Probably half the time I've worked in crypto, I thought that the most probable outcome was death.
You have to be open to living the life less lived when you're young. It doesn't get easier as you get older. There's a lot more trade-offs and sacrifices.
Before crypto became headlines, it was infrastructure. Peter Smith helped build that infrastructure. As CEO and co-founder of blockchain.com, Peter was at the forefront of making cryptocurrency accessible to millions around the world.
Everybody's more worried about losing 100 grand than they are about making 100 grand. But the same is also true of life experience. The faster you get the experience of taking ownership, the longer you have to deploy those skills over the course of your career. In crypto, once every four years, you're really a hero. Then the next year, you're a [ __ ]. That gives you a huge sense of awareness about how much the external is crafting your reality.
Where others saw chaos, he saw opportunity. This conversation isn't just about digital assets. It's about conviction, long-term thinking, and leading through uncertainty.
If you come into crypto with the mindset that you want to get rich fast, you will be destroyed. The most predictable path to success is sustained focused effort over a long period of time. Success and happiness don't come from mastering the universe. They come from mastering yourself. Life is going to be far stranger, far more beautiful, far more fun than you expect.
So you have been at the helm of blockchain.com since 2011. So I would consider you a true crypto pioneer. You've navigated all these different market cycles. What was the moment when you realized that blockchain would fundamentally change global finance?
It would be amazing if I had realized that in like 2012 or 2013. But for me, working in crypto started out a lot more casually in the sense that I didn't know that it was going to become something that would change global finance. I really thought it would probably die. Probably half the time I've worked in crypto, I thought that the most probable outcome was death.
And I think that not just for the company I worked on but for the entire industry. Because it is such an improbable, implausible idea. Like if you're like, hey, we're going to invent a whole new financial system. We're going to do it on chain and we're going to try to do it across the whole world at once. You know, what do you think the probabilities of success are? First of all, you sound crazy. You sound crazy and it has to be like sub 1%. Right? And so for many years when I worked in crypto, I thought it was most likely going nowhere.
And so then of course the question is like why did you work on something you thought was going nowhere? And it really broke down into three things for me. I thought there were like three sectors you could work in that would really change the world. You could work in sort of machine learning which now everyone calls AI. You could work in autonomous vehicles or autonomous manufacturing. Or you could work in digital finance, Bitcoin and then crypto.
I thought that the machine learning game would go totally to large companies that could pay the compute and had the data sets. I thought that to work in autonomous stuff, you needed to be like more of an electrical engineer or like a robotics engineer or something like that. So, I was like, well, I'm only left with the third one, which looks completely unlikely and implausible. Sweet.
But you still jumped into it. What was your first exposure to crypto?
My first exposure to crypto was on an email list serve. And so it started very, very, very small time for me. And the thing that's also true and it's something that I tell people today when they're thinking about exploring an idea or getting involved in an industry really early is that there's no better time to do it than when you're really young. I was really young when I started working in Bitcoin. Really young when I started working on a startup.
I think the best way that you can approach your career is spend one to three years working for someone or some org that really knows what they're doing. And I skipped this part, but a couple of years working for an org that really knows what they're doing and then immediately eject and go work on all of the completely implausible, crazy, [ __ ] possible because it's never going to get easier in your life to do that.
Take the risk when you're young. You have to be open to exploring, open to living the life less lived when you're young because it doesn't get easier as you get older. And of course, it's not impossible when you get older, but it's just a lot harder. There's a lot more trade-offs and sacrifices.
Like when you're young and you're like, okay, I'm going to go work at this startup. And in the beginning days of blockchain.com, there were like six of us living in a two-bedroom apartment. I'm going to sleep on the floor, work all day, and drink really cheap beers on the weekend. Like, that's not a big sacrifice when you're young because if you go work at a bank, which I could have done, I guess, it's like, okay, I would make more money, have a slightly nicer apartment, work really hard, and drink beers on the weekend. Like, it's just not that much of a different life, right?
And so however weird or crazy or implausible the idea that you're working on is, there's nothing that you'll learn more from and be happier that you did it than taking that leap when you're really young.
It's interesting because when you are young, I try and understand why people don't take more risk when they're young, but also at the same time some take an exceptional amount of risk. Because when you're very young, it's either you don't have fear or you have like too much fear. It's like you're on both ends of this ridiculous spectrum. You have so much fear that you're going to screw it up because you have no experience that you kind of just follow. Probably it comes from your parents and what you learned and probably your childhood and what you were exposed to.
Like for me, I had a ton of fear about screwing up and it took a lot of deprogramming to jump into entrepreneurship because my parents worked for government universities, very safe. But on the other end, if you don't have that fear implanted in you and you can just reconcile what you just said as true, which I think it is, then you have no reason to be fearful because you've never failed before.
Well, I think it's a lot about loss aversion. So, there's a lot of psychological research that says, you know, everybody's more worried about losing 100 grand than they are about making 100 grand. Like it's a lot easier to deal with the risk of not making 100 grand than it is to deal with the risk of possibly losing 100 grand that you already have.
And when you're really young, you have this perspective where it's really easy to lose respect and that's what drives.
