CEOInterviews.AIThe Crypto Skeptic vs The Coinbase CEO | Brian Armstrong x Nikhil Kamath

B

Brian Armstrong35:51

Yeah, I mean I think in the same way that rupees and dollars can be tokenized, you can also tokenize gold. You can tokenize stocks, you can tokenize bonds, treasuries, bonds. So anything can get tokenized and what generally happens is that you see a more liquid market for that underlying asset and better distribution globally and real-time settlement. Like it's pretty difficult to take a bar of gold and transport it across the world or to pay for a cup of coffee with it because you know chip off a little flake and measure it or something but you know

I

Interviewer36:27

But you don't have to transfer it. Say if I'm in India and I created a gold coin and Brian in LA wants to trade with me, I'll call up a vault here and settle the equivalent value of gold as the gold there without actually transferring the commodity.

B

Brian Armstrong36:45

Yeah, that's what I mean. Yeah, like when gold was backed by the dollar, was backed by gold, actual physical gold did not move around, people just settled it.

I

Interviewer36:53

Right, so I think that would absolutely happen. Yeah, in that case, there actually are some people I think who've done that, they have tokenized gold reserves on chain. And I would say by the way, Bitcoin is like a digital version of gold.

B

Brian Armstrong37:07

You know, it's actually created, it's very much inspired by gold and the gold standard. And countries all over the world have that sort of affinity and cultural history with gold. And so the scarcity of it and the decentralized nature of gold, like there's no one country who controls it, right? The supply is finite, so that's what gives people a lot of trust around it. And then it's quite durable, it doesn't go bad. Like maybe people might trade bags of rice or something but it could go bad, but gold doesn't go bad, right? So these are some of the properties of money. And Bitcoin, I think, takes all the best properties of gold and it is even better on a couple of dimensions, like the portability, you can transfer Bitcoin instantly, and the divisibility, you can very easily divide it down to eight decimal places. So in many ways, I think the creators of Bitcoin, Satoshi Nakamoto, whoever that is, they were inspired by the gold standard and tried to make a new gold standard actually.

I

Interviewer38:10

Can I lean on professor Brian from founder Brian for a while and go to first principles. What was Bitcoin? I read the white paper.

B

Brian Armstrong38:20

Mhm.

I

Interviewer38:20

It kind of was a protest around the banking crisis of 2008, right when it came out.

B

Brian Armstrong38:28

Well, that was mentioned. Yeah. In the first Bitcoin block, this chancellor on the brink of bailout was the quote that was kind of enshrined in the first Bitcoin block. So that certainly spoke to the motivation of the people or person who created Bitcoin.

I

Interviewer38:45

It is a very simplistic way to define Bitcoin when it began, at least a paper. It was trying to solve one core problem. How do people send money over the internet without needing a bank, government or company in the middle?

B

Brian Armstrong38:59

That's right. Yeah. Peer-to-peer cash was what was described in the abstract. And yeah, they were trying to eliminate intermediaries.

I

Interviewer39:07

And why? Because the Fed was printing excessively and there was unlimited supply of dollars in the system and they were inflating or deflating the currency without you having a say over it.

B

Brian Armstrong39:23

Yeah. Well, I'm speculating, having not spoken to Satoshi Nakamoto, but just having read the paper and seeing some of the early internet forum discussions, I think yeah it was all of these things. So it was to try to be a hedge against inflation and saying that people deserve sound money that holds its value and can't be eroded by inflation. I think they were trying to reduce the cost of transactions. These intermediaries sometimes take high fees or introduce delays. And then I think there was really a freedom argument underpinning it, which was that economic freedom is important for anybody to be able to live their life and start a business. And sometimes we talk about other freedoms, freedom of speech or to congregate. And if you can take away someone's economic rights, you can take away all their rights really, because if you don't have enough money to have transportation or food or housing, you can't really express your other rights. And so economic freedom is this important thing that they were trying to guarantee with Bitcoin. And they said anybody in the world as long as they have an internet connection and a smartphone can have access to sound money and they can hold their wealth in a way that it can't be taken from them and hopefully begin to participate in the global economy in a more open way. So those were the principles that Bitcoin was founded on, at least in my view, and I think they're just as important today.

I

Interviewer40:44

Can I ask you another first principles question? Yeah. Can you explain blockchain? What is a blockchain?

B

Brian Armstrong40:50

Yeah. So, a blockchain is a distributed ledger. So, typically at an intermediary like a bank or something in the prior system, you'd have one company or person keeping an account of, you know, I'm going to debit one rupee from Brian's account and give it to Nquille. So I minus one and plus one. Somebody has to record that as a single transaction to make sure that nobody double spent the money. Right now, what a blockchain is, it's a computer science breakthrough which allows a distributed set of computers to keep a ledger and come to consensus about who has how much at any given time. And that was a computer science breakthrough that really hadn't been solved before. And so it allows these peer-to-peer transactions to happen now without any intermediaries. And this distributed set of computers, kind of like the internet, could now come to consensus about who owns what. And so sometimes people call Bitcoin and blockchain the internet of value, because the internet was a breakthrough in terms of democratizing publishing of information and blockchains democratized movement of value.

I

Interviewer42:02

Another way to like when I'm trying to think of it because I don't understand it truly.

B

Brian Armstrong42:07

Mhm.

I

Interviewer42:08

Is I use Google a lot like Google Drive.

B

Brian Armstrong42:10

Mhm. It's a Google Drive sheet, a Google Drive Excel sheet of a sort where everybody has access to that drive page and when a transaction happens, we can all see it at the same time.

Yeah. So, I'll get into a little bit of the computer science under it actually. Imagine many of your listeners are very technical. So, and I actually would encourage anybody to go read the Bitcoin white paper. It's a little bit hard to understand the first time, but I think it's worth trying to read. And it's one of the most important documents written in financial history. So okay, so the way it works is if you have a set of these computers on the network, anybody can generate a transaction and broadcast it and they each kind of relay it to each other so they're kind of gossiping all the computers and saying all right what transactions have you seen and they're relaying that so everybody has seen everything but that doesn't mean those transactions are confirmed yet. So to confirm a transaction, because somebody might have said I have one rupee, I'm going to give one to you Nikquille and one to somebody else. So I might have submitted two transactions and tried to double spend, right? Okay. So now all the nodes are aware of all the different transactions and some of the nodes are miners of Bitcoin miners, right? In this case we're talking about Bitcoin, but there's other blockchains and the miners what they do is they package up a set of recent transactions and they eliminate any duplicates like somebody trying to double spend and what they do is they do some work on the set of transactions. This is called mining and I can explain how it works but basically it's almost like searching for a rare number in mathematics that would make this block coherent. In this case it's using a hashing function and you're looking for a certain number of zeros at the beginning of the hashing function. But the simple way to think of it is to say any computer can package up the transactions and search, you have to do a lot of computational power to find one of these rare numbers. Now if you find one which is hard to find, you can broadcast that solution to the rest of the network and it's very cheap for every other node to say oh that is a real solution, I verified it. So it relies on this asymmetry of difficult to find, easy to verify. And if the first person to announce one, that becomes the next block in the chain. And each block has a pointer to the prior block. So that's what creates the chain. And so you have this, that's what they call proof of work. It's like basically the longest chain is the official record of the ledger. And it has a lot of computational power embedded in it because it took a lot of work to make this long chain. Sometimes there's a fork in the chain and whichever one is the longest wins and the other one dies off. And so it relies on at least 50% or more of the actors on the network are behaving in a good way. It works and if you have a bad actor who tries to submit some invalid thing they will get outpaced by the rest of the network. So that was the computer science breakthrough really.

I

Interviewer45:18

And when you do this proof of work and put a block on the chain, you get a reward which is

B

Brian Armstrong45:25

That's right. Yeah. So if you discover one of those new blocks, that's how new Bitcoin are created. And so you would initially you would get 50 new Bitcoin by mining one of those blocks. Now it gets cut in half every four years or so. And so the amount of Bitcoin being released every 10 minutes is sort of decreasing asymptotically.

I

Interviewer45:45

That's because there is a finite number 21 million.

B

Brian Armstrong45:48

Correct.

I

Interviewer45:48

Yeah.

I remember a time when people made a business out of just mining bitcoins. Does that still work?

B

Brian Armstrong45:57

Yeah, there's lots of Bitcoin miners around the world. I mean, it's a business. We don't do that business, but you have to be very good at getting inexpensive energy to run the data center and then using custom hardware, custom chips that are optimized for mining Bitcoin.

I

Interviewer46:16

If I were to start a business around because I go back to like people watching this want to start a business. If I were to start a business in mining today

B

Brian Armstrong46:26

Mhm.

I

Interviewer46:27

by virtue of increased energy cost recently, what kind of return might I make? Say hardware being equal.

B

Brian Armstrong46:36

Yeah. Well, it depends. A lot of the successful Bitcoin mines are adjacent to power plants where there's certain times of day where they may have just excess capacity that would not get monetized. So you could almost think of the Bitcoin mine as a floor on the price of electricity. So if it ever dips low enough, then all of that energy can be banked in the Bitcoin that gets mined if you will. So it actually allows sometimes it's a real benefit to people who are trying to underwrite the creation of new power plants because they can say all right I know that there's a floor on the price of energy and it helps them with their modeling. I should mention though because sometimes people have concerns about how much energy Bitcoin uses and I know you're focused on climate you mentioned right and Ethereum and other blockchains use a new system called proof of stake which is actually 99.9% more energy efficient and I could describe that algorithm too if you want but it's

I

Interviewer47:35

Just before we move on to proof of stake and proof of history, if Bitcoin was initially built to transfer value from one person to another, it's not necessarily the most efficient at that if we call it digital gold today, right?

