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

Brian Armstrong, born in San Jose, California, is the co-founder and CEO of Coinbase, the largest U. S.-based cryptocurrency exchange, which he launched in 2012 with Fred Ehrsam. A Y Combinator alumnus, Armstrong grew up in a middle-class family and earned a B. A. in Economics and Computer Science from Rice University in 2005, followed by an M. S. in Computer Science in 2006. Before founding Coinbase, he worked as a software engineer at Airbnb developing anti-fraud tools and founded UniversityTutor.com, an online tutoring marketplace. Under his leadership, Coinbase went public via direct listing in 2021, reaching a $100 billion valuation. As of 2025, it serves over 110 million users with a market cap around $60 billion. A Forbes-listed billionaire with a net worth of approximately $10 billion, Armstrong is a vocal advocate for clear crypto regulation. He founded the Stand With Crypto PAC in 2023 to support pro-crypto politicians, promotes decentralized identity solutions, and has pledged 99% of his wealth to charity through the Giving Pledge. Shawn Ryan Show Sponsors: https://betterhelp.com/srs This episode is sponsored. Give online therapy a try at betterhelp.com/srs and get on your way to being your best self. https://bunkr.life – USE CODE SRS Go to https://bunkr.life/SRS and use code “SRS” to get your 25% off your family plan https://shawnlikesgold.com https://helixsleep.com/srs https://rocketmoney.com/srs https://ROKA.com – USE CODE SRS https://ziprecruiter.com/srs Brian Armstrong Links: X -⁠ https://x.com/brian_armstrong⁠ LI -⁠ https://linkedin.com/in/barmstrong⁠ Coinbase -⁠ https://coinbase.com⁠ Blog -⁠ https://blog.coinbase.com/author/brian-armstrong⁠ Stand With Crypto -⁠ https://standwithcrypto.org Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:30Speaker 01

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• 0:41Speaker 01

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• 1:04Shawn Ryan?

  Brian Armstrong, welcome to the show. Thanks for having me. Oh, my pleasure. I've been looking forward to talking to you for quite some time, so thank you for making the trip. But yeah, you have a lot of stuff going on right now, and even outside of crypto, and we'll dive into that later, but everybody starts off with an introduction, so here we go. Brian Armstrong, co-founder and CEO of Coinbase, the world's leading cryptocurrency exchange. A Rice University alumnus with degrees in computer science and economics, whose engineering background at ARBMB and early startup experience laid the foundation for revolutionizing finance. Visionary entrepreneur who transformed a

• 1:46Shawn Ryan?

  passion for Bitcoin into a publicly traded company that's now part of the S and P 500, driving economic freedom through blockchain technology. An advocate for free market capitalism and crypto's role in fixing broken financial systems. Founder of innovative ventures beyond crypto like New Limit, which aims to extend human health span through epigenetic research and Research Hub, a platform for open scientific collaboration. And I just wanted to rattle off a couple of stats here. When we were researching you, we found some stats about crypto, and so just...

• 2:27Shawn Ryan?

  Just nine percent of Americans are satisfied with the current financial system. Thirty-eight percent of young people say crypto can increase economic opportunities. And crypto prices are up ninety percent year to date. There you go. It's pretty, uh, interesting statistics there. So, all right, couple of things. Before we get going here, so, everybody gets a gift.

• 2:58Shawn Ryan?

  So I got you a couple of gifts. Okay. Here's the first one.

• 3:04Shawn Ryan?

  Those are Vigilance League gummy bears. All right. Legal in all fifty states. Not that you have to worry about that in California. Yeah. But it's just candy, so. Okay. No CBD? No, nothing. Great, thank you. Red dye and sugar, baby. That's it. Thank you. You're welcome. And

• 3:26Shawn Ryan?

  found out that, uh, you are a firearms enthusiast, so got you a gift. All right.

• 3:35Shawn Ryan?

  To add to the collection. All right. So that's, you've heard of Sig, right? Yeah. Sig Sauer. So I got a friend over there, his name's Jason. Huge crypto guy. Okay. Told him you were coming on, and he got all excited, wanted me to give this to you, so.

• 3:50Shawn Ryan?

  Wow. Okay. So that is the Sig Sauer P226 Legion. I think that's the, that's the top handgun that they have right now. Yeah. And, uh, so just a little background on that, you know, we were kind of talking about my SEAL career and some firearm stuff at breakfast. Yep. So that is the upgraded model of what all SEALs were issued, and that thing.

• 4:19Shawn Ryan?

  is awesome. I think you'll really, really like that. All metal. They don't make guns all metal anymore. Not very many of them. And um, and uh, it's just a well

• 4:32Speaker 03

  Thank you.

• 4:33Shawn Ryan?

  machine. You're welcome.

• 4:35Speaker 03

  All right.

• 4:35Shawn Ryan?

  You like it?

• 4:36Speaker 03

  I like it. I mean, it's California. Do we have to go to some federal firearms?

• 4:40Shawn Ryan?

  We'll handle all that stuff.

• 4:41Speaker 03

  The transfer part?

• 4:43Shawn Ryan?

  Well, we'll handle that stuff for you.

• 4:45Speaker 03

  I love it. Thank you so much.

• 4:47Shawn Ryan?

  Yeah, you're welcome.

• 4:48Speaker 03

  This is um, so how is this different from the one you were issued in the SEALs?

• 4:51Shawn Ryan?

  So it's so are you new to shooting?

• 4:56Speaker 03

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

• 5:03Shawn Ryan?

  So it's, it's pretty much, it's pretty close to being the same thing, but there's a couple of things. So if you look at the front towards the barrel there.

• 5:11Speaker 03

  Yeah.

• 5:12Shawn Ryan?

  You'll see those grooves on the top.

• 5:13Speaker 03

  Okay.

• 5:14Shawn Ryan?

  So that is, that disperses the gas, which helps you stay on target faster. So instead of your gun flipping up like that all the time, it'll stay nice and flat.

• 5:24Speaker 03

  Yep.

• 5:25Shawn Ryan?

  Uh, the trigger's been upgraded. Uh, there used to be like this decocking lever um, on the old one, but they've done away with that. And then one of the things that I really like, you see that little notch that's sticking out like right under the ejection port? They call it a gas pedal. Other side?

• 5:43Speaker 03

  This?

• 5:44Shawn Ryan?

  Yeah, right there. So you put your thumb on it.

• 5:46Speaker 03

  That's what I was thinking. Yeah. It's for the, you're, yeah. So that helps keep it the nose down.

• 5:50Shawn Ryan?

  Helps you control it a lot more.

• 5:51Speaker 03

  Yeah. Cool.

• 5:52Shawn Ryan?

  So, yeah, it's like, it's like running a sewing machine. I love that thing.

• 5:58Speaker 03

  What's the magazine capacity on these?

• 6:00Shawn Ryan?

  I believe.

• 6:01Speaker 03

  Is that even allowed in?

• 6:02Shawn Ryan?

  I believe it's 21. Your version might be a little different.

• 6:07Speaker 03

  Yeah, we might have to adjust those. We'll take it to California. But yeah, 9mm. Okay.

• 6:12Shawn Ryan?

  Yep, 9mm. You'll love that thing.

• 6:15Speaker 03

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

• 6:20Shawn Ryan?

  Hey, my pleasure.

• 6:21Speaker 03

  Yeah.

• 6:21Shawn Ryan?

  My pleasure. We don't get to do it today. Maybe the next time.

• 6:25Speaker 03

  Yeah. Well.

• 6:27Shawn Ryan?

  Definitely the next time because in the new studio, we've got a gun range literally right it. You walk out the studio.

• 6:33Speaker 03

  Yeah.

• 6:33Shawn Ryan?

  And you're on a gun range.

• 6:35Speaker 03

  Yeah.

• 6:35Shawn Ryan?

  So we'll have to have you back.

• 6:37Speaker 03

  That's great. Um, I brought you a little gift too. You want to go for it?

• 6:41Shawn Ryan?

  I love gifts.

• 6:43Speaker 03

  Okay, so I'll let you open that.

• 6:47Speaker 03

  This is a, uh, one of 21 Satoshi Nakamoto commemorative cards. This is a Bitcoin credit card. Anywhere you spend with that card, you get 4% back in Bitcoin. And, um, this is something, uh, we released recently.

• 7:06Shawn Ryan?

  This is awesome.

• 7:07Speaker 03

  Yeah, so it has, uh, on the front there, you see a bunch of, um, numbers and letters. That is a copy of the Bitcoin Genesis block, which is the first Bitcoin block ever created. And, um, there's kind of a Easter egg in there. Satoshi Nakamoto, which nobody knows who this is, who created Bitcoin. We can talk about theories on who it is if you want later, but, um, there's a, when they released it in, I think, 2008 or 09, there, there was a headline, Chancellor on the Brink of Bailouts, uh, which was related to the 2008 financial crisis. And they encoded that in the first Bitcoin block. And it was kind of a, you know, nobody knows for sure, but it seems like a good guess that they were sort of saying,

• 7:47Speaker 03

  this is an answer to the, the bank bailouts and the financial crisis is like, let's create a new monetary system. And, um, anyway, so we encoded that right on the front of the card and you can get 4% cash, uh, cash back in Bitcoin anytime you spend with that.

• 7:59Shawn Ryan?

  Oh, man. Thank you.

• 8:01Speaker 03

  Yeah.

• 8:02Shawn Ryan?

  This is awesome. I appreciate that.

• 8:04Speaker 03

  Yeah.

• 8:05Shawn Ryan?

  I think I'm gonna have to have you sign the, uh, the front here. We'll frame it.