The humans are, you know, we're tribe animals, right? And so when you think about like your parents or whatever, the reality is when you're a 24-year-old kid, even if you did get a job at Goldman or whatever other high prestige thing is going on right now, and now I guess it's startups, which is like a little concerning, but you get this high prestige job at Goldman, so you have this respect, right? And in your mind, this is like an incredible achievement. And in some ways it is. I don't want to denigrate that, but all you really did was become one of the like 10,000 new people that Goldman hired this year.
Like it's not that big of a deal. Like it's not like the rest of your life they'll be like, ah, there goes Joe. Like he was hired at Goldman straight out of Stanford. He's a great analyst. But when you are Joe and you have that offer to go to Goldman or you have that offer to go like sleep on the floor and eat ramen and hack with three other weird nerds, it feels like a huge loss.
Because of the reputation.
Because of the reputation, right? And maybe even the money, right? Because the money side of those two things is very different. Even though when I said, look, you're going to be doing the same [ __ ] anyway, just different price points, it feels like it's going to be a big loss because you've never had any money, right?
And one of the most interesting things that people sort of lose sight of is that yes, because of compounding interest, money that you make and save earlier in your life is much more important than later. But the same is also true of life experience, right? The faster you get the experience of being someone who has to take ownership, hiring, managing, leading, the longer you have to deploy those skills over the course of your career.
And when you're a young person, there's no place that you're going to get that experience faster than being a founder of a startup or of a new company or working at a really small one, right? And so I would argue that even more than whatever money you might save from the age of 22 to 28 is the compounding effect of that experience that you get by doing risky off-the-wall things in that sort of 22 to 28-year-old gap.
And then of course in your early 30s you should be focused on achieving financial freedom and doing that by saving money and letting it compound and all that [ __ ] that you read about from Warren Buffett. But when you're really young, I think you want to be racking up this life experience and these skills in a way that lets you deploy them across the rest of your life in a really compounded fashion.
I like that idea a lot. How did you get over this loss aversion?
I didn't have a lot of it. Because I grew up without a whole lot of expectations. Like my grandmother has no idea what Goldman Sachs is. She has no idea what investment banking is.
She tells people, and this means a lot to me, that she's really proud of me because I'm like her most successful angel investment ever. She doesn't even say angel investment. She just says investment. She loaned me some money to go to school. And she still tells people very proudly that she has a grandson who's a millionaire. And so I say all that because one, it's cute and it means a lot to me. But I say it also because I was very blessed that I didn't have the sort of expectations of like if I didn't go to work at Goldman or a hedge fund, I was a failure. And so I think that gave me a lot of freedom to explore and to do weird things. But even my dad was like concerned that I would never have a real job until two or three years ago.
That's funny. So it does come back to all these ideas that are sort of implanted in our head when we're kids and you have to be careful. Like for example, knowing that lack of expectations allowed you to build something great, how does that translate into how you parent your own kids or how will it translate into parenting your own kids in the future when they're older? Have you thought about that? Because every parent wants to have expectations.
You want them to do something great, but it's ironic that the lack of that actually allowed you to pursue something that was riskier that worked out.
I think I'm going to do my best not to have expectations about my kids. And to try to help them think about what will make them happy, what are they going to find meaningful in life, what truly brings them joy. One of the things I've learned from my own personal life is that achieving these sort of milestones that people put in their heads brings very, very little happiness.
I've never had a moment where I achieved a milestone that, classically, people look at someone like me and are like, wow, like that must have been an amazing moment. I can almost guarantee you that all of those moments that someone who doesn't know me would write down were not amazing moments for me personally. And everybody's wired differently, right?
For me, a lot of my focus after achieving a lot of those milestones and not finding happiness in them has been figuring out how to get back to enjoying the process rather than being focused on finding enjoyment in the outcome. And this is like some really great wisdom that a mentor and friend of mine Justin Khan has really helped me, inspired me to focus on.
You have so little control of the outcomes in life. There's so many things that are just frankly so far behind you that if you're not enjoying the process of what you're doing every day, you're really setting yourself up for failure. And this isn't me saying you shouldn't have big goals, you shouldn't attempt big things, but it's about does attempting big things, does the process of attempting big things bring you joy? Or are you just doing this thing because you think that the outcome is going to bring you joy?
And I can tell you from my life and from watching many other entrepreneurs and rich people and whatever, the achievement of those outcomes is very rarely bringing people a whole lot of joy. But I do know a lot of people that have done really big things, really great things, and they've found joy in the process and in the journey of those things, whether they had huge monetary outcomes or not, and they've found real fulfillment and joy in life.
And so I spend a lot of my time thinking about how do I enjoy the process of this rather than how do I think that I'll find enjoyment in the outcome.
That's very wise. I think that a lot of people optimize for outcomes until they realize that well they train themselves to almost hate every day on the journey to the outcome. It's almost like the days are just something to be lived and to be survived on the pursuit of some big outcome but then when it comes it's not as meaningful as you think it is.
And I think that there's in the startup world in particular which is the world I'm from there's a particular almost fetishism around struggle and pain.
I agree. You know, it's like if the founder is not killing themselves and on the edge of mental failure, will you ever build anything? The best founders I know, the ones that make it a really long time, and I'm trying to become one of those founders, although arguably I've made it a while, but if I want to make it another 10, 15 years, I know that I have to build with joy and build out of a sense of purpose rather than build out of a sense of obligation or build out of a sense of trying to achieve a certain outcome.
