#222 Brian Armstrong - Co-Founder & CEO of Coinbase

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Brian Armstrong, welcome to the show.

Thanks for having me.

Oh, my pleasure.

I've been looking forward to talking to you for quite some time.

So thank you for making the trip.

But yeah, you have a lot of stuff going on right now and even outside of crypto and we'll dive into that later.

But everybody starts off with an introduction.

So here we go.

Brian Armstrong, co-founder and CEO of Coinbase, the world's leading cryptocurrency exchange.

A Rice University alumnus with degrees in computer science and economics whose engineering background at ARBNB and early startup experience laid the foundation for revolutionizing finance.

Visionary entrepreneur who transformed a passion for Bitcoin into a publicly traded company that's now part of the S ⁇ P 500, driving economic freedom through blockchain technology.

An advocate for free market capitalism and crypto's role in fixing broken financial systems.

Founder of innovative ventures beyond crypto, like New Limit, which aims to extend human health span through epigenetic research and research hub, a platform for open scientific collaboration.

And I just wanted to rattle off a couple of stats here.

When

we were researching you, we found some stats about crypto.

And so, just

9% of Americans are satisfied with the current financial system.

38% of young people say crypto can increase economic opportunities and crypto prices are up 90% year to date.

There you go.

It's pretty

interesting statistics there.

So,

all right, couple things

before we get going here.

So

everybody gets a gift.

So I got you a couple gifts.

Okay.

Here's the first one.

Those are vigilance

gummy bears.

All right.

Legal in all 50 states.

Not that you have to worry about that in California.

Yep.

But it's just candy.

Okay.

No CBD.

No, nothing.

Great.

Thank you.

Red dye and sugar, baby.

That's it.

Thank you.

You're welcome.

And

found out that you are a firearms enthusiast.

So

got you a gift.

All right.

The collection.

All right.

So that's, you've heard of Sig, right?

Sig Sauer.

So I got a friend over there.

His name's Jason,

huge crypto guy.

Okay.

Told him you were coming on.

He got all excited, wanted me to give this to you.

So

wow.

Okay.

So that is the Sig Sauer P226 Legion.

I think that's the top handgun that they have right now.

Yeah.

And so just a little background on that.

You know, we were kind of talking about my SEAL career and some firearm stuff at breakfast.

Yeah.

So that is the upgraded model of what all SEALs were issued.

And that thing

is awesome.

I think you'll really, really like that.

All metal.

They don't make guns all metal anymore.

Not very many of them.

And

it's just a

well-produced

herd machine.

You're welcome.

All right.

You like it?

I like it.

I mean, it's California.

Do we have to go to some federal firearms?

We'll handle all that stuff for you.

The transfer part.

We'll handle that stuff for you.

I love it.

Thank you so much.

Yeah, you're welcome.

So how is this different from the one you were issued in the SEALs?

So it's so

are you new to shooting?

I've been shooting since I I was growing up a little bit here and there, but I'm not like a, I'm not a, I own a couple guns, but

so it's, it's

pretty much, it's pretty close to being the same thing, but there's a couple of things.

So if you look at the front towards the barrel there, you'll see those grooves on the top.

Okay.

So that is, that disperses the gas.

which helps you stay on target faster.

So instead of your gun flipping up like that all the time, it'll stay nice and flat.

Yep.

The trigger's been upgraded.

There used to be this decocking lever

on the old one, but they've done away with that.

And then one of the things that I really like, you see that little notch that's sticking out right under the ejection port?

They call it a gas pedal.

Other side?

This?

Yeah, right there.

So you put your thumb on it.

That's what I was thinking.

Yeah.

It's for either your, yeah.

So that helps keep it the nose down.

Helps you control it a lot more.

Yeah.

Cool.

So, yeah, it's like

running a sewing machine.

I love that thing.

What's the magazine capacity on these?

I believe.

Is that even allowed?

I believe it's 21.

Your version might be a little different.

Yeah, we might.

We might have to adjust those when we take it to California.

Yeah, 9mm.

Okay.

Yep, 9mm.

You'll love that thing.

Cool.

Well, yeah, I don't know if we'll have time later today, but it'd be fun to do some shooting.

So thank you for that.

Hey, my pleasure.

Yeah.

Pleasure.

If we don't get to do it today, maybe the next time.

Yeah.

Well, definitely the the next time, because in the new studio, we've got a gun range literally, right?

You walk out the studio, yeah, and you're on a gun range, yeah.

So

we'll have to have you back.

That's great.

Um, I brought you a little gift, too.

You want to go for it?

I love gifts,

okay?

So I'll let you open that.

This is a uh

one of 21

Satoshi Nakamoto commemorative cards.

This is a Bitcoin credit card.

Anywhere you spend with that card, you get 4% back in Bitcoin.

And this is something we released recently.

This is awesome.

Yeah, so it has on the front there, you see a bunch of numbers and letters.

That is a copy of the Bitcoin Genesis block, which is the first Bitcoin block ever created.

And there's kind of an Easter egg in there.

Satoshi Nakamoto, which nobody knows who this is, who created Bitcoin.

We can talk about theories on who it is if you want later.

But

there's a, when they released it in, I think 2008 or 9, there was a headline, Chancellor on the Brink of Bailouts, which was related to the 2008 financial crisis.

And they encoded that in the first Bitcoin block.

And it was kind of a, you know, nobody knows for sure, but it seems like a good guess that they were sort of saying, this is an answer to the...

the bank bailouts and the financial crisis is like, let's create a new monetary system.

And anyway, so we encoded that right on the front of the card.

And you can get 4%

cash back in Bitcoin anytime you spend with that.

Oh, man, thank you.

Yeah, this is awesome.

I appreciate that.

Yeah,

I think I'm going to have to have you sign the front here.

We'll frame it.

Okay.

Okay, cool.

All the other relics.

Yeah.

Thank you.

That one's kind of commemorative, but we'll get one hooked up to your Coinbase account too and send you another one

you can use for day-to-day spending.

So thank you.

Yeah.

Yeah, we're framing this.

Cool.

But,

and yeah, I do want to talk about who that was.

Sure.

But

all right, one last thing before we get into the interview.

So I have a Patreon account, a subscription account.

We've turned it into one hell of a community.

I think we got 90,000 people in there now.

And so one of the things that we do is we offer them the opportunity to ask every single guest a question.

So this is from Achilles Actual.

What measures is Coinbase taking from a cybersecurity standpoint to prevent cryptocurrency theft?

Additionally, how is the company addressing concerns that advancements in quantum computing could potentially compromise blockchain security and threaten the integrity of Bitcoin?

Yeah.

Well, great questions.

So there's lots of ways that we try to prevent theft of Bitcoin and cryptocurrency generally.

First of all, there's Coinbase accounts where we store people's funds, and we do lots of security around that, which I can talk about.

But we also have a self-custodial product.

So if people don't want to have to trust us, they can store their own crypto.

And then they're responsible for their own security, but it's fully in their hands.

On the crypto that we store for customers, there's a few things we do.

One is the vast majority of all the customer funds are actually stored entirely disconnected from the internet, which we call cold storage,

because every system can be hacked in theory, right?

That's especially these systems that are online.

So what we do is we actually generate these keys in different geographic locations around the world.

And there's redundancy and consensus needed.

So, you might need 10 different keys.

Imagine there's some in the west coast, the east coast, you know, the middle of America, but also some in London, Dublin, Singapore, Australia, like kind of ally countries.

So, we have these different secure facilities, like a like a SCIF, you know, if you're familiar with those from the

secure facilities,

and you need, let's say, five of the 10 pieces to come together to ever move those funds.

So, if half of them get lost, like let's say there's nuclear war or there's some accidental loss or natural disaster, you can lose up to half of the half of the keys and still have the funds, but no one or two people can kind of take their piece of it and move move off with the funds.

It requires consensus to come together.

So we've had, then we hire external firms to come in and try to break into that system and pen test it.

And we do audits like that every year.

So that's where the vast majority of customer funds are stored in these offline systems.

And we do this now for governments, like big financial institutions, and the same securities provided to retail accounts.

And then for self-custodial wallets, we also allow people just to store it themselves, like in our new self-custodial wallet.

The questioner kind of asked about quantum as well.

And there's this whole kind of area of research around post-quantum cryptography.

for people who don't know that quantum computers are this new type of really powerful computer that can theoretically break a lot of encryption that's out there.

And if this happens, it's bad for crypto, but it's also bad for a whole bunch of other things that we use encryption for, you know, like pretty much everything.

Yeah, banking, you know, financial services, military uses tons of encryption, everything.

So basically,

there are post-quantum cryptographic algorithms that are out there that people can upgrade to.

And the cryptocurrency blockchains are currently meeting, they have proposals that they're looking at about how to upgrade these.

I don't think it's going to happen in the next one to two years, but maybe next three to five years, it's important that we get that done the u.s government by the way they publish standards on this through an organization called uh nist i forget the exact what it stands for but there's um the government has a role here to play too to help industry update to these common uh post quantum cryptography or pqc type standards so coinbase is you know if you're storing your money with coinbase we're we're going to help you make sure that it's quantum resistant um as these computers come online so you think quantum computing will come into play in about five years?

Well, let's say I'd want to make sure we had a solution in place before then.

It might take 10 years, but I'd rather have this solution in place ahead of time because otherwise, if China or someone gets one of these things booted up, we might just start seeing money move unexpectedly or communications get decrypted that should be sensitive.

We might start seeing bad things happen.

So it's the kind of thing you'd want to get ahead of.

Yeah, a lot of talk about that.

A lot of talk about quantum computing lately.

But,

well, I'm just fascinated with innovators like you and doving into the tech space at the beginning of the year.

And

so one of the things, I just, I like hearing where you guys grew up, what your childhood was like, and

how you came to Coinbase.

So let's start with where did you grow up?

Yeah, I grew up in San Jose, California.

And

my mom and dad were both engineers.

You know, my mom was a programmer at IBM.

My dad was a civil engineer, worked at Lawrence Livermore National Lab.

And so it was kind of a household where we focused a lot on school, academics, science and math.

And both my sister and I kind of learned a lot about that growing up and had early computers in the home.

And I was kind of like a...

I was a very shy, introverted kid.

You know, I was not very good at talking to people.

But I loved computers.

I just kind of initially gravitated toward them when we had them in the house, like the early IBM 486 PCs and these kind of things.

So, you know, I was initially I was like playing games on there, but I got to learn over time about operating systems, some basic programming languages.

And

yeah, I didn't really know what I wanted to do with my life, but

I was a nerd, basically.

You know, I was like a total geek kind of learning about these things.

And what age did you start getting interested?

Pretty young.

I mean, even in middle school,

I I was trying to learn how to program computers.

And

in high school, I was taking some classes in that, like at the local community college.

So I had my normal classes for high school, but I was kind of more interested in the computer, the programming classes I was taking at the community college.

And

yeah, in my free, I would stay up late, like until two in the morning and three in the morning, kind of learning how to, these computers worked.

And then I'd be like totally sleep deprived for school the next day, like kind of faking my way through these classes.

So, you know, in hindsight, that should have been a signal probably that I was more interested in this other thing, which they weren't teaching in school.

But,

you know, we didn't have like computer science classes at the high school or anything.

What else were you into as a kid?

Were you into any sports, outdoors,

just computers?

Well, we lived next to this pretty cool park.

So I did spend a lot of time outdoors, just kind of exploring that with my dog.

And,

you know, I was never like the most athletic kid.

Like, i i you know i tried out for like the jv tennis team and i i was i was into like running and sort of like um

just things that would more like personal fitness i would say but i was never good at like team sports and stuff i mean i played a couple like intermural things in college and stuff but yeah i was never like the most athletic kid i was never the most like outgoing um so yeah i was pretty i was pretty introverted

right on yeah

Where'd you go to school?

Well, high school?

Yeah, so I went went to this school called Bellarman in California, which is, it's a private school.

It's actually a Jesuit school.

It's all boys.

It was very good academically.

And they had this mission that was men for others, right?

So they actually, I didn't think too much about it at the time while I was in school, but I actually do think it influenced me, like Judeo-Christian values and thinking about.

how to live your life kind of to try to create value for other people.

I, you know, at the time when I was there,

we would have mandatory kind of like volunteer service and different things like that.

But as I've gotten older in life, I like building things that try to advance the world, be useful, like how to use technology to create better lives for people.

And

creating companies is kind of my way of doing that, right?

Of trying to create value in the world.

And so I do think it actually a Jesuit education kind of had a big impact on me in a, in a strange way.

Where do you go from there?

well i applied to a number of different schools um i really wanted to get out of california because i i don't know i was i was really craving like independence autonomy i'd been living at home with my parents you know i had like a lot of young men probably i was like i want to get out of here and just become my own man right it was a little too sheltered and

And so I applied to, and I applied to like some East Coast schools, you know, and I didn't get into like MIT or Harvard or anything.

So I a couple, I did apply to Rice University in Texas, which had a good engineering program.

And I applied to Berkeley and I got in there.

But I went and visited a couple of these schools, and I just really liked Rice University.

I had a great experience in their kind of, they have a week you can go by there to sort of test it out.

So I ended up choosing Rice University, a really good engineering program.

And learning about economics as well in that setting was really interesting too.

I mean, I remember like the first day of the, you know, Econ 101 kind of on your freshman year.

And the professor said, I think the very first line he said was, you know, economics is the study of scarcity, right?

Like there are finite resources in society.

And so if you ever are saying, hey, we should have more teachers or more firefighters, you always kind of have to ask the question, well, at the expense of what, right?

Because there is scarcity of resources.

Like, so if you want to have more of something, you have to have less of something.

And, you know, they get into like supply and demand and how to housing work.

And so that was like a really interesting foundation for me.

And then I combined it with computer science, which

was really foundational of just helping me understand how technology and computers work.

And so I had no idea what I was going to do with my life at that time.

But of course, in hindsight now, economics and computer science, like crypto was kind of the perfect intersection of that.

Interesting.

So I know you went to Argentina.

Was that to study?

That was after college.

And again, it was me sort of,

I think I was just seeking adventure.

You know, I had, I'd never like been in the military.

I'd never been in like a frat.

I don't know.

I always felt like I was a little too sheltered.

And so after college, I had tried starting this company in the tutoring education space and it wasn't going that well.

And I was like, I just need to, I felt like I just needed to go abroad and like try living in a bunch of different countries and put myself out of my comfort zone.

So I went to Buenos Aires, Argentina almost like the first stop.

And I was going to do like a month in every city and a major city in South America for like a year.

But once I was like kind of more set up and established in Buenos Aires, I was like, I don't know.

It made, it became like a home base.

I didn't, and I didn't want to move every month.

It was just too much work.

So I spent about a year living there.

And did you like it down there?

Yeah, I mean, it was.

So in some ways, it was like quite lonely, actually.

Like I didn't really know anybody.

I barely spoke the language.

I was trying to learn Spanish.

There was a bunch of expats.

And so you get to meet some interesting people, but I didn't really have that big of a friend group.

So it was kind of lonely for like six months, but I eventually did start to build a bit of a community.

One other thing that was fascinating, again, kind of in hindsight, this makes sense, but at the time I had no idea what I was doing with my life.

I was just trying to start different companies and doing some software, consulting for people.

And I got to see a society that had gone through hyperinflation, right?

Because

the currency in Argentina has been devalued many times and people, it affects the whole culture, right?

People get their paycheck and they're like, oh, immediately I want to go spend it because it might be worth less tomorrow, right?

Or I remember like they had these buses that would go around Buenos Aires and

people, you know, it would take like coins, you'd put coins in there to like get on the, on the bus, but the currency had been devalued so much, people had to bring like two

handfuls of coins or something to get on there.

So coins actually became kind of scarce in society.

People would hoard them.

It also just, it really destroyed, I think, the culture.

Like the people there,

they're not optimistic about the future they they they actually kind of revere the past right I think in America we generally have more optimism about the future even though people here say like they get down on it sometimes with polarization whatever but it's still more than most places in the world we're optimistic about the future in Argentina I think people feel like hey it could all be gone tomorrow and so just like live every day like it's your last have good food good wine good family conversations relationships and that's that's fine too but you know there's an inherent pessimism about like just kind of keep your head down don't try anything too crazy because, you know, the government might just come in and take all your stuff.

So it was, that was something I had never seen really growing up in the United States.

And again, when I read the Bitcoin white paper years later, that piece clicked there for me.

I was like, oh my gosh, there's people in the world who don't have access to any kind of sound money that really stores value.

It can be abused and manipulated by the government.

And that's actually the default in most countries of the world.

Like the United States historically has been a real exception to that.

And people who've only spent time in the United States, I think, sometimes don't, they didn't really get crypto early on because they're like, well, what problem is this solving?

You know, the dollar works fine.

And the dollar has its own challenges and with inflation now, and there's high fees and all kinds of broken things about our financial system, but the rest of the world is way, way worse.

Right.

So that was something that when I saw Bitcoin, I was like, okay, this could solve a real problem for a lot of people.

I mean,

what, so you were, what was in the white papers that you read that got you all fired up about it?

Yeah.

So the Bitcoin white paper is a pretty fascinating document.

It's pretty complicated and it's kind of dense.

And for anybody who's not read it,

I read it in, I think, December of 2010.

I just happened to see it on this website called Hacker News, which people just put out technical content.

And it was describing how the world could have a currency that was decentralized.

No country controlled it.

No company controlled it.

But it could be provably scarce, kind of like gold, where you couldn't just make more of it out of thin air.

And, you know, you and I could have a peer-to-peer transaction with no intermediary in the middle, like a bank or credit card company or someone taking fees or being able to de-platform or de-bank one of us.

And so if you could have a peer-to-peer cash system that was trusted because it, there was no government or kind of company that could go in there and manipulate it.

I was initially, I was immediately captivated by that.

Like I, you know, I had, I, I had been reading like a lot of,

you know, like Ayn Rand and some of these economists like Milton Friedman, these kind of free market guys and libertarian stuff.

And the idea like really appealed to me having seen how Argentina, like these people's lives had been destroyed by high inflation.

You know, I was working at Airbnb at that time,

seeing how they were trying to move money to 190 countries all over the world, and it was completely broken and slow and high fees and delays.

And so I read that Bitcoin white paper and I was like, that's a crazy idea.