• 8:09Speaker 03

  Okay.

• 8:09Shawn Ryan?

  Put it in here.

• 8:09Speaker 03

  Okay, cool.

• 8:10Shawn Ryan?

  With all the other relics.

• 8:12Speaker 03

  Yeah.

• 8:12Shawn Ryan?

  Thank you.

• 8:12Speaker 03

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

• 8:17Shawn Ryan?

  Oh, man.

• 8:18Speaker 03

  You can use for day-to-day spending, so.

• 8:19Shawn Ryan?

  Thank you.

• 8:20Speaker 03

  Yeah.

• 8:21Shawn Ryan?

  Yeah, we're framing this.

• 8:22Speaker 03

  Cool.

• 8:24Shawn Ryan?

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

• 8:28Speaker 03

  Sure.

• 8:29Shawn Ryan?

  But, uh, all right, one last thing before we get into the interview. So I have a Patreon account, so subscription account. We've turned it into one hell of a community. I think we got 90,000 people in there now. And, uh, so one of the things that, uh, we do is we offer them the opportunity to ask every single guest a question. So this is from Achilles Actual. What measures is Coinbase taking from a cybersecurity standpoint to prevent cryptocurrency theft? Additionally, how is the company addressing concerns that advancements in quantum computing could potentially compromise blockchain security and threaten the integrity of Bitcoin?

• 9:10Speaker 03

  Yeah, well, great questions. So there's lots of ways that we try to prevent theft of Bitcoin and cryptocurrency generally. First of all, there's Coinbase accounts where we store people's funds, and we do lots of security around that, which I can talk about. But we also have a self custodial product. So if people don't want to have to trust us, they can store their own crypto. And then they're responsible for their own security, but you know, it's fully in their hands. On the crypto that we store for customers, there's a few things we do. One is, the vast majority of all the customer funds are actually stored entirely disconnected from the internet, which we call cold storage, you know, because every system can be hacked in theory, right? Especially these systems that are online. So what we do is we actually generate these keys

• 9:52Speaker 03

  in different geographic locations around the world. And there's redundancy and consensus needed. So you might need 10 different keys. Imagine there's some in the West Coast, the East Coast, you know, the middle of America, but also some in London, Dublin, Singapore, Australia, like kind of ally countries. So we have these different secure facilities, like a SCIF, you know, if you're familiar with those from the...

• 10:14Shawn Ryan?

  Oh, yeah.

• 10:15Speaker 03

  Yeah. So we'll generate them in these secure facilities. And you need, let's say, five of the 10 pieces to come together to ever move those funds. So if half of them get lost, like, let's say there's nuclear war, or there's some accidental loss or a natural disaster, you can lose up to half of the keys and still have the funds. But no one or two people can kind of take their piece of it and move off with the funds. It requires consensus to come together. And so we've had, then we hire external firms to come in and try to break into that system and pen test it. And we do audits like that every year. So that's where the vast majority of customer funds are stored in these offline systems. And we do this now for governments,

• 10:57Speaker 03

  like big financial institutions, and the same securities provided to retail accounts. And then for self custodial wallets, we also allow people just to store it themselves, like in our new self custodial wallet. The questioner kind of asked about quantum as well. And there's this whole kind of area of research around post quantum cryptography, you know, for people don't know that quantum computers are this new type of really powerful computer that can theoretically break a lot of encryption that's out there. And if this happens, it's bad for crypto, but it's also bad for a whole bunch of other things that we use encryption for, you know, like...

• 11:31Shawn Ryan?

  Pretty much everything.

• 11:32Speaker 03

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

• 11:40Speaker 03

  There are post-quantum cryptographic algorithms that are out there that people can upgrade to, and the cryptocurrency blockchains are currently meeting, they have proposals that they're looking at about how to upgrade these. I don't think it's going to happen in the next one to two years, but maybe the next three to five years, it's important that we get that done. The US government, by the way, they publish standards on this through an organization called NIST. I forget the exact what it stands for, but the government has a role here to play to help industry update to these common post-quantum cryptography or PQC-type standards. So Coinbase is, if you're storing your money with Coinbase, we're going to help you make sure that it's quantum resistant as these computers come online.

• 12:21Shawn Ryan?

  So you think quantum computing will come into play in about five years?

• 12:25Speaker 03

  Well, let's say I'd want to make sure we had a solution in place before then. It might take 10 years, but I'd rather have this solution in place ahead of time, because otherwise if China or someone gets one of these things booted up, we might just start seeing money move unexpectedly, or communications get decrypted that should be sensitive. We might start seeing bad things happen. So it's the kind of thing you'd want to get ahead of.

• 12:50Shawn Ryan?

  Yeah, a lot of talk about that, a lot of talk about quantum computing lately. But

• 12:57Shawn Ryan?

  well, I'm just fascinated with innovators like you and dove into the tech space at the beginning of the year. And so one of the things, I just, I like hearing where you guys grew up, what your childhood was like, and how you came to Coinbase. So let's start with, where did you grow up?

• 13:19Speaker 03

  Yeah, I grew up in San Jose, California. And my mom and dad were both engineers. My mom was a programmer at IBM. My dad was a civil engineer, worked at Lawrence Livermore National Lab. And so it was kind of a household where we focused a lot on school, academics, science and math. And both my sister and I kind of learned a lot about that growing up and had early computers in the home. And I was kind of like a, I was a very shy, introverted kid, you know, I was not very good at talking to people and, but I loved computers. I just kind of initially gravitated toward them when we had them in the house, like the early IBM 486 PCs and

• 14:01Speaker 03

  these kind of things. So, you know, I was initially, I was like playing games on there, but I got to learn over time about operating systems, some basic programming languages. And yeah, I didn't really know what I wanted to do with my life, but I was, I was a nerd, basically, you know, I was like a total geek, kind of learning about these things. And

• 14:21Shawn Ryan?

  What age did you start getting interested?

• 14:24Speaker 03

  Pretty young. I mean, even in middle school, I was trying to learn how to program computers. And in high school, I was taking some classes in that, like at the local community college. So I had my normal classes for high school, but I was kind of more interested in the computer, the programming classes I was taking at the community college. And

• 14:45Speaker 03

  yeah, in my free, I would stay up late, like until two in the morning and three in the morning, kind of learning how to, these computers worked. And then I'd be like totally sleep deprived for school the next day, like kind of faking my way through these classes. So, you know, in hindsight, that should have been a signal probably that I was more interested in this other thing, which they weren't teaching in school. But, you know, we didn't have like computer science classes at the, at the high school or anything.

• 15:10Shawn Ryan?

  What else were you into as a kid? Were you into any sports, outdoors?

• 15:15Speaker 03

  Yeah.

• 15:15Shawn Ryan?

  Just computers?

• 15:16Speaker 03

  Well, we lived next to this pretty cool park. So I would, I did spend a lot of time outdoors, just kind of exploring that with my, with my dog. And, you know, I, I was never like the most athletic kid. Like I, you know, I tried out for like the JV tennis team. And I, I was, I was into like running and sort of like, just things that were more like personal fitness, I would say. But I was never good at like team sports and stuff. I mean, I played a couple like intramural things in college and stuff. But yeah, I was never like the most athletic kid. I was never the most like outgoing. So I was, yeah, I was pretty, I was pretty introverted.

• 15:51Shawn Ryan?

  Right on.

• 15:52Speaker 03

  Yeah.

• 15:53Shawn Ryan?

  Where'd you go to school?

• 15:55Speaker 03

  Well, high school or, you know, yeah, so I went to this school called Bellarmine in California, which is, it's a private school. It's actually a Jesuit school. It's all boys. It was very good academically and they had this mission that was men for others, right? So they actually, I didn't think too much about it at the time while I was in school, but I actually do think it influenced me like Judeo-Christian values and thinking about how to live your life, kind of to try to create value for other people. I, you know, at the time when I was there, we would have mandatory kind of like volunteer service and different things like that. But as I've gotten older in life, I like building

• 16:37Speaker 03

  things that try to advance the world, you know, be useful, like how to use technology to create better lives for people. And I doing, creating companies is kind of my way of doing that, right? Of trying to create value in the world. And so I do think it actually a Jesuit education kind of had a big impact on me in a, in a strange way.

• 16:55Shawn Ryan?

  Where do you go from there?

• 16:58Speaker 03

  Well, I applied to a number of different schools. I really wanted to get out of California because I, I don't know, I was, I was really craving like independence, autonomy. I'd been living at home with my parents, you know, like a lot of young men, probably I was like, I want to get out of here and just become my own man, right? It was a little too sheltered. And, and so I applied to, I applied to like some East Coast schools, you know, and I didn't get into like MIT or Harvard or anything like, so I, a couple, I did apply to Rice University in Texas, which had a good engineering program. I, and I applied to like Berkeley and I got in there. But I, I went and visited a couple of these schools and I just really liked Rice University. I had like a great experience in their kind of, they have like a week you can go by there to sort of test it out.

• 17:43Speaker 03

  So I ended up choosing Rice University, a really good engineering program and and and learning about economics as well in that setting was really interesting, too. I mean, I remember like the first day of the econ 101 kind of on your freshman year. And the professor said, I think the very first line he said was, you know, economics is the study of scarcity, right? Like, there are finite resources in society. And so if you ever are saying, hey, we should have more teachers or more firefighters, you always kind of have to ask the question, well, at the expense of what, right? Because there is scarcity of resources. Like, so if you want to have more of something, you have to have less of something. And, you know, they get into like, supply and demand and

• 18:27Speaker 03

  how to housing work. And so that was like a really interesting foundation for me. And then I combined it with computer science, which was really foundational, just helping me understand how technology and computers work. And so I had no idea what I was going to do with my life at that time. But of course, in hindsight, now, economics and computer science, like crypto was kind of the perfect intersection of that.