And I would remind people is that the best athletes in the world, they weren't suffering, right? Like when you think about the highest performance people in the world, they weren't doing it, they weren't suffering through every moment of it. Sure, there's parts of training that suck. There's parts of my job that are very difficult. There are bad days at the office, and I don't want to gloss over that. But for the most part, I really find joy in what I do.
And like, we were talking before the mics went on about vacations and stuff, like most of the time at the end of vacation, I'm bored and I want to go back to work.
Did it take you a while to learn how to enjoy every single day, enjoy the process? And I ask this because also you are probably in one of the, in terms of startup land, you're probably in one of the more volatile types of markets you can build in.
There is nothing more volatile than crypto.
Yeah, I know. So it's like take all the stress and then tack on these macro factors that are going to stress you. Everything could be going great and then all of a sudden the markets impact everything but I don't think with the same volatility as crypto. If I'm selling socks on Shopify, I don't think the macroeconomic conditions in 24 hours are going to impact my sales. Maybe long-term, but not to the same degree. So, you deal with a whole other level of macro.
So, first of all, I would say that I haven't learned to be in that mindset every day. Like, learning to be in that mindset is something that is a big focus of mine the last few years and it's something that I think about probably daily. And I don't achieve it every day which I think is also part of the journey.
I'll say that working in crypto I think is really an interesting opportunity for your evolution and growth as a human being because for most entrepreneurs I think the journey is like toiling in obscurity. People start to hear about your company in a success scenario. People start to hear about your company and then it really takes off and then you're sort of up into the right and at some point there's some character correction where people find out that you're a real human being and then it just sort of stabilizes, right?
In crypto, we have an interesting thing where about once every four years, you're really a hero. You're like a genius. And people are like, oh my god, and then the next year you're a [ __ ] because the market blew off, right? That there's that euphoric year and then there's a terrible year that follows and this is all rough outline, but then you're like a [ __ ]. People are like, why are you still doing this?
And then there's like a year where no one cares about you again. And then there's a year where people are like, oh, this might be coming back. Like maybe he's not a [ __ ] and maybe I should check in.
And you can almost look at my email traffic for this. There's people that I hear from two out of four years.
Particularly in the beloved banking sector. But that gives you a huge sense of awareness about how much your external reality or the external is crafting your reality of how you feel about it.
But at the end of the day, I know that this is going to go up and down. I know it's super volatile, but how do I handle that year where everyone's like, wow, why are you even still doing this?
Do you know how you handle it? Like, are you self-aware enough to know what allows you to navigate these cycles? I mean, I guess the obvious question is why do you want to keep doing this so many years? Like, that's such an obvious question because you're a smart entrepreneur. There's a lot of other things that you could build where you would not have to deal with this.
Well, one, like I said, I think it's a great teacher. So, it teaches you a lot about yourself until I feel like I've learned all the lessons, which I haven't gotten there yet. I'm still learning. I do think that I would love to navigate one, staying in that mindset, a full cycle, staying in that mindset, navigating with grace. That hasn't happened yet. So, I still got more to do.
I think it's also a great teacher in the rest of your life. Like you know who your friends are when you're a crypto CEO. Like you know because the market washes people out every couple years. You know who the people on your team are that you can really count on. Like there is a powerful cleansing effect to the market volatility that is both very difficult to endure and a huge blessing if you can view it that way.
If I look at people, and again, I'm not as into crypto and blockchain as you obviously, but a lot of people have crashed out, burned out, are no longer building the companies that they started, especially when you got into the game. You sort of touched on this, but last question around this. What do you think allowed you to persevere through all that up and down and market cycles and stress and anxiety?
I think about that a lot. And I am, as far as I'm aware, the second longest serving crypto CEO.
So, I'm not wrong. So, there's not many people.
Brian Armstrong has a little bit of time on me, but of the original cohort, we're it. And I want to say Brian is an incredible entrepreneur and arguably a better entrepreneur than I am. For sure a better entrepreneur than I am for what it's worth. But I have retained all my hair. So, in almost every category, he is number one. But in that one vain category, I've still got my hair.
You do have amazing hair. So, no trips to Turkey yet.
No trips to Turkey for me. But what I'll say about learning to go through that up and down is that we've survived because we've stayed very focused on our customers. We're not like a grand vision. We're sort of closer to an Amazon where we try to understand what people are going to need, what companies are going to need, what institutions are going to need, what crypto projects are going to need to be part of the crypto financial system and we build those products and we refine those products.
And we are very knowledgeable about the fact that we serve our customers and if anything, most of my time these days is talking to customers. I probably talk to at least one or two institutional customers a day and I talk to retail customers every single day as well. I think that grounding has really helped us.
I think we've also been very fortunate at times. Like for any startup to survive a long time you need fortune. Fortune favors the bold but you do need the fortune and you do need some luck. And then I think I've been surrounded by a great team. I'm very blessed that our team has been very stable. We have a lot of people that have incredibly long tenure. And we've always been able to attract great people.
The third factor that I think has mattered a lot has been that we have never been based in California. I think California is very difficult for people, and by California, I mean San Francisco, to retain focus long term. It's kind of like the memes you see online about everybody pivoting from crypto to AI, AI to something new, robotics, robotics to I think defense is the thing now, right?