You know, that's kind of like the internet or something.

How do we have a global decentralized network for sharing information?

You know, the internet kicked that whole thing off.

This was describing something kind of like the internet, but for moving value and money and all types of assets and kind of like an internet of money or something.

And so I just kind of couldn't stop thinking about it for like six months.

I kept reading more and more, trying to get my hands on any kind of information I could find.

And then I started going to these early Bitcoin meetups that were happening in San Francisco, which was a crazy experience of its own, because the people who would show up to these things in 2010 were like,

some of them were like anarchists.

Some of them were like computer science PhDs.

Some of them were just like homeless people coming in for free beer and stuff like that.

It was like, it was a real motley crew of early people.

But I couldn't stop thinking about it for six months.

And that's what made me start to work on this prototype, like nights and weekends of what would eventually become Coinbase.

Interesting.

Interesting.

I mean, who is Satashi Nakamoto?

Who is it?

Yeah.

So nobody knows for sure.

And I wouldn't claim to know for sure.

But I think there's a couple of good theories out there.

One is that there's this guy, Hal Finney, who

is a

computer scientist.

He passed away, so he's not alive anymore.

I think there's a good argument.

He's probably one of the people that created it.

Now, it could have been multiple people that collaborated and tried to use this pseudonym as kind of a, you know, I think they knew that if this worked, that they might get hauled in front of Congress or, you know,

killed.

Yeah.

I mean, and that, and that, you know, Soshi Nakamoto or whoever that is or they are, um, they did mine a lot of early Bitcoin, which is now worth a ton of money, like, I don't know, at least $100 billion or something.

So they, they knew like their family would have to have private security, and so I think they were thinking that far ahead.

I'm just speculating, but that could be the case.

So, anyway, Halfini is a good candidate.

There's another guy, Nick Zabo, who may have been a collaborator.

There might have been a third person.

And

a bunch of journalists and stuff have tried to track down these different people who may or may not have been Satoshi.

I think most of them got it wrong.

The most likely explanation is it's probably Halfini and maybe in collaboration with one or two people like Nick Zabo.

But regardless of who Satoshi actually is, the idea stands on its own, right?

It's kind of like,

I don't know, like if someone had discovered the theory of relativity, but that person turned out to be a bad person or a good person, whatever your judgment of them, it doesn't really matter.

Like the theory stands on its own.

It's a genuine breakthrough.

And I think that Bitcoin, that white paper, is a genuine breakthrough in computer science.

It's the first time that someone was able to come up with a purely digital good that was provably scarce.

You know, like, I'll give you a simple example.

Like, you know, let's say you have a photo on your phone and you can make infinite copies of it.

You can send it to me, you can send it to 100 people.

Like, most digital items are easy to be copied, and you can just have infinite copies of them.

That's a bad property for something to be used as money.

Money needs to be provably scarce, otherwise, someone can just kind of create a ton of it out of thin air.

And so, this algorithm that they describe in the Bitcoin white paper says, all right, we're going to have a digital item,

but we're going to guarantee the scarcity of it.

And I mean, if you want, I can try to describe how that works.

It gets a little complicated, but like the more the important thing to realize about it is that at this point,

thousands of people have looked at that algorithm and tried to break it, and no one's found a way to break it.

Even like, you know, if China or like these big nation state actors with the top resources, everything in the world, if they could find a way to break it, it's very profitable.

They would be able to take a trillion dollars or something out of Bitcoin.

No one's been able to break it for like, whatever it is, 13 years now.

So

the longer it goes on, the more proven it's become of how it's going to stand the test of time.

And the mathematics behind it is really solid.

Can you talk?

I mean, we're talking about printing money out of nothing.

Yeah.

Sounds familiar.

Yeah.

And

very familiar.

Federal Reserve, yeah.

And yeah, actually, that's where I want to go is.

I want you to talk a little bit about the Federal Reserve when we came off the gold standard and

what's happened.

Yeah.

So I think this is a fascinating topic if you look, study history, right?

And there's been, obviously America has the reserve currency today.

It's a huge form of power for the United States.

And if you look back at history, there have been various other empire, you know, the British and the Dutch and going back, China and various countries at different times have had

been the global superpower and had the reserve currency.

And usually what happens is they start off with their currency being backed by a hard commodity, something that is provably scarce, like gold.

And then eventually, usually during a time of crisis,

these countries will quote unquote temporarily depeg it from that underlying commodity.

And then after a number of decades or whatever, they'll lose discipline and start to overprint it.

And then they lose the reserve currency status and some new one arises.

So in the U.S., unfortunately, dollars are no longer backed by by gold, right?

That used to be the case.

There was a piece of it got disconnected in like i think the 1930s uh where they said uh the gold's still there you just can't actually come in and exchange a dollar for gold it used to be actually you could go in and if you gave them a dollar they'd give you back uh i forget some fraction of an ounce of gold in exchange for it they in like the 1930s they said trust us the gold is still there you just can't come and exchange it but it's still backed by gold and then in and then i think it was 1971 nixon uh during the Vietnam War, I think they were having budget deficits and whatnot.

And he kind of said, as a temporary measure, you can go watch the video of this on YouTube.

You know, he literally says, this is a temporary emergency measure.

It's not going to be, we're going to go back on the gold standard soon.

Don't worry.

We're going to depeg it from, fully depeg it from the gold.

And that allowed them to run these budget deficits.

And of course, we never went back.

So the dollar today is not backed by gold.

We have started to see more inflation happen with the dollar.

I mean, it was a couple of years ago.

I think there's different ways you could measure this, right?

But it hit like 8% or 9%.

Typically, they're trying to target more like two to three percent.

Um, but it, it's like, where's where's the discipline going to come from, right?

Like if it's not backed by a hard commodity, you know, the temptation is always to give people more free stuff to get elected, right?

It's kind of like high school, you know, free, free drinks in the vending machine or whatever.

So if the dollar continues to lose discipline like that, then

the U.S.

could lose the reserve currency status.

And, you know, I think it's more likely people actually flee to Bitcoin, gold, or real estate, these things which are provably scarce.

Like, they're not making any more real estate in the world.

They're not making any more gold.

They're not making any more Bitcoin.

So that's the kind of assets that people want to go own if they're in this environment of high inflation where people are just printing more money.

And that's, I think, why we're seeing all-time high prices of Bitcoin right now.

Have we lost all discipline?

It's kind of like a big question, right?

Is America in decline?

I mean,

trust in our institutions is at all-time lows if you look at the polls.

You know, I do think that the future is not guaranteed, right?

There are moments in history where you have a great leader come in and change the course of history, right?

So,

you know, around crypto and things like that, like President Trump has done a lot of good stuff.

He's,

we can get into this whenever you want, but I mean, there was a whole war being waged on crypto in the last administration, which we had to fight back against to protect.

Yeah, get into it.

Let's get into that.

Yeah.

But I, maybe, I'm just trying to think about your broader, it's a big one.

Like,

I mean,

I hope America is not in decline, right?

I like America is such a unique thing historically to have a land where you actually have these freedoms and democracy and whatnot.

Like,

it would be a damn shame, right?

If America starts to fall,

who's going to take up the mantle, right?

Like, I don't think China is is aligned with our values on that economically or in other ways.

So it would be bad for the world if America really is in decline.

I think we've got to try to save it, but we can also have

alternatives, right?

Like Bitcoin can come up, or maybe we'll have Mars, maybe special economic zones in the U.S.

We can talk about all kinds of stuff.

I love to talk about this with my friends.

But yeah, you want to jump to the war?

Yeah, I mean,

I don't think America's in decline.

I think we're at a very pivotal moment where if we don't turn the ship around, then we're probably going to be entering decline

very quickly.

Yeah.

And we've been through some crazy shit before, right?

I mean, yeah, the 60s and all that.

And then we also landed a man on the moon, right?

So,

yeah, America seems to be.

No matter how screwed up America is, it's like everywhere else is kind of worse.

So that's kind of where I was going to.

Yeah.

I mean, we have the best innovators in the world.

They've been, I mean, I'm sure you're going to relate to this, but I mean, like I said, I'm doving into the tech space and I've talked to a lot of innovators.

And the one thing I will say, man, is that all of them are really fired up about the current administration and getting rid of some of the bureaucracy, everybody in power and AI and everything.

Everybody seems to be gung-ho about this administration kind of gutting the bureaucracy a little bit and letting the innovators innovate and

change the world

yeah i'm all for it i mean that's how we that's how we build a better future is we've got to get rid of the bureaucracy like deregulate you know allow people to build power plants like nuclear fusion you know we should have like supersonic jets like accelerate biotech um it's you know it takes like 10 years and two billion dollars to get a drug to market now so it's like

every every year you wait you know people are dying right

um so that the mentality of if you over-regulate, you can kind of be so safety-oriented, but then you, you just freeze in time, right?

Um, like air travel is pretty safe.

Um,

used to be, yeah, that's true.

Some gaps in that maybe recently, um, but overall, it's pretty safe, and then but like the jets literally look the same as they did in the 60s, and

none of them can fly faster than 600 miles an hour.

Um,

so that's not what, to me, that's not what America's strength is about, like, is freedom, you know, free markets, small government.

In my view, like, the government really should just be there to kind of run the military, protect from foreign invaders, you know, run the police, protect,

enforce the laws at home, and run the courts and, like, adjudicate disputes.

And I think pretty much everything else, like the private market, would better

solve those issues, right?

And, you know, education, healthcare, like going down the list.

And you should,

you know, it's, it's a, it's a philosophy of more like personal responsibility.

And like thing, non, there are non-government solutions to things in society, right?

Like private charities, you know,

churches, like the family unit, like these kind of things can create that structure and safety net in society.

The government doesn't have incentives aligned to create good outcomes typically because there's no competition.

You know, like competition breeds excellence.

And if the government is the only game in town,

it just deteriorates over time.

So the incentives aren't aligned for the government to do good things.

They should be small, focused on what they have to do-the monopoly on violence-and then let the free market cook.

And I think that would be a stronger America.

Me too.

Me too.

So,

what's the war on crypto?

I'm not.

Yeah.

I can't say I'm not a crypto guy because I buy it, even though

I don't understand it

nearly to your level.

But

why would there be a war on crypto?

Yeah, well, crypto is a threat to

some

people in power, right?

You know, in particular, like in this last administration, Elizabeth Warren and Gary Gensler, I would say, were the biggest architects of this war on crypto.

And, you know, Elizabeth Warren is a socialist.

She basically thinks the government should run all financial services.

And she likes to apply pressure to the big banks that are kind of under the purview of these financial regulators to get stuff done that she can't get done through Congress because the American people don't want it.

So as an example,

she put a lot of pressure on JPMorgan to say, you know, don't give loans to oil and gas companies or to gun companies.

And so she has these kind of political motivations and she can, because she can't get them passed through Congress because the American people don't want that, she'll kind of in an extrajudicial kind of way,

appoint these financial service regulators.

And those regulators will go into the bank and say, hey, it would be a real shame if you were to do this.

You know, they have a lot of soft power.

They can say, hey, we're going to come in and audit you once a month instead of once a year and ask you to produce thousands of pages of documentation.

And

if you upset your regulator, you can be in the penalty box for years and years, right?

So

this kind of soft power,

we called it like Operation Choke Point 2.0.

They would they'd go into the banks and try to debank people that they didn't like for their political reasons.

And so crypto comes along totally outside the power structure that they've been able to infiltrate.

And it allows people to kind of do financial transactions without the risk of being shut off by your bank.

And so she hates, she hates crypto.

And it's like, it's pure hypocrisy, too, because she's always kind of out there saying, well, you know, we're here about consumer protection.

I'm trying to protect the little guy.

And the minute, you know, like some legislation gets proposed for crypto that would protect the little guy, she'll fight against it like tooth and nail.

So anyway, long story short, she appointed this guy, Gary Gensler, to be the SEC chair, as the head of the Securities and Exchange Commission.

And he's just, he's like a powerful financial services regulator.

And what members of Congress told me was that she made a deal with him.

He really wanted to be Treasury Secretary, but she said, hey, look, in the first term of the Biden administration, do the SEC chair role.

Go hard on crypto.

Try to really tamp down on this stuff.

And if you do a good job, I'll try to make you Treasury Secretary in the second Biden term.

And so he really wanted this job to be Treasury Secretary.

So he's a smart guy, by the way.

If you go back and look at his talks before he became the SEC chair,

he was teaching these classes at MIT about how great crypto was and how it's such a powerful technology to update the financial system and all this stuff.

Are you serious?

Yeah.

He totally flopped.

Yeah.

He totally flip-flopped.

Yeah.

I think just for a job.

I think these guys, like, they're just somehow they're mentally willing to, you know, change

their values and what they will do.

It's for basically for personal advancement, right?

To get the job he wants.

And so, you know, he went in there and started creating all this lawfare essentially against crypto companies.

And

like for us, we had gone public in 2021.

As part of becoming a public company, you have to disclose all this information to the SEC.

They send you like like a bunch of comment letters back and forth.

Like they sort of turn over every stone.

They understand everything about your company.

And they allowed us to become a public company at that time in 2021.

They said, okay, great, you're good.

The public

consumers can own your stock and you're good, kosher.

And then a few years later, after this pressure from Elizabeth Warren, he decided, you know what?

Actually, we don't like all this stuff.

And they started sending us these really nasty letters like, hey, we have deep concerns about all these things you're doing that they had just allowed us to become a public company doing.

And so our lawyers, you know, we went in, we met with them probably at the SEC like 30 times over a period of a year or two.

And we just tried to be helpful and answer all their questions.

And, you know, and we would ask them, sometimes we would ask the regulator should be giving you a clear rule book, right?

Like,

here are the rules you have to follow.

And then we follow them.

And that's how it should work, right?

They wouldn't give us any rules to follow.

And our lawyers, I remember we would ask them in these meetings like, well, here's how we think about it.

We read the law and here's the program we designed in compliance with the law.

Do you have any feedback for us?

And they'd say, we're not going to give you legal advice.

And we'd say, okay, well, are we doing anything wrong?

And they're like, we're not going to give you legal advice.

And then

after 30 meetings, they hit us with a lawsuit claiming we had violated all these laws.

And so that was like a pretty interesting moment as a CEO because normally most people would tell you, never engage in litigation with your regulator.

You know, it's like they can make your life hell, right?

And I made a decision at that point.

I was like, we got to fight this, you know, because I was like, show me in the law where we're, did we violate any rule?

They couldn't point to anything, but they said, you have to stop all this activity that you're doing.

And I kind of felt like if we just complied with that, it would not only hurt our business, it would actually kill the entire crypto industry in America.

And a lot of this stuff had been going offshore anyway.

You might have read about like FTX, this exchange, and Mt.

Gox and like these things, American consumers were using these offshore platforms, which were then blowing up and stealing people's money.

And so I was like, really?

We're just going to cede this entire industry to foreign companies and not have the future of technology and financial services be built in the U.S.

Screw that.

Like, let's go fight these guys because I think we have the better argument.

Now,

that, of course, litigation takes a long time, right?

So, for a period of a couple years,

we were engaged in litigation with the SEC.

It had a massive depression on our stock price because a lot of public market investors will just be, oh, you're suing the SEC?

This is too risky.

I'm not going to go near that stock.

And they kind of played dirty.

Like, they pressured these different companies not to work with us.

And they would

like we were trying to close deals with big banks and

to plat, you know, to get money moving onto our platform.

And they would, the SEC would go meet with them and tell them, hey, you know, that company, Coinbase, is under investigation.

Like, we don't think you should work with them.

Wait, are you talking like,

when I go into Coinbase and I want to, you know, put in money from my bank account, is that what they were trying to stop?

Linking bank accounts to Coinbase?

I mean, to be honest, I was worried about getting like personal criminal charges because

some people I talked to, like my lawyers and stuff, they said, you know, this is a civil lawsuit where they think maybe the company had some technical violation, but they're like, it's not unheard of where they actually would put personal criminal charges on you, even if they're totally bogus, just to try to pressure you to settle the other case, right?

And so,

you know, I was prepared for that to happen if it was going to go there, but luckily it didn't.

And,

you know, these guys, basically,

once the Trump administration came in and they appointed a new SEC chair, he looked at these cases and he just threw them all out.

Like he just was like, this is.

ridiculous.

And so that case got, luckily this year, I think it just got

totally withdrawn.

We didn't pay a single dollar in penalties.

We didn't have to change a single thing about our business.

It was like pure lawfare.

They were just like harassing us with these bogus lawsuits to try to kill the industry.

And a lot of startups, luckily, we had deep enough pockets where we could pay these lawyers.

We probably spent like $50, $100 million on lawyer fees.

We had the money to do it, but a lot of startups died because of this in the United States.

I know a lot of founders who their companies just shut down because they couldn't deal with the legal costs of the SEC suing them.

So it was pretty messed up.

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I mean,

I got to commend you here.

That takes some serious balls to go after the SEC.

Yeah.

I mean, people told me I was crazy to do it, but

I mean, I'm so glad we did because, like, the crypto industry might not exist in the United States today if we had caved on that.

Yeah.

And we, and we did it at great personal cost as well.

Um,

wow.

And that took how many years?

It took about, I think, two or two and a half years to resolve.

And yeah, it was like $50 or $100 million in direct legal fees.

But then, yeah, our stock price was down in the gutter too for a long time.

So yeah, it was a huge setback for America.

And I sort of joked with some people that,

you know, after being SEC chair, Gary Gensler should go run the economic development board for like the UAE or the Bahamas or something because he literally just, he grew their economies enormously because a lot of the crypto businesses moved offshore outside the United States and set up shop there.

And he, he created all these jobs offshore, you know?

Anyway.

Well, it turned into a huge win.

So

at least in my eyes.

I mean, the positive of it is that we learned how to become very politically engaged as an industry.

I mean, I was sort of telling you at breakfast, right?

Like I naively coming into starting a company, I kind of thought, and I was always kind of apolitical, and I was like, I didn't really want to engage in government stuff.

And I was just like, all right, well, if we just follow the law, we don't have to deal with DC and a bunch of policy stuff, right?

But it turns out, even if you're not interested in politics, politics is interested in you.

And occasionally they'll come try to unlawfully kill your whole company.

So then we realized, you know, I give Mark and Dreessen and some of these guys on our board a lot of credit for this, but they were like, we have to help our customers and develop political power.