B

Brian Armstrong47:55

Yeah, that's a great point. Actually, I would say that you're right. The Bitcoin white paper describes it as peer-to-peer cash. And money has multiple purposes. One purpose of money would be store of value. Another one would be a medium of exchange, which is more like peer-to-peer cash. You're right. I think it's fair to say at this point that Bitcoin has succeeded as a store of value and I don't think it has become a medium of exchange. There's people who have tried to make that happen with the lightning network, which was an optimization layer on top of Bitcoin, but it never really took off. It turns out that when you have a deflationary asset like Bitcoin that people think it'll go up in value over time. I mean it's volatile. That's one issue for a medium of exchange, but the other one is people think it's going to be worth more in the future, so they don't really want to spend it right now. So we've actually seen massive growth of stable coins running on blockchains, fiat-backed stable coins as the medium of exchange, and Bitcoin has remained the store of value as digital gold. So the way I think of it is we're almost like creating this new financial system, and it's not a perfect match to the prior one, but it rhymes. Like in the prior system, we had gold. Here we have Bitcoin. In the prior system we had Visa and Swift and here we have stablecoin payments happening on chain. So yeah, and then there's lending being recreated and insurance and capital formation with stocks. It's like everything is being recreated on chain. I used to watch these debates, I don't remember how many years ago, but Michael Saylor, MicroStrategy

I

Interviewer49:31

I think he put a lot of money in bitcoins and he would argue gold versus bitcoin overall market cap what will happen tomorrow.

B

Brian Armstrong49:39

Yeah.

I

Interviewer49:39

Do you agree with him for a public company to put he somehow converted a public company into a fund which gives you exposure in a more tax-efficient way into the upside of bitcoins.

B

Brian Armstrong49:52

Right. Well, okay. So he did something really brilliant, which is from a financial engineering point of view, it was brilliant, which is that a lot of different pools of capital in the world, they're able to buy public company stocks, but they were not able to buy Bitcoin. You might be aware that recently they've become Bitcoin ETFs as well, which have become very popular. I think they were like the fastest growing ETFs of the last few years. But Michael Saylor recognized that a lot of funds could just very easily buy a public company stock if they could not buy an ETF or Bitcoin directly. So he happened to make a public company that just was essentially 100% exposure to Bitcoin and that created a lot of demand for that. Then he's using leverage in creative ways and things that I'm not entirely familiar with. Yeah, I mean I think we just need to make it easier for people to get access to digital assets and there'll be various opportunities like that along the way.

I

Interviewer50:48

Do you want to move on to proof of work or proof of stake?

B

Brian Armstrong50:52

Proof of stake.

Yeah, sure. If you want.

I

Interviewer50:55

I'd love to like understand the math behind it in a manner like an idiot.

B

Brian Armstrong51:00

Okay. Okay. I'll do my best to explain the proof of stake algorithm and then I'm sure somebody on the internet will find a detail I got wrong. But that's okay. Yeah. So okay. So I think when they were creating proof of stake they said okay proof of work, the Bitcoin system, it's very robust. It hasn't failed, right? And many people have tried to attack it in various ways. It never failed. So that's a great property but it does use lots of energy. Okay. So how might we create a system that's equally robust but doesn't use so much energy. So in this case the nodes start off the same way. They're all relaying the different transactions to each other, gossiping and sending everybody's proposals. And again, some of them decide they want to try to propose the next block. Okay, so in this case what they do is they package up the transactions that they believe are valid and no duplicates and everything and then when they propose the block they actually put up some money as well. This is the stake, and it's almost like a bond or something like that in corporate finance. So you put up this money and you say I believe this is the next block and I'm willing to put some money behind it. And if other people agree and it becomes the next block, and by the way the other people can vote on it kind of with their own money.

I

Interviewer52:20

Let's ask a stupid question here. Say I stake 35 ETH or whatever to stake while I confirm the particular transaction. What if the value of the transaction is equivalent to 50,000 ETH? The value of the transaction but the stake you're saying is a lower amount.

B

Brian Armstrong52:37

Is this yeah yeah yeah exactly.

Well, so everybody, this again it relies on at least 50% of the participants of the network, hopefully much more, but at least 50% are good actors. They're not going to allow you to propose a block that double spends money or does something bad.

I

Interviewer52:53

So do I have to stake relative to something each time I stake a certain amount of ETH to confirm a transaction?

B

Brian Armstrong53:01

I don't believe the stake is relative to the amount of money being moved. I think it's literally just how sure you are of that one, how much you want to put up. I have to go back and look at that as a detail actually. But basically what happens is you put your own money behind it. Other people can vote with their money and say, 'Okay, I believe that'll be the next block and I've checked it. I think it's legitimate.' And basically the people who are right, they get their stake back plus interest and the people who are wrong lose their stake. So you forfeit it, right? So it's almost like an investment that happens, a round of investment that happens multiple times a second, I believe. And people are voting with their money and they're saying, 'Which one do I think is going to be the next one?' And then if you're right, you get your money back with interest and if you're wrong, you lose it. And so that allowed the network to reach consensus without having to use so much computational power.

I

Interviewer53:58

Okay, please continue. Proof of stake. Then why do people even if proof of stake brought down the cost of transaction because energy was no longer required and people were staking by a magnitude of 99%. Why did that not really become a currency and people start trading on it? Also maybe you can tell us about smart contracts a little bit.

B

Brian Armstrong54:24

Yeah well the Ethereum network which uses proof of stake and there are others as well. I mean I think a lot of people are trading it. I think it's been quite successful. You know if there's some other part of your question I'm missing on that though just let me know. Are you asking okay so I think yeah I think the proof of stake networks have been quite successful. And then you asked about smart contracts. So this is another thing that Ethereum really innovated on was they said okay we don't want just to be able to move money from A to B. What if we could have programmable money? Okay so what does that mean? It means that we could put some sort of, you know in the traditional world you'd use a lawyer to write up a contract and you know maybe it would say okay I'm Brian, I'm going to put a million rupees into Nquille's company and in exchange Nquille's going to give me some shares of his stock and some voting rights and you know we could have a lawyer write that up on a piece of paper and we could both sign it and I give you the money and I get the shares. In the Ethereum world, they said, 'What if we could put the law or the contract into software and on the blockchain itself?' And so they actually have a programming language in the blockchain itself. And so we can make a smart contract where you publish it on the blockchain. Anybody in the world can see it and you say, 'Hey, I'm raising money for my company.' And if I, Brian, send money into that smart contract, I get the shares back. And so I don't have to trust that lawyer who wrote it or some court in some country. Anybody in the whole world can now participate in that smart contract. And there's been very fascinating examples that have happened where people who have never even met each other, there's no lawyers involved, they've never met and they'll post a smart contract and like 20,000 people around the world within 5 minutes will participate in that contract and they'll somehow collaborate and do something in the world together, go buy art or whatever they're doing. And so that's a very fascinating thing. Now, smart contracts are very new and there's been lots of bugs in the software where people sometimes, it's very difficult, there's not a lot of people who have experience writing these. So sometimes people will write one of these and there'll be a flaw found and people get money stolen. So it's a very kind of new area I would say.

I

Interviewer56:46

Can you give me a simple example that I could use it for? Like if I need a smart contract?

B

Brian Armstrong56:51

Yeah. Well, I'd say like the most classic examples that people have done so far is that they want to raise a venture fund and so they have LPs and then they'll publish to the world and say here's what we plan to invest in and everybody can wire money and then we can collectively decide to go buy things. That would be an example. Another example would be, right now we're making an onchain payment protocol. And in the world of payments, you need to think about how to handle things like refunds and you can authorize the card, but settle the funds later when the item ships, right? Or maybe you need to think about how to do subscription payments. So these are all things we can actually write into a smart contract. And so those are examples of the kind of things. It's actually what would be called a Turing complete language in the smart contract, meaning you can actually write any software. It's like a totally complete just like C++ or JavaScript, you can write anything in there. But usually people are trying to make a very specific thing. They're not trying to make a whole computer in there.

I

Interviewer57:57

So what are these being used for now? Say Bitcoin has become a store of value. What is being built on top of proof of stake? Like what's the real world use case today?

B

Brian Armstrong58:09

Yeah. Well, another example would be borrowing and lending. So, in many places in the world, it's kind of difficult for people to get access to credit. And in these, people call these DeFi protocols, decentralized finance. These are all using smart contracts. So in this world, you can have a number of people who have money willing to lend and many who want to borrow and you can have an interest rate that gets generated. You know, you'd mentioned earlier people on Coinbase can actually choose to lend their money out and earn these yields and things, that's using a DeFi protocol underneath. So some of these have reached maturity and it's global, so anybody in the world can participate in this.

I

Interviewer58:56

How does it work? Like again a stupid question, but when I lend money to somebody, I charge a rate of interest based on the likelihood of him paying me back. So when I lend to somebody on proof of stake a DeFi protocol, how do I know if I lend to Brian I should charge 10% versus I lend to him I should charge 15?

B

Brian Armstrong59:18

Yeah. So there's different pools of these in DeFi. You can choose, it's kind of like in the traditional financial world, you'd have a credit rating agencies and things like that. So you can look at different pools and say, 'Okay, this one, the underlying pool is only being lent on Bitcoin with a 50% loan to value or different characteristics like that.' Other pools might have more risk tolerance and pay a higher yield.

I

Interviewer59:44

So they have to pledge something in order to borrow. Yeah, there would be collateral. There's no unsecured lending per se.

B

Brian Armstrong59:51

Not that I'm aware of. There might be something I'm not aware of, but I think the ones that we're doing today are all collateralized.

I

Interviewer59:59

And if we can move on to Solana and proof of history. Can you explain that as well?

B

Brian Armstrong1:00:03

Yeah. Well, Solana is another blockchain that was built for more like high throughput, speed and low cost and they've been very successful as well. So, I'd say that, you know, there was for a while there were actually like dozens of these chains that were coming out and it's really kind of consolidated down where now, I'd say for store value, it's Bitcoin and for the utility layer or let's say the medium of exchange with all the programmability, it's basically Ethereum and Solana. And even on Ethereum, the most popular layer 2 solution is called Base, which is something we incubated. So a lot of the activity actually is really like Base and Solana I think are the two competing to be the utility layer chains. So we don't need like dozens of blockchains. We need like a couple that work really well and then there can be millions of different applications on top of those.