Is it? I don't know. I can't keep track.
I can't keep track either. But we were in London.
Saying like the team and the people that you work with, they're trying to jump to the next latest and greatest thing.
No, I think that entrepreneurs in, I think it's a very difficult temptation for entrepreneurs in Silicon Valley too and in the US in particular, whereas being in London, we weren't as sort of immersed in that whole echo chamber.
And a big example I'll give you is that a lot of the early crypto companies were wiped out by the whole distributed ledgers, not tokens movement. And this is long enough ago now that it's super easy to talk about. Like that happened after the first big crypto up and then bear market. Everybody was like bitcoin [ __ ]. We are going to instead focus on distributed ledgers for banks and our name was blockchain.
So the amount of investor pressure that we had to like go do POCs with Credit Suisse or with UBS or with whoever and become like an enterprise reseller of distributed ledger technology was immense, immense.
It's interesting you were sort of insulated in London but also I'm assuming that the investors that you brought in they were also not just bombarded with all these new technological movements, however you want to call them. So, they probably weren't pushing you to move quicker than you wanted to.
Well, we really don't have any London investors.
Well, where are your investors from? Because I'm trying, because investors also put, the point is investors put so much pressure on the CEO that if you are in SF and you get the wrong investor, they're going to push you to make decisions that you don't want to make, including exit, sell, work on the next thing. I want my money out, whatever it is. So, where were the investors from? Because maybe that didn't happen to you at all. But I'm just curious about how you were able to sort of incubate your idea and not sort of speedrun entrepreneurship because of investor pressure.
Until we started raising our growth rounds in mid 2021, the vast majority of our cap table was based in Silicon Valley.
Did you have some of this pressure then?
Oh, for sure. We definitely did. We had a lot of the pressure and we did one very tiny proof of concept with an investment bank.
Open an office in New York to support it. It was very clear that it was a very silly idea to me. And it came back to me. I remember going for a very long walk in Washington Square Park and just asking myself, I mean Peter, this was the days of R3 if you remember that, the R3 consortium, Blake Masters thing, Digital Asset Holdings, whatever it was called. I remember asking myself, is this the way you want to spend your time? Is this how you want to spend your life?
Like if you're successful and you get bonds clearing on a blockchain for four investment banks and you make $100 million, selling the company to IBM, will you be happy? And the answer to that was no. Like I got into this for human economic freedom, to create a free financial market that anybody anywhere in the world could interact with each other, that you could interact peer-to-peer, that we could make money as easy as WhatsApp. I didn't get into crypto to help banks clear bonds between each other.
Now, I think eventually banks will clear bonds between each other on the blockchain, but they won't do it on a private ledger. They'll do it on a public ledger. And so, I was completely uninterested in the private ledger, blockchains for banks, vertical, and yeah, we shut it down and continued course.
Now, what's interesting about that to wind the whole story out is that every company that pivoted into that space that I'm aware of is no longer here today.
Why do you think that is?
Focus. So, this brings me back to the point of balancing investor expectations with entrepreneurial vision. So, I think that investor expectations, they kill the entrepreneurial vision because they tell them to focus on all these other things because now they have a stake in the company.
So for entrepreneurs that do raise, what's the advice on how to manage investors when they're pushing you in one direction, you have their money, you get stressed out because you have their money because you're a human and you know you're going in the wrong direction, but they're not hearing it.
It's a hard thing to generalize about because it's always so specific. But the things that I generally tell people are number one, raising money is really not to be celebrated because you basically just signed an IOU. And of course, their institutions are sophisticated. They know what they're doing, yada yada, but expectation-wise, you just signed an IOU, right? For something in the future that, frankly, when you're 26, when I raised my first venture round, I was like 26, 27ish, I didn't even totally understand.
But nobody does, nobody does.
Right. So first thing I tell people is whatever age you are you're signing an IOU on a future expectation. Second thing is really, why do you raise money? Well because it's your best source of financing. The best source of financing in the world is making money.
One regret at the company is that I didn't push harder on monetization earlier. You know, I think that it's all well and fine to grow your product. And we've always had great growth and been blessed with that. Until you're growing your revenue, you don't really know how useful your product is, right?
And even revenue can be confusing because for example, if I sell you something that cost me a dollar and I sell it to you for 90 cents, my revenue is going to grow very fast. An example of this right now is ChatGPT. They're losing money on every query, right? So like they don't really know if their product is that valuable and I think it is really valuable. But they're playing this game where they're onboarding as many users as possible at a loss and that's how they keep increasing their valuation where they keep raising.
And I understand that strategy really well. But the danger in that strategy is that you never truly know how valuable your product is or if you're building the right thing because you don't know if it's generating enough economic value that customers are willing to pay you more than it cost you to build it, right? Which that's the definition of building great product is like will you pay me $150 for something that cost me a dollar or $140 or whatever your margin is, right? So I would monetize a lot earlier. I tell every entrepreneur it's never too early to monetize.
