and you know we shouldn't be like. ideally we shouldn't be doing that many. transactions um you know off chain but. just internal coinbase ledger or. something that's not really in the. spirit of crypto so when you say. unchained that includes like a lightning. net that includes layer. layer two technology that the blockchain. proposes yeah so you're when you yeah. okay so i guess i was asking how much.

fun magic is happening off-chain within. coinbase and you're saying in the early. days you had to. but you try and do less and less. so look there's a bunch of like high. frequency traders that use the. centralized products and even just. regular retail people like they don't. want to pay the gas fees and stuff and. they're trying to it actually we we. um back at the envelope you know. calculated this out at one point. and just like. it would be completely infeasible for. like high frequency traders to put. everything on chain at this point that's. basically what dexes are doing and so.

both are important i think more and more. is going to move decentralized over time. which is great and we're and we're. basically our decentralized exchanges. yeah by the way yeah yeah. um. so anyway we want to we want to. encourage more and more of it to move. decentralized over time but i don't the. centralized things aren't going away for. like a long time it's a decade from now. there's gonna be some. big institution or pension fund or. central bank that's like all right we. gotta hold crypto. let's set up the account in a. centralized way so that's that's fine.

both both are important do you know the. number of cryptocurrencies currently on. coinbase do you know that number it's. over a hundred but it depends it depends. what jurisdiction you're in and you know. are you um. an institution versus retail it's like. there's so many different categories now. yeah. so what does it take to become. to to to become an asset to become a. cryptocurrency on coinbase to. add your technology to coinbase.

okay well so we're trying to get away. from this idea of being listed on. coinbase as being seen as like an. endorsement or something because. i actually think it's very important. that we are not considered um. judge and jury about you know like. imagine in the early days of the. internet and you were like what's a good. web page and what's a bad web page like. you would have been totally wrong or. anytime. big tech companies try to make these um. review review boards of like you know. apple famously gets in trouble for this.

a lot with their app store review. process right. and so. something that you think like a. committee of people somewhere thinks. looks silly may turn out to be the next. big thing right and so it's very. difficult so what do we do i mean we. basically have a test of legality right. we we check um. you know do we belie do we believe this. is a security if so it can't be listed. on coinbase and there's a very rigorous. process we go through for that um just. currently the way the laws are in the us. you can't you can't do that and we've. been we acquired a broker dealer license.

from the sec we're trying to work with. them to get that operational and. hopefully someday we can trade real. crypto securities but today that's not. possible in the us at least. um then we look at sort of the cyber. security of the the crypto asset does it. do we think there's some flaw in the. smart contract or. you know a way that somebody could um. manipulate it without the customer's. permission. we look at some compliance pieces to it. as well like the. the actors behind it and like you know. they're any kind of criminal history. anything like that but if we believe it.

meets our our. listing standards basically the this. test of um legality and everything for. for customer protection then we want to. list it because we want the market to at. that point decide and it's kind of like. um. it's kind of like amazon or something. like that where you know it a product. might have three stars or it might have. five stars but if it starts to get one. star consistently like it's probably. fraudulent or it's defective or. something like maybe amazon will remove. it but otherwise you want to let the. market decide what these things are.

um. so that's generally how we do it and by. the way more and more of these. assets um i think especially like low. market cap assets are going to be traded. on dexes through coinbase it's not that. we. we don't need to list every asset on a. centralized exchange i think dexes are. really good for the long tail and then. it becomes an even. it's even more clear to people like this. is not some endorsement by a coinbase of. like. this assets good and this one's bad like. you know my belief is there's going to. be millions of these assets over time. and so. um.

i hope it doesn't like make news every. time we add one in the future basically. yeah i wonder how you get there because. i even i look to coinbase. for for example you know people as you. could imagine. sort of tagged me on twitter or. something like that and all that like. you should interview. our sort of this the the founder of this. particular coin right yeah and i it's so. hard for me to know. what's ha first of all what's. interesting technology.

what's uh. who's a scammer or not who's actually. legitimately representing an ambitious. new thing versus. a scam. and i you know there's very few sources. of uh. like verification signal. and unfortunately coinbase in part has. become. a little bit of that too and you're. trying to get away from that because. you're trying to get as many so let the. people decide so you're thinking of like.

amazon star type system. where the people could rate. yeah so i think we'll actually probably. add like user ratings and reviews so um. and and we'll be very cautious about. like you know these are real people um. there's a bunch of stuff we have to do. from that already so i think wisdom of. the crowds is good in terms of getting. feedback on items but we also we're. gonna do our own review which i. mentioned earlier right which is like. okay it meets this minimum bar to be. listed on our site yeah um.

i think yeah both are important how do. you know if if a coin is a scam or not. well you can you can see a few things so. you know i hate to use the word scam. because a lot of these these are. judgment calls you got a kind of a court. made me or a jury may land either way. but things that would be red flags to. look at would be. um you know is a bunch of the. asset owned by an insider or insiders um. with short vesting periods. um. you know are.

does the background of the founders like. they may have criminal records or. they've perpetrated other frauds in the. past right. um there's a difference between. something which is. just a me too product it's like it. doesn't have anything interesting about. it and something that's an actual fraud. or outright scam and. um. you have to a lot of this data what's. cool about it is that it's now available. on chain you can look at like the. tokenomics behind it and see who owns. economics and are they yeah and are they. selling it you know.

in like inappropriately or are they. pumping it on like youtube and twitter. and making promises about hey the value. of this thing may be a higher in the. future and like all those are just big. big no-nos that we would. um. you know we just don't want to go there. so. our whole thing is like we want we want. to enable innovation in this space but. not allow anybody to. curtail the advancement of this industry. by like doing some kind of fraudulent. thing or get rich quick thing so it's a. tricky industry because i'm trying to.

figure out who to you know. uh what's interesting to to to to. understand to research yeah and uh it's. hard to know let me ask you about a. trick you want to add to a centralized. exchange which is privacy preserving. cryptocurrency so like monero yeah is. that is that technically difficult or is. that why. why is like monero for example forget. that specific one but like privacy. preserving. cryptocurrency blockchains uh why is.

that ever possible to add. so that's that's a great question so the. answer is maybe. so um. here here's the here's the what the. reason why so. um because we're a regulated financial. service business we have various um. licenses to do that we are we are. regulated by various regulators part of. those licenses requires us to have a. quote reasonable um program to monitor. for. suspicious activity um. you know an aml program anti-money. laundering right and so if it if a coin.

is 100 anonymous and we can't really do. blockchain analytics to track. um sorts of funds and where these things. might be going. it makes it harder to have a. um a reasonable program around that. that's defensible now there are privacy. preserving coins like zcash which have. something called a view key and a view. key is basically another key which. allows you to de-anonymize the. transactions in specific situations. where you want that so for instance um. you know we do support zcash and one of.

the ways we got comfortable with that is. that. when you're buying it on coinbase um you. know you can basically have a view key. the the transactions are not anonymous. while you're buying it and we can see. where it goes afterwards and do our our. whole standard program. um now if it gets a few hops away down. the road i mean people could eventually. turn on privacy preserving aspects. so you know these are tough judgment. calls but at least in terms of our. interaction with the customer and. everything we feel comfortable at that. i think there's a broader point here.