I

Interviewer1:01:00

So stable coins fit in where on this? They sit on which chain?

B

Brian Armstrong1:01:06

Well, stable coins are running on most chains at this point, but a lot of it's running on Base and Solana.

I

Interviewer1:01:13

Yeah. And I'm sorry I'm asking you like questions about the fundamentals of this and not Coinbase per se, but I feel like for people who want to start, if I'm a young kid wanting to start a business in this, it helps to hear about the fundamentals of what they're building on top of.

B

Brian Armstrong1:01:29

Yeah, that's great. Yeah. I mean we can talk about anything you want. Anything in the world.

I

Interviewer1:01:36

What would you like to speak about?

B

Brian Armstrong1:01:39

Well, okay. How do we create more entrepreneurs in the world? Let's talk about that because I think part of it starts with education, right? India has amazing universities. There's probably lots more that could be done there. I think AI will help a lot with education, by the way. That's an important area. And then there's the financial markets, right? How do you get your first seed check because, for me that was a big deal. I had a job and I had an idea and I was kind of nights and weekends working on my idea, but I wasn't going to quit my job unless somebody gave me a seed check, because I had to pay rent, I had to buy food and things. So in Silicon Valley, I went to Y Combinator and they had a startup incubator there and Paul Graham was the first person, he gave me a $150k check and that gave me the confidence, maybe someone believes in me, that's what caused me to quit my job and go try to really work on it and then good mentorship and everything that came along with that. We've tried to do a little bit of this in India. Actually, the Base chain, we have this program called Base Grants and we've given $10,000 grants to a bunch of different developers in India and a lot of them we actually fly them out to Silicon Valley and they do a session where they get mentorship and pitch and everything and then they go back to India and there's been I think maybe like 4,000 Base builders now in India which has been really great. But yeah, what do you think we could, what's the limiting factor? I know Elon likes to talk about the limiting factor. So what's the limiting factor on more entrepreneurs in India do you think?

I

Interviewer1:03:23

Risk capital is one definitely. There isn't very much available. I tried to copy Y Combinator and start our own version in India. It's called Foundry. We give about 20-25 kids half a million dollars each every 6 months and they live in a house and try to build consumer companies together.

B

Brian Armstrong1:03:46

Huh?

I

Interviewer1:03:47

But barring risk capital, culturally in India, unlike the West, people have not yet learned to appreciate failure. I think that needs to change. I don't know how somebody changes mindset enough where somebody who tried something and failed is cooler than somebody who never tried. That distinction has to happen, right?

B

Brian Armstrong1:04:14

Yeah. What happens culturally is it's looked down upon, it's a failure, it's a shame or something like that.

I

Interviewer1:04:21

Yeah. See the thing is a lot of this comes in societies with abundance where it's okay to fail once because you can try again and again.

B

Brian Armstrong1:04:32

Yeah.

I

Interviewer1:04:34

It's harder there. It's changing and things are moving in the right direction. I know the prime minister has launched this new fund for deep tech startups where a bunch of venture guys are getting money to then in turn put money into deep tech startups and I think he's doing a great job with it but the scale of India is massive. America has 300 something million people, India has 1,500 million people. To affect change even in culture at that scale is a significantly harder proposition.

B

Brian Armstrong1:05:12

Mhm.

I

Interviewer1:05:13

Yeah. But things like this

I mean the popularity of your podcast tells me something that people in India look up to entrepreneurs. I mean a lot of the best CEOs in Silicon Valley came from India and I think even in India there's actually a couple like we invested in CoinSwitch and CoinDCX, amazing entrepreneurs. I think my sense is they're kind of like heroes to many people there, rightfully so. There's another thing I like about Indian culture which is that I feel like engineering is really celebrated as well. In the US, our government is often run by lawyers. There's actually, I can't remember the name of the film, it was an Indian film I saw but it was basically about three engineers and like they all

B

Brian Armstrong1:06:09

Three Idiots.

I

Interviewer1:06:10

Yeah, Three Idiots, like that that was

B

Brian Armstrong1:06:12

Khan movie.

I

Interviewer1:06:13

Right. I don't think that film would have been made in America because people don't celebrate engineers like that. I don't know, do you think that's true?

B

Brian Armstrong1:06:23

Yeah. See, for a long time because of what you said earlier, the Indian origin people who came here and did very well.

I

Interviewer1:06:33

Mhm. Like when I was growing up, the ultimate upside for me at some point of time, not today, but like 25 years ago, would have been clearing some kind of an exam, maybe going to IIT and then coming to the US for college and then joining Intel or IBM back in the day, right? Because getting paid in dollars back then felt like something which was unattainable back home in India.

B

Brian Armstrong1:07:02

I think that's changed to a certain extent. A lot of people have done well. A lot of first-generation people who started with nothing. People like us and many others like that got lucky in the boom cycle in India which has strangely lasted over 20-25 years now. We didn't really get hit in the subprime meltdown. The regulators did a good job of keeping leverage in check and the Indian markets have compounded at about 11% I might be wrong but over the last 20-25 years, so a lot of people have done well.

I

Interviewer1:07:47

But we're working off a smaller base and the pace of doing well has to go up exponentially, which for which maybe a lot has to change.

B

Brian Armstrong1:07:59

Yeah.

I

Interviewer1:08:00

Mhm. Are you what is your connection to India outside of this? Is there anything there?

B

Brian Armstrong1:08:06

No, I mean I've visited before and we're excited. We have an office in Bangalore.

I

Interviewer1:08:13

Yeah, I'm from there by the way.

B

Brian Armstrong1:08:15

Okay. Okay. Yeah. And I've spent some time in Delhi speaking with the government and in Mumbai and everything and just found them to be very engaged on crypto topics. And actually by most reports, India believe it or not is the number one crypto country in the world by number of people who use it.

I

Interviewer1:08:37

I read that but I don't know how, I read it and I don't know if I believe it.

B

Brian Armstrong1:08:42

Well there's more trading volume in the US.

I

Interviewer1:08:44

Yeah. But yeah those are, I think Chainalysis published that report.

Maybe you're not seeing it day-to-day. I don't know but

B

Brian Armstrong1:08:53

I don't see it like when I meet people. Unfortunately this is true of the recent past.

I

Interviewer1:09:02

A lot of the people I met who were into crypto, really into crypto but also really levered on crypto. And I think in the last correction for the first time in a long time they've become very disenfranchised in a way.

B

Brian Armstrong1:09:19

Yeah, because I think it was sudden. I remember all these guys telling me you need to create a 100 Bitcoin, a thousand whatever number of Bitcoin wallet when it was at about 110, 115,000 which is not a long time ago.

I

Interviewer1:09:33

Mhm.

But the last correction seems to have hit people hard.

B

Brian Armstrong1:09:37

Yeah. Yeah. Yeah. Well, crypto is down the last few quarters. For sure. One thing we've been doing is just diversifying the set of asset classes that are in. We're building the everything exchange. So you can trade stocks and commodities and FX and everything, and index funds. So we see every asset class being tokenized and brought into onchain to 24/7 and global liquidity and all this kind of thing, which is much more efficient. But the other thing I would say is crypto is not just about trading. It started that way. The first 10 years were mostly about trading, but now we're seeing stable coins just grow like crazy and it's totally uncorrelated. So even if the trading markets are down, stable coins are growing like 3 or 4x per year. So I think that'll balance things out and people need to pay for things all the time. Trading, something's always going to be up, something's

I

Interviewer1:10:34

Yeah. When I think of stable coins, I'm still not able to wrap my head around like Satoshi's white paper started around protest against not being under government control in a way, not being subject to excessive printing by governments. Now it seems to have turned around 180 degrees where, you know, after the Genius Act everything is backed by US treasuries and there is KYC at every point. Uh, blockchain is not really transparent because everybody can see if I'm a central bank and I'm adding allocation to a, say I'm a foreign central bank and I'm adding allocation to a particular thing on the blockchain, it's visible to others. There's no anonymity per se. It seems to have become the opposite of what it began as. Don't you think?

B

Brian Armstrong1:11:30

I've heard that argument before and um I don't really see it. Um, it's true that, you know, it started off as like very fringe and kind of renegade and, you know, anarchists and everything, and it is becoming more mainstream. So like now that we have regulatory clarity in some major markets like in Europe and America and in Singapore and places, um, we are seeing more institutional money flow in. We're seeing the Bitcoin ETFs. So these in some ways it's becoming um more credible.

I

Interviewer1:11:59

Yeah, it's becoming more credible. But if you're a central bank moving money in Bitcoin, um, people might be able to see the ledger is open, but you can't always see who the person is, right? Um

B

Brian Armstrong1:12:14

Well, law enforcement, so if you're using a centralized exchange that does KYC like Coinbase in India and in America and other countries, um, we work with law enforcement. If law enforcement sends us a subpoena, we're required to turn over that information. But um, but the average person won't be able to see it like um

I

Interviewer1:12:31

Like, like it is for a bank transfer. The average person can't see it. But the protest was very much against law enforcement and

B

Brian Armstrong1:12:40

Well, I don't think Bitcoin was ever against law enforcement. I think they were against um high inflation eroding people's wealth and

I

Interviewer1:12:47

Caused by the government.

B

Brian Armstrong1:12:48

Yeah. Yeah. Well, yeah. Overprinting in some cases or um intermediaries taking high fees and slowing down innovation or, you know, banks being bailed out, you know, these kinds of things. Um, so it's true the centralized exchanges which are sort of the link between the fiat world, the traditional financial world and the new financial world, they are largely regulated today and um they're doing KYC and all these things. Once people have crypto, um, I think they can start to participate in the new economy and um that's where they're using DeFi or doing payments on, you know, cross-border and saving money on remittance fees and things like that. Um, it's still, it takes a while to update the whole financial system. You know, um, there's still people in America who pay their rent with paper checks and these kinds of things. Um, in many ways like India's ahead with, uh, you know, mobile payments and UPI. So our goal as a company is really to update the financial system, make it faster, cheaper, more global, more fair, um, just provide better financial services. But you're right, it's like there's a lot of pieces to get moving in that direction.