The second thing is I do think it really helps to have investors where you are physically. So when we first started raising, there weren't as many great VC firms outside of Silicon Valley. Today that's not really the case. There's great VC firms in London. There's great VC firms in New York, some of the best in New York now, actually. Silicon Valley. I think it's a lot easier to manage your cap table when you can meet with these people in person and when you don't have to travel to each other. So, I would usually if you have all the choices in the world, which you never do, I would give preference to people that you can spend time with on a regular basis.
And the third thing I'd say about managing investors is that it really helps to raise capital from founders of firms or from people who work at VC firms that used to be founders.
I don't think it matters if someone's never been the founder of a tech company, but if you were the one that started an investment firm, your lived experience and your mindset is different from someone who was an amazing product manager at Meta and then joined A16Z.
Or whatever. A16Z is a great firm, but different mindset, right? If you were an entrepreneur and you joined Founders Fund, you are a different mindset than if you are an ex-analyst that joined a firm.
They get the journey that you're on because they've been on it themselves.
It's not just that. They also have the experience of betting on something when no one else believed in it and succeeding, right? Like even at the end of the day, if you raise capital from, let's pick someone that founded a firm. If you raise capital from Mark Andreessen or Ben Horowitz, pick one, right? Like they know what it meant to bet on something big and succeed multiple times.
When they were entrepreneurs before. They were entrepreneurs before they built A16Z. Like that is a different story and it's a different kind of person than someone who's never had that experience.
I've never heard it, makes so much sense and I know a lot of people that have raised money, but I've never heard somebody bring that idea up. I think it's a really smart idea.
Yeah. And look, there's also the reality of life that you won't always have a choice about who you raise from whatever. But I do think, so the main thought that I keep, I always hear and I agree with is that you find somebody who at least understands what you're building, like at the bare minimum smart money not dumb money.
I actually don't agree with that one as much.
You would take, if somebody made a ton of money in real estate you would want them on your cap table for a blockchain company.
That one's a hard one. It kind of depends on the stage of the company at the later stage maybe. But I don't think that like look every investor at a seed or a series A stage or a B because the further you go the bigger you get the less relevant this advice becomes is going to say that they understand your idea and because they're a successful probably type A person they're going to be pretty convincing that they understand your idea and that they get your vision, right?
It's more to me about the style of person you are of the lived experiences that you've had in the sense that when everything looks silly about what you're doing and you need to, the only way is to double down to go to the other side. You need someone in your corner that has been exactly there, that was like, oh, you know what? This is hard and this is expected. And so that's what I mean by taking money from people who have been founders and CEOs themselves is that no one else really understands what it is to be that until they've done it.
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You built Blockchain to over a trillion dollars in transactions.
Yeah, and these are old, I'm sure, old numbers, so probably much more than that.
Regardless, like a phenomenal company. I want to understand what your vision was when you started it, but also we can tie it back into the raising money component. What was the vision when you started it? And then what was the sort of the idea or the thought that made you think, okay, the vision is great to this point, but I want to go pour fuel on the fire, go raise money, and really blow this thing up with some growth capital. So, a little bit, I don't want to spend too much time on the whole origin story because I know people know it to a degree, but a little bit on the origin story about what you wanted to build.
Kind of comes back to what I said at the beginning. It's like what do people need to actually use Bitcoin? Like what products and services do they need? And of course later that became also, you know, a thousand other cryptocurrencies and then later it became, you know, other crypto companies. One of our biggest segments is other crypto tokens, projects, protocols, companies. Probably it's our probably fastest growing segment.
That was your idea going into it.
No, no, that was much later.
And so it's like that's what's always guided us is like what do people need to be in the crypto space more than anything else. In terms of why we raise capital, you know, in the very beginning of crypto, there wasn't a lot of revenue. And so, you could either be a very tiny crypto company like, you know, three of you, or you could raise capital to be able to like, you know, invest in capex and what have you. And so it's a pretty simple choice. I think also I was probably less thoughtful about why we would raise capital. You know, it's like that was just the thing you did, right? Like you go out and you raise and you raise the most capital you can at the highest valuation possible because that was the game. And I don't mean game in a bad way. I just mean like this is what we do, right? I think it was in later years that I became more thoughtful about why I was doing it. And I think that's kind of usually a natural evolution.
You mentioned before that crypto was initially a mission, not a business. So, how do you maintain that sort of ethos as you build a massive company that is a business?
Yeah. And I'm reminded every day it's a business. You know, now I think of it as a business that supports a mission, right? Which the best missions, they need resources, right? And at the end of the day, like if I was trying to run a 501c charity to like bring human economic empowerment to the world, I don't think we would have gotten anywhere near where we've gotten. Like one of the coolest things we've done is put a US dollar checking account in tens of millions of people's pockets all over the world, no matter where they live. Like we've helped preside over the biggest expansion to like tier one financial services for everybody in the world in human history. And that is something that I get huge joy out of. And look, other companies have been a huge part of that. We didn't do it alone, but we were a big part of an industry that said, 'Okay, look, people in Nigeria, and we haven't gotten them quite to the same access as Americans, but we've gotten them huge leap forward in terms of access to high quality financial services.' Right? Hey people in Buenos Aires, Argentina, you can choose now, right? You don't have to just be in that system. That's massive for people, for human economic freedom, for economic growth. And so today, I think of the company as a business that supports a mission.