which is that i actually think privacy. coins are a good thing for the world and. we and they should be allowed and more. like you know. despite we've made this judgment call to. operate in a regulated and safe and. compliant way but. just taking my coinbase head off for a. minute i think the world would be a. better. place if there were more privacy coins. because it's kind of like the internet. when it first came online like there was. no https everything was http and there. was you know so people were afraid to. put their credit cards on the internet. and um your your messages could be.

intercepted and all the stuff and now. the whole internet has basically moved. to https with a little lock icon in your. browser. which is better like and and financial. information is like the most important. information to keep private right. so there's times where let's say you're. running a charity or something and you. want to have total auditability. transparency for the whole world who. donated and where did the money go. that's great you want it to be public. but if it's like your personal money or. something like that you don't want to be. broadcasting that to the whole world and. in some ways that's what blockchains are. doing.

you know pseudonymously because like but. it is a public ledger and so if you can. know who owns each address you can. basically de-anonymize it. i you know i think basically the people. should fight for um privacy and freedoms. of all kind but privacy of money is a. good thing so i would like to see more. of that in the future you chosen with. coinbase to. to uh to have a seat at the table with. the regulators yeah so what kind of. what kind of conversations. are there at that table what are the.

regulations like. what is the level of understanding with. regulators. what are they worried about what are. they thinking about what are the. positive and what are the negative. regulations that you're facing. that you're educating struggling with. pushing back on supporting all that kind. of stuff yeah. oh man there's so many because we're i. mean we're live in. like. you know maybe 100 countries or more at. this point so the the conversations are. all over the map. um i'm trying to think what broad.

strokes i could paint for you so i'd say. one trend that's that's positive is that. basically regulators around the world. are con are more and more as over the. last five years i would say. it's more and more common to find a. regulator today. asking. how can we preserve the innovation. potential of this technology. while keeping the bad actors out than it. was five years ago where they were. saying this is all bad activity how do. we prevent it. and so. um maybe this is when you say more and. more.

what fraction. [Laughter]. i'll give you like a u.s specific. example although we operate in many. countries so when i go to dc now i would. say. you know 50 60 of the people who i meet. with are basically. you know they're in the camp of crypto. has a lot of potential we should. regulate it to make sure the bad people. don't do something bad with it but this. is here to stay and it has a lot of. upside we should basically. um create thoughtful regulation and.

celebrate it and actually encourage this. innovation to happen in the u.s that's. a huge change from just three years ago. where it was probably 30 of people. saying that now it's like 60. it's like. almost double it's getting harder to. find like true cryptoskeptics in dc. um i'd say that you know. maybe maybe only like 20 or 30 of people. are like willing to say something. negative like they actually think it's. net negative it's like it's really hard. to defend that position at this point. because. almost like one in five americans have. used or tried crypto at this point so.

you're kind of condemning 20 of your. fellow citizens if you say that at this. point. um. you know especially with nfts and all. these things like a huge segment of. people who don't even care about. investing or whatever came into the. space so. and then basically that's that same. conversation is happening um but. you know delayed by a few years in in. like india and europe and in in some. asian countries and. um. some countries have really embraced. crypto and they're like trying to really. they're they're ahead of where the us is.

because they're trying to actually uh. attract the best startups and. entrepreneurs like you know like dubai. and uk and australia and all kind of. pushing good regulation. um el salvador actually i guess adopted. it as like bitcoin as a legal tender. there was another country central. african republic i think that supposedly. did that as well. but. you know there's countries like china. that are more autocratic that are saying. hey this is a threat to our power and. like we're going to try to really. curtail it so what kind of regulations. are there that you feel the most.

that are limiting or that are empowering. like is there specific examples. yeah okay so um. i mean basically i think the securities. laws in the u.s need to be clarified. about. um. what. there's crypto is many different things. that's what people don't realize so like. some crypto like bitcoin ethereum and. many others are probably more like. commodities. um they're not controlled by any one. person you know like. anyway there's people who want to raise. money for a company that sounds more. like a security that should be regulated.

by the sec commodities are regulated by. the cftc. then there's some cryptocurrencies which. are more like uh currencies like stable. coins and central bank digital. currencies and. those are probably you know should be. regulated by the treasury or someone. like that and then there's a whole. another category of cryptocurrencies. which are none of those things they're. they're nfts like artwork or their. metaverse items or decentralized. identity and voting and. so. i i think that there's a very um. unhelpful. point of view out there by some folks.

which is. hey this is all most of this is like bad. activity we need to shut it down so. we're just going to pursue enforcement. actions or something like that most. people in dc don't feel that way anymore. and i think the people of the us don't. feel that way anymore. because a lot of them are using this. stuff and their their general view is. there's a lot of upside potential here. we can all agree let's get rid of the. fraud and the scams we all want to get. rid of that. so let's create a relatively simple test. which says. you know if it's like.

nobody controls more than 20 of it or. some threshold it probably is more like. a commodity if someone's raising money. for they're selling this thing for a. business then it's probably a security. and then you know if it's more like a. medium of exchange it's a currency and. if it's none of those things maybe it's. artwork or whatever. a legal test like that would help. clarify who which regulator is. regulating what. and then um you know we also want to. have probably like a sandbox for. innovation where if you're a startup and. you're doing less than i don't know some.

number. um. less than some amount of payment volume. or customer funds you're storing it's. like just let those things get off the. ground without. a soul-crushing amount of legal bills. you know and uncertainty so if the u.s. can get there that would be great i. think a bunch of other countries now are. rushing around the world to sort of. create that regulation that it does. attract innovation. and so um in the nash international. bodies like imf and g20 and stuff. they're they're starting to look at. proposed regulation.

i hope that coinbase and a bunch of. other crypto companies can help in that. conversation too we have a whole policy. effort i think actually crypto policy. efforts are like probably one of the. biggest things in dc right now so. um. it moves it moves slow at the speed of. government but um. yeah and in the meantime we're just. trying to help more and more people use. crypto because ultimately that's what in. the democracies that's what they care. about like they'll do what the people of. the country want so you want governments. to start understanding uh differences. between in the crypto space commodities. securities currencies nfts i still don't.

understand. what is supposed to make sense of nfts. what is nfts exactly from a perspective. of a regulator. yeah so um. is it the other categories is that yeah. you know most nfts you could think of as. like artwork although it's it's who. knows where it's going to go it could be. you mentioned metaverse right you. mentioned some kind of unique identity. of a thing. yeah like i mean there's everything. yeah right nfts. i actually i bought this nft that's like.

um. it's like citizenship in this like city. dao in wyoming like i've never been. there but um it's almost like a. like a as like a badge or at a station. like to get access to this location. um. there's like people doing like like. tickets to events like you know they're. called uh co-ops like um. proof of attendance and things like that. so. it'll be very interesting to see where. nfts go over time it could get. that's and that's the danger you don't.

want to try to like define the. regulation if you don't even know where. this thing's going to go so and so your. efforts on the policy arm is is. education. yeah education advocacy. we're just trying to be like a helpful. educational resource essentially and. then if they give us feedback and like. hey. don't do this or don't or do this like. we're more than happy to do anything. that's requested. we generally go get licenses and we've. just tried to do the right thing in the. absence of clarity because. it's if it's not clear what what the law. says then you should just basically do.