• 18:47Shawn Ryan?

  Interesting. So I know you went to Argentina. Was that to study?

• 18:52Speaker 03

  That was after college. And again, it was me sort of, I think I was just seeking adventure, you know, I had never like been in the military. I'd never been in like a frat. I don't know. I always felt like I was a little too sheltered. And so after college, I had tried starting this company in the tutoring education space. And it wasn't going that well. And I was like, I just need to, I felt like I just needed to go abroad and like, try living in a bunch of different countries and put myself out of my comfort zone. So I went to Buenos Aires, Argentina, almost like the first stop. And I was going to do like a month in every city and a major city in South America for like a year. But once I was like, kind of more set up and established in Buenos Aires, I was like,

• 19:34Speaker 03

  I don't know, it became like a home base and I didn't want to move every month. It was just too much work. So I spent about a year living there and Did you like it down there? Yeah, I mean, it was, so in some ways, it was like quite lonely, actually. Like, I didn't really know anybody. I barely spoke the language. I was trying to learn Spanish. There was a bunch of expats, and so you get to meet some interesting people. But I didn't really have that big of a friend group, so it was kind of lonely for like six months, but I eventually did start to build a bit of a community. One other thing that was fascinating, again, kind of in hindsight, this makes sense, but at the time, I had no idea what I was doing with my life. I was just trying to start different companies and doing some software consulting for people. And I got to see a society that had gone through hyperinflation.

• 20:16Speaker 03

  Right? Because the currency in Argentina has been devalued many times and people, it affects the whole culture, right? People get their paycheck and they're like, immediately, I want to go spend it. Um, because it might be worth less tomorrow, right? Or I remember like they had these buses that would go around Buenos Aires and Um, you know, you would take like coin, you'd put coins in there to like get on the on the bus, but the currency had been devalued so much, people had to bring like like Are you serious? Two handfuls of coins or something to get on there. So coins actually became kind of scarce in society. Um, people would hoard them.

• 20:52Speaker 03

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

• 21:31Speaker 03

  So it was, that was something I had never seen really growing up in the United States. And again, when, when I read the Bitcoin White Paper years later. That piece clicked there for me. I was like, oh, my gosh, there's people in the world who don't have access to any kind of sound money that really stores value. It can be abused and manipulated by the government. And that's actually the default in most countries of the world, like the United States historically has been a real exception to that. And people who've only spent time in the United States, I think, sometimes don't, they didn't really get crypto early on. Because like, what problem is this solving? You know, the dollar works fine. And the dollar has its own challenges and with inflation now and there's high fees and all kinds of broken things about our financial system. But the rest of the world is way, way worse. Right?

• 22:13Speaker 03

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

• 22:19Shawn Ryan?

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

• 22:25Speaker 03

  Yeah. So the Bitcoin White Paper is a pretty fascinating document. It's pretty complicated and it's kind of dense for anybody who's not read it. And it, I read it in, I think, December of 2010. I just happened to see it on this website called Hacker News, which like people would just put out technical content.

• 22:46Speaker 03

  And it was describing how the world could have a currency that was decentralized. No country controlled it. No company controlled it. And, but it could be provably scarce, kind of like gold, where you couldn't just make more of it out of thin air. And, you know, you and I could have a peer-to-peer transaction with no intermediary in the middle, like a bank or a credit card company or someone taking fees or being able to deplatform or de-bank one of us or, you know. And so if you could have a peer-to-peer cash system that was trusted because it, there was no government or kind of company that could go in there and manipulate it. I was, I was immediately captivated by that. Like I, you know, I, I had been reading like a lot of.

• 23:32Speaker 03

  You know, like Ayn Rand and some of these economists like Milton Friedman, these kind of free market guys and libertarian stuff. And the idea like really appealed to me, having seen how Argentina, like these people's lives had been destroyed by high inflation. You know, I was working at Airbnb at that time, seeing how they were trying to move money to 190 countries all over the world, and it was completely broken and slow and high fees and delays. And so I read that Bitcoin white paper and I was like, that's a crazy idea. You know, that's kind of like the internet or something. How do we have a global decentralized network for sharing information? You know, the internet kicked that whole thing off. This was describing something kind of like the internet, but for moving value and money and all types of assets. And kind of like an internet of money or something.

• 24:18Speaker 03

  And so I just kind of couldn't stop thinking about it for like six months. I kept reading more and more, trying to get my hands on any kind of information I could find. And then I started going to these early Bitcoin meetups that were happening in San Francisco, which was a crazy experience of its own. Because the people who would show up to these things in 2010 were like, some of them were like anarchists, some of them were like computer science PhDs, some of them were just like homeless people coming in for free beer and stuff like that. It was like, it was a real motley crew of early people. But I couldn't stop thinking about it for six months. And that's what made me start to work on this prototype, like nights and weekends of what would eventually become Coinbase.

• 25:01Shawn Ryan?

  Interesting, interesting. I mean, who is Satoshi Nakamoto? Who is it?

• 25:07Speaker 03

  Yeah. So nobody knows for sure. And I wouldn't claim to know for sure, but I think there's a couple of good theories out there. One is that there's this guy Hal Finney, who is a computer scientist. He passed away, so he's not alive anymore. I think there's a good argument, he's probably one of the people that created it. Now, it could have been multiple people that collaborated and tried to use this pseudonym as kind of a... You know, I think they they they knew that if this worked that they might get hauled in front of Congress or, you know, Killed? Killed, yeah. I mean, and that and that, you know, Satoshi Nakamoto, whoever that is or they are, they did mine a lot of early Bitcoin, which is now worth a ton of money,

• 25:53Speaker 03

  like at least 100 billion dollars or something. So they they knew like their family would have to have private security and all. So I think they were thinking that far ahead. I'm just speculating, but that could be the case. So anyway, Hal Finney is a good candidate. There's another guy, Nick Zabo, who may have been a collaborator. There might have been a third person and a bunch of journalists and stuff have tried to track down these different people who may or may not have been Satoshi. I think most of them got it wrong. The most likely explanation is it's probably Hal Finney and maybe in collaboration with one or two people like Nick Zabo. But regardless of who Satoshi actually is, the idea stands on its own, right? It's kind of like, I don't know, like if someone had discovered the theory of relativity, but that person turned out to be

• 26:36Speaker 03

  a bad person or a good person, whatever your judgment of them, it doesn't really matter like the theory stands on its own. It's a it's a genuine breakthrough. And I think that Bitcoin, that white paper is a genuine breakthrough in computer science. It's it's the first time that someone was able to come up with a purely digital good that was provably scarce, you know, like I'll give you a simple example, like, you know, let's say you have a photo on your phone and you can make infinite copies of it. You can send it to me, you can send it to 100 people. Like, most digital items are easy to be copied and you can just have infinite copies of them. That's a bad property for something to be used as money. Money needs to be provably scarce, otherwise someone can just kind of create a ton of it out of thin air. And so this algorithm that they described in the Bitcoin white paper says, all right, we're going to have a digital item,

• 27:22Speaker 03

  but we're going to guarantee the scarcity of it. And I mean, if you want, I could try to describe how that works. It's it's it gets a little complicated, but like the more the important thing to realize about it is that at this point, like thousands of people have looked at that algorithm and tried to break it and no one's found a way to break it. Even like, you know, if China or like these big nation state actors with the top resources, everything in the world. If they could find a way to break it, they would, it's very profitable. They would be able to take a trillion dollars or something out of Bitcoin. Um, no one's been able to break it for like, whatever it is, 13 years now. So it's, the longer it goes on, the more proven it's become of how it's going to stand the test of time. And the mathematics behind it is, is really solid.

• 28:06Shawn Ryan?

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

• 28:09Speaker 03

  Yeah.

• 28:10Shawn Ryan?

  Sounds familiar.

• 28:11Speaker 03

  Yeah.

• 28:12Shawn Ryan?

  And, um,

• 28:13Speaker 03

  Yeah.

• 28:14Shawn Ryan?

  Very familiar.

• 28:14Speaker 03

  Federal Reserve, yeah.

• 28:15Shawn Ryan?

  And, uh, yeah, actually, that's where I want to go is, is, is, I want you to talk a little bit about the Federal Reserve when we came off the gold standard and, and what's happened.

• 28:27Speaker 03

  Yeah. So I, I think this is a fascinating topic. If you look, study history, right? And there's been, obviously, America has the reserve currency today. It's a huge form of power for the United States. Um, and if you look back at history, there have been various other empire, you know, the British and the Dutch and going back China and various countries, different times have had, been the global superpower and had the reserve currency. And usually what happens is they start off with their currency being backed by a hard commodity, something that is provably scarce, like, like gold. And then eventually, usually during a time of crisis, um, these countries will quote unquote temporarily de-peg it from that underlying commodity. Um, and then after a number of decades or

• 29:12Speaker 03

  whatever, they'll lose discipline and, and start to overprint it. And then they lose the reserve currency status and some new one arises. So in the US, unfortunately, dollars are no longer backed by, by gold, right? That used to be the case. Um, there was a piece of it got disconnected in like, I think the 1930s, uh, where they said, uh, the gold's still there. You just can't actually come in and exchange a dollar for gold. It used to be actually, you could go in and if you gave them a dollar, they'd give you back, uh, I forget some fraction of an ounce of gold in exchange for it. The, in, in like the 1930s, they said, trust us, the gold is still there. You just can't come and exchange it, but it's still backed by gold. And then, and then I think it was 1971, Nixon, uh, during the Vietnam War, I think they were having budget deficits and whatnot. And he

• 29:55Speaker 03

  kind of said, as a temporary measure, you can, you can go watch the video of this on YouTube. You know, he literally says, this is a temporary emergency measure. It's not going to be, we're going to go back on the gold standard soon. Don't worry. Um, we're going to de-peg it from, fully de-peg it from the gold. And that allowed them to run these budget deficits.