I

Interviewer1:13:55

What is uh Zcash, Brian?

B

Brian Armstrong1:14:00

Yeah, Zcash, you asked about as well. I mean, so, you know, after Bitcoin, the Bitcoin white paper came out, there was lots of innovation that people made, other variations of this in computer science. So, Zcash um made a privacy focused blockchain and they said that, you know, financial transactions are some of our most sensitive information. Of course, we don't want to broadcast it to everyone. Uh, we should have optional privacy. So Zcash had a lot of brilliant uh cryptography behind it and this guy Zuko is like a really smart cryptographer who pioneered a lot of these zero knowledge proofs. Um, so yeah, it's gotten a resurgence of interest lately actually, people are trading it again. Um, there's also people working on private transactions on on Base, uh, including us for instance. So uh hopefully we'll be able to launch um the first uh private transactions on Base soon as well. So I think yeah, for this truly to be adopted, we had to solve a couple of things. To make a new financial system you needed a few things: you needed scalability of the blockchains to get the cost down and the speed down, you needed regulatory clarity, and then we needed privacy of the transactions. It's actually almost perfectly mirroring the evolution of the internet because, you know, when the internet first started, there was no HTTPS, so there was no secure uh private um transactions. You didn't have broadband, so it wasn't scalable. So it's actually kind of going through like a similar evolution um on the crypto side.

I

Interviewer1:15:26

I was speaking with your colleague earlier, uh your communications colleague

B

Brian Armstrong1:15:33

Uh, very interesting person.

I

Interviewer1:15:34

I'm sure she'll be thrilled to be in this interview.

B

Brian Armstrong1:15:37

Yeah, we can.

I

Interviewer1:15:38

The comm people always like to be behind the scenes, but you can say something about her and then maybe we can play it. Okay. She told me about her three kids. Okay, we'll we'll put up her picture when this part is playing. She was showing me the Jamie Diamond interview this morning.

B

Brian Armstrong1:15:53

Okay. What was that? Well, um, yeah. So we are trying to advocate for our customers to have clear rules in America to have benefits from this new financial system. Right? So that includes a whole variety of things including what I shared earlier about we want people to be able to earn more money on their money. Um some of the banks are thrilled with this. They're actually doing integrations with us. We're doing stable coin integrations with five of the 20 largest banks in the world. Um some of them are less happy about it. Uh it's a little unclear to me why. There's the reason that sometimes the bank, it's not actually really the banks themselves, usually it's the bank lobby, uh which a lot of industries have these lobbying groups in DC which become more protectionist sometimes. But I get it, like if I were a banker and if you park money with me, I get 1% but if I park money in a stable coin you give 4%, that's a problem. It's competition, right? Yeah, it's actually a problem, right? Well, it's a problem in terms of they're going to have to improve their products and maybe offer more to their customers, but I don't see it as a problem systemically or something like that. So, they're, in my view, trying to craft um arguments to instill fear in legislators and lawmakers and say, 'Well, this is dangerous.' And um, you know, I don't think there's any truth to it. Like, the president's own council of economic advisers put out this report saying that the bank's concerns were illusory and fake basically. Um, and they've sort of made these claims like, well, if you want to do this, you have to have a bank license like us. And that's not what the law says. The law says you need a bank license if you're going to do fractional reserve lending, which we don't do. And the Genius Act, which passed in the US, already made this clear and legal that stable coins can be backed by short-term US treasuries, 100% reserves, right?

I

Interviewer1:17:47

I have another question here.

B

Brian Armstrong1:17:48

Sure. Yeah. Sorry, I'm going to when a bank is doing fractional reserve wherein I need to keep a part of the money that you have and then lend it and all of that.

I

Interviewer1:18:00

Yeah. And you get to keep 100% you have to keep 100% of the money I park with you.

B

Brian Armstrong1:18:07

Banks don't, banks in their, we call this kasa in India. It's current account saving account and how much money is there versus how much money is lent. I don't know what that word is in America, but banks on pure banking alone do not make a lot of money. They make money out of a whole bunch of other things. But out of if Brian gave me money and I took the money and lent it to somebody at a carry of say 2, 3, 4% depending on what I'm lending against, on that business the NPAs, the percentage of loans which don't pay out and they go defunct, cut my carry or my profitability to such a large extent that I struggle to make money as a bank.

I

Interviewer1:18:51

Mhm. If a bank is going to struggle even with holding a fractional portion of the reserve, how will you do better holding a 100% of the reserve? Needing a 100% of the reserve always to be parked.

B

Brian Armstrong1:19:06

Yeah. Okay. So, you can go look at the biggest the big banks and kind of where is their revenue coming from, right? And some of it's coming from this fractional reserve, which they, you know, net interest margin they call it. Some of it's coming from their payment businesses. Some of it's coming from asset management. There's lots of different types of banks. Um, and so in this world, you know, in my view, we should have a financial system that does not have fractional reserve as the foundation because it's not a secure foundation to build on, right? There's been many examples of these bank runs for instance, and typically what happens is either the company blows up and um even if there's FDIC insurance, the customer only gets a maximum of 250k or something. So there's either the customer loses money or the government has to come in and bail it out and it creates this kind of adverse incentive for banks to take unnecessary risk. Occasionally they blow up. I don't really see why we need a financial system based on that. If you can be an underlying layer of companies that actually just store, if you're paying, you know, I'm keeping my money with someone, why not ask them to keep 100% of it, right? Um, now if in a stable coin world, these regulated stable coins, like they can be held in short-term US treasuries, the government has said that that's quite low risk. It's the risk-free rate, you know, some people call it. Uh, we can take a small percentage of that. We can provide products uh for people, if the customer is choosing to lend out their own money, that's they're opting into it, right, it's not something happening without their permission. Uh, we can take a fee on that. We can have a payment fee that's again, it's probably a 10x improvement over the traditional financial system, but it's still a fee, right. Um, so we make money on trading, um, stable coins, you know, custody fees, staking fees, we have a Coinbase card where you can spend stable coins in crypto. So we're doing great as a business, but our cost structure is just fundamentally different than the big banks and traditional financial service companies. And so like any disruption that comes along in the world, like you know when you had newspapers and now the internet arrived, or anything like that, and you know these big banks, they're great companies, they're smart CEOs, they're going to adapt and they understand this is an opportunity. They've survived many waves of innovation, you know, from the internet to electronic trading, and you know, ATMs instead of having people at the branches working their bank tellers, right. So the best banks are leaning into this as an opportunity. We're working with many of them to power a lot of that tech. Um, and some of them are still trying to preserve the old way and their lobbying firms and organizations are sort of doing a zero sum kind of regulatory capture mindset. I just have very little tolerance for that as a CEO. I believe that we all have a responsibility to build the future. You know, accept that change is constant and we should try to make better products for our customers and compete on a level playing field. Um, and you know, if I see a company sort of trying to do protectionism, you know, I'm going to call that out.

I

Interviewer1:22:13

In the direction that you're going in, especially when you mentioned the DeFi thing, will you soon become like Robin Hood or will Robin Hood soon become like you?

B

Brian Armstrong1:22:23

It's starting to sound like the same. I mean, the business I have in India is a lot like Robin Hood. We've been yeah, discount brokers for about 18 years now and regulation is different. We can't fractionalize. We can't do a bunch of things that Robin Hood is doing, tokenize, but the path you're heading in and they're heading in seems to be converging at something. Yeah. Yeah. Well, I'd say that um lots of fintech apps and companies are adding more of these features, right? So they have customers who want to trade not just stocks, they want to trade crypto, they want to trade commodities, they want to trade um FX like perpetual futures. So yeah, we've actually done a great job of that now. You can trade all those things on one platform at Coinbase and have um increasingly you can have global pool liquidity and capital efficiency uh for traders who that's important to. We also want to become the primary financial account for people over time. So, they're doing direct deposit, they have Coinbase card, and they can get a loan. So, it's partly a brokerage investment function. It's like here's the pool of money I want to grow over time and build wealth for myself and my family. Here's the money that I want to use to like live my ordinary life and be safe and pay rent and um earn good rewards on that and maybe send money to my family abroad and whatever I need to do. So, I think that we can use crypto to just that, that's the main thing that I would say is different is that we are the company in the world that stores more crypto than anybody else. We're crypto native and we're leaning into crypto as the way to update these financial services and hopefully provide um you know 24/7 global trading, faster, cheaper global payments, better rates on your loan, you know, better rewards on your card. We want to use crypto to improve the financial system. I think we're the best company in the world at that. But you will see lots of, I think every financial services company will integrate crypto in some way, shape or form. Uh, we hope by the way to power a lot of that for other companies using our Coinbase developer platform, uh which is kind of like our AWS. But um if they build it on their own as well, that's great because it's going to take thousands of companies to update the financial system. And even the banks will join this, I guess.

I

Interviewer1:24:56

You in a way gone from BlackRock, we work with BlackRock as well to power their Bitcoin ETFs and different things. You know the best argument somebody made for crypto. I have a friend who runs a private equity fund in San Francisco called Mickey Mala. He has a

B

Brian Armstrong1:25:13

I know Mickey. Yeah, he's an early investor in Coinbase actually.

I

Interviewer1:25:16

Yeah. So whenever I see Mickey, I saw him like some time ago and we were having a meal and he spoke about he spoke about bitcoins and crypto not as things on the blockchain but how they're inherently energy as the unit of transaction. He made a very nice argument for it. In the world that I live in or we live in, it does seem to be going that way that the future of transaction will not be what the central bank of our countries tell us is a unit equivalent to something but some form of energy. And if this can be considered that, it kind of starts to make a little bit of sense.