good things that you think may be. required in the future to show good. faith effort towards the right thing. and uh. that's part of like innovating in a. regulated field which is you know whole. topic in itself so if you are. at the table i mean. this is less the case in the united. states but can government agencies seize. a person cryptocurrency by forcing. coinbase. to to hand it over. so when you're centralized you they have. a phone number to call. okay so this is a complicated topic.

um like if you really want to be sure. that um this is why people want to store. their own crypto right like with. self-custodial wallets like with. coinbase wallet and bracing. decentralization they want to avoid that. now in the u.s there is rule of law. right so we have reasonable protections. in place around um like search and. seizure and things like that. um you know coinbase does we publish. transparency reports on this we get. subpoenas court orders things like that. from various um countries around the. world and um.

there are situations where we have been. ordered to freeze accounts things like. that um. you know we have to follow the law is. there's no another way to put it we're a. regulated financial service business and. so if the money is used to break as part. of breaking the law that's what that uh. in a particular. jurisdiction in particular. right and then the other thing sometimes. you we will actually get court orders or. subpoenas that are overly broad we've. seen so they need to follow. due process right and so we've seen um.

some in the past that were like well we. need you to freeze this huge number of. accounts and it's like well. we'll actually have gone to court and. like pushed back on some of these and. said like what is your the probable. cause and is that has the threshold been. met and like we've won some of those. cases on behalf of our customers so. yeah it's it's actually really. it's kind of unfortunate and frustrating. as a you know as a large business you. spend a lot of resources basically. interacting with. inbound requests by all kinds of lawyers.

and people and. requesting things and some of them are. silly and ridiculous and you have to. push back and say no and so. it's kind of a tax on every company at a. certain size which ultimately gets. passed on to the the customer in higher. fees so. you have to employ armies of lawyers to. deal with this stuff can you educate me. on something how much innovation. is there in the legal space. so for lawyers working with coinbase. because it's such a new. cutting-edge thing.

so you're. if there's a lot of gray area you're. supposed to be operating. under like how hard is is it being a. lawyer at coinbase. like uh how much precedence is there i. guess is what i'm asking i mean just. like you said three years. it's kind of a new space yeah well it's. probably very hard to be alert coinbase. and very fun because. you know whenever you're in a new field. that's growing fast there isn't a lot of. um. case law and just precedent set so.

that's also an opportunity for you to go. create that stuff and that's what a lot. of legal careers are made out of is like. take a complex situation where you have. to balance difficult things like how do. we prevent bad activity but still enable. an innovation that's a hard question. and there's you can go draft legislation. and circulate it to policy policymakers. or. come up with these policies and. you know how do you operate a business. in an environment where. the law is just unclear right it's like. try to do the right thing.

um but like. you know strike the right balance so. yeah a lot of our lawyers have to come. up with that very creative stuff you. mentioned one of the things you're. focused on is expanding the number of. people maybe a billion people. on coinbase or using cryptocurrency. where are we at now how did we get to a. billion. as of q4 last year we had 89 million. verified accounts on coinbase but in any. given. uh quarter only you know maybe. like 10 or a little more million of. those are like really active so.

um and then if you look at globally i. think some of the estimates i've seen is. maybe there's like 200 million people or. something like that who have ever used. or tried crypto. so. we're along you know. ways from a billion but it's not like. that far off. um how do you get there. yeah. so a few things one is the blockchains. have got to become way more scalable. um it's kind of like we're all running. dial-up modems and we need broadband and. so it's just like.

too expensive too slow to do all these. transactions and i think. if we just get l2s working and. scalability you know we'll see another. order of magnitude kind of come out just. from that. um i think the second one be more clear. regulation that would help a lot um. i do talk to you know pension funds and. um. you know various asset managers. sovereign wealth funds and stuff and. a lot of them tell me we've we've got. one percent of our portfolio in crypto. today. but. we really would rather have like 20 in.

there but what we're waiting for is. more clear regulation um coming out and. saying that clear test that i was saying. these assets are commodities regulated. by so if you see these are my sec these. are about treasury whatever. so that would be a big unlock. do transactions so one of the things. that you mentioned uh payments sorry. yeah well does that unlock a lot of. users. yeah it does i mean remittance is like a. huge thing people sending money home to. their families in other countries where.

the fees are super high so yeah if we. get blockchains to be more scalable and. there's more global adoption like i. think we'll see. remittance quarters um move over to. crypto a lot. there's also just um the other thing. that's driving a lot of crypto adoption. is basically. the creation of more and more. third-party apps so or adapts they're. sometimes called decentralized apps so a. lot of startups now um. you know how like you used to use in the. early 2000s they called them.com. startups but now you don't need to. say.com because everybody's using the.

internet and so now there's like. hundreds or thousands of these crypto. startups. but i think in the future you won't need. to call them crypto startups because. they'll just be called startups because. everyone's using the internet and crypto. and whatever so. anyway the the the use cases the utility. of crypto is is getting better and. better with like all these third-party. apps getting funded and created and do. you think there's gonna be a killer. or a set of killer daps. like a thing where nobody can live. without are we still waiting for that. there's gonna be a bunch of them it's.

just like it's like the internet like. what were the killer web companies you. know like uber and wikipedia and airbnb. and google and like. so. there's going to be some big winners but. there'll be thousands of this is. basically the new. it's like what happened with the dot-com. startups in the early 2000s it's like a. lot of the best entrepreneurs are. building crypto startups now so. um tons of venture money flowing into. the space a lot of smart young people so. do you think bitcoin or some other. cryptocurrency will become the reserve. currency of the world at some point.

so this is kind of a controversial idea. but i actually think yes um. i do think bitcoin could end up becoming. a reserve currency of the world there's. so you know i've been reading ray dalio. recently um. with his new book like the changing. world order and i i thought it was a. really well researched book um. he talks in there he looks back at. history right he looks at like empires. and. um you know going back to various. chinese empires the dutch and ottomans. and everybody and. how did they rise and they they were.

able to have the reserve currency as. they as they rose and what produced that. like it came from you know good. education and innovation and better. trade and anyway. so. the u.s by some measures is kind of. looks like it's maybe it's had a really. good run and it's coming down a little. bit and china is kind of kind of coming. up who knows how that'll play out by the. way like the world is very complicated. it could that could switch. um. but i guess. if the u.s dollar is going to be seeing. more inflation in the future.

the chinese yuan is not like. necessarily better right i mean. they have a ton of debt as well and um. you know it's not like. you could really that that the yuan. could be inflated as well right i. probably will be and so i do think that. there's this group of people today which. probably most traditional um. i don't know like the people. who run big banks and like governments. and stuff that they're not this is not. really on their radar today but i think.

there's there's a basically a group of. younger people in that kind of. you know 25 35 year old range who are. tech savvy. they're starting to think of crypto as. like the primary thing. in their financial life it's like. i basically hold my wealth in crypto and. i use. dollars or euros or whatever if i if i. happen to need something i convert it to. that last minute it's like if i if i go. home if i'm traveling i might convert. some local currency in the moment but. that's not where i hold my most of my. wealth. so this segment of the population is not. like.