• 30:14Speaker 03

  And of course, we never went back. So the dollar today is not backed by gold. We have started to see more inflation happen with the dollar. I mean, it was a couple of years ago. I think it, there's different ways you could measure this, right? But it hit like eight or nine percent. Typically, they're trying to target more like two to three percent. But it's like, where's the discipline going to come from, right? Like if it's not backed by a hard commodity, you know, the temptation is always to give people more free stuff to get elected, right? It's kind of like high school, you know? Free drinks in the vending machine or whatever. So if the dollar continues to lose discipline like that, then the US could lose the reserve currency status.

• 30:56Speaker 03

  And, you know, I think it's more likely people actually flee to Bitcoin, gold or real estate, these things which are provably scarce. Like they're not making any more real estate in the world. And they're not making any more gold. They're not making any more Bitcoin. So that's the kind of assets that people want to go own if they're in this environment of high inflation where people are just printing more money. And that's, I think, why we're seeing all time high prices of Bitcoin right now.

• 31:21Shawn Ryan?

  Have we lost all discipline?

• 31:26Speaker 03

  It's kind of like a big question, right? Is America in decline? I mean, I, you know, I would, trust in our institutions is at all time lows. If you look at the polls.

• 31:37Speaker 03

  You know, I do think that the future is not guaranteed, right? I, there are, there are moments in history where you have a great leader come in and change the course of history, right? So, you know, around crypto and things like that, like President Trump has done a lot of good stuff. He's, we can get into this whenever you want. But I mean, there was a whole war being waged on crypto in the last administration, which we had to fight back against to protect.

• 32:01Shawn Ryan?

  Yeah, get into it. Let's get into that.

• 32:03Speaker 03

  Yeah, but I, maybe I'm just trying to think about your broader, it's a big one, like, I mean.

• 32:10Speaker 03

  I hope America is not in decline, right? Like, America is such a unique thing historically to have a land where you actually have these freedoms and democracy and whatnot. Like, it would be a damn shame, right? If America starts to fall, where, who's gonna take up the mantle, right? Like, I don't think China is aligned with our values on that economically or in other ways. So it would be bad for the world if America really is in decline. I think we've got to try to save it, but we can also have alternatives, right? Like Bitcoin can come up, or maybe we'll have Mars, maybe we, special economic zones in the US. We can talk about all kinds of stuff. I love to talk about this with my friends, but, but yeah, you want to jump to the war on crypto?

• 32:52Shawn Ryan?

  I mean, I don't, I don't, I don't think America's in decline. I think we're at a very pivotal moment where if we don't turn the ship around, then we're probably gonna be entering decline.

• 33:05Speaker 03

  Yeah.

• 33:06Shawn Ryan?

  Very quickly.

• 33:07Speaker 03

  Yeah, we've been through some crazy shit before, right? I mean, yeah, 60s and all that, and then we also landed the man on the moon, right? So, yeah, America seems to be, no matter how screwed up America is, it's like everywhere else is kind of worse.

• 33:22Shawn Ryan?

  Yeah, that's kind of where I was going to.

• 33:24Speaker 03

  Yeah.

• 33:26Shawn Ryan?

  I mean, we have the best innovators in the world. They've been, I mean, I'm sure you're, you're gonna relate to this, but I mean, like I said, I've dove into the tech space and I've talked to a lot of innovators. And the one thing I will say, man, is that all of them are really fired up about the current administration and getting rid of some of the bureaucracy. Everybody in, in power and AI and all, everything. Everybody seems to be gung ho about this administration kind of gutting the bureaucracy a little bit and letting the innovators innovate and, and, and change the world.

• 33:59Speaker 03

  Yeah, I'm all for it. I mean, that's how we, that's how we build a better future is we've got to get rid of the bureaucracy, like deregulate, you know, allow people to build power plants, like nuclear fusion. You know, we should have like supersonic jets, like accelerate biotech. Um, it's, you know, it takes like 10 years and $2 billion to get a drug to market now. So it's like.

• 34:22Speaker 03

  Every, every year you wait, you know, people are dying, right? Um, so the mentality of if you over regulate, you can kind of be so safety oriented, but then you, you just freeze in time. Right? Um, like air travel is pretty safe.

• 34:38Shawn Ryan?

  Used to be.

• 34:39Speaker 03

  Yeah, that's true. Some, some gaps in that maybe recently. But overall, it's pretty safe. And then, but like the jets literally look the same as they did in the sixties and none of them can fly faster than 600 miles an hour. So that's not what, to me, that's not what, America's strength is about, like, is freedom. You know, free markets, small government. In my view, like, the government really should just be there to kind of run the military, protect from foreign invaders, you know, run the police, protect. They enforce the laws at home and, and run the courts and like adjudicate disputes. And I think pretty much everything else, like the private market would, would better, uh, solve those issues, right?

• 35:26Speaker 03

  And, you know, education, healthcare, like going down the list and you should, you know, it's, it's a, it's a philosophy of more like personal responsibility and like thing, non, there are non-government solutions to things in society, right? Like private charities, you know?

• 35:43Speaker 03

  Churches, like the, the family unit, like these kinds of things can create that structure and safety net in society. The government doesn't have incentives aligned to create good outcomes typically because there's no competition. You know, like competition breeds excellence. And if the government is the only game in town, it just, it just deteriorates over time. So the incentives aren't aligned for the government to do good things. They should be small, focused on what they're, they have to do, the monopoly on violence. And then let the free market cook. And I think that would be a stronger America.

• 36:16Shawn Ryan?

  Me too, me too. So what's, what's, what's the war on crypto? I'm not, yeah. I can't say I'm not a crypto guy because I buy it, even though I don't understand, I don't, I don't understand it. Nearly to your level, but.

• 36:33Shawn Ryan?

  Why would there be a war on crypto?

• 36:36Speaker 03

  Yeah, well, crypto is a threat to some people in power, right?

• 36:44Speaker 03

  You know, in particular, like in this last administration, Elizabeth Warren and Gary Gensler, I would say, were the biggest architects of this war on crypto. And, you know, Elizabeth Warren is a socialist. She basically thinks the government should run all financial services. And she likes to apply pressure to the big banks that are kind of under the purview of these financial regulators to get stuff done that she can't get done through Congress because the American people don't want it. So as an example, she put a lot of pressure on JP Morgan to say, you know, don't give loans to oil and gas companies or to gun companies. And so she has these kind of political motivations and she can, because she can't get them passed through Congress because the American people don't want that, she'll kind of in an extrajudicial

• 37:29Speaker 03

  kind of way, appoint these financial service regulators and those regulators will go into the bank and say, hey, it would be a real shame if you were to do this. You know, they have a lot of soft power. They can say, hey, we're going to come in and audit you once a, once a month instead of once a year and ask you to produce thousands of pages of documentation. And, you know, if you upset your regulator, you know, you can be in the penalty box for years and years, right? So this kind of soft power, you know, we called it like Operation Choke Point 2.0. They would, they'd go into the banks and try to de-bank people that they didn't like for their political reasons. And so crypto comes along totally outside the power structure that they've been able to infiltrate.

• 38:10Speaker 03

  And it allows people to kind of do financial transactions without the risk of being shut off by your bank. And so she hates, she hates crypto. And it's like, it's pure hypocrisy too, because she's always kind of out there saying, well, you know, I, we're here about consumer protection. I'm trying to protect the little guy. And the minute, you know, like some legislation gets proposed for crypto that would protect the little guy, she'll fight against it like tooth and nail. So anyway, long story short, she appointed this guy Gary Gensler to be the SEC Chair as the head of the Securities and Exchange Commission. And he's just, he's like a powerful financial services regulator. And what members of Congress told me was that she made a deal with him. He really wanted to be Treasury Secretary.

• 38:54Speaker 03

  But she said, hey, look, in the first term of the Biden administration, do the SEC chair role. Go hard on crypto. Try to, try to really tamp down on this stuff. And if you do a good job, I'll try to make you Treasury Secretary in the second Biden term. And so he really wanted this job to be Treasury Secretary. So he's a smart guy, by the way. If you go back and look at his talks before he became the SEC chair, he, he was teaching these classes at MIT about how great crypto was and how it's such a powerful technology to update the financial system and all this.

• 39:23Shawn Ryan?

  Are you serious?

• 39:24Speaker 03

  Yeah.

• 39:24Shawn Ryan?

  So he totally flopped.

• 39:26Speaker 03

  Yeah.

• 39:27Shawn Ryan?

  He totally flip flopped.

• 39:28Speaker 03

  Yeah, I think.

• 39:29Shawn Ryan?

  Just for a job.

• 39:30Speaker 03

  I think these guys, like, they're just, somehow they're mentally willing to, you know, change their values and what they will do to, it's for, basically for personal advancement, right? To get the job he wants. And so, you know, he went in there and started creating all this lawfare, essentially against crypto companies. And like for us, we had gone public in 2021. As part of becoming a public company, you have to disclose all this information to the SEC. They ask, they send you like a bunch of comment letters back and forth. Like they sort of turn over every stone. They, they understand everything about your company. And they allowed us to become a public company at that time in 2021. They said, okay, great, you're good. The public market, the public, you know, consumers can own your stock and it's, you're good. Kosher.