Like we, we had, you know, we had tens of millions of customers in the United States.

We're like, how do we organize these people?

These are, these are voters, right?

And so we actually got, we created this grassroots campaign called standwithcrypto.org.

And it was a 501c4.

We got about 2 million Americans in this last election to raise their hand and said they want to elect pro-crypto candidates.

And we created like scorecards for all the different members of Congress and everything.

And so about 2 million of those voters showed up in this last election.

And we now have the most pro-crypto Congress ever.

So I was,

that was something where I had never really engaged politically before, but you know, we, there has to be real consequences, right?

Like if you have a member of Congress who's out there trying to kill crypto, and that's not what the American people want,

they got to lose their job for the rest, somebody in D.C.

to wake up and, oh my gosh, this is like a, this is a risk politically for me to be against this thing.

So that's exactly what we did in this last election.

And I think it had a big impact.

So I mean, you, you set up, correct me if I'm wrong, but you set up a fund.

You've got, is it $140 million set aside for pro-crypto candidates?

Yeah.

Yeah, that's a.

It doesn't matter what side they lean.

Yeah.

That's the goal.

It's bipartisan.

That's a pact that

we were involved in along with a bunch of other people in the industry called Fair Shake.

So yeah, it's got a bunch of money and they're helping elect pro-crypto candidates.

Yeah.

How's that?

I mean, have you got anybody unseated in the Senate or in Congress for going against crypto?

Yeah.

So, I mean, the most notable one was that in this last election in November, Sherrod Brown was the sitting member.

He was chairing of the Senate Banking Committee, and he was super anti-crypto.

I flew to DC

probably like three or four times trying to meet with this guy.

He would never take a meeting with me.

We flew in a bunch of entrepreneurs from his state, Ohio, like crypto and blockchain entrepreneurs.

This was during an election year.

And I was like, hey, maybe if you won't meet with me, he'll meet with people from his state trying to build businesses, right?

He refused to meet with them, didn't show up.

And he was just blocking.

Every time we were saying, look, the SEC and Elizabeth Warren are trying to kill our whole industry unlawfully.

Like, can we talk about getting some real legislation passed that would protect consumers and allow the industry to be built here?

He would never meet, right?

And he'd block every attempt at legislation.

So he was up by about 11%,

the polls going into November,

sitting member of Congress, like very senior member of Congress.

And there was a guy running against him, Bernie Marino.

And we and the crypto community decided to like back this guy, Bernie Marino.

And he went from being down by 11 points to winning the election.

I can't remember by how much, but it was, that was a huge upset.

That sent like shockwaves through D.C.

where people are like, oh my gosh, like Sherrod Brown, the sitting senator, like got kicked out because of the crypto industry.

And, you know, I think that woke a lot of people up.

And there was probably like a dozen other races that we played in in the House and the Senate.

Most of them, I can't remember what percentage it was, but it was like an 80 or 80 or 90 percent win rate.

Yeah.

And so people realize.

Congratulations.

But people realized in D.C., there's like, there's no constituency that wants to vote.

If you're anti-crypto, nobody really cares.

But if you're pro-crypto, you can get a lot of votes.

Like the American people want this.

So it's just bad politics to be anti-crypto.

Have you had anybody that told you that they would be pro-crypto and then flipped?

We've had some people that were a little wishy-washy.

Yeah, like there was a couple of people, we called it like a foxhole conversion.

You know, like

right before the election, they'd suddenly be saying a lot of pro-crypto stuff, but they had been saying anti-crypto stuff previously.

And then,

you know, Maxine Waters is like a very interesting person.

I spent a bunch of time with her trying to like get her educated on this.

And she was always like really nice to me, to my face.

And then, um, we donated money to her and all this stuff, which was probably a terrible mistake.

Um, but yeah, I'm when this crypto bill came up, um, there's been a couple of them, one of them just got passed into law.

She would like go out on the house floor and talk about like how terrible Coinbase is as a company.

And I was like, damn, Maxie,

I spent all this time with you, you were so nice to my face.

And suddenly, she's like,

Yeah,

she flipped.

Yeah, I don't think she's gonna, she's not gonna be pro-crypto.

I mean, how do you

how do you educate

congressmen, senators, anybody, appointees, anybody a government, especially, I mean, we're dealing with a lot of dinosaurs up there.

Yeah.

You got,

we have people

stroking out on camera.

We have people dying in office.

We have people with dementia.

Like,

how do you,

because I don't even understand it fully.

And I mean, I just interviewed Charles Hoskinson, Hoskinson.

Yeah, awesome human,

but I still don't get it 100%.

And so if I don't get it,

how do you get it to somebody that's a dinosaur in government?

I mean, how do you

educate them?

Yeah, well, this is definitely a bit of a generational issue.

Like a lot of times I'll meet members of Congress that are like over 70 and they don't really get exactly, but all their staff have the Coinbase app or, you know, their kids have the Coinbase app.

And it's, it's okay like if I was in their shoes I you know they're like a mile wide inch deep right they need to know a little bit about everything

school choice and healthcare and supersonic jets and you know so they're constantly to have a stream of people coming into their office every day trying to tell them about their local thing that they care a lot about so I get it why they're not like experts in everything I don't think I could be either

and so they have to rely a little bit on their staff and a little bit on just good general principles like do we think the government should be building more stuff or like the free market right or

there's various principles like that you could fall back on and I one thing I realized actually having I don't know probably like five or six years ago I started going to DC like once a quarter to try to build these relationships because I knew the policy thing was going to be important initially we started off just trying to be an educational resource and it kind of it didn't really work that well I was I think I was sort of naive about what how DC worked because I'd go in there and I'd tell them I'd try to be helpful and answer their questions and and they'd kind of pat me on the head and be like okay thank you for coming in I'd leave it it.

Nothing would ever happen, right?

And it wasn't until we actually got like political power, like organized the millions of Americans who are using crypto like with real votes that could get someone elected or, you know, have them lose an election.

And it wasn't until, I think, the political power is what really woke them up.

And like, hey, we need to get this done.

Because a lot of these folks in Congress, like, not to be too cynical about it, I think a lot of them are like really hardworking Americans that want to do something good.

But a lot of them are also,

they're just trying to stay in power, you know?

And

like to stay in power, you have a finite amount of things you can focus on at any given time.

And so it's kind of like, who has a bunch of votes?

Who has a bunch of money?

You got to kind of focus on that.

And be, you know, you kind of want to be for the thing that's going to happen.

And nobody wants to stick their neck out for some kind of pet issue that's not going to decide an election one way or the other.

And so it wasn't until we actually got the crypto industry organized to protect our customers' rights that they started to take us more seriously.

I mean, what do you tell them, though?

I mean, because

especially with some of these,

the older generations in government, I mean,

I can't see any of them wanting

to move to crypto.

Yeah.

Yeah.

Well, in many ways, you're right.

I mean, crypto is about individual freedom and sovereignty.

Like, it's not, if you want more power in the government, like, it's a little unclear why, you know, but the people want it, right?

So, the things that we usually talk to them about are: this is a technology to update the financial system, right?

Like, your average consumer and American or citizen, like you talked about those stats at the beginning, right?

Like,

vast majority of Americans think the financial system is not really working for them, right?

Like, the fees are super high.

You get like these overdraft fees, right?

It's hard to send money in certain ways.

Like,

you know, you can get de-banked or there's unequal access.

Like, there's a whole bunch of of people who are underbanked or you know can't get a bank account or get access to a loan or these things that just you know so if you look at the how satisfied people Americans are with the financial system it's very low

so we tell them that crypto is a technology that can update that it can make payments faster and cheaper more global it can give people better rewards on their money like you know

Right now, the average savings account in America pays you 0.14%.

You should be getting like 4.5%.

That's what the US Treasuries are paying.

So like, that should just be riving into your checking account.

Why doesn't every American have that?

And there's all these kind of, and like, it doesn't, you know, the banks, the payments don't really work on the weekends and, you know, the stock market doesn't work on the weekends.

So there's all these kind of like legacy systems that are just kind of there because they've been there for 30 years and they're ossified.

They have no incentive to really improve.

And so crypto is coming along and updating the financial system, making better financial services for everybody, empowering them with sound money that can't be inflated away.

And it can do it for everybody in the world with just a smartphone, right?

We'll connect them into this global economy.

So that's appealing to many of them.

I also, we talk a lot about like the national security arguments, right?

Especially for people on the right, how

a digital dollar is essential to ensuring it

maintains like its reserve currency status.

How we want these industries to be built in America.

I mean, imagine if like the big internet companies were built overseas.

Like that would Google and you know, Amazon and all these things, people have their quibbles with them, but like I'd much rather those companies were built in America under the US system than to be built in China.

And we were all using a Chinese search engine, right?

So if the internet companies had been built offshore, that would be a huge loss to America.

Okay, let's make sure the crypto companies are built onshore as well.

Once in a while, these things get away from us.

Like, you know, the 5G or semiconductors now are all being made offshore.

And now it's a big issue in DC.

Everyone's like, well, we can't be buying our 5G routers from Huawei, maybe the Chinese company, or the semiconductor are all made in Taiwan.

And this is a huge national security risk.

They're all trying to, now scrambling and throwing $100 billion to try to bring these things back onshore.

It's like, well, hey, let's just not lose it in the first place, you know?

So those are the kinds of arguments we make to folks.

And it's generally pretty compelling.

Congress is now, there's a strong bipartisan majority that wants the industry to be built here in America, partially because of this last election.

And actually, they just passed this piece of crypto legislation last Friday.

I was at the White House doing that signing ceremony.

That was a huge step in the right direction.

And then there's one more bill that hopefully will get passed in September, October of this year.

We'll get into those in a little bit.

But, you know, I wanted to ask you, we were talking about money.

We were talking about the Federal Reserve coming off the gold standard, real estate,

how currencies can be tied to commodities.

And so I just wanted to ask you, I mean, what is money to you?

Yeah.

Well, to me, money is really like a medium of exchange.

And it came out of this need from the barter system not fully working, right?

Like if I if I grow apples and you raise beef and I kind of want some beef, but you don't need my apples right now, you got enough apples.

It's like that's a barrier to a trade happening, right?

So it helps if we have this common medium of exchange.

that can be used to price things and just

allow a transaction to happen even if you don't need the exact good that I produce, right?

And, you know, over time, lots of things have been used as money, right?

Like people used salt as money at one point.

In prisons, people use like cigarettes or different food items as money.

Seashells, you know, famously, all these like kind of things.

And there's certain properties of money that make it good money or bad money, right?

Like

scarcity is one of those.

Can people just, if you can use, find a bunch more seashells

on the beach, then that's like a bad form of money, right?

Or durability, like,

you know, will the, will the thing deteriorate over time?

Like bread or something like that is probably like a bad form of currency because it just, it goes bad, it rots, right?

How portable is it?

Like, you know, a bar of gold is great as like a store of value, which by the way is another good property of money, but it's hard to move gold.

Like if I need to pay somebody in Japan, like I need to fly that bar of gold, right?

Or how subdivisible is it, right?

Can I like chip off a little flake of of gold to pay for my coffee?

Or, you know,

so people look at these different properties of money, and you can kind of score different monies.

And, like, this is partly why I think Bitcoin is probably the best form of money that's ever created because it is scarce, provably scarce, just like gold or something like that.

But it's more portable than gold.

You can send a Bitcoin transaction kind of anywhere in the world pretty quickly.

It's subdivisible down to like eight decimal places.

You know, it's very durable.

It's not going to go bad.

And

it's fungible too.

Like, you know that

if I have one Bitcoin, it's just as good as another Bitcoin, right?

Like,

imagine if you had different purities of metals and like, oh, is this one diluted a little bit?

Or are they hiding some lead in there?

So, yeah, I think you could think of Bitcoin as like a digital gold.

And

it has some of the best properties of gold, but some of the ones that gold doesn't have too, like the portability and subdivisibility, the programmability too.

I would say you can use it in different case, in different

setup different contracts with it, and things like that.

So, that's kind of what money is to me.

It's intended to be a medium of exchange.

And I think crypto is really providing a better alternative on that dimension.

I mean,

you know, the big argument, and I listen to a lot of people

that I respect.

One, Dave Ramsey.

Are you familiar with Dave?

Yeah, I think so.

Yeah.

He's a good friend of mine and a big finance guy.

Does not like crypto, unless he's changed his mind in the last, I don't know, year.

But, you know, and he says it's backed by nothing.

And so, you know,

that's kind of where I'm going.

Yes,

there's a limited amount of crypto.

It's never going to go over, I can't remember how many coins.

21 million, yeah.

21 million coins.

But what actually, like, what, why do people value it?

Yeah.

Well, he's right.

I don't think it's necessarily backed by anything,

but neither is the dollar.

We talked about it's no longer backed by gold.

You know, are Picasso paintings backed by anything?

Not really.

I mean, they're just paint on some canvas.

There's not like an intrinsic value to it.

People value gold or casso paintings or Bitcoin because they are scarce

and other people believe they have value.

It really comes down to

trust, right?

And a lot of things contribute to trust, like

the fact that Satoshi Nakamoto kind of put out this white paper and allowed anybody in the world to mine it.

So it was kind of like a fair way to launch it into the world.

That created a lot of trust.

The fact that no government or anybody has been able to hack it or break the algorithm behind Bitcoin, that created a lot of trust.

Do you think that the energy required to mine Bitcoin is

possibly a backer?

Yeah, I mean, so you could make an argument.

It goes off

to mine it.

Yeah.

Your energy price.

I think if you were to make an argument that it is backed by something,

yeah, so there's a lot of energy and hashing computing power that goes into verifying the network.

So that makes it defensible against somebody trying to take it over.

I think you could say another,

like, what is the intrinsic value of it?

Is another question people ask sometimes?

And the way the value of it is that it allows you to instantly transfer value anywhere in the world on a decentralized ledger, right?

So these are kind of philosophical arguments, though.

Sometimes people get really wrapped around the actual of like, yeah, but that's not, it's not really backed by anything.

And so

I don't know.

I just like to kind of concede that point.

I'm like, okay, just let's take it.

Let's just say that it's not backed by anything, but that's true of the dollar and Picasso paintings and all that.

So to me, that's not like a,

you know, you can't like discount Bitcoin just because of that.

If people trust it and believe it has value and it's provably scarce, that's all you need.

What are some of the other coins out there that

people transact in?

Or is Bitcoin the, I mean, is Bitcoin the primary?

I know it's the primary one, but you got all these other ones that have popped up, you know, Cardano, Ethereum,

XRP, Solana.

I mean, there's, I mean, I don't know how many there are.

There's probably thousands.

And then we saw the stuff with Doge, you know, and Elon.

Yeah.

Am I saying that right?

Yeah.

Dogecoin.

And

I think it was like early 2020.

I was like buying all, just buying all kinds of shit that had no idea what it does.

And you'd see these crazy spikes, you know, both up and down.

What are people using?

What are the reasons people would hold some of these other coins?

Yeah, so crypto is not just one thing, right?

Like Bitcoin is digital gold, but there's other blockchains that are really trying to be like the payment layer, the utility layer for crypto.

So that's kind of what Ethereum and Solana are doing.

And actually, those are like, I would call those blockchains.

There's like millions of coins built on top of these blockchains.

So you could have, someone might be like, why would there be like millions of these things, right?

And if you're thinking about it in terms of currency or money you probably only need like one or two of those right but if you're if you're thinking about it as hey this company might need to raise money or um

this social media post like this piece of artwork or content or podcast episode or whatever it that's that's how you're getting millions of these coins actually coming out

and so this is kind of where crypto is now on the frontier Bitcoin's like digital gold.

There's USDC, which is like a digital dollar.

That's like people spending dollars digitally faster and cheaper, more global.

And now there's people, every social media post, whether it's like text or audio or video, that could be a coin.

Or like, you know, you.

What do you mean by that?

Well, like, if you put out this

episode, right?

You know, today you have like sponsors on the podcast, right?

And, you know, that's how you kind of have to monetize it is like a certain number of eyeballs and you sell sponsorship.

But what if people who love your podcast or on your Patreon or wherever, like, maybe they want to own a copy of this episode, right?

Or the next

song that gets put out by some famous musician, right?

People want to own a copy of that song.

Like people are actually, they can buy directly from the creators in this new model for crypto.

So it's actually crypto started as like digital gold with Bitcoin.

Then it started to update different kinds of financial services like payments, borrowing and lending, trading.

And now what it's doing is it's actually updating the way these applications monetize on the internet.

Like, all even things that aren't directly related to financial services, like podcasts or, you know, video or audio.

Like, there's going to be a version of like YouTube, Spotify.

Is this like NFTs?

It's similar.

Yeah.

So these things keep coming in waves, but the early version of it was NFTs, exactly, that were like pieces of artwork.

But those were kind of like...

baseball cards or collectibles people would want to own that was like a picture of a funny penguin or something.

This is more like every piece of content generated online can be its own coin and have its own market cap and people trading it.

And it's just a way for creators to get paid more directly by their audience and their fans.

So is this happening right now?

It is.

Yeah.

I mean, we just released this app called Base

just like last week, and it's still in beta, but people can get invites for it and stuff.

And it's kind of like...

It's like a new social media app where every post that you make is a coin.

And,

you know, if I hope we get you on there at some point or whatever, but if you could put out your podcast episode and people could own it and it would just monetize directly without having to have advertising be the primary business model of the internet.

Wow.

Yeah.

That's awesome.

Yeah.

That's through base.

Yeah.

So that's where, that's where this is going.

The other cool thing about base is it's a self-custodial wallet.

So you can just hold your own crypto.

You own all your own content.

That way, like you don't have to trust any third party, even Coinbase.

You don't have to trust us.

And, you know, we talked about this at breakfast a little bit, but

for the main Coinbase app where we're storing people's money,

that's a regulated financial service business, right?

So you have to get a license every country you want to operate in.

And so we've had to go one country at a time, set up a local team, get the local license.

So we're in like dozens of countries now, but

it's really slow and expensive.

With a self-custodial wallet, you're not a financial service business because you're never taking possession of customer funds.

It's really just like a software product, just like a web browser or a messaging app or something.

So we can launch that to 190 countries from day one.