Well, you're actually banking people that were unbanked. That was kind of the original goal to a degree. The interesting, and I'm curious about how you view this, because the interesting idea around sort of like self-custody in banking people is that they no longer rely on financial institutions and then you're in an industry where there's lots of fraud and security breaches and people not understanding what it actually means to control their own money. So this is a macro idea. Do you think crypto, do you think crypto and blockchain in general, we can talk about crypto because it's more applicable to like the average consumer, do you think we've done a good job of achieving the mission that crypto was set out to achieve or is it causing more stress and anxiety and loss than good?
The answer to that question really also depends on the customer themselves. And what I mean by that is that you know if you come into crypto and you come in with the mindset that you want to get rich fast, you will be destroyed. I don't think that that's about crypto. I think that's about almost anything in life where people try to get rich quick. Like at the end of the day, for every story out there about someone making a bunch of money in any industry really quickly, there are a hundred other people that tried to do that and got completely wrecked. In life, as with anything, the most predictable path to success is like sustained focused effort to do high quality things over a long period of time. And so, and this is the thing I come back to all the time. Everybody has always asked me, 'What coin should I buy? What's going to do really well? How do I trade crypto?' And I almost universally disappoint people because I say, 'Look, I've seen people trade crypto. I've seen the best funds trade crypto. I've seen myself trade crypto.' And let me tell you the number one alpha strategy I can give you. It's to take a look at your checking account, decide an amount of money that's not stressful, take that money, and then divide it into six or 12 equal amounts and go out and buy the top two cryptos, top three cryptos, maybe just Bitcoin, you know, once a month for 6 to 12 months, and then forget about the fact that it's there maybe for three, four, five, six, seven, eight, nine years. If you log in and the balance is like frightening to you because of how big it is, just start selling until you're no longer stressed about it. If you find yourself waking up in the morning wondering what your crypto portfolio is worth, there's a sell button for a reason. Now, people are usually disappointed with that answer because it is not 'here's how you can make, you know, 25x on your money in the next 60 days.' But for people that are willing to be a long-term investor in the crypto ecosystem and even better yet a long-term participant in the crypto ecosystem, which is sort of the next level we could talk about, I've never seen anyone that didn't make amounts of money that meaningfully improve their life for the better. And I've never seen anyone participate in the crypto ecosystem that didn't meaningfully change themselves and their life for the better if they were willing to follow the slow and steady plan.
I would love to understand how people become a participant, but I was actually speaking about people just taking control of their own finances to a degree. That's also something that I think people do not fully understand. So when they put money, and I think that actually the need to make money is probably what prompts people, pushes people to make these stupid decisions and they don't realize that putting money into a memecoin, if it goes to zero, it's gone. There's no way to get it back. And also if you're not a smart custodian of your money, you don't understand the technology, and there's a hack, like there's no insurance on that money. So I think that all these ideas of not gambling, not looking for quick returns. Also understanding that when you have money in a wallet or whatever device you use to store crypto, like that's yours.
Yeah. It's like, you know, not only should you invest for the long term, you should use platforms that have been here for the long term. Obviously, full disclosure, I'm self-interested because I have one of the longest running ones, but like we've never broken a trade or not honored a withdrawal. Coinbase has never broken a trade or not honored a withdrawal. Use one of us. You know, or not. But like if you don't use one of us, like, you know, and it's some new entrant and they blow up on you, like, you know.
Well, that's when people get stressed out because like, you know, like the largest hack I think of all time just happened what, like a week ago?
So when somebody who is not, you know, not technically savvy and they're kind of just like an average consumer and they see a 1.5 billion dollar hack. Well, that shakes faith in the whole ecosystem.
And we have an amazing part of our product that I really believe in, which is we have, you know, one side of our product which is like a trading and brokerage account where we have custody of your crypto and we treat that as a sacred duty. It makes it easy to trade, easy to onboard, you know, so on and so forth. You can link your bank account, your cards, like all that kind of just normal stuff you'd expect in like a fintech trading experience. And then in the same wallet, we also have an on-chain DeFi wallet, right, where you control the key. We have no access to your funds. But of course, backing up that key, as you've already alluded to, can be tricky for people. So, we build a cloud backup, which makes backing up your key incredibly easy. Like if you will take the time to back up your key in the cloud backup, you will not lose access to that crypto. With one button, you can move all the crypto from our custody to your custody, right? You no longer have to trust us. And there's been moments in the crypto market that look extremely high risk.
Yeah. And you know like this one big hack but you know there was the whole post-FTX, BlockFi, just Gemini, like all companies were falling left and right, huge companies, enormous companies.
We sent our customers an email and we said, you know, this is how long we've been in the space, this is our board, this is our governance. We want to earn your trust every day. But if for any reason you do not want to trust us, click this button. And a lot of people clicked the button.
Yeah. But what was interesting was it was one of the biggest days for withdrawals of all time, the next 72 hours. The week after that was one of the biggest weeks ever at the time for inflow back.
Because if you can honor all the withdrawals and people trust you.
And not only was that, people I think told their friends. So we had signups, we had inflow. So we believe in user choice and we believe that, you know, we should make it easy for people to be their own bank. We should also make it easy for people to onboard, to buy, to trade, to have that classic fintech experience. But at the end of the day, this comes back to what I've been saying a lot. We believe in serving our customers.