• 40:14Speaker 03

  And then a few years later, after this pressure from Elizabeth Warren, he decided, you know what? Actually, we don't like all this stuff. And they started sending us these really nasty letters like, hey, we have deep concerns about all these things you're doing, that they had just, you know, allowed us to become a public company doing. And so our lawyers, you know, we went in, we met with them probably at the SEC, like 30 times over a period of a year or two. And we just tried to be helpful and answer all their questions and, you know, and we would ask them, sometimes we would ask the regulator should be giving you a clear rulebook, right? Like, here, here are the rules you have to follow. And then we follow them and that's, that's how it should work, right? They wouldn't, they wouldn't give us any rules to follow. And our, our lawyers, I remember we had asked them in these meetings like, Well, here's how we think about it. We read the law and here's the program we designed in

• 40:59Speaker 03

  compliance with the law. Do you have any feedback for us? And they'd say, we're not going to give you legal advice. And we'd say, okay, well, are we doing anything wrong? And they're like, we're not going to give you legal advice. And then after 30 meetings, they hit us with a lawsuit, claiming we had violated all of these laws. And so that was like a pretty interesting moment as a CEO, because normally, most people would tell you, never engage in litigation with your regulator. You know, it's like, they can make your life hell, right? And I made a decision at that point, I was like, we got to fight this, you know, because I was like, show me in the law where we're, did we violate any rule? They couldn't point to anything, but they said, you have to stop all

• 41:42Speaker 03

  this activity that you're doing. And I kind of felt like, if we just complied with that, it would not only hurt our business, it would actually kill the entire crypto industry in America. And a lot of this stuff had been going offshore anyway. You might have read about like, FTX, this exchange, and Mt. Gox, and like, these things, American consumers were using these offshore platforms, which were then blowing up and stealing people's money. And so I was like, really, we're just going to cede this entire industry to foreign companies and not have the future of technology and financial services be built in the US? Screw that. Like, let's go fight these guys, because I think we have the better argument. Now, that, of course, litigation takes a long time, right? So for a period of a couple of years, we were engaged

• 42:25Speaker 03

  in litigation with the SEC. It had a massive depression on our stock price, because a lot of public market investors will just be, oh, you're suing the SEC? Oof, this is too risky, I'm not going to go near that stock. And they, they kind of played dirty, like they pressured these different companies not to work with us, and they would...

• 42:42Shawn Ryan?

  What companies?

• 42:43Speaker 03

  Like, we were trying to close deals with, you know, big banks and to plot, you know, to get money movement onto our platform. And they would, the SEC would go meet with them and tell them, hey, you know that company Coinbase is under investigation? Like, we don't think you should work with them.

• 42:58Shawn Ryan?

  Wait, are you talking like... Like when I go into Coinbase and I wanna, you know, put in money from my bank account, is that, is that what they were trying to stop linking bank accounts to Coinbase?

• 43:08Speaker 03

  I mean, to be honest, I was worried about getting like personal criminal charges. Because some people I talked to, like my lawyers and stuff, they said, you know, this is a civil lawsuit where they think maybe the company had some technical violation, but they're like, it's not unheard of where they actually would put personal criminal charges on you, even if they're totally bogus, just to try to pressure you to settle the other case, right? And so, you know, I was prepared for that to happen if it was, if it was gonna go there, but luckily it didn't. And, you know, these guys, basically, the, once the Trump administration came in and they appointed a new SEC chair, he looked at these cases and he just threw them all out. Like, he, he just was like, this is ridiculous.

• 43:50Speaker 03

  And so that case got, luckily, this, this year, I think it just got totally withdrawn. If we didn't, we didn't pay a single dollar in penalties, we didn't have to change a single thing about our business. It was like pure lawfare. They were, they were just like harassing us with these bogus lawsuits to try to kill the industry. And a lot of start, luckily, we had deep enough pockets where we could pay these lawyers. We probably spent like 50, 100 million dollars on lawyer fees. We had the money to do it, but a lot of startups died because of this in the United States. They, like, I know a lot of founders who their companies just shut down because they couldn't deal with the legal costs of the SEC suing them. So it was pretty messed up.

• 44:57Speaker 01

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• 45:26Shawn Ryan?

  I mean, Doug, I gotta commend you here. That takes some serious balls to go after the SEC.

• 45:34Speaker 03

  Yeah, I mean, people told me I was crazy to do it, but, um, I mean, I'm so glad we did because, like, the crypto industry might not exist in the United States if, today, if we had caved on that.

• 45:45Shawn Ryan?

  Yeah.

• 45:45Speaker 03

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

• 45:51Shawn Ryan?

  Wow. And that took how many years?

• 45:54Speaker 03

  It took about, I think, two or two and a half years to resolve. And, yeah, it was like $50 or $100 million in direct legal fees. But then, yeah, our stock price was down in the gutter, too, for a long time. So, yeah, it was a huge setback for America. And I, I sort of joked with some people that, you know, after being SEC Chair, Gary Gensler should go run the Economic Development Board for, like, the UAE or the Bahamas or something, because he literally just, he grew their economies enormously, because a lot of the crypto businesses moved offshore, outside the United States, and set up shop there. And he, he created all these jobs offshore, you know? Anyway.

• 46:36Shawn Ryan?

  Well, it turned into a huge win, so.

• 46:39Speaker 03

  Yeah.

• 46:39Shawn Ryan?

  At least in my eyes.

• 46:40Speaker 03

  I mean, the positive of it is that we learned how to become very politically engaged as an industry. I mean... I was sort of telling you at breakfast, right? Like I naively coming into starting a company, I kind of thought, and I was always kind of apolitical. And I was like, I didn't really want to engage in government stuff. And I was just like, all right, well, if we just follow the law, we don't have to deal with DC and a bunch of policy stuff, right? But it turns out, even if you're not interested in politics, politics is interested in you. And occasionally they'll come try to unlawfully kill your whole company. So then we realized, you know, I give Marc Andreessen and some of these guys on our board a lot of credit for this, but they were like, we have to help our customers and develop political power. Like we had, you know, we had tens of millions of customers in the United States.

• 47:24Speaker 03

  And we're like, how do we organize these people? These are, these are voters, right? And so we actually got, we created this grassroots campaign called StandWithCrypto.org. And it was a 501(c)(4). We got about 2 million Americans in this last election to raise their hand and said they want to elect pro crypto candidates. And we created like scorecards for all the different members of Congress and everything. And so about 2 million of those voters showed up in this last election. And we now have the most pro crypto Congress ever. So I was, that was something where I had never really engaged politically before, but you know, we, there has to be real consequences, right? Like if you have a member of Congress who's out there trying to kill crypto, and that's not what the American people want, they got to lose their job.

• 48:07Speaker 03

  For, for the rest, somebody in DC to wake up and, oh my gosh, this is like a, this is a risk politically for me to be against this thing. So that's exactly what we did in this last election, and I think it had a big impact. So.

• 48:19Shawn Ryan?

  I mean, you, you set up, correct me if I'm wrong, but you set up a fund, you've got, is it $140 million set aside for pro crypto candidates?

• 48:30Speaker 03

  Yeah. Yeah, that's a.

• 48:31Shawn Ryan?

  Doesn't matter what side they lean.

• 48:33Speaker 03

  Yes.

• 48:34Shawn Ryan?

  That's the goal.

• 48:35Speaker 03

  It's bipartisan. That's a PAC that we helped, we were involved in along with a bunch of other people in the industry called Fair Shake. So yeah, it's got a bunch of money. And they're helping elect pro crypto candidates, you know.

• 48:46Shawn Ryan?

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

• 48:52Speaker 03

  Yeah, so the, I mean, the most notable one was that in this last election in November, Sherrod Brown was the sitting member, he was chairing of the Senate Banking Committee, and he was super anti crypto. I flew to DC probably like three or four times trying to meet with this guy. He would never take a meeting with me. We flew in a bunch of entrepreneurs from his state, Ohio, like crypto and blockchain entrepreneurs. This was during an election year. And I was like, hey, maybe if you won't meet with me, he'll meet with people from his state trying to build businesses, right? He refused to meet with them, didn't show up. And he was just blocking. Every time we were saying, look, the SEC and Elizabeth Warren are trying to kill our whole industry unlawfully. Like, can we talk about getting some real legislation passed that would protect consumers and allow the industry to be built here?

• 49:38Speaker 03

  He would never meet, right? And he would, he'd block every attempt at legislation. So he was up by about 11% in going into the polls going into November.

• 49:49Speaker 03

  Sitting member of Congress, like very senior member of Congress, and there was a guy running against him, Bernie Marino. And we, we and the crypto community decided to like back this guy Bernie Marino. And he went from being down by 11 points to winning the election. I can't remember by how much, but it was, that was a huge upset. That sent like shockwaves through DC where people are like, oh my gosh, like Sherrod Brown, the sitting senator like got kicked out because of the crypto industry. And, you know, I think that woke a lot of people up. And there was probably like a dozen other races that we played in, in the House and the Senate. Most of them, I can't remember what percentage it was, but it was like an 80 or 90% win rate. Yeah. And so people

• 50:31Shawn Ryan?

  Congratulations.

• 50:32Speaker 03

  Well, people realized in DC, there's like, there's no constituency that wants to vote. If you're anti crypto, nobody really cares. But if you're pro crypto, you can get a lot of votes. Like the, the American people want this. So it's just bad politics to be anti crypto.

• 50:45Shawn Ryan?