And people in all these countries that really need access to better financial services, like Venezuela, and Turkey and Nigeria, places where there's high inflation, they don't have good options, they can now use a self-custodial wallet, anybody with a smartphone.

So, that's a really cool way for us to just get this technology to

the other 150 countries of the world that are a little harder for us to operate in as a regulated financial service business.

What I mean,

how many countries out there are fighting crypto?

Don't want it to.

Yeah.

So, I mean,

the biggest one is probably China, actually.

It's not technically illegal for Chinese people to own crypto.

And by the way, the people in China love crypto.

They all want to own it.

A lot of the rich people there are trying to get their money out of China.

But the government doesn't like it.

It's kind of like what China did with the internet, if you're familiar with that, like the Great Firewall of China, where a lot of applications, including Coinbase, Coinbase, but also, you know, Facebook and all these things are blocked in China, like Google.

So they've, China passed this law where they said banks in China cannot work with crypto companies.

So they kind of like debanked them, kind of like what Elizabeth Warren tried to do in the United States.

And so they made it very difficult for crypto companies to operate there.

But the Chinese government issued their own digital currency for the Chinese yuan.

So they made it what's called a central bank digital currency, digital yuan.

But of course, it's controlled by the government.

And if you, if you get on the wrong side of the government, they can just take all your money and shut down your account.

So it's a tool.

They're using it as a tool for control because they wanted to run their own blockchain controlled by the government.

They're very anti-like these decentralized blockchains like Bitcoin that are pro-freedom for individuals.

So yeah, so China, China's is trying to crack down on it.

There's a couple other countries that

I'd say the commons, like in India, for instance, the Reserve Bank of India has some concerns about crypto because they're worried about, again, capital controls.

Like a lot of the wealthy people, they want to plug into the broader economy.

They want to get their money out of the country to go do things in the world.

So some countries are trying to clamp down on that,

which takes people's freedom away.

So they tend to be a little skeptical of crypto, but the people in those countries desperately want crypto.

So we're often like

We're often in this kind of interesting situation where we go in there.

We want to work with the government in those countries to do things by the books.

But the government's interest sometimes diverges from the people's interest in that country.

And so we want to provide the tools to the people for freedom

and not get on the wrong side of the government.

So it's like we're trying to oftentimes play a delicate game there.

Yeah, I'll bet.

I'll bet.

I mean,

when we're talking about people exchanging,

basically using crypto as

a currency.

How do they, I mean, the big thing for me is the volatility and all of it.

You see these massive up and down swings.

I mean, when do you think this will kind of, or will it?

Do you think it will level off?

Yeah, so Bitcoin has gotten less volatile over the last 10 years because there's just more and more people who own it now.

And I think as you get like bigger pools of capital in the world, like big institutions and rich people all over the world and just everybody really, like as we get to having, there's maybe 500 million people who've used crypto today.

I think as we get to like 5 billion or even a couple billion, it'll get less volatile, but it'll still be going up over time because more and more people will be coming in.

But you won't see like these 100% wild swings up and down.

But, you know, this is why a lot of people are using Bitcoin more like a store of value.

And then

as a currency, like a medium of exchange, they're using things like USD coin.

um or things which are less volatile.

So again, it's like crypto kind of has, if you're going to update the entire financial system, you kind of need to reinvent everything.

You need like a digital gold, you need a digital dollar, you know, you need digital stocks, you need digital every, so it's crypto is kind of reinventing all these pieces of the financial system and making them more fast, cheap, global, efficient.

What do you think it will go to?

Like the long-term implications of it?

Or, yeah, I mean, well, from a market cap point of view, I think it's got like a long way to go, 10 or 100x.

But I think the ultimate outcome of this is that

governments stop controlling um currency really like we you know we exist in this world today where there's like 190 countries or so um some of them are pegged to the dollar but there's maybe like 150 or so currencies and each currency each country has its own currency that might sound like an obvious thing but Like imagine if every country had its own internet.

Like that would be a terrible situation, right?

Like somebody in Germany wants to listen to your podcast and like they have to pay an exchange fee because they're using different internets or something like that.

Like that would be super inefficient, right?

We should all be running on the same internet globally.

Well, we should all be running on the same monetary system globally, but do it in a way that takes the power out of the hands of a small group of bureaucrats that can manipulate the currency or whatever.

It should be like, a fair system that no one country or company controls.

So I think that's kind of what we're seeing is

the power to issue currency is being unbundled from the state and it's returning that power into the hands of individuals and people who they can choose what they want to use.

They don't have to use it just because they live in that country.

And that's going to be a more fair and free society.

It's going to be money that can't be inflated away.

It's going to be every transaction you can do instantly, you know, for a tiny amount instead of like 2% to 3% every time you swipe your credit card.

and it's gonna work cross-border like there's tons of people who are trying to send money to their family in another country or they're trying to order goods and goods from another country like the current financial system is this incredibly unfair tax on every transaction in the economy and it kind of just slows down all progress

like I'll give you an example would be like

you remember text messaging used to be like 30 cents yeah yeah

And

I think that at that time there was maybe like a billion messages a day sent by text message or something.

But these applications like WhatsApp came out and Signal and

text messaging got cheaper.

And now it's basically like with WhatsApp or Signal, it's free to send a message anywhere in the world, right?

Instantly.

There's now,

I think it's like a couple hundred billion messages sent per day, right?

It's no longer one billion messages a day.

It's like 200 billion messages sent per day because it's free and it's instant and it's global.

And that's kind of what's going to start to happen with the economy and with money.

There's so much friction today to move money that if we can bring the cost down

like under a cent, one cent, under one second, anywhere in the world, you're just going to see like

transactions in the economy will just flourish and you'll see a lot more of them happening.

So that's kind of what we're trying to do: update the financial system with crypto, make it more efficient, more global, more fair, more free.

Who

a couple of questions just off what you were ripping on there.

Who set up the USD stable coin?

So originally, there was a company called Circle in partnership with Coinbase, and we co-created it.

And now they're the issuer of it, and we're a distributor of it.

But there's a bunch of legal details behind it.

But yeah, basically, Circle is the issuer of USDC.

Okay.

And then, you know, when we're talking about moving to a digital currency globally and having a global currency, you know, how do you think that would affect the U.S.?

I mean, Elon Musk talks about this, how the U.S.

has weaponized the U.S.

dollar, which, you know, is a bad thing, but

I mean, slippery slope there, right?

I mean, you get the reputation of that, then people are going to want to move.

I mean, I've brought this up on several shows.

We see BRICS.

You're familiar with BRICS.

Brazil, Russia, India,

China, South Africa.

Several other countries have joined, you know, because the U.S.

has weaponized the dollar.

I mean, so if we'd move to a global currency, how does that affect the US from being able to to have a certain amount of control around the globe through

yeah

so this is a great question because I think it's it's a mixed bag um it's not it's complicated right

so I think if you look if you think about like a digital dollar I'll start with that like USDC to me that's unequivocally just good for the the dollar in the United States it helps make sure the dollar is the reserve currency in all these countries around the world creates enormous demand for us treasuries there's a bunch of bunch of reasons why it's good if you if you're talking about about Bitcoin, I think

it's more complicated because if the dollar maintains discipline, then it'll continue to be the reserve currency.

If the dollar loses discipline, like we talked about earlier, people start printing a ton of it, like the Federal Reserve, or there's these huge budget deficits we keep running at the federal level that require us to print more money just to pay things back, and they sort of devalue the dollar.

people will flee the dollar and they'll go to Bitcoin.

And in that case, the United States could lose the reserve currency status.

Now,

if the U.S.

is going to lose the reserve currency status, I'd rather people went to Bitcoin than to the Chinese yuan.

Right?

So that's why I say I think Bitcoin is kind of like a check and balance on the dollar and deficit spending.

Like, I hope that the U.S.

finds a way to maintain that discipline and the U.S.

remains strong.

And in that case, crypto will just be

a very good thing.

But if we're going to lose it, I'd rather we have Bitcoin than we have to all live under a Chinese system.

And then, you know, we're talking about you're fighting congressmen, you're fighting senators, governments.

What about banks?

What about banks like Chase, Bank of America, Regions?

I mean,

are they?

I would imagine they do not want this to happen.

Yeah.

I mean, these are big organizations.

And it's funny, sometimes, like, depending who you talk to in the bank, it's either very positive or very negative.

In general, general, we've had good relationships with the banks.

You know, we actually need to work with them because we've basically built a bridge from the

bank system into this crypto system, right?

So, we, when people come to Coinbase, they usually connect their bank and move a bunch of money into Coinbase.

So, we actually need to work with a lot of them, and we work with most of the big ones.

But there certainly are

elements of those banks that are skeptical about crypto, and I think they're afraid of being disrupted by it.

I mean, it could eliminate them, correct?

Yeah, I mean,

I don't know.

If I'm sitting here in 10 or 20 years, I'd be hard.

I still think there'll be like dollars and there'll be banks, but you're right.

Like a whole generation of young people are growing up kind of thinking, like, why would I need some checkbook and a bank branch on the corner?

Like, I've got my phone.

Obviously, my phone is my wallet.

And they're really using Coinbase like a bank replacement, like a neobank, sometimes people call it.

You know, in particular, there's actually like this

community bank lobby.

I'll just tell you kind of one anecdote about this.

So, when we were trying to get this legislation passed

in Congress for stablecoins, the community bank lobby, which they have representatives in all 50 states, you know, so they're very powerful politically because there's members of Congress in all the districts around the US and they each have these community banks.

So, they came in and they lobbied hard against the stablecoin bill.

And in particular, what they were most concerned about is they said, well, these stablecoins are paying people interest, like 4.5% on their money.

And they don't want that to happen because they pay their customers, you know, like 0% or 0.14%, like kind of in their check, in their savings account.

And their argument to the members of Congress was, well, if you allow these stablecoins to come in and start paying people 4.5% on their money,

all the loans will dry up in these communities, like in these small community banks.

Now, there's not really any evidence that that'll happen.

I think what's more likely is they were just trying to protect their profit margins.

They're like, well, we don't want to have to pay our customers

a fair rate to compete in the market.

And so they actually managed to get this line in there, in the bill that was like, prohibits stablecoin issuers from paying interest to their customers, which is like kind of unimaginable to me how they managed to convince members of Congress with a straight face that like, hey, we want a law to block our competition from giving more money to their customers.

It's like kind of ridiculous.

Now, that passed.

That passed.

So, and we, now there's a good news here, which is that

We're not a stablecoin issuer, so we actually are allowed to continue to do it.

We also pay rewards to our customers, which are different than interest.

There's a whole bunch of legal definitions around this, but we found a way to continue to do it.

So we're going to continue to pay 4.5% to our customers holding

USD coin because we want to just, that's what we want to do is update the financial system.

And if people don't like the rates in these community banks, they should have to compete on a level playing field with everybody else.

Like, that's what the free market is there to do.

It creates better products at lower prices for customers.

So, yeah, but that's the kind of stuff we have to deal with in DC: is like these lobbying groups coming in with special interests.

And it's part of the reason I'm in favor of small government, is like there's just less to be captured, you know?

Yeah.

If you have a big government, everybody's trying to influence it and try to get their special favors.

And it just, it gets like, it gets you these suboptimal outcomes.

How long do you think it'll be before we start seeing,

and maybe we already are, but

when will we start seeing people use crypto as currency at

Walmart, at the gas station, at the grocery store,

everywhere?

Yeah.

Well, I think the earliest adopters of it are going to be online, like e-commerce.

Just because they're more digital native, right?

Like we actually just announced this partnership with Shopify.

They have millions of merchants.

Even if people,

almost everybody's actually bought something from a Shopify store, they just sometimes they don't know they're doing it because each one's like a boutique shop, right?

If you go and buy like beef jerky or like apparel or whatever.

So we just announced a partnership with them where they're going to accept USD coin and actually give 1% cash back to the customer because the merchants are now saving the 2% to 3% on credit cards.

So we're doing things like that.

Oh, that's slick.

Yeah.

Incentivize them.

Yeah.

Incentivize people to pay with USDC and get, yeah, get some cash back.

Or like that Bitcoin credit card that I gave you at the beginning is allowing people anywhere Visa is accepted or Amex in that case, we also have a Visa debit card.

They can start to go spend their crypto.

Now, the merchant's still paying 200% on that, but I'm hoping, you know, we can go to the merchant eventually and say, hey, you know, a lot of people are paying a crypto.

You might not even know it.

Why don't you do a direct integration?

You can kind of save those fees.

So there's areas like that where we're starting to chip away at it.

But,

you know, the credit card companies are a big oligopoly where it's

a reason they're able to charge those high fees because they've built such a strong network effect that it's hard for new entrants to come in.

So we had to come up, you know, a decentralized protocol like crypto is maybe the only way you could go compete with them.

It wouldn't be, you wouldn't be able to do it as like, you know, if it was Coinbase versus one of those things, we'd probably lose.

But if it's a totally open protocol like the internet versus them, maybe there's a chance to break in.

Do you transact in crypto?

Yeah, I mean, I use my Coinbase card for most purchases.

And then I use it online too, just to like, just to buy crypto, shop increasing, like these things at Shopify and stuff like that.

But, you know, I'm kind of really trying to live on the frontier.

A lot of people, they just, a lot of our customers, they just hold Bitcoin, Ethereum, and they start off with like really an investment use case.

And then they slowly add on these other things.

Like this, all right, well, okay, I have a bunch of Bitcoin.

Can I get a loan on that?

Or can you?

Yeah, like you can actually get loans on.

There's a lot of people who they bought early Bitcoin.

They've got like tons of money and they just, they can go get a loan on our website now.

So we're starting payments, lending, um earning yield like it's starting to become like a bank replacement is that through base or through coinbase uh that's through coinbase okay yeah so i can go on coinbase and apply for a loan yeah fuck i didn't even know that yeah and we're that's what we ultimately want to do is you know it's it's kind of difficult for a lot of people to get a loan and it's a lot of paperwork and um that's what we're trying to do update the financial system like all parts of it including including borrowing lending what are you checking when somebody borrows are you checking credit or or is it just what's in their Coinbase wallet?

Yeah.

So in that case, it's just the collateral with a Bitcoin in their wallet.

So we don't need to run a credit check or anything.

But I think we'd like to find a way to do what they'd call like non-collateralized lending too, which would be just based on credit.

And I think one thing we're trying to invent is like a decentralized credit score based on the blockchain too.

So

we could see a record of like, let's say that

you've been receiving a bunch of money from, I don't know, your pod, different companies you're involved in, this podcast or whatever.

And, you know, you could actually build a reputation score, like a FICO score, kind of equivalent on chain of all the transactions that person has done and then probably lend to them based on that.

So we're trying to think about how to create things like that too.

Wow.

Wow.

So a whole new, whole new credit score system.

Yeah.

And by the way, I mean, like in the U.S., people,

it's difficult to get a loan sometimes.

Other times you can.

In a lot of emerging markets,

there's no credit system.

When I was living in Argentina,

nobody can get a mortgage to buy a house or get a loan to buy a car.

So the only people who can own real estate are rich people who can basically pay the whole amount in cash because there's no mortgage industry.

So this is an example where Like we sort of take these things for granted in the United States sometimes.

Like you can get a mortgage to get a house and that's how people build wealth and all this kind of stuff.

I think that we have a chance, again, with the smartphone and this new set of financial services powered by crypto, we can actually provide like a lending market to people all over the world.

Like if you, if you live, you're some 20-year-old like living in India and you have, you want to start a little business or like, I don't know, whatever it is, you should be able to get a loan to do it.

That's a lending is a key way that you grow, you have economic growth.

And most people in the world do not have access to any credit market.

It's kind of crazy.

Interesting.

Interesting.

Let's take a quick break.

Yeah.

And when we we come back, I want to talk about the journey to starting Coinbase.

Great.

Perfect.

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All right, Brian, we're back from the break.

We're getting ready to get into the the journey to innovating Coinbase, but just a couple of questions that came to mind on the break.

So we talked about 21 million Bitcoins will only 21 million Bitcoins will ever exist.

What do you think will happen when

we hit 21 million?

Well, yeah, so right now there's a smaller and smaller number of Bitcoin being produced over time.

And it kind of, it hits like a maximum number.

It actually takes like 100 years, right?

But it, we're most of the way through that.

I think there's probably already 20 million or so already out there So there's only maybe a million left that'll only it'll ever be created

so

right now

The big new Bitcoin are created when people the miners the Bitcoin miners

Verify a new block and so that's how new Bitcoin are kind of issued to them as like a reward for doing all that computational work running running the network

once that runs out, they're gonna have to be compensated by the small transaction fees that happen on Bitcoin.

And so,

this may be more detailed than you wanted, but

you can take it anywhere you want to go.

But basically,

miners are the people that run the Bitcoin network.

They run these data centers all around the world.

And today,

the majority of their revenue is coming from new Bitcoin being issued, and a smaller percentage is the Bitcoin transaction fees.

As fewer and fewer Bitcoin are produced and the network grows, it'll shift to being more about transaction fees than new Bitcoin

being mined.

And eventually it'll be zero new Bitcoin being mined, but they'll still make money from transaction fees.

So I think

what that basically means is that the supply of Bitcoin is not going to keep growing.

So if you want Bitcoin, you're going to have to buy it from someone willing to sell it, which is how most people do it today already.

But some people mine them to get brand new Bitcoin.

So anyway, that's like a simple way to think about it is

once the supply, there's no more ever created, you have to just buy one that already exists from someone else.

And so that is the price of Bitcoin is who's willing to sell one.

So is that, is that,

how do I say this?

Is that like already set up to where

when we hit 21 million, then

the miners will be incentivized

with transaction fees?

Yeah, I'd say that's already happening today.

It's just it'll it'll gradually shift more and more to the transaction fees over time.

And then, I mean, does the system ever need to be updated?

Like, for example, Bitcoin, nobody knows who it is.

And so

will it need to be updated?

And if it does, who does that?

Yeah.

I do think Bitcoin will need to be updated

to become quantum resistant, right?

So

quantum computers create this risk that we talked about.

And so, you know, Bitcoin has a mechanism for it to be upgraded.

And the way that it works, since there's no central authority that controls Bitcoin, right?

So anybody can propose propose an upgrade to Bitcoin.

There's

what are called the core developers, some of the people that work on it, like the open source project kind of volunteering or they're getting paid by donors.