B

Brian Armstrong1:26:05

Yeah, that's an interesting idea. I mean, I have heard people discuss this that if AI and robots continue to accelerate at the pace that they are and we live in this world of abundance where this bottle of water is essentially free or you know, mining and manufacturing and okay, so then what is still scarce? I think you know real estate would probably be scarce, isn't they're not making more of that at least on this planet. Um, energy I think you're right, it could be. There will, you know, you could imagine the demand for energy just becoming exponential. Real estate is scarce if there are more humans. Yeah, that's true. Well even if there's more robots though, maybe I mean, robots need real estate, I guess. Yeah, I mean we're not like running out of space to make data centers at the moment, but um I guess you could imagine it's, I still think real estate will have value. It would be hard for me to imagine real estate becoming free because it's not like you can just produce infinite amounts of it. But um yeah, so you could end up in a world where I mean yeah and then there's Bitcoin which will be scarce. So I think yeah, I mean in some ways like real estate is the original Bitcoin because it's provably scarce. Um, I think energy could be, really compute could be another fundamental unit. Real estate won't be scarce if uh Elon goes to Mars. You're expanding in a different dimension. Yeah. Yeah.

I

Interviewer1:27:38

Do what do you like? I sit far away from what's happening in the world of AI, but I interview a lot of these people like Sam, Elon, and Dario and all of them. What do you make of it? Like me, the stock trader investor, I'm starting to feel at this point that if I were to take every private company in AI and short their stock today, in 5 years I might make money.

B

Brian Armstrong1:28:08

Okay. Why why do you feel that?

I

Interviewer1:28:11

Because it's a bubble or what? It feels a bit like the internet bubble. Uh, I'm not saying AI will not have a use case but again this is a very immature understanding of somebody who does not, who's not an expert at the science. I'm not an engineer or in that domain, but I feel like all of these models will get to a point where they're very similar to each other, uh either by copying or reverse engineering or whatever. There will come a point where these models become so similar to each other that more countries will go the China way. I think the world was getting globalized. The next phase is the world gets fragmented. India will have its own copy of the model. Another country will have its own copy. Mhm. Uh, the tokens, the energy, all of that will sit domestically within our country. It might not be at the cutting edge but it'll do the job. If the world goes in that direction, I don't see the reason to pay the multiples that these private companies have today.

B

Brian Armstrong1:29:21

Yeah, I think I see what you mean. I think I probably somewhat agree in the sense that I mean right now the demand for intelligence seems to be unlimited. So I think that's going to continue. But you know the open source models are really like 6 months behind and they're like 99% cheaper or more sometimes for inference. So I think it's entirely possible that um a larger percentage of the workload goes to these models that are like 99% cheaper. It's kind of like what Moore's law happened with chips, right? But even more dramatic. And you know the chip industry didn't, it's a very important industry. It's had a good run recently because of this new wave, but it's not just going to grow infinitely forever, right? So, there is going to be some world we get to where um okay, there's like these very powerful frontier models that are useful for discovering new physics or something, but 99% of people are just running on um like they become price sensitive at a certain point and the models get good enough and cheap enough where you can run it on commodity hardware. Um, so yeah, I don't know what the terminal value of these AI companies is. And then it's just like any technology revolution, like where is the value going to be captured? Is it in the frontier models or is it really in the people building chips and energy? I mean the coding harnesses to me don't feel that defensible. You know, some of them have actually been leaked on the open source. I mean you could actually recreate a coding harness like the Anthropic coding harness, I think. Um, so it's like yeah, it makes me a little nervous when I see these valuations growing this fast as well. I've seen things like this happen before in crypto and they correct, and then there's real value under it, so they grow later. All markets seem to repeat these cycles with the internet and everything, even going back to railroads and canals and everything.

I

Interviewer1:31:20

I agree with that in a way. I'm rooting for it. Yeah. Like a correction. The one thing I do hope, you know especially in India this is again personal to me but since I am from there I'm batting for that region. We had this phase where there was Microsoft available and there was Linux available. They were both almost equally the same thing. But getting stuck with a Microsoft for a few years when they don't charge much takes you to the point where they begin to charge and it becomes harder to move away from it. Mhm. I hope people building in India pick open source over these models which are charging a fee because the last thing India needs is a kid paying $20 a month to another American company, especially if you're building a business which is an application layer on any of these models. You don't want to be held hostage to these guys when tomorrow the thing that was 6 months behind has caught up but you're stuck because they can get you stuck. Yeah. I don't know how to articulate this better.

B

Brian Armstrong1:32:39

Yeah. I mean I'm a fan of open source. I think um I'd like to see the open source models continue to evolve and build and get better and better. Um yeah. So, and then I also appreciate companies who put in all the time. There's like a thousand details to get right to make something good. You know, it's like um having Mac OS or something like that, you know, versus an open source that didn't, I'm glad Mac OS exists, you know, these kinds of things. So, it's a good healthy balance, you know.

I

Interviewer1:33:11

Yeah. What are the are there any companies in India focusing on open source models that are particularly good building on top of open source or making the models themselves?

B

Brian Armstrong1:33:25

There's Sarv, which is India's answer to a large language model. Mhm. I think I hope they do well. Yeah. I hope they do well for all of our sakes. But I think that's the thing. If you're building an open source model, I don't know if it matters who built it. Mhm. As long as you can get the most productivity out of it. Yeah. Right. I think that's brilliant. And that's one when I think about these things, that's one way I think of it. The other path it might take is if these companies keep getting any bigger, they get nationalized and we go into some form of socialism where the productivity gains of this are redistributed in some UBI kind of way.

I

Interviewer1:34:15

Yeah, I'm very skeptical of that too. Whenever somebody says this is so scary, you everybody should have to come in and get a license from the government. I'm like, well, the government does a lot of things very well, but the one thing they're not great at is understanding the very frontier of technology, and that usually just slows things down and it makes it better for the incumbents and it kills a bunch of startups. So, I agree with you on that.

The one disservice I think, I don't know disservice to who, but the American government is making the entire crypto world very American right now. Either willingly or unwillingly. Uh, 5 years ago when I thought crypto blockchain, I thought democratic, open, free, accessible. When I think of crypto today, it's increasingly becoming the imagery in my mind is more Trump and President Trump and stuff like that. I don't know, I know it helps in the short run and I know it's strange for you to be an engineer who has in some way become a lobbyist to a certain degree because you've maybe had to. Uh, it kind of works out in the short run, but long term I don't know how it plays out.

B

Brian Armstrong1:35:32

Yeah. Well, we, you know, I certainly believe crypto is not about any particular political party. It has benefits for people on both all sides of the aisle. You know, um when I speak to Democrats, they're excited about it in terms of financial inclusion and people that they care about in certain communities are overrepresented in adoption of crypto, you know, and then, you know, Republicans are more conservative people are interested in it from privacy and freedom points of view or, you know, national security. So, there's something there for everyone. I think crypto is inherently apolitical. Um, it's true that Trump has really embraced it, right? Which has given that the prior administration in the US was so anti-crypto that that um you know it was kind of a welcome relief. But going forward, my hope is that whoever is in power in the United States would be just recognizing you can't uninvent this technology. It's going to clearly exist. We should just have a clear set of regulatory frameworks to make sure it's done in a trusted way. And then hopefully the US has an interest in having these companies built in the US for economic reasons and soft power reasons, just like I think India should have the same goal. Certainly, you know, China has their own motives here. They certainly recognize the power of blockchain, um and they've actually digitized the renminbi and made it like a central bank digital currency which has allows them to have more control over the population. So the people in China actually love crypto. The government is nervous about it. So I think in democracies around the world, crypto will flourish.

I

Interviewer1:37:11

Is there anything interesting you've learned about politics?

B

Brian Armstrong1:37:14

Oh, sure. Lots of awesome things. I mean, I'm an engineer by background, so I never really had any interest in government. And my simple assumption as a young entrepreneur was that um you know as long as I just follow the law, I don't have to interface with the government at all. Like I just don't have to spend any time on that because I just follow the law. Obviously it's very simple. Well, it turns out if you're building in a new area, um the law is often times unclear, and if your company gets big enough, you will eventually intersect with government. Even if you have no interest in the government, the government will eventually develop an interest in you. And that's true everywhere in the world. Totally. Yeah. And so I was very naive on this, I would say. And at a certain point, my board started coaching me and they're like, 'Okay, we're at that point now. You might want to start to go to DC and these different um meet with the government in different countries where we're operating all over the world and begin to develop a relationship and be at the minimum become an educational resource, right? And just put on a suit and be presentable and make sure you develop these relationships.' Now, we started doing that and I couldn't really tell if it was accomplishing anything. Um, and it wasn't until in the US in the last administration, the SEC chair Gary Gensler, who is this, you know, kind of figure that polarized them, and you won. We did. We sued the SEC, we won. I'm glad you know that. Thank you. Um, that was very inspiring. It's a very inspiring thing. I hope more people can do that across the world in different ways. Well, you have to be. Yeah, it's very contrarian to as a public company CEO to sue your regulator. Um, most people told me, don't do that. That was a bad idea. And I think in general that's true. You shouldn't do it unless it's existential and you're right, which we happen to be in this case. Um, if we had capitulated, it would have probably spelled the end of the crypto industry in the United States. So, we took a stand, sued them, and we did eventually win. Um,

I

Interviewer1:39:12

I think we have to take a break.

B

Brian Armstrong1:39:14

Sure. And after the break, maybe we can get a little, I'm going to add two friends who know more about crypto than I.

I

Interviewer1:39:20

Okay.

Okay. I introduced Arian on a previous podcast, so I won't do it again. Arian is my 21-year-old chaperon in the US.

B

Brian Armstrong1:39:45

Chaperon. Okay. Making sure you stay out of trouble.

I

Interviewer1:39:48

Yeah. Good. Yeah. And get into it.