massive yet from a gdp point of view but. um i think it's a leading indicator of. where things could be going and this is. actually good for the world it's kind of. like. especially if china does continue to. rise and it has a more authoritarian. view it'll be kind of this very. centralized east versus a decentralized. west. um where people are in the west in the. free world really kind of embracing. um crypto and a more open fair free. global. financial system which i think will. be enormously beneficial for humanity.

and i do think basically bitcoin is the. reserve currency the gold standard of. the crypto economy. um. so that's pretty crazy yeah the gold. standard i mean it's also. like with ray dalio. um. i feel like china will drive a lot of. this. either in response or directly i mean um. i think the ruble i'm not paying as. close attention to the financial systems. but. i think they're trying to tie it to gold. once again so that's an interesting.

maybe it'll be one of the more. authoritarian regime that will switch to. bitcoin standard first. and then. um it's the the west that will. out of that pressure will catch up. versus uh versus the other way around. it's. it's it's fascinating to think of what. is the. the forcing function. what kind of perturbation is required to. switch to change anything honestly about. the financial system but. it could be.

um. as you're saying just waiting for the. people that are young now that are. embracing crypto to. enter the positions of power. essentially. but i hope that's not the case because. that's uh. if for any innovation we have to wait. um sorry to say for the older folk to to. pass away yeah. that's not an efficient way to uh to. make change yeah. that is that's a super interesting topic. of how. people's minds become less plastic as.

they age yeah. i guess it's a feature. it's called wisdom but then we also need. the wild ones to explore exploration. versus exploitation. you wrote a blog post that's really. interesting in september 2020 titled. coinbase is a mission-focused company. like what we're talking about. so one interesting thing you said in. that blog post is that. we're not going to be distracted by. sort of activism within the company.

that's not related to the mission of the. company. now that's a rare thing for a company to. state for companies here at the state. especially in this climate. um. can you. first of all describe in a little more. detail what you meant. uh did you receive blow back for this i. definitely received some blow back but. yeah i'll describe what i meant and um. if you want to talk about how it came to. that too we can talk about that but. what i meant is that um.

there's a lot of companies right now. including tech companies but not. exclusively where. um. you know i think like great companies. they have an important mission they're. trying to do something really good for. the world. and. unfortunately they're getting a little. distracted from that at times because of. employee activism that is causing the. company to. basically jump into whatever the current. thing is and try to. help is like the positive interpretation.

you know the negative interpretation. would be to virtue signal. and. my view is that this is actually kind of. destructive to um this is largely an. american company phenomenon by the way i. i i do worry that this is making america. less competitive um even though i think. of myself as kind of internationally. minded but i you know i'm a u.s citizen. and have a lot my whole life here so. um. when we put out this statement we had. employees that were not in the u.s who. were confused by it they were like. why did brian need to say that you're. just saying you're going to work focus.

on work at work. that's what we were doing already yeah. you know and there was certain pockets. of the us certain cities you know in. particular where we had employees that. um a very peculiar cultural. phenomenon had evolved where. i think people really wanted the company. they worked at to be. you know uh. almost acting like the government or. something and like trying to solve the. hardest societal issues and and how at. least have an opinion on it if not.

contribute to the solution on almost. everything. um. and for me. i kind of uh. you know i was it was a very. uncomfortable situation for me as a ceo. i'd never quite been in this situation. where. most the time when employees in the past. were kind of asking me questions. um they would be asking about like you. know how do we make this product better. like what do we do with this competitor. what about this regulator. and it got to a place around that time. where um. most of the questions we were receiving. were i think even about things not.

related to the company they were about. broader societal issues like brian. what's your stance on xyz controversial. thing. and you know it was. i often like didn't have an opinion on. these really hard questions right and um. i didn't really i felt like it was. distracting the company people. internally were getting into fights a. lot too like. disagreeing with each other there were. there was a thing where like the social. slack internally was turning into social. media almost with people putting in. flame wars. so and this culminated by the way with. um. a walkout that happened in the company.

we we received like some demands from. employees groups about various things. and there was like basically an. antagonistic thing with management and. employ and i was like we're all on the. same team here. if you want to be antagonistic let's do. it with somebody else outside the. company you know that we're trying to. improve the world on in that dimension. so. yeah eventually i was like okay the. company is not aligned on this. i just don't feel i don't like the job. as ceo frankly like if if the job is to. come in here every day and like have to. squirm in front of like these the most.

difficult societal questions. um i don't think i want to do that job. so like either they're gonna have to go. or i'm gonna have to go. and i founded this company and i really. believe in the mission so they're gonna. have to go and. what i realized was that um so i. basically i made an exit package. available to anybody who wasn't on board. with this direction five percent of. employees took it i got the company. realigned towards this this mission. we're all here to do work by the way. people can they can go do anything like. political or social activism outside of. work it's totally fine like we all.

everybody has stuff like that. um in their personal life but while at. work we can also disagree at work by the. way on the work you know this is not. like a no disagreement culture like we. should let's try to get the truth. um but don't bring stuff into work. that's just going to create division. make the workplace a refuge from. division about all these crazy things. and like we're all aligned here to work. on the mission let's do that yeah that. was really. really. really refreshing to hear. so this is me speaking but there's a. sense when companies.

take on these issues publicly from a ceo. position or anywhere else. that it does seem to optimize. for virtue signaling versus solving a. particular problem. because to solve a particular problem. you really have to. really put in a huge you have to hire a. huge number you basically have to create. a company within a company to take on a. particular thing right uh but if you. allow yourself to internally care. about a particular issue you're.

basically pacifying some number of. employee like making sure slack doesn't. get out of hand and then you're doing. this kind of from my perspective. especially on issues that care about. fake virtue signaling basically trying. to understand what will make me look the. best what would make the company look. the best in this particular aspect and. it just seems very shallow and it's. optimizing for the wrong thing not for. the solving of the problems yeah but for. the. making yourself look like the good guy.

and trying to then leverage that to say. i'm the good guy in all situations and. it's just it's it's the wrong thing and. perhaps from your perspective as a ceo. for as a leader it's also creating. division unnecessary division within. people like they get yeah there's. something to bother us we get. extremely. argumentative about certain topics they. really bring out the emotion yeah. and i think that probably as you were.

saying that emotion. is even probably okay maybe productive. when that emotion has to do with the. mission of the company yeah like you. really care about. those disagreements versus like. something that has nothing to. nothing to do with a particular with uh. with increasing economic freedom. uh using crypto. yeah it's fascinating. but it was so refreshing because it's. rare. why do you think that's a rare. so you the city you're mentioning. i mean there's a bunch of cities uh but.

you know san francisco. is one such city when one when that. culture. and. it's sad because san francisco is also. the bay area is also the hub. historically of some of the greatest. innovation in human history yeah so that. there's that tension how did that. culture emerge there. where like the innovation was done by. people that are very mission driven you. get a bunch of smart people together to.

solve a difficult problem. they get maybe sometimes too much. blinders on but they try to balance that. and because it requires that focus to. solve an actual problem and yet that's. also the place where this culture. emerged it's a fascinating human. dynamic i don't know somebody will one. day tell the history of of uh silicon. valley. not just the innovation but the social. dynamics that occurred there anyway why. do you think that's so rare. well because people don't want to get.