There's also the miners, the people running the network.

There's exchanges like Coinbase that play a role.

So there's this whole community of different participants in the Bitcoin ecosystem.

And for an upgrade to happen, like to make it quantum resistant,

There will be various people who discuss proposals about how to do that.

You know, Coinbase might help with that, or the core developers have proposals.

And essentially, for Bitcoin to be upgraded, everyone has to agree.

I mean, not everyone.

You actually just need more than 50%.

So let's say that 51% of all the people running the exchanges, the miners, the core developers,

they all sort of decide, okay, this new proposal is the one we're going to adopt.

And that, like at least 50% or more move to that new proposal, that is Bitcoin.

That is the chain that has the most people on it using the most computational power.

So

it's truly a consensus mechanism.

All these people have to come into agreement.

Now, there's pros and cons of that.

The downside of it is it's harder to get that many people to agree on something.

So it can go a little slower.

But the upside is that you're never going to get some small group of people who can take it over and unilaterally do something to harm Bitcoin.

Okay, that was actually another question of mine.

I mean,

Michael Saylor.

Yeah.

You know, I mean, he is just buying

like shit tons of Bitcoin.

And so is that,

is it good for the, for the Bitcoin market for somebody to, to have that big of a stake in it?

I think it's good.

I mean, he's obviously a bull on Bitcoin, but I don't, I don't, it's not like he can own like 50% of all Bitcoin or something like that.

It's too big right now,

like in the many trillions, right?

Okay.

So, you know, there's going to be various groups that come in and try to acquire Bitcoin positions,

but that's good.

I think it's just, it's just driving up the demand.

Okay.

Okay.

And then just another question I had was,

you know,

will we ever see anything like

investing for your kids, like IRAs, Roth IRAs,

529 college tuition thing?

Like,

is there anything like that that's going to come in the future where

you can set aside money for your kids or your grandkids or whoever you want

without opening up all these different

wallets?

Yeah, well, so in some ways, this is already happening today.

In fact,

like there's some members of my family, you know, when they were, when they were born, I gave them like a Bitcoin, right?

In, that

their parents kind of put in a wallet just to hold on for future.

And they were kind of laughing at me too, because when when I did it, it was like $200 and they're, you know, I was like, hey, maybe someday this will pay for their college tuition or whatever.

And they, they kind of laughed at me, but they haven't, they haven't sold it yet, so that's good.

So in some ways, it's already happening, but I think, you know, these IRAs and like these different types of tax advantageous accounts,

I'd have to go look at the specific details on each of them, but there's certain that have permissible types of investments in there that are allowed or not allowed.

We're constantly trying to chip away at these rules to make it easier where,

I mean, people should absolutely be able to hold crypto in there just like any other asset class.

And actually, we need to make it easier for people to do that on Coinbase.

That's something we're still working on is to open up these kind of retirement accounts and tax advantageous accounts.

We have some customers are asking for it now, so we'll probably have to do it soon.

Okay, okay.

And then I kind of touched on this earlier, you know.

Bitcoin, I mean, there's a handful of them that seem to be

the mainstays that are going to be around for a long time.

But then we see all these, for lack of a better term, trash coins coming out.

And

there's been some scams in the industry.

FTX, Sam Bankman Freed.

I mean, you had all these big-time celebrities vouching for it.

Turned out to be a complete scam.

I mean,

how do people navigate that that are new in the industry?

Yeah, so there's no doubt.

I mean, crypto has attracted its fair share of scammers, right?

Just Just like anything else.

Yeah.

Yeah.

I mean, like the internet, you know, the early internet, and even still to this day, right, is like these emails from Nigerian princes and all kinds of scams on the internet.

You know, technology is a double-edged sword, right?

Like anytime you make a technology like a shovel, you know, you can use it to build something or hit someone over the head with it or whatever, right?

And financial services technology, I think, does attract some of the wrong actors, but it also attracts like the right people who can build things.

My mental model of the world, I always try to remember: is like, I think, you know, like roughly speaking, 99% of people are good, 1% are bad.

So there's always going to be bad people who try to do these things.

And some of them can attract a lot of headlines and get really big in the public psyche.

But you have to remember, like, there's 99 people behind every one bad one that's trying to do the right thing and build good things in the world.

So we have to be careful not to like just say the technology is bad because 1% of people bad people try to abuse it.

But I think for the average person coming into the industry, I mean, look, it's a lot of basic stuff, right?

It's like, if someone's offering you some crazy yields that sound too good to be true, like it probably is, if you're just learning about something for the first time, you know, don't put all your money into it.

Like

I would say that's true of crypto, but it's true of anything in life, right?

Like a lot of people who are getting into crypto for the first time, you know, I tell them, all right.

Put like 1% of your net worth into Bitcoin or something and just see how it goes for a couple years.

And, you know, if you like it and you want to start trading other ones, you're learning about it, okay, put in 2%, 5%, whatever.

There's people who have like 50% or more of their portfolio in crypto too, but they have different levels of risk and comfort with that.

And then, of course,

you got to figure out what company to trust, right?

Like sometimes

this, you know, sometimes there's companies overseas that are offering certain products and services that are not allowed here in the U.S.

And, you know, that can be interesting because it allows you to live on the frontier.

But if you're going to live on the frontier, you know what?

You might take some arrows too.

And so you've got to sort of have more personal responsibility.

Like the government's not going to protect you in that situation.

You need to know what you're doing to really look out for yourself.

So

I'd say in investing, there's no return without risk.

If anybody thinks it's like a this is a risk-free return or whatever, you know, that's doesn't really exist.

So, you know, you've got to use good judgment, sweet smarts.

And then just another question.

You know, we were talking a little bit about prepping at breakfast.

Yeah.

And

the big argument with crypto,

which is a little ridiculous to me because

is basically what happens if the grid goes down?

You have no access to your Bitcoin.

Well, you probably don't have access to your money too because the financial institutions won't have any power either.

And so, but I just want to know what your thoughts are on that.

Yeah.

Well, if electrical grid or the whole internet went down, I mean, yeah.

So society is going to be very disrupted at that point.

Your Bitcoin won't be going anywhere.

It's not like you're going to lose it.

If, like, let's say that there's a outage for a month or a year or like, you know, five years, at least, you know, your, your crypto is still safe.

It's not going to go anywhere.

There is a hypothetical way actually that people could continue to do transactions without any internet where it's actually using your phone,

Bluetooth,

to talk to each other, and you could actually have more of a mesh network, they would call it.

So, that is possible in that kind of situation, but

I think it would certainly be disruptive and challenging.

In that type of situation where you're talking about that level of societal collapse, probably things like ammunition and

gold and start, those start to be a little bit more like your fallback.

So, I think people should also own gold, right?

I don't think it's not like exclusively one or the other, but

in a world where civilization more or less continues to exist with electricity and things like that, I think, you know, Bitcoin is probably a superior version to gold.

So.

Thank you.

Thank you.

All right.

Let's talk about the road to Coinbase.

Yeah.

So I know you got inspired by the white papers.

Yeah.

Yeah.

It was, I think it was December of 2010.

I first read that Bitcoin white paper.

At that time, I was working as an early employee at Airbnb, a software engineer trying to help them move money to different countries around the world.

And reading that white paper really captivated my attention.

I was like, wow, this is fascinating.

And I kept, I reread it a few times, went to some of those Bitcoin meetups I mentioned.

How did you come across it?

Well, yeah, I was just cruising.

There's this website called Hacker News, which sometimes like people in Silicon Valley read that

has just like technology encoder type updates.

And yeah, it got posted on there in.

December 2010, I think is where I first saw it.

And, you know, I went and talked to some of my friends about it who I was working with at that time.

I was like, this paper is really cool.

Like, have you seen it?

What do you think?

And a lot of my smart friends,

they're like, I don't get it.

This doesn't make any sense.

Like, this sounds like a scam or something.

And so I kind of had a lot of self-doubt about it.

I was like, I don't know.

I think this is kind of a cool idea.

But a lot of people I talked to didn't seem to think that.

So for about six months, I was just thinking about it, reading stuff, going to meeting people at these meetups.

And sometimes when I can't get an idea out of my head and I keep thinking about it and going down to this rabbit hole, I'm like, okay, I got to build something.

I got to try doing something

because I don't know what's going to happen, but if I take some action in this direction, like it might produce more information.

And later, this kind of created a good thing I like to say to people, which is like, action produces information.

If you're ever unsure, just like do anything.

Because

even if you do the wrong thing, it'll help you figure out the right thing to do.

I started working on a prototype on nights and weekends while I was, you know, I was at my job at Airbnb.

Nights and weekends, I'd come home and work like 7 p.m.

to midnight on this prototype which was a simple Bitcoin wallet and

I wasn't really thinking of it exactly like a company I was just trying to like learn about Bitcoin and figure out if I could make a simpler way for people to use it the analogy I kind of roughly had in my head was you know email is another decentralized protocol.

A lot of people don't know this, but underneath when you're sending emails, it's using a protocol called SMTP, which would be sort of like Bitcoin in this example.

And you could in theory run your own email server,

but most people don't do that.

They use like Gmail or Outlook or something.

And that's kind of like a hosted server in the cloud.

They sort of deal with all the security updates and how these email servers talk to each other.

And so I was thinking there's probably going to be a company kind of like that for Bitcoin that's like

Gmail, right?

Like I'll run the servers for you, worry about the security and the backups.

And the average person is going to benefit from this,

but they don't need to have to understand exactly how Bitcoin works and all the complexity behind it.

So I started building this as a prototype, and I applied to this startup incubator called Y Combinator.

Some people might have heard of it, but it's kind of famous in Silicon Valley because they'll give you like

$150K as a check if you have a really early stage idea for a company.

And I applied to this

Y Combinator program, and I got invited to interview.

I was trying to find a co-founder.

I couldn't find the right co-founder.

Long story short, I got accepted into this program or offered to join it.

And they're like, well, you have to quit your job.

We'll give you 150K and you come work on this thing full time if you want to really, really do it.

And so I had kind of a tough decision to make because Airbnb I knew was going to be a big company.

And I was an early employee there.

So I had stock options.

You know, that would have been like the comfortable path, right?

I think if I had just stayed at Airbnb and

just let my options vest, I probably would have been worth like tens of millions of dollars, right?

And I had like maybe 20 grand in my bank account at that time as just being a software engineer in Silicon Valley, traveling a little bit.

I'd made a little bit of money and saved it, but I could tell I was on a rocket ship and this was going to be a good company.

But I was like, I really wanted to try to go build something new in the world.

And I was willing to take that risk because I was, I think I was 30 years old um unmarried i didn't have kids and i i had this really deep desire as well i was like i want to try to do something important with my life you know um i don't know if it was like an insecurity that came from like just people not recognizing me or you know i wanted girls to like me or like whatever it was i was like i want to go do something important like it's something crazy and something hardcore you know that really has an impact And it, you know, for whatever reason, I was like, I have to do this and really give it a shot.

And if it fails, like, I'll be okay with that.

But if I never tried it, I would probably regret it.

Right.

So I don't know.

It might feel similar to like, why were you called to like be in the military or whatever?

I never felt like I had taken a risk and really done something that would have greater like significance.

So

I decided to quit my job.

I called my parents, told them that.

My mom was like, oh my gosh, like.

Are you going to have health insurance?

Or like, what did, you know, she, my parents always worry about these, you know, the practical things.

And I was like, I don't know, I'll probably get health insurance.

It's fine, mom.

So this guy gave me 150K.

I'm good.

Right.

And so I quit my job to go work on this thing full time.

And I joined Y Commoner has this three month program where you go there and you basically are with a bunch of other founders and hackers and you just grind like 12, 14 hour days and you try to create a prototype.

And at the end of the three months, they put you in a room full of like a couple hundred investors like Silicon Valley venture capitalists.

And you give your like five minute pitch along with like a hundred other companies and then you see who wants to invest and

you know at that time I was really just solo by myself and I didn't really get that much attention from investors like I was out I was trying to I think they'd give me the 150k check I was trying to raise a million dollars as my at the end of the three months from investors and I think I got like

three or four hundred K like I got a little bit of money there but there wasn't enough interest to get like a million dollar investment at the end of this and I talked to a bunch of these venture capitalist guys, and a lot of them were like, This, you're going to make like a new kind of money to like compete with the dollar?

Like, what?

This doesn't, you know, why would anybody trust you?

This doesn't make any sense, right?

And I was like, no, no, it's not me creating it.

It's a, it's a decentralized protocol.

It's Bitcoin, right?

And they, they, some people were just like, get out of my office, you know, like,

they didn't understand what I was doing.

But there were a couple people like that had already read about Bitcoin and they were pretty excited about it.

They were just looking for the right company to back.

And

I did get some good seed, like seed investments and things like that.

And that's when I raised that initial seed round.

And then I was lucky enough to meet my co-founder, Fred Ursum.

I can keep going, but some of the pieces started to come together in the early stages of like finding the right investors, finding the right early people to work with, finding a co-founder.

And we also made a big decision at that time to actually go and try to get licenses to operate in the United States and be like a trusted legal business.

Because

a lot of the crypto people I met at that time, they were kind of trying to fly under the radar.

They were trying to build these offshore entities because they hated the U.S.

government.

And I was like, you know what?

The company that wins in this space, you can't just be like

underground flying under the radar.

Like, you know, if you eventually get big enough, like the government's going to come talk to you and ask you why you're doing this without a license or whatever.

So we went and got

money transmitter licenses are called in the U.S.

This is the same thing that like PayPal has and these different companies.

So we decided to build it in the U.S.,

take a trusted and compliant approach.

And, you know, that was the early days.

I can tell you,

there's lots of good stories about finding product market fit.

How do you, you know, because a lot of times you're building these prototypes and nobody cares.

You put it out there in the world and like people come and look at it and nobody gives a shit.

Right.

And

yeah, I mean, I don't know.

You want to hear that story?

I can tell you later.

Yeah, yeah, I want to hear it.

Yeah.

I mean, so this is the hard thing about starting a company, right?

Is like

you, you try to, this could be what it could be anything, anything, like a podcast, a coffee shop, but it's certainly true in tech startups too.

You know, you, you make your, your version one, and you put it out there in the world.

And usually like no one cares, right?

That's the, that's the default.

There's so much noise of things that people are going on.

This is trending and this is what, you know, and so how do you, how do you break through the noise?

And so I had put out this prototype of a simple Bitcoin, hosted Bitcoin wallet.

along with my co-founder, Fred Ursum.

And we posted it just on the internet, like on Reddit and some of these forums.

And like a hundred people would come sign up and then

no one would stick around and use the product.

And so they teach you this thing in Y Common Lator, which is like how to find product market fit.

Like how do you get your initial users to want to actually come back and use the product on a recurring basis?

And what you basically do is you just like go and talk to them and get their ideas and feedback.

And then you go try to improve your product.

And then you go talk to them again and you improve it again.

And you talk to your customers again and you improve the product.

It sounds simple, but like a lot of people don't do that.

They're when they're trying to start a company, especially tech entrepreneurs in Silicon Valley, they get caught up in all this other bullshit.

They're like going to fancy conferences and like trying to write really amazing blog posts and try to sound smart.

And, you know,

just they over-optimize on talking to every venture capitalist.

It's like, no, you got to just talk to your customers and improve the product.

Talk to customers.

And that's how you get a product to actually find product market fit.

So long story short, so I thought you, how would you talk to, how many customers were there at the beginning?

Yeah, so when we put out the first version, it's like maybe a couple hundred people came and signed up.

And then they, but they didn't stick around.

They didn't, they didn't keep using the product.

And so I remember I was just emailing random people who had signed up.

And I'm like, hey, I built this app.

I'd love to get on the phone and talk to you about it.

So I would just call these people out of the blue.

And

I remember this one guy was talking to the phone.

I was like, hey, I noticed you signed up for the app and you didn't come back like any feedback.

And he's like, well, yeah, I mean, it was pretty cool.

Like, I would use the app, but I don't really have any Bitcoin.

And I was like, oh, that's interesting.

Well, when you signed up, if there had been like a buy button right in the app, would you have used that?

And he's like, I don't know, probably.

And it sounds so obvious, but at the time, you couldn't actually buy Bitcoin on Coinbase.

You had to, if you already had Bitcoin, you could put it in there and use it.

But I don't know why I didn't think about this beforehand.

Some of these talking to customers, sometimes you have these like, obvious moments come back to you.

But so I was like, okay, well, let's try to just put like a buy Bitcoin button in the app.

And to make that work, I had to go get a bunch of stuff done.

We had to hook up like a payment method.

We had to get a bunch of legal things figured out.

We had to hook up to one of the early Bitcoin exchanges to source the Bitcoin.

Anyway, long story short, we got that launched and like people started using it, right?

Like, and it was like every day, more people would use it than the prior day.

because it became the simplest way to buy Bitcoin and people started to spread the word about it.

Like back in that time, to buy Bitcoin, you had to go to like one of these overseas exchanges like Mt.

Gox in Japan.

You had to like wire money

and it was inconvenient.

And so just through that process of like talk, and that, by the way, that was not like the first thing we tried.

There was like probably a dozen other things we talked to customers about, tried to improve the product that didn't work.

And eventually

we hit on one of them and the product became good enough that there was more people coming back every week trying to use the product than had the prior week.

Not because we were manually talking to them.

They were just word of mouth.

They were starting to tell other people.

And that was the minute we were like, oh, the metric started to go up.

And the biggest problem became not trying to find product market fit.

It became how do you keep up with demand?

And how do we scale this company?

How do we start to hire more people?

Because we were getting a bunch of customer support tickets.

How do we go raise more money?

Because we were using all of our working capital to try to source the Bitcoin on these exchanges and moving tons of money around the world.

So that was the moment we were like, okay, we're ready to go raise the next round of financing.

And we felt like we had the kernel of something that was now starting to grow.

People actually cared about it.

And it came with, it like solved one problem and then it brought along a whole another set of problems to go deal with.

Wow.

Wow.

How fast did you see it grow?

You know, that's when product market fit, especially with tech companies, starts to work, it's...

it's shocking how fast it can grow because it's not like like a local business you know a sandwich shop or something only a certain number of people drive by it every day or whatever.

But it went from like a hundred people using it every day to,

or it was maybe easier to talk about in terms of people signing up every day.