B

Brian Armstrong1:39:50

Yeah. Because I can't go to most places because he's not allowed in. Right. And if you're always hanging together, it keeps me away from

I

Interviewer1:39:58

Okay. I like it. So, Hardik is a friend of mine. He makes a lot of money. None of us know how he makes money. Okay. And people in India are always wondering because he has the things that come with money, you know, like from the lens of viewing it from outside. I finally figured he trades crypto not too long ago and he's tried to explain a couple of times the different trading strategies and stuff like that. So I thought it'll be interesting to have somebody who does really well trading crypto on this. Great. So he can ask you things that I did not and so can Arian. I think Arian had a question on purpose. Maybe you can start with that.

A

Arian1:40:44

Um, that's mostly because that's the most relevant part and most interesting part to me. I think Hyperliquid has been like it's been on the rise for the last 6 months. Everyone in SF talks about it. All my friends have it. It's intriguing because equities that used to be on 5-day markets are now 24/7. There's insane amounts of like volume that is floating around on these things. Um, and so it seems like we're going towards that direction. I think we've soft agreed that everything becomes more tradable. We'll tokenize everything. And I guess that's the direction Coinbase is going into. Uh, the thing that is the question that I had was this a few months ago there was a lot of talk around this, you know, degeneracy wave that will accelerate if everything becomes tradable and speculation just keeps growing because a lot of young people who would have chosen to build companies or they had a traditional path to wealth creation. Um, and on one hand these things are great because I love prediction markets. I love the markets. I think they do a lot of good and um markets in general are good. But on the other hand, the more this stuff proliferates, it seems like these are the traditional paths of speculation and these lottery ticket-like mechanisms seem to be the only way to create wealth. Um, and so I'm just curious like if you were a young person today or like when you look at people like me who are thinking about what they should do, is this net kind of positive for society? Do you think it's net wiring brains in slightly not great ways? If speculation grows more than it should, or like where's the boundary? How would you make decisions?

B

Brian Armstrong1:42:26

Yeah. Well, you're touching on a couple great points there. So, first the rise of perpetual futures or perps is a big trend and we've been working on that as well, especially trying to get it to be available in the US in a trusted safe way, that's truly 24/7 and with reasonable amounts of leverage. Um, so we actually just today got approval for crypto perps and options tradable by US people. I think we're the first regulated exchange in the US to do that. So that's been a bunch of policy work and um you know Hyperliquid has been amazing as well and I think onchain perps is a whole other big trend that's going to happen and we're going to see some of that happen on Base and the whole thing. It's great. We're going to work with Hyperliquid in a variety of ways um including with USDC. So that's all good. Now I think your question is a really good one about just you know financial markets obviously bring a lot of value. Are there downsides as well? And I would agree, I think there are certainly downsides like some of these things can become super high leverage. They can become, you know, I think at times where crypto was under threat from the government, um the only things that were allowed were sort of sketchy things and you saw the rise of meme coins and sort of um different things like that. Now leverage and speculation has been in the traditional financial system for a long time, right? So it's not unique to crypto. You can trade stocks today that are regulated by the SEC and they went down 90% right, there's lots of, you know, Spotify and Figma went down like 85% right. So these are the blue chip companies, there's no such thing as investing without risk. That's important for people to understand. And in the traditional financial system, there's been many examples where people got excessive leverage and things blew up, right. Um, so I think that you have to approach this with caution and say okay, um what is the healthy mechanism either from a regulatory point of view or you know, I actually think there's one nice thing about the crypto markets which is there's not like a bailout coming, right? If something does take on too much risk and blow up, they suffer the losses. It's not the government that's going to come on the taxpayers' dime and bail it out. I think that's a feature not a bug. But it does mean you're going to tolerate periodic failures. So, one thing we've tried to do at Coinbase is just try to help the crypto ecosystem mature and be more legitimate. And we do that by cybersecurity audits on DeFi protocols. We do it um by being a little more hesitant sometimes on what we list on Coinbase and uh sometimes people are frustrated by that. They're slow, we're slower to adopt it. I think you're going to find more reasonable levels of leverage and things like that, you know, um than you might find in some of the unregulated offshore exchanges. So, we're hopefully doing our part to make it legitimate. And trading is great for that. Uh, we also need investing for just people to build wealth. And then there's lots of other things in crypto just around payments and borrowing and lending that everyday people can use that is not related to speculation at all.

I

Interviewer1:45:30

Hardik, would you like to go next?

H

Hardik1:45:32

H, my question would be first tell us a bit about what you're doing in crypto. I basically trade burps in a degenerate way like I'm the one causing those

Liquidation cascades and stuff like that used to at that point.

H

Host1:45:46

Uh, come into context to this conversation.

Can I ask you another question? When I trade equity,

H

Hardik1:45:52

I trade them based on the fundamentals of the company, the earnings, the industry, the sector.

H

Host1:45:58

When you trade the asset class that you do, what do you base it on?

H

Hardik1:46:02

Good question. So unlike traditional companies which have like tangible hands going on to work and stuff where you can quantify someone's work based on how many human hours of input has been given like an employee and stuff, and then you base and come to like a bias which is usually a 51-49 in favor of either going up or down, deriving value like where is this company going in the future. Unlike that, BTC is like one unique asset which has a 50-50 bias, which means half the world thinks it's going to the moon and half the world thinks it's going to zero. So it's a very different asset to trade and it's a very psychological asset to trade.

H

Host1:46:48

A bit like gold.

H

Hardik1:46:50

Bit like gold, yes.

H

Host1:46:52

If you remove jewelry from it. I mean, so the whole relationship between the gold which is tangibly removed from the earth versus bitcoin which is also like a system that is mimicking the digital proof of work system, it has very psychological impact. Like say for example BTC is at whatever amount, it can be at a million dollars and people will still think that it can go to zero and it can still go to 10 million or 100 million or a billion. So the way I trade this asset is it's very psychological on a day-to-day basis and it depends on a lot of geopolitical factors on how people derive that psychology. One day I think it can go up, one day I think it can go down. So the liquidity of Bitcoin or any other crypto asset is very different compared to a stock. Like there's a fair value for a stock to buy and sell, but Bitcoin can have a million fair values in a single day. So it's very different from how you trade stocks.

You have a question for Brian?

H

Hardik1:48:00

And I'm actually I'm curious, are you using AI agents at all to synthesize the psychology of the market?

B

Brian Armstrong1:48:06

Absolutely not. I'm a very instinctual trader.

H

Hardik1:48:09

What are you ingesting every day to feel the vibes of the market?

B

Brian Armstrong1:48:13

Uh, my knowledge of American history,

H

Hardik1:48:17

How it's performed and previous empires falling and rising.

B

Brian Armstrong1:48:22

Because BTC is a very psychologically driven asset. It depends on the emotional capability of a person to think if this is going up or this is going down. As of now, there's no real value of Bitcoin, right? I can't buy milk with it unless there's a paper money thing attached to it, which is the value part of it. So,

H

Hardik1:48:44

Is the offramp easy now for Bitcoin? If I had one BTC, can I convert it into $75,000 of cash easily in 1 second on Coinbase?

B

Brian Armstrong1:48:53

Mhm.

H

Hardik1:48:54

Cash?

B

Brian Armstrong1:48:55

Yes.

H

Hardik1:48:56

Yeah.

B

Brian Armstrong1:48:56

USDC is basically one-to-one peg to the USD. And I think Coinbase offers one-to-one offramping in the US with zero cost.

H

Hardik1:49:03

There is an offramp from USDC to cash. I'm talking physical cash.

B

Brian Armstrong1:49:07

Instant. It comes in your bank account in seconds from Coinbase, right?

H

Host1:49:13

You have a question for him?

H

Hardik1:49:15

Yeah, I do actually have a question for you. So, great job with Coinbase. I think that's the only exchange that I trust in this world. And why so is because as I said in my previous conversation, it's a very psychologically traded commodity. And we have today massive machine learning programs that decode human emotion in real time in relation to Bitcoin in predicting what level of the trading volume thinks at this point. There's this one company that has developed a complete AI algorithm that connects to other international exchanges that exist and as prerequisite order flow priority and stuff to gain access to that psychological information derived through numbers today. Are you willing to give that access to these kind of market participants in the US in the future?

B

Brian Armstrong1:50:14

What kind of access would it be? It's like the market trading volume data or you're saying this?

H

Hardik1:50:19

It's order flow data and order flow priority for AI algorithms which consistently have priority over like retail investors or retail traders, and then they can predict on a microsecond level what the psychology of the buyer and the seller is at that point because I think Coinbase doesn't have it yet.

B

Brian Armstrong1:50:40

Mhm.

H

Hardik1:50:40

And that's why I trust it so much because that's the kind of edge that we have as a retail trader.

B

Brian Armstrong1:50:45

Yeah. But yeah, so obviously a lot of the market data is public in terms of volume and trades and things, but we definitely try to make it a level playing field for anybody to access it.

H

Hardik1:50:56

In the traditional financial world, there are tiers to payment for order flow and things like that, correct?

B

Brian Armstrong1:51:02

Yeah. Where you could get collocated at this data center and intercept at the peak level and all this. We've built this in the cloud where anybody can spin up an AWS instance in the same availability zone and have the same access as Citadel or Jane Street. So that's one of the principles we try to have is a level playing field for any trader.

H

Hardik1:51:22

Okay. Got it. Thank you.

B

Brian Armstrong1:51:24

Mhm.

H

Hardik1:51:26

No, I was going to follow up on what you've done with Base. And the reason I care about that is my exposure to crypto. I have some assets here and there. I think I like playing around with everything, but it's easy to build. It's permissionless. That was kind of the premise why this started. If I want to build a new kind of product, a yield product, any kind of transaction product, I can go pull in a bunch of contracts, tie them together and get going. Mhm. I think the way I see the most exciting part of crypto growing in the future is more kinds of financial products being created by more parties and more participants because the traditional financial system, you guys spoke about regulation and licenses, it's still somewhat gated for the right reasons, but I think there's a lot of value to be created if you can sort of channelize the free market and let people go build whatever they want to build. And so, where is Base headed? Like, is this the direction, or maybe you have thoughts on how you think this should be steered in the future?