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

• 50:53Speaker 03

  We've had some people that were a little wishy washy. Yeah, like there was a couple of people, we called it like a foxhole conversion, you know, like,

• 51:01Speaker 03

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

• 51:08Speaker 03

  And then, you know, Maxine Waters is like a very interesting person. She, I spent a bunch of time with her trying to like get her educated on this and she was always like really nice to me, to my face. And then we donated money to her and all this stuff, which was probably a terrible mistake. But yeah, when, when this crypto bill came up, there's been a couple of them, one of them just got passed into law. She would like go out on the, the House floor and talk about like how terrible Coinbase is a company and I was like, damn, Maxie, I spent all this time like with you, you were so nice to my face and suddenly she's like, yeah, she, she flipped. Yeah, I, I don't think she's gonna, she's not gonna be pro crypto.

• 51:52Shawn Ryan?

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

• 52:05Speaker 03

  Yeah.

• 52:05Shawn Ryan?

  You got, we, we have people stroking out on camera. We have people dying in office. We have people with dementia. Like, how do you, cause I don't even understand it fully. And I, I mean, I just interviewed Charles Hoskinson.

• 52:23Speaker 03

  Yeah.

• 52:24Shawn Ryan?

  Awesome human. But I still don't get it a hundred percent. And so, if I don't get it, how do, how do you get it to somebody that's a dinosaur in government? I mean, how do you, how do you educate them?

• 52:37Speaker 03

  Yeah, well, this is definitely a bit of a generational issue, like the, a lot of times I'll meet members of Congress that are like over 70 and they don't really get exactly, but all their staff have the Coinbase app or, you know, their kids have the Coinbase app. And it's, it's okay. Like if I was in their shoes, I, you know, they're, they're like a mile wide inch deep, right? They need to know a little bit about everything. School choice and healthcare and supersonic jets and, you know, so they're constantly have a stream of people coming into their office every day, trying to tell them about their local thing that they care a lot about. So I get it why they're not like experts and everything. I don't think I could be either. And so they have to rely a little bit on their staff and a little bit on just good general principles, like.

• 53:20Speaker 03

  Do we think the government should be building more stuff or like the free market, right? Or there's various principles like that you could fall back on. And I, one thing I realized actually having, I don't know, probably like five or six years ago, I started going to DC like once a quarter to try to build these relationships because I knew the policy thing was going to be important. Initially, we started off just trying to be an educational resource and it kind of, it didn't really work that well. I was, I think I was sort of naive about what, how DC worked because I'd go in there and I'd tell them, I'd try to be helpful and answer their questions and and they'd kind of pat me on the head and like, okay, thank you for coming in. I'd leave and nothing would ever happen, right? And it wasn't until we actually got like political power like organized, the millions of Americans who are using crypto like with real votes that could,

• 54:02Speaker 03

  that could get someone elected or, you know, have them lose an election. And it wasn't until, I think the political power is what really woke them up and like, hey, we need to get this done. Because a lot of these folks in Congress, like not to be too cynical about it. I think a lot of them are like really hardworking Americans that want to do something good. But a lot of them are also, they're just trying to stay in power, you know? And like to stay in power, you have a finite amount of things you can focus on at any given time. And so it's kind of like, who has a bunch of votes? Who has a bunch of money? You gotta kind of focus on that and be, you know, you kind of want to be for the thing that's going to happen. And nobody wants to stick their neck out for some kind of pet issue that's not going to decide an election one way or the other. And

• 54:47Speaker 03

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

• 54:56Shawn Ryan?

  I mean, what do you, what do you tell them though? What do, I mean, because especially with some of these, the older generations in government, I mean, I can't see any of them wanting to move to crypto.

• 55:14Speaker 03

  Yeah. Well, in many ways, you're right. I mean, crypto is about individual freedom and sovereignty. Like it's not, if you want more power in the government, like it's a little unclear why, you know, but the people want it, right? So the things that we usually talk to them about are, this is a technology to update the financial system, right? Like your average consumer and American or citizen, like you talked about those stats at the beginning, right? Like, Vast majority of Americans think the financial system is not really working for them, right? Like, the fees are super high, you get like these overdraft fees, right? It's hard to send money in certain ways, like, you know, you can get debanked, or there's unequal access, like, there's a whole bunch of people who are underbanked, or, you know, can't get a bank account, or get access to a loan, or these things that just, you know, so if you look at

• 55:59Speaker 03

  the, how satisfied Americans are with the financial system, it's very low. So, we tell them that crypto is a technology that can update that, it can make payments faster and cheaper, more global, it can give people better rewards on their money, like, you know, right now, the average savings account in America pays you 0.14 percent. You should be getting like 4.5 percent, that's what the US treasuries are paying, so like, that should just be riving into your checking account, why doesn't every American have that? There's all these kind of, like, it doesn't, you know, the banks, the payments don't really work on the weekends, and, you know, the stock market doesn't work on the weekends, so there's all these kind of like, legacy systems that are just kind of there because they've been there for 30 years,

• 56:41Speaker 03

  and they're ossified, they have no incentive to really improve, and so crypto's coming along, and updating the financial system, making better financial services for everybody, empowering them with sound money that can't be inflated away, and it can do it for everybody in the world with just a smartphone, right? Connect them into this global economy. So that's appealing to many of them. I also, we talk a lot about like, the national security arguments, right? Especially for people on the right, how the digital dollar is essential to ensuring it maintains like, its reserve currency status, how we want these industries to be built in America. I mean, imagine if like, the big internet companies were built overseas, like, that, Google, and, you know, Amazon, and all these things, people have their quibbles with

• 57:26Speaker 03

  them, but like, I'd much rather those companies were built in America, under the US system, than to be built in China, we were all using a Chinese search engine, right? So, if the internet companies had been built offshore, that would be a huge loss to America. Okay, let's make sure the crypto companies are built onshore as well. Once in a while, these things get away from us, like, you know, 5G, or semiconductors now are all being made offshore, and it's a big issue in DC, everyone's like, well, we can't be buying our 5G routers from Huawei, maybe the Chinese company, or- The semiconductor are all made in Taiwan and this is a huge national security risk. They're all trying to now scrambling and throwing a hundred billion dollars to try to bring these things back onshore. It's like, well, hey, let's just not lose it in the first place, you know?

• 58:09Shawn Ryan?

  Yeah.

• 58:10Speaker 03

  So those are the kinds of arguments we make to folks and it's generally pretty compelling like this, the Congress is now, there's a strong bipartisan majority that wants the industry to be built here in America, partially because of this last election. And actually, they just passed this piece of crypto legislation last Friday. I was at the White House doing that signing ceremony. That was a huge step in the right direction. And then there's, there's one more bill that hopefully will get passed in September, October of this year.

• 58:37Shawn Ryan?

  We'll get into those in a little bit, but you know, I wanted to ask you, we, we were talking about money. We're talking about the Federal Reserve coming off the gold standard, real estate, how, how, how currencies can be tied to commodities. And so I just wanted to ask you, I mean, what is money to you?

• 58:54Speaker 03

  Yeah. Well, to me, money is really like a medium of exchange. And it came out of this need from the barter system not fully working, right? Like if I, if I grow apples and you raise beef and I kind of want some beef, but you, you don't need my apples right now. You got enough apples. It's like, that's a barrier to a trade happening, right? So it helps if we have this common medium of exchange that can be used to price things and just allow a transaction to happen, even if you don't need the exact good that I produce, right? And you know, over time, lots of things have been used as money, right? Like people use salt as money at one point. In prisons, people use like cigarettes or different food items as money. Seashells, you know, famously all, all these like kind of things.

• 59:39Speaker 03

  And there's certain properties of money that make it good money or bad money, right? Like, like scarcity is one of those. Can people just, if you can use, find a bunch more seashells on the ocean, on the, on the beach, then that's like a bad form of money, right? Or durability, like, you know, will the, will the thing deteriorate over time? Like bread or something like that is probably like a bad form of currency because it just, it goes bad, it rots, right? How portable is it? Like, you know, a bar of gold is great as like a store of value, which by the way, is another good property of money, but. It's hard to move gold. Like if I need to pay somebody in Japan, like I need to fly that bar of gold, right? Or how subdivisible is it, right? Can I like chip off a little flake

• 1:00:22Speaker 03

  of gold to pay for my coffee or, you know? So people look at these different properties of money and you can kind of score, score different monies and like, this is partly why I think Bitcoin is probably the best form of money that's ever created because it is scarce, provably scarce, just like gold or something like that. But it's more portable than gold. You can send a Bitcoin transaction kind of anywhere in the world pretty quickly. It's subdivisible, down to like eight decimal places. You know, it's very durable. It's not going to go bad. Or, and it's, it's like, it's fungible too. Like you know that if I have one Bitcoin, it's just as good as another Bitcoin, right?

• 1:01:04Speaker 03

  Like some, you know, imagine if you had like different purities of metals and like, oh, is this one diluted a little bit? Or like, are they hiding some lead in there? You know? So, yeah, I think you could think of Bitcoin as like a digital gold. And it's, it has some of the best properties of gold, but some of the ones that gold doesn't have to, like the portability and subdivisibility. The programmability too, I would say you can use it in different, in different, set up different contracts with it and things like that. So that's kind of what money is to me. It's intended to be a medium of exchange. And I think crypto is really providing a better alternative on that dimension.

• 1:01:44Shawn Ryan?

  I mean, you know, the, the big argument in, I listen to a lot of people that I respect. One, Dave Ramsey. Are you familiar with Dave?

• 1:01:56Speaker 03

  Yeah, I think so. Yeah.