It was like

instead of like a hundred people signing up a day, it was, it would be like a thousand, and then it was like 10,000.

And then I remember one day it was like 25,000 people signed up in one day.

And I went to, you know, if you look at these different sports stadiums and I was Googling sports, like that stadium holds 50 000 people i was like it looks like a ton of crazy number of people i'm like holy shit all 50 000 people signed up in one day you know and then

to give you a sense of the kind of problems we started to encounter at that point was like

you know you can imagine if you have 50 000 a day people signing up you're getting a lot of customer support tickets we had no customer support team so between like 9 p.m.

and midnight, my co-founder and I and our first employee, we would answer all these customer support tickets.

Holy shit.

Yeah.

So we were, and we had, we, we were developing a backlog of like 10,000, 20,000 customer support tickets where like nobody was hearing from us.

And this was a big problem.

And

then, you know, we had a bunch of hackers come in and try to start to hack into our website into the app because they realized, oh, more people are storing money here.

And we had to create a whole, that cold storage system I told you about earlier where we started to store all the funds offline.

We had to build that rapidly because, you know, if we had gotten hacked at that point, like we would have been insolvent out of business and

I'll tell you like a little story actually from that day because you know you can imagine we're kind of sleep deprived we were like working 14 hour days seven days a week trying to keep up with all this and

I remember we were in the office one day and eating lunch and there was just like maybe three or four of us around the table And somebody is looking at their computer and they're like, hey, there's a lot of like refunds going out to customers.

That's weird.

Like we all looked around and none of us are doing it.

Who's sending sending all these refunds?

We realize

this hacker had broken into one of our systems that like an admin interface on the back end that allows you to issue refunds to customers.

And he was just sending refunds to himself as fast as he could.

Right.

And we're like, oh, shit.

So we go in there, we shut down the site temporarily.

Customers can't access it either.

And we're like, how did he get in here?

We start trying to debug it.

We find the way that he accessed this particular system

and we patch it and we come back online.

In the time that he was able to send out all these refunds as fast as he could,

I think we had lost maybe

$50,000 or something like that.

Now at that time, we had only raised, I think, the $300,000 or $400,000 that I mentioned.

And so $50,000 out of $3,000,000 or $400,000, we were still alive, you know?

But if he started doing that at midnight while we were all asleep, we would have been out of business by morning.

Wow.

You know, because we caught it within like 10 minutes.

Yeah.

And it's just pure, it's pure luck that like Coinbase would not exist today.

That was like a coin flip.

That if that hacker had waited till midnight to start doing it and we hadn't noticed, we would have been insolvent by morning.

Wow.

Yeah.

Wow.

Damn.

I mean, what was the

moment that really got you

when you were like,

holy shit, this is going to work?

Well,

there was a lot of moments along the way where I knew that we had a chance to really make this big, but it was not guaranteed.

Like, there was a lot of ways we could fuck it up along the way.

I mean, that's an example where we were seeing a lot of demand.

We were starting to generate revenue, but like, were our systems hardened enough where these attackers couldn't get in?

Obviously not.

There were some gaps right at that time.

So that was a risk.

Like the cybersecurity risk was very real.

That was how a lot of crypto companies died, right?

And then the other big one was compliance and like government.

We thought the government might just come by and shut it down, the whole thing.

So

those were probably two of the biggest risks.

And then there were also competitors, right?

So

we were off to the races, but then we started to see really solid companies pop up overseas and in the US.

You know, I

yeah, I mean, there was definitely

we also thought that, by the way, there could have been like a flaw found in the Bitcoin algorithm or something like that.

That would have just blown up the whole thing.

You know, we had looked at it, we couldn't find any flaw in the algorithm.

We thought, okay, this will work, it'll stand the test of time.

But who knows?

Like, maybe some smart mathematician came up with something we didn't think of, right?

Now, so anyway, all those risks we were able to mitigate over time.

And

I think it got big enough where enough Americans started to use it that the government now can't shut it down.

It'd be political suicide to try to shut it down.

Like people want freedom in the United States.

They want the ability to own gold, guns.

They want Bitcoin, like all these things.

Yeah.

So, but in the early days when it was small,

somebody in the government, if they had had their act together, could have.

tried to kill the whole thing.

I mean, Elizabeth Warren and Gary Gensler tried to, right?

Yeah.

But it was too late.

So

those were the risks along the way where we didn't know if it it was going to work.

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I mean, we talked a lot about economic freedom here and there on the first segment here.

So I just want to ask you,

what does economic freedom mean to you?

Yeah.

I think economic freedom to me is it's your money, right?

You should be able to do whatever you want with it.

There's a lot of middlemen in society that are blocking payments, taking fees, slowing things down.

Economists would call it this idea of property rights, which is basically,

can you actually own stuff or can it be taken away from you without your permission, right?

And in many countries of the world, actually,

like the money in your bank account can just be yanked out by the government.

In Cyprus, in the 2010s, there was an incident like this where the government passed some resolution.

They were like the government was having deficits and they had some law they passed where they just took like 50% of the money out of everyone's bank account.

So, obviously, you don't actually own it, right?

When was that?

I think it was in the 2010s, yeah, or maybe the 2000s.

Yeah.

So, there's, and there's examples like that in history.

Same thing in Argentina, by the way.

There's times where the government has just printed so much currency that it devalued it.

That's another form of theft, basically, is high inflation, where they devalue everyone's assets to just give the government more money, right?

So, property rights is this kind of like, it's a foundation that's required for all progress in civilization.

Like if you, if you can't actually keep what belongs to you, or like, you know, if there could be some

gang that runs through the neighborhood and just like kicks you out of your house and takes all your stuff,

you know, it's hard to like make a real plan for the future and try to build a company or like do anything good for society if your shit can just be taken from you at any given time, right?

And it's the same thing with

what we'd call like sound money, right?

Can the value of your money or your wealth just be eroded or seized from you?

So property rights, sound money, these are foundational to all progress in society.

And most people in the world actually don't have very high economic freedom.

We sort of take it for granted in the U.S.

Even in the U.S., I'd say it's a little under threat.

Like we talked about the inflation of the dollar.

You know, there's incidents where like people have felt like their property rights are under threat here, you know, eminent domain or like whatever you want to talk about.

But in general, like the U.S.

is pretty good.

We have a pretty good rule of law.

Most countries in the world, that's not the case.

And so that's what economic freedom means.

I think crypto is like a, it's the key piece of technology that can give economic freedom to anybody in the world as long as they have a smartphone.

They can sort of opt out of that local system that they're in if it's corrupt or not meeting their needs.

Why do you think crypto, or excuse me, why do you think Coinbase is the most trusted exchange out there?

Yeah.

What have you done that's different than the other ones?

Yeah, it's a great point.

When we do surveys

by third parties or just blind surveys, we do come back as the most trusted brand of crypto.

I think it's a few things.

One is that companies are a reflection of their founders, right?

And I think the fact that I was willing to put my name behind it.

I'm based in the United States.

You know, I'm American, I'm an American citizen.

I think just my demeanor, like I'm, I try to just be like, do the right thing, kind of tell the truth.

You know, people may or may not like me.

I don't know, but at least they're like, this guy, I don't think he's like full of shit or a scammer.

Right.

And I think we've also tried to follow like a compliant and regulated approach.

You know, I like in general, I'm like probably more for like deregulation and like free markets, but

we've like followed the law.

We've gone and got every license that we needed to do in the U.S., in other countries where we operate.

So

I think those things, we also, we've reached a certain size and scale now where

we have a track record of doing this successfully, right?

Like, you know, we're storing crypto for like 140 different government institutions now.

If you look at federal, state, and local.

You know, we work with like the U.S.

Marshall Service, for instance, at the federal level.

There's other federal agencies we work with, but that we can't talk about.

But, you know, we work with some of the largest institutions in the world too, like BlackRock and these folks.

We're a public company.

So our financial statements have been audited by the big, you know, the big four accounting firms.

They can come in there and validate that we're actually saying what we're saying is true.

The money is really there, you know, these kind of things.

So I think all those things have contributed to our brand having a lot of trust.

And like, you have to earn it every day.

I mean, there's, there's times where, you know, we got backed up on customer support tickets and we and we like didn't invest enough in customer support.

or

there's times where we've had hackers try to break into our systems and we've had to make customers whole right or they'll call customers and try to impersonate coinbase support and trick them into moving their their crypto somewhere right and in general uh we try to like stand stand behind our customers and you know reimburse them when things happen that are our fault um and we try to go push back on the government when it does something unethical and tries to take our customers rights away so people i think they really appreciate that that as well.

So those are probably all factors that contribute to trust.

How do you, I mean, how do you lead your company?

Well, it's a broad question.

I mean,

there's kind of the tactical, which is

about once a week, I get together.

Usually on Mondays, we get together as an executive team, and we just do a deep dive on anything that needs to get worked out and decided.

I try to push decision-making down into the organization so that I'm not a bottleneck to things getting done.

Like, oftentimes, we're about 5,000 people now, and in these organizations, as they grow, oftentimes, like, people get frustrated with, I don't know, there's like seven people who have input on this thing, no one's in charge.

Like,

if everything has to go up to Brian as the CEO, like, you're just not gonna be able to execute quickly.

So, I try to name who's the decider and push it down in the organization so stuff can just keep moving.

Try to have a really high bar for talent,

you know, like be very selective on the way in, performance manage people out, make it merit-based.

And then, you know, we have a healthy balance, I think, of we're investing in our core business today, but we're always trying to like build the next thing on the frontier.

And we try a lot of small bets,

and some of them don't work, and that's okay.

Like in a lot of big, a lot of bigger companies, you can actually, they get risk averse, right?

Like if somebody tries some new project and it doesn't work, it's like a black mark against them and it fucks up their career.

Coinbase, that's not the case.

We want people who are willing to try innovative ideas on the frontier with small teams, like two to five people.

It's almost like a startup within the company.

And if they try it and it doesn't work, try another one.

And eventually these things break through and you can have innovation happen in big companies that create lots of products that people want to use.

So it's not just like we found one thing that works and that's all we're going to do forever.

What are some of the things that your special teams have innovated?

Well, an example would be like USDC.

We co-created that

Digital Dollar.

Another one is Base, which is like a very fast, cheap blockchain that allows all these payments to happen instantly over the world.

And we just released a new app that lets these content creators get paid directly.

You know, another one is that we are creating a platform where anybody can integrate crypto into their company.

So you might be familiar with like, you know, Amazon web services, right?

It's like Amazon is the retail shop, but they also said, hey, all this computing and data centers, maybe if other companies want to use it,

they can plug into it.

We've similarly created something called Coinbase Developer Platform, CDP.

And for people who want to integrate crypto, custody, payments, trading, et cetera, they can just use the services that we've built and plug crypto into any company they want.

So there's various products like that that we've built over time, which are, I think, hopefully continuing to push on the frontier.

You know, another thing that

I like about you is you don't bend to the culture wars.

Yeah, yeah, let's talk about that.

Let's talk about it.

Yeah.

Well, okay, I think what you're referring to is I put out a blog post a while back called Mission First, which said, we're going to be apolitical here at Coinbase.

We're just going to focus on the mission of the company and not any of the other activist kind of social justice warrior policies that were running rampant at that time.

And it had a big impact, not on Coinbase, but also, I think, a lot of the tech industry.

I'll give you kind of the backstory on that.

So,

yeah, it was

around 2020, I believe.

You know, we, as CEO, you always host these open, open mic sessions and town halls at the company.

And normally people would be asking questions about our products and competitors and regulators and like, how are we going to win?

And around that time, I noticed we started to get more questions from the employees.

at these town halls about issues in society that were totally unrelated to our business.

You know, they were asking about like police brutality or

guns or Middle East stuff or

social issues.

Right.

I remember thinking this was kind of strange at the time because I was like,

you know, that's not why we're here.

Like I'm just like anybody else.

I'm trying to understand these issues.

I read about it sometime, but

why are they asking me what I think about police brutality or something like that?

That's not what our company is focused on.

And it got to kind of like a fever pitch at a certain point where it almost was like they were trying to put, see who could make the executives on stage like squirm the most with like the most uncomfortable, you know, difficult question.

And this culminated with at one point, an employee stood up and they, and they said, I want to know if this company is going to support Black Lives Matter.

And I, and I kind of, I was, I didn't really know much about Black Lives Matter at that time and what that organization stood for.

And I declined to answer.

I was like, I don't know.

I'm happy to look into that, but I'm not going to commit at this moment.

And they did like a little bit of of grandstanding and they kind of held the mic and they said, that's not good enough.

I need to know, like, are you as a CEO going to support Black Lives Matter?

This was kind of in the fever pitch of George Floyd and all this kind of stuff.

And I declined to answer.

And so after the town hall, 300 employees did a walkout where they basically like refused to work and they kind of went on protest and left.

Are you serious?

Yeah.

Yeah.

This was,

I didn't realize the extent to which this had happened, but like a bunch of kind of this activism mindset had infiltrated the company.

And a lot of this originated, I later learned a lot of this originated in the universities.

They were kind of teaching about like Marxism and how to speak truth to power and like be an activist inside these organizations.

So culturally, this was like reaching a fever pitch.

And how many, how many employees did you have at the time when 300 walkouts?

Probably one to 2,000 or something.

So a good chunk did a walkout.

And actually, it's funny.

I remember there was one guy on our team,

john who he's he's actually a veteran and all these guys were like posting in slack about i'm i'm walking out and i'm holding the counter and he he just he was one of the only people who posted he's like you guys can leave if you want i'm staying here to support our customers

so he had he had the balls to like stand up to this in the moment which was hilarious but um

i always appreciated him for that but anyway all these people walked out and so i pulled the executive team together and i had never I had never experienced something like this as CEO.

I was like, what is going on?

Like, what the hell is Black Lives Matter?

Like,

And

somebody on my team came in and they were like, I think it's just like,

it's just asking for equality amongst all people.

And I was like, okay.

Later, of course, I found out they wanted to defund the police and they had all this kind of like crazy misallocation of funds.

There was all kinds of issues with BLM.

But

you might remember at that time, like every company in America, it felt like was putting out these flags.

Oh, I remember.

Yeah.

So

I was, initially, I was like, okay, well, if it's just about equality or something, like put out some statement and let's get people back to work.

And people came back to work, but I felt like something was very wrong here.

I was like, we have a fundamental misunderstanding about what we're doing here.

I thought we were here to kind of be able to create more economic freedom with crypto.

And these people think that this company should become an activist company for social justice

and BLM.

Like, we are not on the same page.

And what I realized is I had failed as a leader.

Like, it was one of those kind of moments where the frog was slowly getting boiled.

Like, people would sometimes ask me these things in the company, and I was kind of walking on eggshells around it because I was like, I didn't really know how to deal with it.

I was like, oh, yeah, yeah, yeah.

Like, we're, we're, we're just kind of trying to be good for everyone.

And I made a lot of very vague statements.

And it culminated in this walkout.

And the more I started to think about it, I was like,

okay, either I need to go as CEO because this is how companies are run now, like where you have to answer all these social justice things, or they need to go.

Because I don't want to work in a company like this where we're just jumping to whatever the current issue is, trying to virtue signal and touch on some giant, you know, whether it's whatever, Hamas or whatever it is that day, you know, and like we, we should, we should be focused on one thing.

It's hard enough to change one thing in the world.

We can't be like jumping around to some new issue every month.

And I don't like this environment where like the company, the employees feel like they can come in and hold the company hostage to whatever their their current thing is

so

i drafted this post which basically said hey guess what at coinbase we're going to focus on the mission increasing economic freedom it's okay if you can have whatever political beliefs or anything you want outside of that but like keep it outside of work right we're here to focus on work at work which sounds like kind of an obvious statement but at that time this was

uh highly contrarian.

Let's just put it that way.

And I knew that this was going to be controversial if I put it out.

In fact, there were people inside the company who begged me not to post this.

They said, this will destroy the company.

Like, you know, an underrepresented person will never work at this company again.

And I was, and I was like, as a young CEO, I was kind of like, is that true?

That doesn't sound right.

So I went and talked to like groups of employees, like including our black employees and other groups.

And I kind of asked them, and I was like,

Do you care if we're like a social justice company?

And they were like, no, no, we just want to like come in here, do good work, like learn things, you know, have an impact, like make more money.

Like that's, it's the kind of stuff everybody wants.

And so my instinct was telling me the level of fear is like totally out of proportion to reality.

And some people told me, if you post this, like 50 or 60% of all the employees are going to quit or they're going to walk out again and protest.

It's going to be an even bigger protest.

And it was like this kind of like moment where I was like, have I lost control of the company or am I willing to stand up to this nonsense?

And so I decided to post it

and I posted it and I announced it to the company.

I was scared shitless, to be honest with you.

Normally when I'm up there talking in front of the company, I can like, I feel fine.

Like my leg was like shaking, my voice cracked like I was a teenager.

Like I felt, I was like, you ever, I don't know if you ever have that moment where you're like trying to give a talk to somebody and then there's like a voice in your head kind of evaluating how you're doing at the same time.

You're like, oh, I'm fucking it up, you know?

So it was like the most awkward presentation I've ever given to the company.

I almost

wanted to cry.

I was like, this is gonna, this is gonna, I knew it was gonna like piss off a ton of people.

And

afterwards, I said, anybody who's not on board with this, we'll give you like a three-month severance and like,

you know, help you find your next job.

Like, totally, you know, it's on, it's my fault.

Like, I didn't make this clear up front, but this is the kind of company we're going to be going forward.

So we got to all be on the same page.

And 5% of the company quit.

They took the exit package.

And 95% of the company was aligned.

We were all ready to get shit done, go in the same direction.

Best thing we ever did for the company.

And suddenly, like, a few things happened after that.

Like, one,

New York Times and a bunch of mainstream journalists started writing hit pieces on the company about how we were racist and all this nonsense.

Oh, go figure.

Yeah.

By the way, a year later, it didn't change the demographics of the country, the company at all.

We had some, it was either the same or better metrics across all the things you look at, by the way.

We just, we just try to go on merit now.

Who cares like what your sexual orientation is or whatever?

I don't, I don't care.

Like, we just try to hire people based on merit.

But all of their accusations about racism and stuff, it's, it's like, it was completely false.