When somebody who is again not fully entrenched in crypto, they see FTX was fraud, but Bybit was not.
No, it was an IT security breach. So, what do you say to that person who sees these stories and it's like, 'Well, if it's a security breach, a $1.5 billion security breach, how can I trust anyone when somebody can lose $1.5 billion?' What I would say is you don't need to. It's the beautiful thing about crypto, you know, like go use an exchange, use us, whatever, buy the crypto, and then move it into your own custody.
What do you mean by being your own bank? You can't even, you can't trust banks either, like, you know.
But with what was it the startup, Mercury, was it Mercury or...
No, it wasn't Mercury, it was Silicon Valley Bank.
Yeah, but I mean even more than that, Signature, SVB, First Republic, you know, Silvergate, those are all top 20 US banks that went bankrupt in the space of two weeks. Right? And now the federal government stepped in and made them whole. But I was a customer of two of those banks and there was a very long weekend where I didn't know if they were going to do it right. And I rested pretty easy that weekend actually because, you know, I had some other monies in my own custody.
What do you mean? What do you mean by being a market participant or crypto participant?
Yeah, there's a lot of ways to participate in crypto and that was kind of one of the beautiful things about it is you don't need anybody's permission. So you could do the very obvious thing. You could go to our website blockchain.com/careers. We have many jobs open. You could apply for a job there. You could become a participant building in the crypto ecosystem. And I think that's a great way to be part of crypto. You can contribute to open source projects. And not just developers. There's also people that contribute community. So typing, how-to, documentation. You can join the discussion. You can be someone who talks about crypto. You can become a crypto evangelist. You can go to community meetups. It's a system in which you don't need anybody's permission to get involved. And you can even go out and start your own company and put yourself through many years of massive up and down markets and eventually end up on a podcast talking about it.
It almost feels like crypto feels a lot like open source.
Well, it's not open source.
No, I mean a company that involves community. It's great, but I mean the companies, a lot of them are centralized. They're still private companies.
Sure. But even in open source, you have private companies building on top of the open source.
Correct. Yes. But I feel, yeah. So you're right. I just feel like the culture is very much akin to open source. People want to contribute.
That's one of the most fun things.
I know. And you don't see that in regular tech.
And it's the biggest open source sector in the world.
Yeah. Like if you look at all the other open source projects on GitHub and then you look at the crypto ones, you know, it's massive.
For people that don't understand the difference between traditional crypto and say DeFi, how do they understand if they want to invest and they want to put money somewhere and they want to not look at it for the next 10 years. Okay, check, you've done all the right things. You have the right mindset going into it. Where does DeFi fit into this from an asset class? Obviously there's like utility as a technology but from an asset class is it something people should consider at all?
For sure. I mean the number one application of DeFi or decentralized finance is what I've already talked about which is being your own bank. Right now of course decentralized finance today goes further than that. You can be a lender on a decentralized lending market. You can be a borrower on a decentralized lending market. You know, you can be a yield generation, a staker, a miner, and then, you know, frankly, 20 other things that are maybe even more complicated than I can get into. But the biggest use case of decentralized finance today and has always been custodying your own funds, being your own bank.
When you think about sort of the evolving regulatory landscape, if you're building in this space, I mean I think regulatory frameworks have been super unclear. That's sort of been the biggest pain point that I see people speaking about online. Obviously you build in spite of that, but do you think that we're finally getting some clarity from the government? Do you think that's going to be something that we see in this administration? Do you truly feel that? Because this has been going on for how long? You started this in 2011, 2012, whatever. 2020. Has there been any regulatory clarity since 2012?
We have MiCA in Europe, which is pretty clear. To be frank, it's not great in some areas, but I think it'll improve over time. But we do have clarity. Asia, like Singapore, Hong Kong, Tokyo, you got clarity from all those jurisdictions. And ignorant of the rest of the world, the US has been a laggard thanks to the Biden administration. But I do think that while we don't have that clarity today, what we do have is an incredibly strong commitment from the current administration to provide that clarity as quickly as possible. So I expect that we achieve clarity in the United States within the next 12 to 18 months.
If you think about unclear, like unclear or either unclear or overly restrictive regulation, how does that impact where you want to take the company? Does it impact you at all or do you just build in spite of what's happening in terms of regulatory?
You do your best to future-proof. You follow all the current applicable regulations and there are plenty. And you know, you try to work collaboratively with governments to make sure that the eventual regulation, you know, leads to the creation of a healthy market that grows.
Have they called on you to like sit down with them?
Yeah. Yeah. I've had hundreds of meetings with regulators in the last couple of years. Yeah.
Is it moving in the right direction?
It wasn't. It was pretty tough there for about four years.
But even like, even since Trump, like have you sat down with anybody since?
Yeah, I sat down with Trump.
It's moving. Yeah, it's moving the right way. You know, had really wonderful conversations with President Trump, with his team, and I do think we're going in a really positive direction.
No, that's really good to hear because again, like I'm just speaking to the layman who is...
And I do think there's an expectation gap. There was kind of an expectation gap, meaning that I think people thought Trump would be elected and like day two we'd have the framework.
Oh yeah, because I was watching, I think in his first, one of his first addresses, people were losing their [__] because he didn't mention Bitcoin. That was like one of the first speeches he gave or like when he was just elected, I'm pretty sure like the night he was elected, he didn't mention Bitcoin.