• 1:01:58Shawn Ryan?

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

• 1:02:03Shawn Ryan?

  Does not like crypto, unless he's changed his mind in the last, I don't know, year. But, you know, and he says it's backed by nothing.

• 1:02:11Speaker 03

  Mm hmm.

• 1:02:12Shawn Ryan?

  And so, you know, is, that's kind of where I'm going is, yes, there's a, there's a limited amount of crypto, it's never going to go over, I can't remember how many coins.

• 1:02:23Speaker 03

  Twenty one million, yeah.

• 1:02:24Shawn Ryan?

  Twenty one million coins. But what actually, like, what, why do people value it?

• 1:02:31Speaker 03

  Yeah. Well, he's right. I don't think it's necessarily backed by anything. But neither is the dollar. We've talked about it's no longer backed by gold. You know, are Picasso paintings backed by anything? Not really. I mean, they're just paint on some canvas. There's not like an intrinsic value to it. People value gold or Picasso paintings or Bitcoin because they are scarce. And other people believe they have value. It really comes down to trust, right? And a lot of things contribute to trust, like the fact that Satoshi Nakamoto kind of put out this white paper and allowed anybody in the world to mine it.

• 1:03:13Speaker 03

  So it was kind of like a fair way to launch it into the world. That created a lot of trust. The fact that no government or anybody's been able to hack it or break the algorithm behind Bitcoin, that created a lot of trust. So.

• 1:03:27Shawn Ryan?

  Do you think that the energy required to mine Bitcoin is possibly a backer?

• 1:03:35Speaker 03

  Yeah, I mean, so you could make an.

• 1:03:36Shawn Ryan?

  It costs money to mine it.

• 1:03:38Speaker 03

  Yeah.

• 1:03:39Shawn Ryan?

  Your energy price.

• 1:03:40Speaker 03

  I think if you were to make an argument that it is backed by something. Yeah, so there's a lot of energy in hashing, computing power that goes into verifying the network. So that makes it defensible against somebody trying to take it over. I think you could say another, like, what is the intrinsic value of it is another question people ask sometimes. And the way, the value of it is that it allows you to instantly transfer value anywhere in the world on a decentralized ledger, right? So these are kind of philosophical arguments, though. Sometimes people get really wrapped around the actual of like, yeah, but that's not, it's not really backed by anything. And so. I don't know, I just like to kind of concede that point. I'm like, okay, just let's take it. Let's just say that it's not backed by anything, but that's true of the dollar and Picasso paintings and all.

• 1:04:25Speaker 03

  So to me, that's not like a, you know, you can't like discount Bitcoin just because of that. If people trust it and believe it has value and it's provably scarce, that's all you need.

• 1:04:35Shawn Ryan?

  What are some of the other coins out there that, that?

• 1:04:40Shawn Ryan?

  People transact in, or is Bitcoin, I mean, is Bitcoin the primary? I know it's the primary one, but you got all these other ones that popped up, you know, Cardano, Ethereum. XRP, Solana, I mean, there's, I mean, I don't know how many there are, there's probably thousands. And then we saw the stuff with Doge, you know, and Elon.

• 1:04:59Speaker 03

  Yeah.

• 1:05:00Shawn Ryan?

  Doge, am I saying that right?

• 1:05:02Speaker 03

  Yeah.

• 1:05:02Shawn Ryan?

  Dogecoin and, and like, I think it was like early 2020, I was like buying all kinds. Buying all kinds of shit that I had no idea what it does.

• 1:05:13Speaker 03

  Yeah, yeah.

• 1:05:14Shawn Ryan?

  And you'd see these crazy spikes, you know, both up and down. What are, what are people using? What are, what are the reasons people would hold some of these other coins?

• 1:05:24Speaker 03

  Yeah, so crypto is not just one thing, right? Like Bitcoin is digital gold, but there's other blockchains that are really trying to be like um, the payment layer, the, the utility layer um, for crypto. So that's kind of what Ethereum and Solana are doing. And actually, those are like, I would call those blockchains. There's, there's like millions of coins built on top of these blockchains. Um, so you could have, someone might be like, why would there be like millions of these things, right? Um, and if, if you're thinking about it in terms of currency or money, you probably only need like one or two of those, right? But if you're, if you're thinking about it as, hey, this company might need to raise money. Or um, this social media post, like this piece of artwork or content or podcast episode or whatever.

• 1:06:07Speaker 03

  That's, that's how you're getting millions of these coins actually coming out. And so this is kind of where crypto is now on the frontier. Bitcoins like digital gold, there's USDC, which is like a digital dollar. That's like people spending dollars digitally faster and cheaper, more global. And now there's people, every social media post, whether it's like text or audio or video, that could be a coin. Or like, you know, you- What do you mean by that? Well, like if you put out this, uh, this episode, right? You know, today you have like sponsors on the podcast, right? And you know, that's how you have, kind of have to monetize it is like a certain number of eyeballs and you sell sponsorship.

• 1:06:47Speaker 03

  But what if people who love your podcast or on your Patreon or wherever, like maybe they want to own a copy of this, this episode, right? Or the next, uh, song that gets put out by some famous musician, right? People want to own a copy of that song. Like people are actually, they can buy directly from the creators, um, in this new model for crypto. So it's actually crypto started as like digital gold with Bitcoin. Then it started to update different kinds of financial services like payments, borrowing and lending, trading. And now what it's doing is it's actually updating the way these applications monetize on the internet, like all, even things that aren't directly related to financial services like, like podcasts or, you know, video or audio.

• 1:07:30Speaker 03

  Like there's going to be a version of like YouTube, Spotify. Is this like NFTs? It's similar, yeah. So these things keep coming in waves, but the early version of it was NFTs. Uh, exactly. That were like pieces of artwork, but this, those were kind of like baseball cards or collectibles people would want to own. That was like a picture of a funny penguin or something. This is more like every piece of content generated online can be its own coin and have its own market cap and people trading it. And it's just a way for creators to get paid more directly by their audience and their fans, so. So is this happening right now? It is, yeah. I mean, we, we just released this app called Base with, just like last week, and it's still in beta, but people can get invites for it and stuff.

• 1:08:11Speaker 03

  And it's kind of like, it's like a new social media app where every post that you make is a coin. And, um, you know, if, I hope we get you on there at some point or whatever, but if you, you could put out your podcast episode and people could own it and it would just monetize directly without having to have advertising be the primary business model of the internet. Wow. Yeah.

• 1:08:31Shawn Ryan?

  That's awesome.

• 1:08:32Speaker 03

  Yeah.

• 1:08:32Shawn Ryan?

  That's through Base.

• 1:08:33Speaker 03

  Yeah, so that's where that's where this is going. The other cool thing about Base is it's a self custodial wallet. So you you can just hold your own crypto. You own all your own content. That way, like, you don't have to trust any third party, even Coinbase. You don't have to trust us. And, you know, we talked about this at breakfast a little bit, but for the main Coinbase app where we're storing people's money, we that's that's a regulated financial service business, right? So you have to get a license every country you want to operate in. And so we've had to go one country at a time, set up a local team, get the local license, you know? So we're in like dozens of countries now, but it's takes it's really slow and expensive. With a self custodial wallet, you're not a financial service business because you're never taking possession of customer funds. It's it's really just like a software product,

• 1:09:18Speaker 03

  just like a web browser or a messaging app or something. So you can, we can launch that to 190 countries from day one. And people in all these countries that really need access to better financial services, like Venezuela and Turkey and Nigeria, places where there's high inflation, they don't have good options. They can now use a self custodial wallet, anybody with a smartphone. So that's a really cool way for us to just get this technology to, you know, the other 150 countries of the world that are a little harder for us to operate in as a regulated financial service business.

• 1:09:47Shawn Ryan?

  What I mean, how many countries? How many countries out there are fighting crypto? Don't want it to?

• 1:09:55Speaker 03

  Yeah. So, I mean, it the biggest one is probably China, actually. It's actually it's not technically illegal for Chinese people to own crypto. And by the way, the people in China love crypto. They all want to own it like they're because, you know, a lot of the rich people there are trying to get their money out of China. But the government doesn't like it. It's kind of like what what the China did with the Internet. If you're familiar with that, like the Great Firewall of China, where a lot of applications, including Coinbase, but also, you know, Facebook and it's all these things are blocked in China, like Google. So they've China passed this law where they said banks in China cannot work with crypto companies. So they kind of like de-banked them, kind of like what Elizabeth Warren tried

• 1:10:37Speaker 03

  to do in the United States. And so they made it very difficult for crypto companies to operate there. But they the Chinese government issued their own digital currency for the Chinese yuan. So they made it what's called a central bank digital currency, digital yuan. But of course, it's controlled by the government. And if you if you get on the wrong side of the government, they can just take all your money and shut down your account. So it's a tool. They're using it as a tool for control because they wanted to run their own blockchain controlled by the government. They're very anti like these decentralized blockchains like Bitcoin that are pro freedom for individuals. So yeah, so China China is trying to crack down on it. There's a couple other countries that I'd say the commons like in India, for

• 1:11:22Speaker 03

  instance, the Reserve Bank of India has some concerns about crypto because they're worried about again, capital controls, like a lot of the wealthy people, they want to plug into the broader economy. They want to like get their money out of the country to go do things in the world. So some countries are trying to clamp down on that, which takes people's freedom away. So they tend to be a little skeptical of crypto, but the people in those countries desperately want crypto. So we're often like, we're often in this kind of interesting situation where we go in there, we want to work with the government in those countries to do things by the books. But the government's interest sometimes diverges from the people's interest in that country. And so we want to provide the tools to the people for freedom and not get on the wrong side of the government. So it's like, we're trying to oftentimes play a delicate game there.