And then, um,

yeah, and then all these like other CEOs of other companies started calling me and be like, holy shit, how did you do that?

Like, I want to do that.

And you're, and I, and I was like, well, you can just do it.

And like,

but, you know, people were kind of scared to do it.

Some of them did do it.

And I think a lot of companies moved, moved in that direction.

So, you know, we took some arrows for it to be kind of early on this, but I think it was great.

And I loved it.

Like, um,

it made us such a stronger company.

And I've now, we've actually been able to hire a lot of the best people who've come in and they're like, I joined Coinbase because of that blog post.

Like, I want to.

That's awesome.

Yeah.

I mean,

where do these people go?

I mean, you did it.

Elon did it with X.

And And now we're starting to see it at Google, Facebook,

lots of tech companies like followed suit on that.

Where do these people go?

And that's a black mark.

I mean, for anybody, I mean, I'm

the

Silicon Valley tech network seems to be pretty tight.

You guys all seem to know each other.

And so, and everybody knows what's going on.

And that hit the New York Times and everything.

So, I mean, if you see somebody that left Coinbase at that time era or

left

Twitter during that time, I mean, it's like a black mark.

It's like, oh, you were, oh, until that date.

Okay, so you're one of those.

Where do they go?

Yeah.

You know, I haven't really like spent a lot of time tracking that, but

you're right.

I mean, we do look at that of when people worked at different companies and you can kind of draw a story.

Now, you can go talk to them as an individual and get more nuance.

But

I mean, look, there were some companies that just leaned even harder into it.

And they're like, hey, we, I know we make suitcases or like CRM software or whatever, but we're actually about some bigger thing in the world.

And if people wanted to work at these social justice companies, they're welcome to go do that.

Not to mention, I mean, talking about social justice and what you're trying to do is economic freedom.

Yeah.

Like, okay.

Like,

what the fuck are you complaining about?

Exactly.

Like, if somebody's really into like Marxism and socialism, it's like not a good fit.

You know, you should not work at Coinbase.

So there was, I think, we've been much more clear with people now when they joined the company.

And so, that's what I had failed to do: just create clarity because I was afraid of upsetting people.

And that was a good moment for me as a leader to be like, okay, your job is not to be liked, it's to be clear about what we're doing here.

And then people can opt in or not.

It's fine.

Let's talk about

there was one other thing

took on the SF SEC.

We talked about that.

And then

extortion by hackers.

What was that all about?

Yeah, well, this has been a more recent one where.

So we've always had hackers trying to break into our systems, and we spent a lot of time building secure storage.

And I mentioned earlier kind of like how we divide up keys and they're never touched the internet and they're like distributed all over the world in these like super secure locations and we pen test it and everything.

But there are hackers who tried to do something a little different recently, which was

they actually started contacting our customer support agents and trying to bribe them to turn over customer information.

Now, our customer support agents don't have access, they can't like move your money, right?

But they can turn over things like, you know, people's personal information, like their name, address,

maybe their balance or something like that, because they're looking at that to try to help customers with their problem.

And, you know, we started getting customer support agents get get offered like 250 grand bribes for some of these things, which is crazy, right?

And unfortunately,

especially in some of our

facilities we operate overseas on this, if you ask a thousand people, you offer a thousand people 250K to turn over some information like that, they're going to find one or two bad apples.

And so that's what started happening.

Some of these agents were actually, you know, because they're not allowed to use their own computer.

It's a lockdown system.

They're not even allowed to bring in their own phone they have to use like a work phone but what some of these folks started doing was smuggling in a personal phone and taking photos of the screen with some of the customer information and giving it to these attackers and then the attackers would call up our customers and say hey this is coinbase support like are you blah blah blah who lives at this address and it would create credibility and they would try to tell them hey your account has been compromised like you need to move your funds immediately and like can you send it to this address and sort of trick people into sending their funds to the attacker

so um

we noticed that this was happening and um we start we by the way we refunded the customers who were affected by this so none of them had any loss

so the attacker who had gotten these this information they were the the information they had gotten was starting to get less and less useful because we were cracking down on it and hardening our systems.

There's a whole bunch of ways we can do that, by the way.

But what happened is they basically, once the information started to be less useful, they sent us a ransom demand and they said, hey, we're going to leak all this customer information, send it to journalists, and if you don't pay us, $20 million.

So we kind of got together as a team, our chief security officer, and these guys are great, been working on this stuff for a long time.

And they kind of said, look, we shouldn't pay the ransom.

Because,

yeah, maybe they'll hold off releasing the information for a few months, but guess what always happens?

They come back and demand more like three months later, six months later.

And how good are we going to feel if we give $20 million to these criminals and it just funds their next attack and like, you know, just emboldens them, right?

And so we came up with this idea in the room.

Why don't we flip the ransom on them?

We'll put out a $20 million bounty for any information leading to their arrest and conviction.

And this was kind of a controversial idea in the

security community.

A lot of people later told me like, oh, we'd always wanted to do that but we were kind of afraid to do it and um and this was a great moment where I was like let's turn the tables on them and try to catch these these bastards right so that's exactly what we did we put out this 20 20 million dollar bounty by the way when Osama bin Laden you know took down the trade the towers

I think the US government put out a 25 million dollar bounty for information on him so this was like a pretty substantial bounty right

And it's one of the, you know, you know, you heard that expression, like, there's no honor amongst thieves.

So all these hackers started sending in tips.

A lot of them were, some of them were regular people, but others were actually other threat actors.

And they're like, guess what?

I know the guy who did that attack.

Like, you know, because they have some beef with this guy or whatever.

We got like 5,000 tips that came into this tip line because people wanted $20 million, right?

And, you know, maybe like a couple hundred of those were like really solid leads.

We had a team start to work down the list.

We don't have anything to announce today on on it, but I think we're making really good progress towards a couple arrests here.

And

long story short, it's not just one person involved.

As with everything, it's more complicated, but

we've gotten to build some really good relationships with law enforcement.

And

it's going to feel really good to catch some bad guys.

That's awesome, man.

I can't wait till you get them.

Yeah.

That's good thinking.

Great thinking.

Let's talk about the, I mean, I know you were instrumental in the Genius Act, correct?

Yeah.

What is that?

The Genius Act is a piece of legislation that helps stablecoins be allowed to be used in the United States.

Stable coins are these digital dollars.

It allows payments to happen quickly and cheaply anywhere in the world with the U.S.

dollar.

You know, I mentioned some of these other payment methods, right?

Like credit cards, 2% to 3% fee every time the merchant swipes your card.

Like wire transfers, they work internationally, but they cost like $50.

They're kind of slow.

You know, there's lots of different payment methods, but none of them are like fast, cheap, and global, right?

And so stablecoins are the only ones that check that box.

They can send them anywhere in the world for under one cent in one second or less.

Wow.

So

USDC is,

you know, I think the biggest legitimate one that's out there.

And all the all the dollar stablecoins are backed by US treasuries, which means that we can actually pay like 4.5% to people holding these things, which I mentioned earlier, you can't really get on on your checking account or savings account.

So anyway, the Genius Act, it took a lot of work by members of Congress and Senate, a bunch of companies, including us, have been kind of advocating for this legislation.

And it just creates like clear rules around how these things can be issued and used.

And now that there's clear legislation that just got passed last Friday, it was at the White House for the signing ceremony with President Trump.

I think you're going to see more and more businesses start to accept stablecoins.

It just saves them money.

Like if you're, I don't know, as an average consumer, you might think, oh, two to two to two to three percent fee, that's not that much.

I don't pay it and the merchant pays it.

But if you're like a grocery store or something, your margin might be like only 5%, right?

So if you have to pay 2% to 3% to the credit card companies and your margin's five, that's like a huge chunk of

your profit margin, right?

Your, your, um, your margin.

So

anyway, I think it's just another way that crypto is updating the financial system.

And the Stable Coin Act is a huge first step, this Genius Act.

The other big piece of legislation we need to get done is called the Clarity Act, which is about the other kinds of crypto assets that are not stable coins, like Bitcoin, Ethereum.

And it's kind of helping determine which of these are commodities or securities.

There's this is the lack of clarity that got weaponized by Gary Gensler and Elizabeth Warren in the prior administration.

If we have laws passed that make it clear how these things are regulated, they can't come attack it and try to kill it again in the future.

Makes sense.

Makes sense.

I mean, what do you?

I think I read that the Federal Reserve put Bitcoin, Cardano, Ethereum,

XRP.

The Federal Reserve is going to hold some.

I mean, what does that mean for us?

Yeah, well, President Trump passed this executive order creating a strategic Bitcoin reserve and then a crypto asset stockpile to hold some of these other ones as well.

A lot of people don't know, but the U.S.

actually holds strategic reserves of a number of different assets.

So gold is probably the most famous one, but there's a bunch of other ones that they hold.

Like, you know, there's an oil, strategic reserve, there's like palladium.

I think there's a bunch of like rare minerals.

And so, it's kind of a historic step where the United States government is saying, actually, we think Bitcoin is another strategic asset which should be held by the U.S.

government.

This would have been unthinkable, by the way, like five years ago, where the government was so skeptical of it.

And now, like, the United States government is holding a stockpile of these Bitcoin assets.

So,

that was a huge moment.

It kind of, by the way, now that the U.S.

is doing this, I think the rest of the G20 countries and central banks are all starting to look at this.

It just kind of instantly legitimized it.

And, you know, President Trump, to his credit, he said he wants to be the first crypto president in the United States and certainly in the world.

Like, he's all in on this.

He's like, America has to lead here.

This is a technology to update the financial system and become a financial center of the world, which is important for American power.

So he's kind of gone all in on it.

And I think the rest of the G20 are now looking at this as a model to follow.

Man, nice work.

Again.

Yeah.

Yeah.

So let's move into, I want to talk a little bit more about

Base.

So

Jeremy, my producer, who you met at breakfast, says it's the Amazon of crypto.

What all is going to be wrapped up in this?

Yeah, so base is an app that we just launched, the beta of it last week.

You know, people started off with cryptocurrency.

They're buying it like Bitcoin, like for investment purposes.

Then we started to make other types of financial services like payments and borrowing and lending with things like USDC, stablecoins.

Base is kind of the third act here, where we actually want to make a way for applications on the internet to use crypto natively and allow value transfer between users that's totally permissionless.

So like if you're a content creator, either you have a podcast or maybe you put out, like you're a musician, you're putting out music or you just post on social media like text content or anything you can have a direct relationship with your audience and actually monetize from them directly

so an example is like if you make a post on base

and you put out a photo or text or audio video anything

people every post is a coin right so people can buy that coin um if they think it's cool they like it they think it's going to go up in value it's like literally every every social media post on base the minute you post it it has a coin with a market cap that people can trade.

And they can also buy a coin of you as the content creator.

And they can say, okay, I like that post.

I think Sean's going to put out a lot more banger content.

Like, let me buy his token and you have a market cap.

Like, your thing can go up and down.

And so it's allowing content creators to basically directly monetize their audience or their customers.

It breaks, you know, there's traditionally in the internet, there's been kind of like an ad business model for everything.

Sponsorship on podcasts is one example of that.

But even like Google and Facebook, they always have these ads, right?

Because payments are so high friction on the internet, most of the big companies got built on the ad business model.

And that means that they're collecting all your information, trying to sell it to advertisers.

That's sort of how the internet happened.

Now the internet has a native layer for money, and value transfer can be super seamless, like microtransactions, giant transactions, whatever.

And so we we think it's going to actually put this whole ad business model like flip it on its head where um yeah people can directly have the relationship with their their audience there's no middlemen and like instead of 95 of the value going to the platforms it's going to go to the content creators it's going to totally flip that value equation on its head wow what kind of creators are on there right now so it's all early stuff um it's some people that are you know they're they're putting out like video content kind of like tick tock some people are putting out music um i think that you're also going to see

kind of like communities form that are due to like around specific interests, right?

It might be people who are like tech entrepreneurs or really into fitness or whatever.

So it's early days.

It's kind of like the early days of the internet.

A lot of it's like kind of quirky and weird.

But people are experimenting with it and coming in at a pretty rapid clip.

There's like, I think, I don't know, I think there's like 300,000 people on the waitlist right now.

So we're slowly giving out invites as it as it ramps up.

But yeah, it's cool.

And by the way, I should mention base is a self-custodial wallet too.

So everybody owns their own coins and their own, all the content they're posting and everything.

They fully own it.

They can take it with them anywhere.

If they don't like the base app,

it's all based on open protocols.

So you can basically, you can move to another app that supports the same thing.

There's no lock-in to that one.

And you own your own coins.

Like it's not Coinbase storing it for you.

It's a self-custodial wallet.

So we can distribute it to 190 countries from day one.

It's not like it's not a regulated financial service business.

How do I get on the wait list?

I'll send you an invite.

Yeah, I mean, actually,

I mean,

your audience would probably exceed our capacity.

But yeah, I mean, we can give you an invite code or something if you want to give it to Patreon members or something like that.

Yes, I would love that.

Okay, yeah, we could do that.

Hell yes.

Thank you.

Yeah.

Thank you.

How many Patreon members do you have?

We got about 90,000.

Okay, okay.

That's even bigger than I thought.

But we we can break it up.

Yeah.

Break it up.

Okay.

We'll put it at the top tier.

Okay.

Man, thank you.

Yeah, that'd be great.

And then, you know, I know you're, so you're, you're venturing into some stuff that

has nothing to do with crypto.

What is that?

Yeah, well, I mean, just zooming out, like, my, I guess the thing I'm most interested in the world, and I feel like the best way to help the world is to accelerate technological progress and try to build cool things that are useful to people.

And so when Coinbase went public, you know, I was, I got some liquidity from that, some money, and I was trying to think about,

in addition to going and buying a house and some things like that, I was like, all right, what do I want to try to do in the world?

Still pretty young.

And so I started to look at some of the, what are the big challenges on the frontier of science and technology that I could try to put some money towards, right?

Like, honestly, I was kind of inspired by Elon, right?

He made some money early from PayPal, and he was like, you know, rockets and electric cars.

And, you know, sometimes it's hard to raise money from venture capitalists for like the really really crazy ideas because

it's it's higher risk right and so i feel like in some ways if you're a software entrepreneur and you manage to have some success you almost kind of owe it to society to like put some of that capital back into the frontier like try to do hard things which are high risk in the world of atoms not just bits right which would be like software etc um

so i remember i i reached out to a couple smart friends of mine we started hosting uh some dinners and i would kind of go around the table and ask people like you know what are the coolest things on the frontier of technology right now that need more investment and smart people working on it?

And, you know, of course, like, people talked about AI, crypto, brain machine interfaces,

fusion energy.

And one of the topics that came up was human longevity.

Right.

And we were thinking, like, okay, people have been trying to live longer forever.

This is kind of like, you know, most of it's snake oil.

But we're a couple of like interesting trends are happening right now where this might start to be tractable like in the next decade or two.

One of those trends is that like AI is coming on the scene, right?

And we can actually use AI to test a lot of hypotheses and help drug discovery be more efficient.

The second big trend is that there's something called single cell sequencing where you can like take an individual cell and read out the state of it.

you know, what genes are turned on and off and like what kind of proteins are going on in there.

And you can, the cost of sequencing in a cell, like its entire state, has been falling like crazy.

Are you familiar with like Moore's Law?

In the computer revolution, there was a thing called Moore's Law where the number of transistors that you could get on a computer chip, it like doubled every 18 months for a certain price point.

And that's why computers kept getting more and more powerful at like an exponential pace.

So there's a phenomenon kind of like that in biology where to read out the state of a single cell, human cell,

the cost is like falling by half every 18 months or something like that.

And so we we can now read out the entire state of a single cell for like five cents US.

It used to be like $500 to do it per cell.

Now it's like $0.05.

And it's just going to keep getting cheaper and cheaper.

So these two trends were happening.

And,

you know,

some of these scientists and folks that we invited over, they told me, you know, you should go look at this field called epigenetic reprogramming, where you can essentially reprogram the state of a cell.

Like if you had a cell that's an older cell, maybe you could restore function that it had when it was younger.

Or if you had a cell like a skin cell, you could turn it into like a muscle cell or a different stem cell or like a neuron, like a different type of cell.

And so we went to go look into this and kind of like reading that Bitcoin white paper in 2010.

And the more I started to read about epigenetic reprogramming, I was like, there's something interesting here.

This is an underfunded kind of novel area of science that could be really high potential.

Like imagine if

your metabolism or your immune system or something or your skin cells, like we could go in there and reprogram it to be restore function it had when it was younger, right?

Like who wouldn't want to have like the metabolism of a 20-year-old or maybe your muscle recovery from like injury or the gym or your immune system could be like a 20-year-old, right?

Like if you get the flu when you're 85, it could be fatal, but if you get the flu when you're like 20, it's fine.

You just take a week off, right?

So

we found a couple of the right scientists and people to start this with.

I co-founded the company along with Jacob Kimmel, who is a brilliant scientist in this area, and Blake Byers, who had worked in biotech for a decade.

Because

my background was not in the science piece, but I had capital and I had

some experience building companies.

And so we decided to kick off this company just a few years ago.

And it's had some really exciting initial progress where we've been able to demonstrate for the first time taking human cells and restoring function they had when they were younger.

Wow.

Yeah.

And there's some cool videos I can show you of just like, you know, like

we have these like humanized mice model where we actually put human cells inside the mouse.

And then, like, if you have an old mouse and a young mouse, and you give them both a certain amount of alcohol, like the old mice take longer to sleep it off, you know, kind of like people.

And we've been able to like restore the liver of these older mice and they wake up like the young mice with no hangover kind of thing.

Wow.

So

again, getting this working in humans is

is like a big challenge.

It's like definitely, this could take another decade to like start to see drugs and therapies that humans could take, but it's early stage.

It's an exciting company.

It's like 35 people in South San Francisco.

You know, I put like 100 million of my money into it, committed to it.

And,

you know, we've raised some money from some really amazing people too.

So anyway, that's an example of the kind of thing I've been working on.

What kind of things is that going to be able to solve?

Well, yeah, so imagine, you know, we all kind of lose function in our bodies as we get older, right?

Like the big things that, if you look at the biggest killers, it's like heart disease, cancer, diabetes.

So

a lot of medicine is targeting how do you treat that disease.

But there's another theory, which is like maybe

the root cause of all those things is that you know, our cells are just losing function as we get older.