attacked it's like super you don't want. to get canceled right it's super unpro. un uh comfortable you know nobody wants. to be called a racist or whatever. whatever you know people want to say on. twitter so um get attacked. yeah yeah i definitely got attacked i. mean and i knew i knew it would be. controversial the only reason i did it. frankly was that. um. i was kind of at my wit's end i was like. well like i said earlier like the job. the ceo job sucks like either i don't. want to do it or they have to go and i'm. going to make the company into something.

that i want and. you know. i spent um i'd spent eight or nine years. of my life at that point kind of. building this thing i was like well i. could go start another company but it. takes a long time to get momentum with. these things and. you know coinbase is a very rare thing. that happened in the world i feel very. passionate about it so. um yeah i'm not going to go like i need. to make this the company that i want to. work at and what was really interesting. was that there was such a huge. outpouring of support. so i knew that it would be controversial. and i would get attacked and predictably. you know there was some um.

some journalists and you know new york. times and all these people who kind of. like went and started writing hit pieces. on on the company after shortly. thereafter and they basically just call. people who've left the company and like. you know can get quotes on whatever they. want and then they'll write a story so. mainstream media i lost a lot of trust. in mainstream media frankly after that. and of course it's kind of become. obvious since then that um most. mainstream media is like hyper. politicized at this point it's basically. either super left or super right and. it's not really. that focused on.

um. truth so that's that's kind of. unfortunate because i think journalism. is actually like really important in. society so that that whole thing got. eroded in the u.s luckily there's sort. of new media people like you um and a. whole bunch of people did that blog post. help that statement the the 95 people. that remained. is this still something you struggle. with because there it's also a culture. of the broader tech space. okay so that was an interesting thing. which was that so the 95 percent of. people stayed i got a huge outpouring of.

support from people. who said. thank god you finally spoke up and said. something because. frankly. it was making not a very fun place to. work either. and i realized that there is. i think there was a i think is it the. steam to lab has this blog post about. the tyranny of the. the one percent or something like that. but there's basically a relatively small. group one five percent or something like. that that is. really. upset about something it's not the. majority of the company it's like five.

percent there's another 15 or something. that are sympathetic to the cause. they're they're actually somewhat. suggestible they will go along with. whatever because it sounds reasonable. you know these are like real issues. they're talking about it's not not to. say that it's not real. and they'll kind of get swept up in it. but there's an 80 of the company that. basically. doesn't agree or just wants to get their. work done without all this drama. and or distraction and. they're afraid to speak up because if. they speak up they're afraid of being. again called a racist like fired you. know ostracized amongst their peers and.

so. it did require um. it to get to a bad enough place for me. to finally say you know what i just i. feel like i have to do this. live through the short-term attacks of. the press which ultimately was very. freeing for me because now i don't. really care. and now i can actually just build the. company that i want to build without. like caring. about that so. and then what was cool was a lot of. really great people reached out to the. coinbase too after that and were like. i you know i'm an early engineer at. google or wherever and like.

this culture has gotten kind of messed. up and like i want to work at a company. that's willing to stand for that and so. we've gotten a lot of good people come. over basically what i realized and by. the way are diversity numbers and all. that stuff like people told me when i. was drafting this post they're like. don't post this you're like people. underrepresented groups will never want. to work at this company again and i was. like i don't think that's true like i. talked to like our erg groups and. they're not telling me they care about. this stuff that much they're telling me. they just want to like be respected at. work and do good work and contribute so. my gut was telling me that that advice.

was wrong and like i can tell you a year. a year after doing it like our diversity. numbers are basically either the same or. better in every category so that turned. out to be false. um. look i i hate to be like like i'm you. know polarizing on in either dimension. here like i just want to get good work. done and build good stuff with. technology so. you know um. i think companies should just have like. reasonable policies like you want to get. rid of bias and hiring you want to. attract great people from all. different backgrounds like you know we.

have pledge one percent we put one. percent of the company equity into a. foundation like i hope we're able to do. good stuff with that that's. you know give back in some way but like. the main. the main message i guess for me is like. the core the core mission the core work. that we're doing on economic freedom and. just all of our products are that is. like the main value that we're. contributing in the world like let's. just do that more and hopefully we can. get from. 89 million verified users to a billion. or whatever. and then um. i just think that's how we'll have the.

biggest impact it's tempting though it's. so interesting how companies get tempted. to to help. yeah it's like and you step in and it's. almost like a drug and then you can't. you forget i mean like all of us in life. doesn't have to be companies you get. distracted. yeah and maintaining focus like you're. absolutely right the way for coinbase to. add value to the world is just to. maximize the mission. that it's on not not other not other. stuff and when you get wealthier more. successful there's becomes more and more.

tempting. to just help out in some other shallow. ways and. it's fascinating and you just kind of. brought that to light so it was very. refreshing and it shouldn't be. controversial to sort of. focus on just getting stuff done well. let me ask you i mean do you think that. this it's all these things tie together. there's like a general trend of like. more censorship you know there's like. more cancel culture um. there's uh. some of these like freedom values are. kind of you know. even like freezing people's accounts.

like the trucker thing that happened and. it seems like there's a general trend of. um. more authoritarian. you know uh policies there. but. do you think that do you feel like the. tide is turning on that like there's. counter examples to it we've seen. recently yeah i think it's uh the last. gasp of old way of doing things and so. there's desperation and so on because. to be fair. it's kind of the internet which is where. is the source of a lot of this where. people have a voice is making the power.

centers of the world really nervous and. so that's where that's coming from i. think and and the internet is tricky. it's weird it's full of bots yeah it's. full of like misinformation of all kinds. yeah full of large groups with. conspiracy theories and so on uh and i. mean misinformation broadly people are. misusing the word misinformation they're. just. governments are just labeling random. things with misinformation just to. censor them. but.

i just think it's just like a new. world where the internet is really. finally taking hold where there's. billions of devices and everybody has a. voice it's it's almost. uh basically governments. and powerful people. are slightly losing hold of power and. they're starting to freak out a little. bit. that's it and so and then once you have. young people that are coming up now. gain power i think will will rebalance. everything and and then there's yeah. like you said promising signs.

um. that it's obvious that the majority of. people. want freedom and that means a lot of. things that means economic freedom that. means freedom to have a voice. um freedom to move around freedom to act. in the way they you know without without. reasonable sort of. um. limitations by people that don't have. their best interests and. i i gain more hope from just regular. people that are.

uh fighting. and like demanding. the. being able to have freedom of speech. or more specifically sort of resisting. crude overreach of government in the. acts of censorship. at least in the united states. uh and hopefully that percolates out to. the rest of the world that's struggling. on a much more basic level where people. are being put in prison for the worst. they say not just banned from twitter. right could be worse.

what are some. lessons. from your failures and your successes. about what it takes to run a company i. think. one of the things that i've learned. about leadership is that. you know i never really thought of. myself as a very natural leader to be. honest i don't think i was a natural. leader. but so i always envisioned you know good. leaders as like these military generals. like they seem so like confident and. they're just like bark orders you know. like charge that hill and do this and.