B

Brian Armstrong1:52:38

Yeah. Well, for anybody who doesn't know, Base is a layer 2 blockchain that we build on top of Ethereum and it's gotten a lot of traction. It's the most popular layer 2 on top of Ethereum now and people are using it for all kinds of apps to be built, payment stablecoins, trading, and AI agents like agentic commerce is happening on there. So you're right. One of the best things about it is it is permissionless to build on top of it. It's decentralized. So you don't need our permission to build on top of it. And one thing we're doing is we've been progressively decentralizing Base over time to provide that as a guarantee into the future, right? To make sure that we fully don't control it. So there are different stages of decentralization, you know, that Vitalik has outlined in his writing. And we've made it through stage zero, stage one. We're partly partway through the final stage of stage two, and to do that we've explored issuing a Base token and there's a path to potentially decentralizing it over time on that route. So that's what we need to do next to ensure that permissionless innovation is enshrined forever in a way that nobody in the future could change it. And I think we talked about earlier how we made some grants to different people including in India, these Base grants of like $10,000, and people are building all different kinds of apps. There's about 150 startups I think that have come out of India building on top of Base, and a lot of the top ones we fly to the US to meet with startup entrepreneurs and then they fly back to India. So yeah, Base is one of the things I'm most proud of because it's a public good, a public utility, and it's gotten a lot of adoption, and I hope we can just keep building that into the future.

H

Hardik1:54:16

And just as a follow up on this, this is more a selfish question, but I think there's a world as AI adoption increases, financial services will structurally change because if the nature of jobs changes or the nature of what people do day to day changes, maybe credit changes, lots of things have structural changes in society that will have downstream effects on financial services. If you were building something, if you're 25 or 22, if you were building a financial services company today, maybe on Base, maybe not on Base, using crypto rails maybe not, what would you think about? What structurally changes in how financial services works today in the US?

B

Brian Armstrong1:54:54

Yeah, okay. So I'll just share a few ideas off the top of my head. But you know, I think sometimes I think about history doesn't repeat but it rhymes, you know. So, what needs to get built in this new financial system? We talked earlier about some of the pieces like digital gold is there, and now we have stablecoins and payments, and okay, what are some of the pieces that are still missing? I mean, one of them that I see is actually an on-chain credit score or reputation score. Something that can use all the data on the blockchain with a graph structure, you know, like in computer science, like Google has a page rank algorithm. There could be an equivalent to that on-chain to decide how creditworthy someone is, or if I'm about to send money to buy something from a company, what are the reviews on that company? So I think an on-chain reputation or credit score could be interesting. I think there could be someone who builds an on-chain ad network actually as well. This is basically monetizing attention or distribution on-chain, and this is one of the best business models in web2, right, with Google and Meta and everything. People have lots of pluses and minuses to advertising of course, but on-chain, if I publish a smart contract or a DeFi protocol and I want to incentivize people to come use it, there could be something I put in my smart contract which is like a rev share, and any wallet or brokerage out there that wants to connect into it could get a percentage of it. And you could sort of see all this on-chain, like where am I getting the best rates by sending my customers? So an on-chain ad network would be another one. The last one I would just think about is special economic zones. How are people going to do governance in these new worlds? This is crypto and blockchain going beyond just money and value to how we might do on-chain voting or coordination. Tokenizing parcels like cubic meters of land in a new specially planned community. So title, you earlier talked about doing insurance and mortgages, and this could be done in a world where all the land in a certain area is tokenized, and I think you could eventually have new forms of governance that emerge from that. That's a more ambitious long-term startup idea.

H

Hardik1:57:25

It's a very different question, but I've followed your journey from the beginning, it's quite commendable, and you've always fought for what's right. So my question is, is Brian for president in the future?

B

Brian Armstrong1:57:39

Well, thank you for asking that. That's the first time I've been asked that. I don't think I would be a very good politician, but let me first say what you said, I've always fought for what's right. I think that is what would make you a great politician. Hopefully. Yeah, I mean, one that thinks that they cannot be a great politician always are the greatest politicians. Ah, well that is a good insight. That is true of managers too, a lot of the best managers are people who don't want to be managers, they're just really good engineers or something like that. I do think that we have that as a defining characteristic of Coinbase. When we published the mission first blog post about not having political activism in the workplace, or when the SEC tried to kill the industry in the US and we sued them and won, or even this most recent bill in the US, the market structure legislation where the bank lobby is trying to take away people's rights, we've fought back against that. So I appreciate you saying that. I've got to spend more time in DC working on some of these things. And it's definitely less fun than being a CEO because as a CEO, you have all kinds of problems, but you ultimately listen to everyone's input on your team, board, investors, and you get to make a decision. If people don't like it, they can leave. But at least someone makes a decision. In government, by design, the founding fathers intentionally put in that it's hard to get anything done so nobody can have unilateral power. So the Senate and Congress, it's like herding cats, 100 kings and queens trying to align on something. It's pretty hard to get stuff done. I think it's persistence and you have it. Yeah. Well we have been working on this legislation for like 5 years. I've had multiple US bank accounts shut because of on-ramp and off-ramp stuff. If it wasn't for you, we wouldn't be sitting here with such easy access to it. Amongst other million things that you've helped the country progress in the digital asset space, but I think you have the persistence to fight. All of those difficulties put into place shape a precedent. Well, maybe if we can get one of these new special economic zones set up on Mars, I would do that. We'll have to see. But honestly, America is worth fighting for too. This is a bastion of freedom and rule of law. There are structural things that worry me about it, like deficit spending. I wish there was a constitutional amendment to cap deficit spending and size of government, otherwise I worry democracies will trend toward deficits because it helps win elections to give more free stuff. But yeah, I think there will be somewhere in the world where the frontier is, where freedom will exist.

H

Hardik1:59:20

I think it's persistence and you have it.

B

Brian Armstrong1:59:24

Yeah. Well we have been working on this legislation for like 5 years. I've had multiple US bank accounts shut because of on-ramp and off-ramp stuff. If it wasn't for you, we wouldn't be sitting here with such easy access to it. Amongst other million things that you've helped the country progress in the digital asset space, but I think you have the persistence to fight. All of those difficulties put into place shape a precedent. Well, maybe if we can get one of these new special economic zones set up on Mars, I would do that. We'll have to see. But honestly, America is worth fighting for too. This is a bastion of freedom and rule of law. There are structural things that worry me about it, like deficit spending. I wish there was a constitutional amendment to cap deficit spending and size of government, otherwise I worry democracies will trend toward deficits because it helps win elections to give more free stuff. But yeah, I think there will be somewhere in the world where the frontier is, where freedom will exist.

H

Hardik2:00:00

Look forward to that. Yeah, maybe as a president, if we have network states or proto states, then you have more places to be president in.

Can I ask you a selfish question from the India lens?

B

Brian Armstrong2:00:52

Yeah.

H

Hardik2:00:53

You know the tax policy.

B

Brian Armstrong2:00:55

Yeah.

H

Hardik2:00:56

You know the 30%, you know the TDS. What does a 25-year-old in India build around this world that has a use case?

B

Brian Armstrong2:01:07

Well, I think that's mostly a policy issue for the government. I will say yeah, the 30% tax on trading in India is quite punitive. I think that's actually one of the most punitive regimes anywhere in the world that we operate. So I hope the Indian government relooks at that. I don't know if an entrepreneur can solve that with a new product. I think it's a tax policy issue. People can do it by essentially, like we talked earlier, there are so many Indians using crypto now that there's probably a policy effort like what happened in the US with Stand With Crypto. Maybe we can bring StandWithCrypto.org to India and get people to raise their hand and say they want to elect pro-crypto candidates. It's generational, so sometimes the people in office don't realize there's a real constituency for this. That would be my first idea.

H

Hardik2:02:00

And tell us a bit about health. I know you're passionate. How long is Brian going to live for and what is one thing I can take, inject, eat that will help? Just one thing.

B

Brian Armstrong2:02:14

Well, okay. So yeah, broadly I'm just interested in how to use technology to improve the world. Getting some liquidity from Coinbase has allowed me to think about how to invest in other companies. I think fortunes are being made in software and crypto and everything. So it's on all of us to think about how to put that capital into hard tech problems which are sometimes more risky. I was very inspired by what Elon did with his companies after PayPal. So I co-founded this biotech company in the longevity space and invested in it called New Limit. They're doing epigenetic reprogramming to try to find new drugs that restore function your cells had when they were younger. The company's doing really well. The first drug trials will happen next year. They've been doing a lot of cool stuff with AI to discover new drug candidates. I also invested in this company called Research Hub, which is trying to make scientific research more like open source software. That company has gotten good traction. Recently I've invested in a couple of companies doing reproductive tech, helping people with IVF and things, but also frontier biotech companies that allow you to create egg cells out of skin cells, reprogram them, or even have artificial wombs. There's a company I invested in that does embryo editing. So I think that will be an interesting area. I hope everybody picks an interesting trend on the horizon they're excited about and goes to build a company in that space. That's the best way to improve the world, have a fulfilling life, build wealth.

H

Hardik2:04:07

But you didn't answer my question, bro.

B

Brian Armstrong2:04:09

Which part?

H

Hardik2:04:10

What is the one thing I should take, eat, ingest?

B

Brian Armstrong2:04:14

Well, okay. I'm not a doctor, but the general ones are, I think sleep, if sleep was a drug on the market, it would be the most effective drug on the market and it's free. So everyone should probably get better sleep, track that.

H

Hardik2:04:32

So I love supermarkets. Wherever I travel, the first thing I do is go to a supermarket.

B

Brian Armstrong2:04:37

Yeah.

H

Hardik2:04:38

I went to Awan and they had these jellies called sleep. They have melatonin, theanine, and GABA.

B

Brian Armstrong2:04:46

Yeah.

