a16z Podcast: Brian Armstrong: Building Crypto, from Vision to Reality

  • Right now about 90% of what people are doing with crypto is investment or speculation: It’s more interesting to think about the 10% that’s building utilities. Examples: Auger is a global prediction marketplace where people are using the wisdom of crowds to tell you what will happen with elections or weather etc. Another use is in emerging markets. People in Venezuela are trying to leave the country and the government is confiscating their wealth.

  • Companies are just another way of having tribalism: Tribalism runs deep in human beings. It’s true in politics, countries, cities, team sports, etc. Our version at Coinbase is rallying people around creating an open financial system for the world. Something like the internet. Global, decentralized, and nobody owns it. Instead of moving information around this system would be for moving value around.

  • The benefits of an open financial system for the world: Innovation, equality of opportunity, economic freedom, strong property rights.

  • Four things that describe the Coinbase culture: (1) Clear Communication. We look for people who are concise and kind. People that convey information effectively. (2) Positive energy. Optimism about the future. Determination to get there. (3) Continuous learning. (4) Efficient execution. Get a lot done with a little. How can we get 80% of the impact with 20% of the resources?

  • There is a whole bunch of work that needs to be done to get institutional money into crypto: 90% of the capital [in the world] is in institutions. You can think of that [work] like putting tracks down for the railroads or laying fiber for the internet.

  • Crypto will allow people to build decentralized apps: Thousands of apps are already being created. There will be a whole generation of kids that grow up and their phone is the only bank account they will ever know. It will make every payment as fast, cheap, and global as sending an email. [Another open network.] This removes a lot of waste of out the economy. For example paying 2% every time you swipe a credit card.

  • Chris Dixon was also on the podcast. This is what he said: There should have always been a native internet currency. You are familiar with error 404? There is also error 402, payment required. In the original spec was a native payment system and it was never built. Then we took a wrong turn on the internet and made everything based on ads. Which causes misalignment between users and companies. From a pure business perspective, transaction-based business models unlock a dramatically bigger opportunity. Advertising is only 3% of GDP.

  • Where did you get the idea for Coinbase? There are a few pieces that had to come into place for it to happen. (1) I studied computer science and economics. I was interested in how software was going to disrupt the holdout industries: finance, education, healthcare. (2) I lived in Argentina for a year. I got to see what a country looked like that had gone through hyperinflation. (3) I joined AirBNB and was working on their payment integrations across a lot of countries. I saw how broken the global payment system is. All different proprietary systems with high fees and slow movement of funds. And then in 2010, I read the Bitcoin white paper and it captured my imagination. I couldn’t get it out of my head.

  • Full podcast here.