Crypto people are impatient and insufferable at times. I often say that you have to forgive us for our excitement and our passion.
That's fine, though. That's no problem with excitement and passion, but that excitement and passion moves market. I think the fastest we were ever going to see it is 12 months. So, you know, when Trump was elected and it was like, you know, 'I'm going to bring you as an industry clarity,' we were like, 'Sick. Next month.' What does industry clarity mean for you? Like, best possible outcome. What would you want them to say?
Perfect world. I mean, a perfect world, we'd get a national crypto charter. So, we would, you know, I think it's really hard to fit crypto into any of the existing frameworks or regimes. I think that right now a lot of the regulatory is done at the state level. So I think federal preemption makes a lot of sense. You know, I think that the best thing for consumers, for companies, for innovation is a national crypto charter and a national crypto framework.
And I mean you've compared crypto to like the internet in 1997 before and sort of the adoption curve of crypto. If we get a national crypto charter, do you think that that drastically accelerates adoption in the US at least and globally?
And globally. So countries will follow the US.
When you look at different crypto market cycles, what are some patterns that you observe for people that are just trying to understand, and this is never investment advice, when you're trying to understand crypto markets, you mentioned like sort of like a four-year cycle that you regularly impacts how people, you know, engage with the business, reach out to you.
Which strangely aligns to the presidential election cycle.
And as well to the, you know, overall business liquidity cycle.
Yeah, I have a completely reliable magic indicator that tells me exactly when the top is here. For the record, I do not.
I know you don't. I know you don't. But what are some patterns?
It's like any market, right? Like when things stop making sense, when everyone agrees that crypto is like in a super cycle to the stratosphere and it feels euphoric and things are happening that don't make sense, then I think that's probably the top. Like I think we've seen the top in AI.
Yeah. Like I think when you had people talking about spending half a trillion dollars building AI infrastructure on stage together when no one on that stage has half a trillion dollars. That is probably the top.
You see what happened with DeepSeek and the fact that they built it at a fraction of the price.
The fact that they say they built it, supposedly.
I think the truth is probably somewhere in between.
I agree. It's like you look at the chart of like exports of compute to Singapore and it's like boom, you know, straight to the right. You're like, I don't know if there's that much in Singapore.
No, that's funny. No, but I mean I don't think you're wrong. So, I mean, you do have to sort of understand when you're at my, my advice and my advice is very uneducated advice is just probably similar to what your advice would be. If everyone's talking about it, it's probably not the time to buy. And I don't, you know, when I say about any asset.
When I say we've seen the top for AI, I don't really, I should be more specific. I think we've seen the top for foundational models.
Top for foundational models. I, you know, like and they'll come back and they'll be very sexy again, but I think we're going to see a blow-off in foundational models.
So like the foundational models, like, you know, when ChatGPT builds a new model. Well, like ChatGPT, the way that I see like ChatGPT and Anthropic, they're almost like building like the foundational model OS that everyone else can build upon and DeepSeek was kind of like the new competitor in foundational models, right? But you have to, everybody has to remember that everything is faster now. So there was like a period of time where operating systems were really valuable, like Microsoft, like they're the most valuable tech company and probably 80, 90% of that market cap was to do with Windows. Now I think, you know, Windows is probably like sub 10% of their market cap. Now they've been very well, they've a great business so they've managed to build other things, their market cap, you know, they're only bigger than ever, bigger than Microsoft, right?
But like to some extent, you know, no one really cares about OS. Well, this is so to draw a parallel, this is what you see with Ethereum being an OS that people build on but now you have all these other sort of OS.
And I actually think that's one of the biggest ways that crypto is going to change over the next few years is that there's always been a shortage of capacity on our protocols. So, every time crypto has a huge cycle, whatever chain's being used the most, the fees go over 50 bucks and some time in the next few months, the cycle ends. Why? Because frankly, like consumers get pretty tired of like using a product where they can't get their transaction through. They have to pay a lot for it and it fails half the time. Now, we have enough high bandwidth protocols that I don't know if that's going to happen again, which means two things. One, like we could keep growing consumer use cases, which is amazing, but two, it means that every protocol is probably worth less now than it was in the past because it's not a scarce resource.
What was the protocol that Trump launched his memecoin on? Was it Solana?
That was failing and is...
No, Solana didn't fail actually. Phantom, the app that people were using got overloaded and failed. So it wasn't the actual...
Okay. Because I was going to say I thought I don't know all the...
You just had to, you know, everybody was reporting that Solana was failing. It was just Phantom. You could go on and use another wallet and you would have been totally fine which is interesting. Right now the choke point is at the application layer not at the protocol layer.
That is interesting. So out of, I mean Ethereum has been around for a long time. Obviously Solana is a new protocol. What are some other protocols that like don't have scalability issues?
Almost any new protocol has far higher scalability than anything we did in the past. And Bitcoin was actually, you know, very pretty smart about this. It was a pretty controversial idea at the time. There was a whole industry civil war over it. Bitcoin hasn't tried to upgrade. They haven't tried to be faster, more bandwidth, more consistent speed. They said, 'No, like we're going to be digital gold. We're going to make our value that we don't change.'