And so you're more susceptible to get these diseases.

Like, I'll give you an example so

if you're in if you're like let's say you're in your 20s or 30s and

you know you have some damage to your cells like you you have some you drink too much or you

you get sick or like you know and and there's this kind of like this insult or damage to your cells your cells have the ability to recover from that

when you get older your cells don't really have the ability to respond as well to these kinds of threats or like you know it could be viruses or you know eating or drinking too much or what not getting enough sleep or whatever they start to lose their function and so instead of treating like the effects of these down these diseases why don't we just try to restore the function your cells had when you were younger um and it might actually be like kind of a root cause of a lot of these diseases that manifest later in life like if you look at all those diseases i mentioned they're basically highly correlated with age.

The older you are, the more you're likely you are to get it, right?

Like once in a while, you'll see a kid, like a young person who gets cancer or something, but it's very rare.

It's almost all people later in life.

And so it's kind of like what you might call

like a root cause or a meta, like solving a meta problem.

Like if you can solve this problem, it automatically knocks out or minimizes the effect of a bunch of later diseases that you get in life.

Like you might be familiar with

the GLP ones, like these Ozempic type drugs, you know, and that's the first time we've seen a drug that's like a trillion, that's like a trillion dollar drug where people, even healthy people are taking it now because they just want to have, they want to lose weight.

I think that the exciting thing about these longevity drugs is that

if these start to work, and again, it'll take like another 10 years or more to know for sure.

If these start to work, like everybody over a certain age is going to take these because like who wouldn't want to feel like you had the metabolism or immune system or whatever, or the muscle system of like a younger person, right?

That would just be

more years of healthy life, you know, to get stuff done.

So anyway, I think we're on the cusp of potentially being able to make a breakthrough in this area.

And

it's high risk, but I think this is exactly what people should be doing.

Like, if you have some success in business, like try to push the frontier, right?

Do something that's really challenging.

So, is I mean, how is this like, how does it work?

Is it like a stem cell where they inject cells into you?

Or it's related to that.

So, so, yeah, the science behind it, I'll give you the high-level version.

Um,

so there's a guy, Shinyo Yamanaka, who won the Nobel Prize, Japanese guy in around 2006, And he showed you could take a skin cell and reprogram it into a stem cell, like you were saying.

And

through a bunch of work, he showed that if you basically put these four proteins in a cell, it kind of reverts back to an earlier state where it's a stem cell,

and then it can redifferentiate into being a skin cell again, but with younger properties.

So this was like a breakthrough in the field.

He got a Nobel Prize for it.

Subsequent to that, people have shown that you could turn a skin cell into a different kind of cell, like a neuron or a a muscle cell.

What we're trying to do is not change the type of the cell.

We're trying to just change the functional age of the cell.

Like if it starts as a skin cell, stay as a skin cell, but just be like a younger version of yourself.

And so we're searching the vast space of different sets of proteins.

They're called transcription factors, which basically turn on and off different genes in the cell.

There's like a massive number of combinations of these that are potential.

developed a high throughput screening system that can test like millions of hypotheses And we're looking for interesting targets that come out.

To be honest, our understanding of the biology of it is not very good.

We actually don't know why.

Like even this guy won the Nobel Prize.

We don't even really know how it works and why it works, but he found something that did work.

And so that's what we've done at this lab in South San Francisco.

We've set up this high-throughput screening system that's testing millions of different combinations of these, looking for novel sets of proteins you can put in these cells that change the state of it back to like a younger cell.

And we know that so you're injecting proteins and yeah it would be an injection of proteins into the body that the cells absorb yeah and they're delivered via this thing called lipid nanoparticles but yeah yeah yeah it's basically a way to deliver proteins into these cells and it causes them to turn on and off different genes wow yeah

how far out do you think you are um i mean we're gonna start clinical trials on our first program probably in the next year or two in humans.

And that's where you have to go go through FDA or different countries you can do it in.

And then we have two or three other programs coming along.

So I think within like five to 10 years, we'll hopefully have candidates ready for, you know, potentially someone could actually go get it prescribed by their doctor in like,

hopefully like less than 10 years.

But,

you know, these are kinds of things that

sometimes you need to try a lot of shots on gold to get something that works.

Right.

And it can start to get expensive.

the later you are down doing these human trials.

Like some, it costs something like $2 billion

and takes about 10 years to get a drug to market.

And that's with a lot of failures along the way.

So, you know, we're putting a lot of capital to see if we can come up with a breakthrough here.

So you're getting ready to be introduced to a whole other type of bureaucracy.

Yeah, the FDA.

I mean,

actually, inside the current FDA, they are trying to find ways to optimize this.

By the way, China is making very quick progress on how they run clinical trials.

And there's a phenomenon happening where sometimes someone will publish a paper, like a research paper in the U.S., and then apply for a clinical trial.

And before their clinical trial starts, there's already patients in China with that drug in their body because they're kind of seeing all of our papers get published, and then they can run the trial faster.

So there's people like in the current FDA that are trying to think about,

you know, I'll give you an example of how we could make it more efficient.

So right now there's three, there's phase one, two, and three trials.

The phase one trial is all about safety, like is this thing even safe to put in a human body?

And phase two and three are about what they call efficacy, meaning does it even work?

So, first you check if it's safe.

Second, does it work?

One thing we could do is like

if you pass phase one trial and you know it's safe, allow a doctor to prescribe it to patients while it's going through phase two and phase three.

I mean, if someone's at the end of their life, like they literally, they're gonna die like in a month and they have no other option and we know it's safe, dude, allow them to take it, you know, especially if it, if a doctor

like a right, right to try,

those kinds of things, but it's still it hasn't gone far enough.

Um, that would be an example where we could really start to accelerate it.

So, I hope we get some of those things put through the FDA as well.

Otherwise, like these companies are going to start running clinical trials overseas just to get faster data back.

Yeah, I mean,

I know you're in very early stages, but I'm just curious.

I mean, how much

maybe you have a target, maybe not.

I don't, do you have any idea how much more life

somebody could experience by taking something like that?

Yeah, so the initial, the initial drugs that will come through, you know,

we hope they could add something like five to 10 years of life.

But the real moonshot goal here is that if we get this working in one cell type, we can get it working in another cell type and another one.

And eventually you'll be able to take a cocktail of these, like, of these that kind of help improve like a dozen cell types, especially your brain.

Like that's the, that's the holy grail kind of.

And if that works, I mean, the goal is to get to like

indefinite, right?

Like, you're not going to be immortal because you could still get hit by a bus or something or shot or something, right?

But

if you don't have something like a physical thing that takes you out,

you should, in theory, I can't see any law of nature that's getting broken that would not allow you to become perpetually kind of renew, right?

And there's all kinds of crazy implications of this downstream if this works.

I mean, I'm kind of in purely hypothetical land here, right?

I don't want to overstate this,

but we might start to see these people that, you know,

they look kind of young, but they look different.

You know, they're, it's like the vampire movies or whatever.

Like, they look like they're in their 30s, but they kind of look different, like they're like a thousand years old or something, right?

So you get into all kinds of interesting sci-fi type analogies, and people come up with all these philosophical debates about,

you know, should we even want to live longer?

Anyway, I think that curing disease,

giving people the option just to live longer if they want to, these are all unequivocally good things.

And so it's worth pushing on this frontier.

But

if it ultimately works, how it changes society could be quite profound.

Yeah, I mean, do you think,

do you think it would, would it make in

would it make an older person look younger or would it kind of stunt aging and you like if you if you're 42 years old are you gonna stay 42 years old or are you gonna look like you're 32 years old in a year or however long it takes to work?

Yeah, the answer is we don't know for sure.

I mean, there are now examples of human cells that we've been able to restore.

It's not just stop the aging.

We've been actually able to restore function they had when they were younger.

So in some sense, you could call it like reversing the aging, right?

But, you know, I'll give you an example.

So like

your skin, when you're when you, you know, we all start as like a single cell, like a fertilized egg, right?

And we're dividing and our skin and bones and like brain, everything kind of develops.

Like in our skin, we have this thing called the extracellular matrix, which is kind of like this protein structure.

It's not the cells themselves, but it's kind of like, you know, you probably heard about collagen and these different, so it kind of gives your skin like that flexibility and springiness.

And over time, that the ECM, the extracellular matrix kind of can deteriorate, right?

So this is like a big open question.

If we restore your skin cells to be like they were when they were 20, are they actually going to go in there and maintain and repair the extracellular matrix so your skin stays like really springy or are they just going to be like aged uh sorry are they just going to be young cells but on an aging extracellular matrix we don't really know we got we got to go run these experiments

another example would be like you know people um who they have like uh scarring on their liver that's like called like fibrosis right if you damage your liver it develops this kind of like scar tissue and one of the experiments we've kind of been running recently is like if you reprogram your liver cells to back when they were younger, maybe your liver cells are young, but it's the scar tissue is still there.

This is still too early to say, but like some of the data we've been seeing indicates that the young cells can actually like

repair or disintegrate the scar tissue.

Wow.

So

we don't know yet, but like there's a possibility that if we actually are able to successfully restore these cells back to the younger state, that they'll just like kind of maintain and restore.

Like, I'll give you one other kind of interesting data point.

Like, um,

you know, baby, there's such, there's a thing called like, um,

I think it's called like prenatal surgery, right?

Like where a baby in the womb can actually get some kind of surgery to repair something.

And when the baby's born, they don't have any scars from the surgery.

Or even, you see this sometimes with like really young kids, like if they get like a part of their finger chopped off or something, like a kind of horrific thing, but there are accidents like this.

If it happens when they're really young, like two years old, a lot of it will grow back, right?

And so

our bodies, like there is something in our biology which has the ability to like regenerate tissue, to even regrow like a piece of a finger.

And if we can unlock that capability in adults,

we know it's possible because it's happening when we're younger.

So why can't we turn that back on?

It might be possible in adults.

It's not like some completely, it's impossible thing.

There's sort sort of an existence proof.

It happens at some point in our life.

So why couldn't it happen later in our life?

That's what we're trying to find out.

Do you think it could be a cure to diseases like Alzheimer's, stuff like that?

Again, we're in highly speculative land here.

I don't want to like overpromise, but in theory, yes, it's possible because We don't know exactly the cause of Alzheimer's.

I mean, people talk about these amyloid plaques building up and things, but when you're younger, why don't they build up?

I don't know.

Maybe you're you're

there's certain cells in your brain that are not like the neurons, but they're basically helper cells trying to clear out those plaques and things.

So if we can reprogram them to have the function they had when you were 20, maybe it does help with that.

We don't know.

One, we haven't started on it.

We want to actually start a program on Alzheimer's and brain and like brain cells.

We haven't started it yet because it's one of the most expensive ones to do in terms of how you run clinical trials.

But we'll get to it eventually.

I think that's one of the most exciting ones to figure out because ultimately,

if our bodies are still functional but our brains are going it's kind of like what's the point right yeah no reason to live if you if your brain's not there sorry to pepper you with questions it's great you know newborns i mean

stuff like

down syndrome things like that is that something that this could prevent so that's kind of a different area of science but i think um because that's really more about the dna like that if you have an extra chromosome that that's what causes down syndrome but um I do think there's a whole other field that's emerging around embryo editing, right?

So you're probably familiar with like people using IVF, right?

And you can have these embryos frozen and then you can kind of sequence them and see if they have diseases or Down syndrome or anything like that.

And this is kind of controversial because people, you know, people have all kinds of beliefs on this about what should or shouldn't be allowed.

Is the embryo a living thing or not?

There's a lot of...

fraught territory here.

But I think what's happening is that

first we're getting to a world where where people can choose, like sequence these embryos and choose the one that they feel like has the best chance.

Then what's going to happen is people are going to have a lot more embryos to choose from.

There's a technology called in vitro gamma genesis where you can turn skin cells into embryos.

So you don't have to like harvest them from the eggs like from a woman, which can be a quite invasive procedure.

So then you'll be able to have like thousands of embryos to choose from.

Then

what'll happen after that is people will choose the best ones and then they can start to make a few edits to it.

Like it to prevent, it'll start off initially to prevent disease.

Like there's like sometimes a single base pair of DNA can cause you to have like heart disease or higher risk for Alzheimer's.

Like there's different single base pair changes.

And then there will eventually be like multiple base pair changes where, I don't know, anything, you know, like depression.

you know, like IQ, you know, there's all kinds of things people might want to edit in the future.

And it's an interesting thing society is going to have to figure out is do we feel okay with that?

Like, you know, we are, we already sort of go out of our way to try to give as much benefit to our children as we can, like what food we give them, where we send them to school, where we where they live.

And so I think if you have a choice about, okay, like this embryo has a 50% chance of

depression, but they might also be like a great artist, you know?

And this embryo,

they're less likely to have these bad things and they spike really high on these other things I care about.

Parents are going to have choices to make, like which embryo do I want to implant?

Which ones do I want to bring to fruition?

So, you know, in some ways, that's for a lot of people, that's probably like really scary and playing God and like all kinds of things.

I think for other people, it's saying, okay, how are we going to start to shape evolution and like take control of it?

Because AI is taking off at a crazy pace.

Like, how is human intelligence going to keep pace?

And

we already choose this by who we choose to marry and who we choose to have children with has a huge impact on what our kids are and where you send them to school and et cetera, et cetera.

So why wouldn't we also kind of give them the best chance they can genetically?

I think eventually it'll become like

weird not to do this like in 50 years.

It'd almost be like risky like rolling the dice to not

take a look at the data.

So that's another interesting area that'll that could come to come to fruition.

I'm not doing anything currently in that area today, but just kind of intellectually interested in it.

Wow.

Fascinating stuff.

Yeah.

We're wrapping up the interview, but I just got a couple of questions left.

What advice do you have for new innovators and founders?

Well, there's a lot of different areas like people could get advice on.

I think the biggest, the big picture advice I would give people

is

it's action produces information, right?

A lot of people are sitting there thinking, I kind of want to start a company, but I'm not sure exactly what to do.

And this area could be interesting, but what if that happens?

And what if the government shuts it down?

What if this competitor does it?

You can kind of have this analysis, paralysis.

You just need to get started with something.

And just anything you can think of to do, like just go try and do it.

It'll probably be the wrong thing, but just the fact that you tried it, it'll give you an idea about what to do next.

And there was many times in Coinbase's history where

that was the case.

Like the first version of the Coinbase app that I built, I built it totally wrong, right?

And almost like the minute that I released it, I was like, oh, now I realized how I should have done it.

But if I hadn't actually gone and stepped into the unknown, I never would have figured out a better way to do it.

And there's an analogy I love to think about, which is kind of like, imagine you're looking at a mountain, you want to try to summit the mountain, and it's shrouded in fog and clouds, and you can't really see the top of the mountain.

In fact, you can only see like six feet in front of you.

The fog is so thick, but you know there's some mountain up there.

You can't just sit down on the ground and think about how the right path.

You got to take a few steps into the fog, into the unknown.

And you might get stuck on some ledge that's like, oh, I got to backtrack.

Like, that was the wrong way, right?

And sometimes you'll be able to see a little farther in the distance.

Sometimes you can only see a few feet ahead.

But if you don't take steps into the unknown, like that action, you'll never know the better path to go.

And most people, they don't have, I don't know if it's the risk tolerance or the fear of looking stupid or like doing the wrong thing or whatever it is.

I think, you know, they never take that step into the unknown.

And this, sometimes people ask me, like, why do a lot of tech founders have autism, you know?

I think like one of the reasons, I'm probably somewhere on that spectrum myself, by the way.

But I think one of the reasons like people with on the spectrum or have autism like our tech founders is that

they don't really have

social anxiety about people thinking that they're looking stupid or dumb.

Like it's, it's not that they don't know it's happening or that they, but they just don't care.

It's like

fear is gone.

Yeah.

Like, and it's like a social, um

they're kind of blind to it socially, which can be funny in certain situations.

Like, you know, if they just do something that they don't, everyone else thinks it's weird, but they don't know that it's even weird.

But in an entrepreneurship, that tends to help you a lot because you're willing to just take steps into the unknown, unafraid of looking stupid, to try lots of things.

And eventually you find something that works.

So I don't know, that would be my biggest piece of advice is just like action produces information.

If you have any kind of idea of what to do, just do it, even if it's the wrong thing, and it'll produce more information.

I love that.

I love that.

Last question.

If you had three people you'd like to see on this show, who would they be?

Hmm.

Ah, there's so many good ones.

I think, and you've, you've met with a bunch of them already.

Let's see.

Have you had Elon on?

No.

Okay.

Could be a good one.

I mean, everybody wants to interview him.

That's maybe an obvious one.

I'm trying to think about ones that would be less obvious.

Who are you excited about?

Yeah.

I think I am excited about people building on the frontier of technology.

So I'll give you a couple names.

I think there's a guy, Keller Renato.

He started a drone delivery company that's really amazing called Zipline.

He's also working on another biotech company.

I think he's really impressive.

Have you had, I know you had Palmer on.

Have you had Brian Schimp from Andrew?

He's the CEO.

He's a rock star as well.

I mean, they're building like nuclear submarines, all kinds of crazy stuff now.

Let's see.

I mean, do you want to talk to like government people?

You'll talk to anybody.

I don't know.

Anybody?

Government people?

We talk to a lot of those.

Could be anybody.

How about the crypto space?

Yeah.

Who's doing something new and innovative than that?

Well, I think

Jesse Pollock on our team, who created the base protocol and the base app, he's great.

Perfect.

That's three.

Yeah, that's a good start.

All right.

Brian, thank you for coming, man.

Thanks for having me.

Appreciate the time, and I hope to see you again.

Thanks for being interested in what we're up to.

Yeah.

cheers.

I am Michael Rosenbaum.

I am Tom Welling.

Welcome to Talk Bill.

Where it's fun to talk about small bills.

We're going to be talking to sometimes guest stars.

Are you liking the direction Plois is going in?

Yeah, because I'm getting more screen time.

That's good.

But mostly it's just me and Tom remembering.

I think we all feel like there was a scene missing here.

You got me, Tom.

Let's revisit it.

Let's look at it.

See what we remember.

See what we remember.

I had never been around anything like that before.

I mean, it was so fun.

Talk, Bill.

Talk, Bill.

I just had a flashback.

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