i was i was actually like more. introverted and kind of um. i wasn't really confident in the way i. communicated and. you know and so. what i realized is that there's lots of. different kinds of leaders you can be. any kind of ceo you want right i was. kind of more like a product technical. focus ceo and i preferred to sort of. hear everyone's opinion. and i wasn't just gonna like render a. decision in the room in some like kind. of heated moment and like piss off half. the people i would be like all right i'm. gonna go think about it and i'll send. you my decision later today or tomorrow.

or whatever and so i i would i found. ways to kind of make it work for me. where i could basically. i always tried to avoid like um. you know when people getting like super. emotional about something and like i. think they're they're thinking their. judgment goes down right and it's like. never make a decision when you're angry. right and so. if i would always sort of try to get a. sense of are these people like trying to. be right or are they trying to seek the. truth you know and you you can do these. little tricks like you know okay you. argue that person's position and you. argue the other one and like.

see if you can genuinely represent it. now i know you're listening and you know. these kind of things. um but i guess sorry getting back to. your question about leadership i think. i basically just kept doing things that. were a little outside my comfort zone. and then my comfort zone kept getting. bigger and bigger you know yeah and so. that's i think that's how you build. confidence. is. you you do the thing that's scary and. it's like a little outside and like when. i first started coinbase i had never. managed anybody i would have i would.

have never i would have been scared to. death to have put out like a very. controversial opinion like that and sort. of. all right. five percent of people go you know we. didn't know what percent was gonna be by. the way it could have been one percent. it could have been fifty percent like. but we went into it scary because i it. was a scary thing i was like i don't. know i think this is right i'm just. gonna do it. so if you do if you do enough scary. things like you'll build the confidence. and i feel like i'm still on that. journey every every year or two at. coinbase there's some big thing that. comes out is like oh my god like i. didn't sleep well for a week and like.

this is the next level right. um but that's how you that's how you. learn and grow so you're still going up. that mountain through the fog one step. at a time yeah uh can i just quickly ask. you about a couple of other efforts that. are super interesting that you're. involved with so first of all. a little bit more old school fascinating. effort of research hub. um. so what what what's that about the. github for open science. yeah okay so basically i've had a chance. to try to help a couple other companies. get off the ground too because i want to.

see various efforts out there um succeed. and. um one of them i've always thought about. like why is scientific research. not more like open source software or. why couldn't it be much faster right and. there's. you've probably have seen this like in. an academic setting right but. there's all kinds of things that feel. very antiquated to me about scientific. research everything from. the funding process and grants to how. peer review works to how you submit the. journals all the costs associated with. journals. you know that the people you'd think.

like you'd get paid for this or. something and it would then be available. to all the taxpayers for free but no. they're like they're all paywalled and. there's like these big companies that. have sort of. in my view kind of held back um. innovation here. so and. the preprint servers like bioarchive and. archive.org have really helped this but. those websites are they look like. they're kind of from like 15 years ago. or something yeah it's like craigslist. yeah. so anyway i one of the things i. once once coinbase went public last year. i had a little bit of liquidity and i. was like all right let me fund a small. team let's see if we can.

if they can like go off and make. something better here so we have a we. have a prototype out there uh it's at. researchhub.com people can check it out. and it's basically um. you know the first version is kind of. like reddit for science there's like. various hubs which are like journals um. you but you know you can publish papers. there you can use an electronic lab. notebook to sort of have a modern day. paper which is not just a pdf that's. static but it's a living document. ideally in the future you know you can. get comments and feedback from people on. there you can update it over time we. want people to be able to share the code.

and the data sets associated with their. paper research paper is not just. a pdf. in the future we want to make it even. where like you know people can um. get funding for science through through. that site and even license out. innovations that they've made because. the other thing i've noticed in life is. that there's kind of like there's a. bunch of people working on science and. there's a bunch of people building. companies and they very very rarely. intersect but when they do you get the. best things like like spacex and. genentech and even google and like even. coinbase was based on a research paper.

the bitcoin white paper. and so most business people are like. creating companies that don't have any. scientific innovation they're just like. marketing based on you know whatever and. then a lot of scientists are making. things which never actually benefit. humanity because they're not. commercialized and turned into products. and so. if we can somehow create a translation. layer between those two groups and help. them. you know help align the market forces. align scientific research to market. forces so that they're more incentivized. like if you if you discover crispr or.

something like that like you should be a. billionaire you know and like all the. downstream implications of that. not going through some antiquated tech. transfer office or whatever and if you. and if you're an entrepreneur you should. be looking to commercialize the latest. scientific innovations and so that's. kind of like the long-term vision for. that site um i think it's just an early. step today but we've got like a really. passionate community on there that are. jumping into like you know computer. science or longevity or. um. various bio hubs or whatever and like.

beginning to source the best innovations. but also discuss them and prove them and. publish through the site so i have a. question about incentives but first let. me say for people listening who are. outside of academia might not be. familiar with an absurd situation so. there's journals like you mentioned. and. scientists publishing those journals. and. the journals provide very little value. except. matching you with reviewers that are. unpaid.

and so. uh. in the digital world they're providing. basically almost no value except hosting. your paper. and they put up a paywall and charge. people. to access that and that charge is not. like even netflix fees you're talking. about a lot of money. so they're basically. blocking your research that should be. wide open. uh from the world and creating a paywall. it's a fascinating like scam that's.

actually holding back. i don't it's it's a shitty scam because. you're not making that much money. i feel like a definition of a scam you. should at least be making money that's. like significant amount of money you're. basically making shitty money and. holding back all of human knowledge okay. so that put aside and people get a. little confused because the journals. aren't the ones paying the scientists. people think like the journals are. somehow funding the scientists. therefore. they have the right to put up a paywall.

no no the funding is coming from. elsewhere journals yeah are the middle. man that nobody asked for especially in. the digital world anyway. that said there is uh. interesting kind of incentives for. scientists which is prestige and so on. so. there's a. thing with journals if there's if. there's a prestigious journal. and you uh pass the review process you. get into that journal. or a prestigious conference in computer. science then that's seen as a good thing.

in your resume. and not just your resume within your. community that's a respected thing is. there some way to achieve that same kind. of incentive in an open um. in the open setting of research hub so. like where i could say i got. x y and z like look i'm impressive. because this happened on research hub i. think you're right like the whole um. academia like progress track is about. like where you got published and how. many citations and it's kind of like a.

false economy. of um. reputation because like there's not real. money backing it and so i think we've. thought about this a little bit um. and i think the research hub team has an. opportunity to do something here that. basically says like okay i had the top. paper for 2022 in. um you know biology on in here and you. basically publish a list a leaderboards. of these like top you know for the month. the the year um in all these different. categories then actually you know we.

should probably give out grants and. awards um in in addition to that fund. those people almost like fellows or. even give out like you know like the. nobel prize. there should be like a research hub. prize or something and like ship people. maybe maybe even ship like a print. version of a journal that is the top. papers in each category in each month or. whatever and like people want to put. that in their wall in in the lab and. like so i do think we need to sort of. change i don't know like the traditional. folks in academia or science would.