H

Hardik2:04:46

So you meant to take one. I've been taking four, five, six.

B

Brian Armstrong2:04:51

Okay.

H

Hardik2:04:51

And sleep is solved.

B

Brian Armstrong2:04:53

Okay.

H

Hardik2:04:54

Even with the jet lag and

B

Brian Armstrong2:04:56

Don't overdo it. I mean,

H

Hardik2:04:58

Yeah. But that

B

Brian Armstrong2:04:59

What can happen with theanine and GABA and a little melatonin.

H

Hardik2:05:03

I mean, those are over the counter, non-prescription. Probably on the safer side, but yeah. Do you know how many milligrams of melatonin you're taking? Each one has one. Each sachet has one. So if I take five, that's five grams.

B

Brian Armstrong2:05:16

I used to take like a long time ago I took 3 to 5 milligrams of melatonin. But now I realized with just one or even half a milligram it's really the same effect. I think I was taking too much. But it's a sleep trigger, right? It doesn't help you stay asleep.

I don't know. I think so. The big ones are sleep, nutrition, and exercise. You could add a fourth one, mental health, taking time to de-stress.

H

Hardik2:05:48

Now you've covered everything. I want one thing.

B

Brian Armstrong2:05:52

Sleep 7 and a half hours a night or more. That's probably it.

H

Hardik2:05:54

I would agree to that as well.

B

Brian Armstrong2:05:56

Yeah.

H

Hardik2:05:56

Do you sleep hard?

I trade PS. I fall asleep automatically every day.

B

Brian Armstrong2:06:01

Why is that?

H

Hardik2:06:02

Brain thing, right? The brain gets tired psychologically.

H

Host2:06:07

Actually, this is interesting. Brian gets to see a lot of traders from the other end, and Hardik is a very obsessive trader who's trading all the time.

B

Brian Armstrong2:06:18

Mhm.

H

Host2:06:19

What can you tell him that you have seen as a pattern in traders to watch out for?

B

Brian Armstrong2:06:27

Well, I'm not going to say anything you don't know. It's like excessive leverage and things. There are examples of people who've built it all up and it can unwind quickly. So how do you think about position sizing and leverage and taking enough wins off the table?

H

Hardik2:06:47

I've learned it the hard way.

B

Brian Armstrong2:06:49

Yeah, I imagine it's a process. The hard thing about trading is that no matter how well you do, with 20/20 hindsight you can always look back and see how you could have done better. So even if you do pretty well, you're like, 'Oh, but it could have been a 20x from there.' It does weigh psychologically on some people, but some people have the right constitution for it.

H

Hardik2:07:11

Yeah. I don't think about what's behind me at all.

B

Brian Armstrong2:07:15

That's great. That's important because if you let that weigh you down, you're not going to be able to treat it as something you can do on a daily basis.

I think people who are naturally inclined can be great traders. They should lean in. But most people should probably not be traders, they should be investors. Dollar cost average, own the index fund, diversify the portfolio. Have some Bitcoin, have some in everything. The one thing that worries me about Bitcoin traders is similar to what worries me about real estate developers in India. They believe it will go up in perpetuity. They believe it so vehemently that whenever you take a contrarian outlook, even if it's minuscule, they'll debate you to the end. A real estate developer in India will say how can land go down? Land can only go up because it's finite. Strangely, it's similar to Bitcoin. Things like that, when they fall, they fall a lot. Gold bugs are the same. I mean, as long as the population keeps growing, there will be less real estate to go around. That's true, but it doesn't mean it's the best investment that year. In Bitcoin, you can also make money when it goes down by shorting it. The thing with Bitcoin versus gold, I have never traded a Bitcoin in my life. Never bought one. So I feel comfortable taking the contrarian view. The thing with gold is it's not replicable today. I can't go and create 21 million more bricks of gold and call it Catcoin. But with Bitcoin, I worry what if there is another Satoshi with a similar white paper creating another product tomorrow? Well, if it's undifferentiated, Bitcoin will stand as the original. People give credit to the first breakthrough. But if somebody puts out a new white paper for something differentiated and better, then it should get attention and investment should shift there. From our conversation, I've learned that Bitcoin is not the most efficient store of value because to send a bitcoin, you need to spend a lot of energy. Layer 1 Bitcoin transactions are still a bit expensive and slow, but the Lightning Network lets it move faster. A lot of activity moves to stablecoins on Ethereum, Solana, and Base. So I think the Bitcoin chain is okay with that. It's digital gold, maybe it shouldn't be moved too often.

H

Host2:10:44

From you guys, anything else for Brian? We wanted to talk about one more thing: more opportunities for young people to start a business around this ecosystem. The intent of doing this every time is that somebody goes back home and starts a business.

B

Brian Armstrong2:10:59

Mhm.

H

Host2:11:00

Even you guys can come up with ideas. What can young people back home start as a business, understanding the regulation and compliance requirements in India? I've identified a gap. In our country, the biggest advantage of this system lies in remittances. The majority of our foreign earning population have no clear way of sending money cheap and fast even today. So whoever builds that remittance and ramp system is sitting on a gold mine. We spoke about this, but they will not allow an offramp. It doesn't make sense for the government. Say what you may about the Indian regulator, the one thing when the price was at 120, now at 75 after a recent correction, they seem to have preempted a bunch of turmoil and saved. I'm not talking about Bitcoin, I'm talking about stablecoin. It doesn't have an offramp. Anything dollar-denominated will not. I'm not saying it's easy, but I think that's the opportunity. If someone figures out an entire on-chain payment system that can then lobby into our banking system and provide easy access for overseas transfers, fast, easy, cheap, at par with daily currency pairs, that's a huge opportunity for our country.

B

Brian Armstrong2:12:44

I think all this agentic finance stuff is clearly going to happen. The form factors are unclear right now. But if there are more things that are tradable on-chain, the best place to build agentic finance is on-chain because you can connect a system to a bunch of places you can trade. You have a lot of transparency, clear comparative data. I think new versions of financial advisors, where if I have a goal and I build a strategy around it, that will be interesting in the next four or five years. Brian, any ideas?

H

Host2:13:30

Brian, any ideas?

B

Brian Armstrong2:13:34

I think agentic commerce is going to be big. One of the most reliable ways to start a company is to identify a technology on the horizon that you believe needs to exist in the world and do it mission-focused. Like, we need to radically extend human healthspan, or become an interplanetary species. You can start with a big mission and work backwards. The other way is to solve a problem you have yourself. You notice problems around you, and if you build a solution to a problem you have, at least you know there's a customer of one. That tends to be easier.

H

Host2:14:53

I force every guest I ever have to pick a stock that is not their own. If you only had $1 to allocate to something, what would you buy?

B

Brian Armstrong2:15:04

Oh, well, you're not going to hear something totally novel. I think SpaceX has a natural moat, how do you get from Earth to space? They're doing 90% of that. But you can't buy SpaceX because it's not listed. You can buy SpaceX pre-IPO. It's a new emerging category. I think Google is incredible, the breadth of chips, leading AI models, massive user base. Any company could be doing better, but they're in such a good position.

H

Host2:15:59

It's funny how many people say Google.

B

Brian Armstrong2:16:01

Yeah. On any given day there's something undervalued, but for longer-term bets, those are some of the things.

H

Host2:16:14

Anything from you? You'd like to speak about last five minutes or two minutes?

B

Brian Armstrong2:16:20

I just hope more people go create companies in the world and try it. It's very fulfilling. If they don't work, you learn a lot and it makes you more valuable as an employee. Then you can go do your next one. Most entrepreneurs I know, the first thing they tried didn't work, the second, third, often the tenth didn't work. They just keep showing up. If you do that and have an inclination, you can create a lot of value and wealth, and then put it back into the next thing to advance society. It's a good way to be on team human.

H

Host2:17:06

Thank you, Brian. Thank you for doing this. This was fun. Thank you guys.

B

Brian Armstrong2:17:09

No, of course.

H

Host2:17:10

Super. Thank you.

B

Brian Armstrong2:17:12

Cheers.

H

Host2:17:13

Yeah, that was great.

B

Brian Armstrong2:17:14

Yeah. Okay.

H

Host2:17:16

Yep.

H

Hardik2:17:17

I think for people like us, when I moved to the US 7 years back and set up a bunch of companies, if it wasn't for Coinbase, it wouldn't be so easy for me to do the sheer scale of things and businesses I do because of transfers.

B

Brian Armstrong2:17:35

Yeah.

H

Hardik2:17:35

Yeah. You were saying you're doing your venture investments through Coinbase.

B

Brian Armstrong2:17:38

Yeah. Investments coming from all over the world, it just wouldn't be possible. It would take months of regulation to get through stupid banks and wire transfers take a lot of time. Yeah.

H

Hardik2:17:55

It made a huge impact on the way I operate in this country.

B

Brian Armstrong2:17:59

Glad to hear it. We need to get capital formation to be much more low friction so that anybody in the world with a good idea can just go raise a million bucks like that. They don't even have to meet the person or sign a bunch of fees over to lawyers. We're starting to work on that once this legislation hopefully passes.

H

Hardik2:18:22

Any insight on what's going to happen on the market structure clarity?

B

Brian Armstrong2:18:28

I'll just tell you what I've said publicly: we're working hard on it. I'm cautiously optimistic. It just got voted through the Senate Banking Committee with a bipartisan vote. The House already voted on it. Now the two committees in the Senate have to come together to reconcile their drafts, and then it could go to a full Senate vote in the next month or two.

H

Hardik2:18:50

Amazing.

B

Brian Armstrong2:18:51

Yeah.

H

Hardik2:18:51

Thank you for all you do.

Thanks, Brian.

B

Brian Armstrong2:18:55

All right. Cheers.

H

Hardik2:18:56

Can I ask for a picture with

B

Brian Armstrong2:19:12

Mhm.

The Crypto Skeptic vs The Coinbase CEO | Brian Armstrong x Nikhil Kamath | People by WTF

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