probably think this is like crazy a. crazy idea but i think we need to change. the culture to. not celebrate getting published in. paywall journals. almost like friends don't let friends. publish in. like. paywall journals like because that's. it's just not helping humanity so like. you know it should be more prestigious. to publish. in an open science way. and get the top spot that should be. celebrated above being published in. whatever i don't even want to name one. of them you know well there's currently. it's the culture has already shifted to.

where almost everybody publishes an. archive and by archive and so on yeah. but. so that the culture is there on that. that scene friends don't let friends not. publish open but then the prestige thing. is missing which is like anyone can. publish an archive yeah so how do you. know it's actually a strong paper now. funny enough even with the crappy. systems we have now. word of mouth is powerful like you have. a like citation system is pretty. powerful so like you say okay this is a.

strong paper we don't need reviewers our. human eyes are the reviewers like that. the community are the reviewers so it's. already it's like that part is there but. it it would be nice to have like. uh. you know nature level like this is. respect this is a respectful. accomplishment yeah and something like a. leaderboard but a stable kind of system. yeah and i should mention so there's a. crypto angle to this too which is um so.

research hub has a coin associated with. research coin and it's basically if if. people you know upvote your paper or. like. support it you'll accumulate more. research coin which is basically like. rep or like a reward token um and so. that is a way to um. i guess measure the the community's. collective view of that paper. a form of peer review um and it can even. be weighted by like the reputation of. the people voting on it and that sort of. thing over time. um. yeah i think the last thing i'll just. say is that so i think from from a rep.

like a prestige point of view. it won't start off that way it'll. probably start off like being a little. more quirky like you know like remember. when youtube first started it was like. people posting weird cat videos and. stuff and but now like you know if you. have a million subscribers on youtube. that's probably better than getting like. a tv show on nbc or whoever the. traditional gatekeeper was. so my hope it might take 10 years 20. years whatever but i'm hoping that. this can sort of be the new prestigious. way that that young people publish in. science and it'll become to be viewed as.

more prestigious the the journals. nutritional journals will be viewed as. old-fashioned well. it's definitely a. system that could do a lot better and. there's a lot of incredible brilliant. people doing science. they deserve better the better platforms. yeah uh so another thing you're taking. on and helping out with is this new. limit which is looking at longevity yeah. what's what's the idea there. yeah okay so as you can see i'm excited. about science like i think you know. science is sort of the.

basically if you get scientific. innovation then you get um better. products and you get better economic. growth and then you get. all kinds of like surplus in society. that can go to arts and philosophy and. like all kinds of stuff but. um with new limits so yeah i kind of got. i started hosting some dinners with. scientists um. last year and i was. learning about all kinds of the latest. stuff happening in bio and there's a lot. of really cool stuff happening with like. car t cells and crispr and all these. things and um anyway one of the.

topics that i started to learn more. about was um something called cell. reprogramming and you know. people maybe have heard of this. induced pluripotent stem cells where you. could take like a skin cell and turn it. back into a stem cell. and um shinya yamanaka won the nobel. prize for this work that was done in. 2006. and um. you know it's kind of a crazy thing you. can turn one cell into another another. type of cell well. people recently have been. experimenting with um different types of. transcription factors that.

would either not you don't want the cell. to go all the way back to being a stem. cell um you can end up getting like. cancerous cells and things like that but. you want it basically to the cell to. revert a little bit um earlier in its. you know it would call it the waddington. landscape but it's basically like um go. become act start to act like a bit of a. younger cell but not to to. de-differentiate and become more like a. stem cell and so i decided this might be. an interesting area to go fund. i think that that team has come together. there's like some really talented people.

who've come together to help get that. off the ground and they're basically. building a. a platform that can test a lot of. different transcription factors on. different cell types and hopefully find. ways to rejuvenate different types of. cells and tissues to extend human health. span i mean the moonshot goal here you. know the get to mars. is um that there could be some therapy. here that in i don't know 10 or 20 years. that you take and from a whole body. point of view um it's sort of. rejuvenating tissue not just one type of. tissue like your immune system but.

eventually your whole body maybe even. your brain so that. you know we don't have that issue where. people who are older have trouble. learning or they're more ossified in. their thinking. um. to me this is just i always think about. you know it's it's actually a little. inspired by elon right it's like what. are some of the biggest things in the. world like that are probably high. technology risk but if they did work. maybe they're they're kind of low chance. of working but if they did work would. have enormous impact i like the idea of. trying hard tech problems especially. for people like founders like me who've.

made some money in software which i. think we're in kind of like a golden age. of software so there's like fortunes to. be made but if you if you do make some. money in that my hope is people will. like. do atoms not bits you know and try some. of the harder things like in biotech or. you know i guess he's doing cars and. rockets and stuff but. anyway it i think we should try hard. hard tech or you know physical science. problems as well and see if that can. advance. for team human. yeah so he's also doing bio with.

neuralink. yeah and i feel like bio is tough yeah. because it's messy we don't understand. it as well we don't understand it the. risk is higher. in terms of uh not the risk is higher. but like you have to deal with. uh the actual sort of um to get to human. to get to stuff where it could be uh. therapies for actual human bodies. um. is is tricky because you have to prove. that it's safe it's effective all those.

kinds of things with uh with fda i mean. it's just it's tricky it's very. difficult it's yeah it's a long it's a. long journey i mean. if i can give a quick um. plug so i yeah i'm on the board at new. limit we're hiring talented scientists. that are interested in the celebrity. programming space they don't necessarily. have to be. coming from like an aging background or. anything like that there's sort of a. small group of people doing even. something's a new thing this is a is new. limit relatively new yeah it's very new. there's a there's a small team today. just a handful of people and so we're.

we're hiring more there. um if people are excited about that. space reach out and. um same thing for research hub there's a. small team there that's really awesome. that's. doing more like software engineering. design product. that kind of stuff. what advice would you give if you put on. your. old. wise sage hat. what advice would you give to young. people today high school. maybe undergrad and college. about life so like career.

having a career they can be proud of. or maybe a life they can be proud of. so. people can do whatever they want to be. happy right so there's not one way to do. it. i do think that some people. a particular type of people out there a. lot of people actually they want to have. an impact on the world that's how they. get a sense of fulfillment right. so i mean you need to have like health. physical health you need to have good. relationships like. there's lots of things but most people. want to do something important they want. to have fulfilling work a way that they.

can feel like they're contributing. i think a lot of people young people. today are are thinking like um you know. i should be an activist or something. like that. and there's people in the world who have. power and i and i don't a lot of people. who don't i don't have power and so the. way to change the world is to. you know um. speak truth to power or like criticize. power and. try to pressure them to change. to me i don't think that's the right way. to actually have an impact on the world. because.

you know everybody has probably i think. people have more power than they realize. um and by the way it's easy to be a. critic. it's hard to actually change these. things and fix it and so um you'll get a. lot of accolades from friends and things. like that if you kind of go around. criticizing it you know it's easy to do. like everything is broken and could be. better. um including you know stuff i'm working. on i i find like. so frustrating it's the million things i. want to be better about like what we're. doing in coinbase. um.

so be be the person in the arena you. know like that theodore roosevelt quote. i think he said it right like. go chew glass and stare into the abyss. like if if you really want to have an. impact either. join a company that has a mission that. is trying to fix the thing you're. passionate about or start start that. company if it doesn't exist or start a. charity if if it's not suitable to be a. company or whatever it is but. go try to be a part of this solution. don't. just you know criticize or be a part of. the problem my hope is that um.

more people can. you know. realize that they they actually can have. a meaningful impact that way and i think. that. to me technology is actually one of the. most important ways to improve the world. like if if you look at. um climate change like. a lot of the best ideas like carbon. sequestration all these things it's a. technology thing right if you want to. try to fix education it's like look at. like khan academy and all the stuff. going online right if you want to if you. want to fix um you know whatever.

transportation and like. um the financial system and global. freedom and like equality of all these. things like there's typically the way to. get. something changed in the world today is. with technology and so i do think people. it's very bizarre to me that there's. this kind of like anti-tech thing going. on. um look no nothing is perfect like if. you create something new and like. tens of millions of people use it or. billions people use it it's like. there's going to be some bad people who. use it too okay and there's you know. society is complicated but like i think.

most of these things have been net. positive because most people in the. world are good is at least my view. so yes we can mitigate like the one. percent of bad people trying to you know. abuse something but 99 of people in the. world are good and the way you can. improve the world is with technology. joining companies starting companies. that are working on the right stuff so i. hope. i hope more young people do that and uh. just. if you're not sure what to do like just. get started with anything that's how you. learn and basically have the optimism. that you have the power to do the change.

so. yeah um. it's easy to distract yourself by being. the critic. um that's almost like acknowledging to. yourself that that's all you can be. but. basically everybody has the power to be. the fixer. i like. chew glass and look into the abyss. um that's much more fun than it sounds. [Laughter]. uh what do you think is the meaning of. this whole thing why are we here. it's life.

yeah what's the meaning of life what's. this existence we got. you're trying to increase the amount of. economic freedom on this planet earth. trying to alleviate some of the. suffering yeah but why. i don't really think there is any point. to life um. you know uh. somebody once told me um. you know if you go into these like kind. of really big existential questions. um it can get a little scary because. like you you stare off the cliff and. there's like there's nothing there you. know um.

one this one person told me one time. they were like. you know brian you should you should. probably s uh snorkel don't scupa. i guess and i think they were trying to. say like. i i some of my friends have done this. right they'd they'll go to like you know. epic medita meditation retreats and like. all they'll kind of come back with all. this. existential dread of like what's the. meaning of all and like as far as i can. tell we are just some organic molecules. in the ocean started like dividing and. replicating and the selfish gene and all.

this stuff like basically ended up here. and our only it's it's some kind of like. really naive algorithm that's just kind. of trying to get us to survive and. replicate and we have dna just like. every other animal and so we and we. happen to develop these like really cool. neocortexes and so now we're sort of. self-aware and we have all these big. questions. and maybe. maybe we'll create another you know as. computers get better we'll create the. simulation inside our thing and. um i think it's cool like we should. basically i just want to keep watching.

the movie you know unfold that's part of. why i want to work on um like new limit. is really cool because it's help if. people can live longer whether that's. uploading their brain to the cloud or. um you know basically through we get. biology to work or the strong ai to work. or whatever one of those two hopefully. works out and then we get to we get to. keep watching the movie and see how it. all unfolds i think that's fun and so. i don't know if that's like an answer. but i guess i don't think there's any. real purpose so just try to have fun. well the cool thing is that uh we get to.

write the movie as it as as we watch it. yeah. that's exactly right i mean that's like. the steve jobs quote and all that where. he's like everything around you was. invented by some somebody who just was. like that this is a crazy idea they. thought up so. once you realize you can kind of do. anything you want. um. then. that's what you start to go you start to. go try crazier stuff i mean what this is. another one of those areas where um not. to get too out there but like you know. when you're when i was i think you can.

build your comfort zone around like. people being upset with you you can also. build your. your range of what you think is possible. right like. when i was a when i was in my 20s i was. like reading all these books about like. self-improvement and goal right how to. write down your goals and stuff and. my goals were like. someday i want to. make a hundred thousand dollars a year. or something like and that was. and you know um. and it seemed like a little outlandish. or what i wrote down these goals like i. want to own rental property or something.

anyway. and i and then i slowly started to get. get some of these things done over a. couple of years and so i started to. think a little bigger. i remember one time i wrote down this. goal where i was like. what's the craziest thing i could think. of i was like what if i i want to write. i want to start a billion dollar tech. company. that's crazy and i had i had never. started like a million dollar tech. company or any any tech company really. so what business did i have writing that. goal down i remember i wrote that on a. piece of paper like. like probably every day for a year or.

something almost right i don't know if. it was every day but like i wrote it. down a lot and. and so little things started to happen i. was like all right well maybe i should. move back to the bay area from buenos. aires maybe i should. try to apply to y combinator or whatever. like and i started thinking about these. ideas and so whatever gets you fired up. it doesn't have to be like some company. goal or startup thing it could be. anything right. um maybe you want to publish a book or. like do something creatively or whatever. anyway. you you know i think like within. seven years.

uh no it's probably more like 10 years. of me writing that goal down. um coinbase had a valuation over a. billion dollars. so it. it was out of my realm of what was even. possible. and then. within 10 years you can you can. accomplish more in 10 years than you. think less than in a year than you think. so now i start now i'm like okay what's. the next goal what's the crate okay. maybe. i want to get a billion people accessing. the open financial system through. our products every day you know that.

would be cool for for humanity and. that's a pretty crazy goal like it's. only eight billion people or something. right so one out of eight. um. or maybe i can radically like if i make. some like the right investments or. whatever i can like help. radically extend human health. human health span or whatever right. um. so. try crazier stuff i don't know even if. it doesn't work like hopefully you'll um. you'll. advance the state of affairs like. something interesting will happen and so.

most people today they look at they look. at people trying this stuff and they're. like oh my god they're so they're a. genius or whatever and it's like or. they're an idiot like one of one of the. two. neither one are true it's just like um. anybody can start by thinking about what. they want and then like. go for it and then once you get that. like go for something a little bigger. and like you just have fun with it and. the universe is a way of smiling. and uh helping you out if you just write. it down and and you dream big yes. there's something about just. karma about.

the energy you put into this world. other people will help you out doors. will open you'll notice that the doors. open. and you'll make you could actually have. a shot at making it happen it's a funny. world yeah i mean i don't i don't i. don't really subscribe to all like the. woo interpretations of this but my my. like very rational brain interpretation. of it is that if you just wake up every. day and write down like what you want to. get done and towards your longer goals. at your larger goals it's just it's just. on your mind that day so you start to. notice opportunities and you think about. it more so so brian thank you for.

dreaming big um thank you for doing what. you're doing doing incredible. engineering at scale. uh trying to help out people from all. over the world and uh actually helping. me personally get more into crypto. just because it's so easy so um thank. you so much and. thank you so much for giving your. extremely valuable time today to this. awesome conversation thanks for your. awesome podcast i i love it i listen to. it often. thanks for listening to this. conversation with brian armstrong to.

support this podcast please check out. our sponsors in the description. and now let me leave you with some words. from benjamin franklin an investment in. knowledge. pays the best interest. thank you for listening and hope to see. you next time. you.