• 1:12:07Shawn Ryan?

  Yeah, I'll bet, I'll bet. I mean, when we're talking about people exchanging, basically using crypto as a currency.

• 1:12:24Shawn Ryan?

  How do they, I mean, the big thing for me is the volatility and all of it. You see these massive up and down swings. I mean, when do you think this will kind of, or will it? Do you think it will level off?

• 1:12:37Speaker 03

  Yeah, so Bitcoin has gotten less volatile over the last 10 years because there's just more and more people who own it now. And I think as you get like bigger pools of capital in the world, like big institutions and rich people all over the world and just everybody, really. Like as we get to having, there's maybe 500 million people who've used crypto today. I think as we get to like 5 billion or even a couple billion, it'll get less volatile, but it'll still be going up over time. Cause more and more people will be coming in, but you won't see like these 100% wild swings up and down. But you know, this is why a lot of people are using Bitcoin more like a store of value. And then the, as a currency, like a medium of exchange, they're using things like USD coin.

• 1:13:17Speaker 03

  Or things which are less volatile. So again, it's like crypto kind of has, if you're going to update the entire financial system, you kind of need to reinvent everything. You need like a digital gold, you need a digital dollar, you know, you need digital stocks, you need digital every. So it's crypto is kind of reinventing all these pieces of the financial system and making them more fast, cheap, global, efficient.

• 1:13:40Shawn Ryan?

  What do you think it will go to?

• 1:13:43Speaker 03

  Like the long-term implications of it or, yeah, I mean, well, from a market cap point of view, I think it's got like a long way to go 10 or 100x. But I think the ultimate outcome of this is that governments stop controlling currency. Really like we, you know, we exist in this world today where there's like 190 countries or so. Some of them are pegged to the dollar, but there's maybe like 150 or so currencies. And each currency, each country has its own currency. That might sound like an obvious thing, but like imagine if every country had its own internet. Like that would be a terrible situation, right? Like somebody in Germany wants to listen to your podcast and like

• 1:14:27Speaker 03

  they have to pay an exchange fee because they are using different internets or something like that. Like that would be super inefficient, right? We should all be running on the same internet globally. Well, we should all be running on the same monetary system globally, but do it in a way that takes the power out of the hands of like a small group of bureaucrats that can manipulate the currency or whatever. It should be like a fair system that no one country or company controls. So I think that's kind of what we're seeing is the power to issue currency is being unbundled from the state. And it's returning that power into the hands of individuals and people who they can choose what they want to use. They don't have to use it just because they live in that country. And that's going to be a more fair and free society. It's it's going to be money that can't be inflated away.

• 1:15:14Speaker 03

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

• 1:15:23Speaker 03

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

• 1:15:40Speaker 03

  Give you an example would be like you remember text messaging used to be like 30 cents?

• 1:15:46Shawn Ryan?

  Yeah.

• 1:15:46Speaker 03

  Yeah. And, you know, I think that at that time, there was maybe like a billion messages a day sent by text message or something. But these applications like WhatsApp came out and Signal and you know, text messaging got cheaper. And now it's basically like with WhatsApp or Signal, it's it's free to send a message anywhere in the world, right? Instantly. There's now like, I think it's a couple hundred billion messages sent per day. Right? It's no longer one billion messages a day. It's like 200 billion messages sent per day because it's free and it's instant and it's global. And that's kind of what's going to start to happen with the economy and with with money. There's so much friction today to move money that if we can bring the cost down, like

• 1:16:29Speaker 03

  under a cent, one cent, under one second, anywhere in the world, you're just going to see like Transactions in the economy will just flourish and you'll see a lot more of them happening. So that's kind of what we're trying to do is update the financial system with crypto, make it more efficient, more global, more fair, more free.

• 1:16:46Shawn Ryan?

  Who, who, couple of questions just off what you were riffing on there. Who, who set up the USD stablecoin?

• 1:16:55Speaker 03

  So originally there was a company called Circle in partnership with Coinbase and we co-created it. And now they're the issuer of it and we're a distributor of it, but there's a bunch of legal details behind it. But yeah, basically Circle is the issuer of USDC.

• 1:17:08Shawn Ryan?

  Okay. And then, you know, when we're talking about moving to a digital currency globally and having a global currency, you know, how, how do you think that would affect the US? I mean, Elon Musk talks about this, how the US has weaponized the US dollar, which, you know, is a bad thing, but I mean slippery slope there, right? I mean, you get the reputation of that, then people are going to want to move with, I mean, I've brought this up on several shows. We see BRICS, you're familiar with BRICS, you know, Brazil, Russia, India, China, South Africa, several other countries have joined, you know, because the US has weaponized the dollar.

• 1:17:50Shawn Ryan?

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

• 1:17:58Speaker 03

  Yeah. So this is a great question because I think it's, it's a mixed bag. It's not, it's complicated, right?

• 1:18:06Speaker 03

  So I think if you, if you think about like a digital dollar, I'll start with that, like USDC. To me, that's unequivocally just good for the dollar in the United States. It helps make sure the dollar is the reserve currency in all these countries around the world. It creates enormous demand for US treasuries. There's a bunch of, bunch of reasons why it's good. If you're talking about Bitcoin, I think it's, it's, it's a, it's more complicated because if the dollar maintains discipline, then it'll continue to be the reserve currency. If the dollar loses discipline, like we talked about earlier, people start printing a ton of it, like the Federal Reserve, or there's these huge budget deficits we keep running at the federal level that require us to print more money just to pay, pay things back and they sort of devalue it, the dollar. People will flee the dollar and they'll go to Bitcoin.

• 1:18:50Speaker 03

  In that case, the United States could lose the reserve currency status. Now, if, if they are, if the US is going to lose the reserve currency status, I'd rather people went to Bitcoin than to the Chinese yuan, right? So that's why I say I think Bitcoin is kind of like a check and balance on the dollar and deficit spending. Like, I, I hope that the US finds a way to maintain that discipline and the US remains strong. And in that case, crypto will just be on, like, a very good thing. But if we're gonna lose it, I'd rather we have Bitcoin than, than we have to all live under a Chinese system.

• 1:19:22Shawn Ryan?

  Mm-hmm, mm-hmm. And then, you know, we're, we're talking about, you're fighting congressmen, you're fighting senators, governments. What about banks? What about banks like Chase, Bank of America, Regions? I mean, are they, I would imagine they do not want this to happen.

• 1:19:45Speaker 03

  Yeah. I mean, these are big organizations, and it's funny, sometimes, like, depending who you talk to in the bank, it's either very positive or very negative. In general, we've had good relationships with the banks. You know, we actually need to work with them because we, we've basically built a bridge from the, the bank system into this crypto system, right? So we, when people come to Coinbase, they usually connect their bank and move a bunch of money into Coinbase. So we actually need to work with a lot of them, and we work with most of the big ones. But there certainly are elements of those banks that are skeptical about crypto, and I think they're afraid of being disrupted by it, right?

• 1:20:19Shawn Ryan?

  I mean, it could eliminate them, correct?

• 1:20:22Speaker 03

  Yeah. I mean, if, I, I don't know, if I'm sitting here in 10 or 20 years, I'd be hard, I, I still think there'll be, like, dollars and there'll be banks. But you're right, like, a whole generation of young people are growing up, kind of thinking, like, why would I need some checkbook and a bank branch on the corner? Like, I've got my phone. My, my, obviously, my phone is my wallet. And they're really using Coinbase like a bank replacement, like a neo-bank, sometimes people call it. You know, in particular, there's actually, like, this, this community bank lobby. I'll, I'll just tell you kind of one anecdote about this. So when we were trying to get this legislation passed in, in Congress for stable coins, the community bank lobby, which, they have representatives in all, all 50 states, you know, so they're very powerful politically, because there's, there's members

• 1:21:06Speaker 03

  of Congress in all the districts around the US, and they each have these community banks.

• 1:21:11Speaker 03

  So they came in and they lobbied hard against the stablecoin bill. And in particular, what they were most concerned about is they said, "Well, these stablecoins are paying people interest like 4.5% on their money." And they don't want that to happen because they pay their customers like 0% or 0.14% like kind of in their savings account. And their argument to the members of Congress was, "Well, if you allow these stablecoins to come in and start paying people 4.5% on their money, all the loans will dry up in these communities, like in these small community banks." Now, there's not really any evidence that that'll happen. I think what's more likely is they were just trying to protect their profit margins.

• 1:21:52Speaker 03

  "Well, we don't want to have to pay our customers a fair rate to compete in the market." And so they actually managed to get this line in the bill that was like, prohibits stablecoin issuers from paying interest to their customers, which is like the kind of unimaginable to me how they managed to convince members of Congress with a straight face that like, "Hey, we want a law to block our competition from giving more money to their customers." It's like kind of ridiculous. That passed? That passed. So now, there's a good news here, which is that we're not a stablecoin issuer, so we actually are allowed to continue to do it. We also pay rewards to our customers, which are different than interest. There's a whole bunch of legal definitions around this. But we found a way to continue to do it.

• 1:22:35Speaker 03

  So we're going to continue to pay 4.5% to our customers holding USD coin. Because that's what we want to do, is update the financial system. And if people don't like the rates in these community banks, they should have to compete on a level playing field with everybody else. Like, that's what the free market is there to do. It creates better products at lower prices for customers. So, yeah, but that's the kind of stuff we have to deal with in DC, is like these lobbying groups coming in with special interests. It's part of the reason I'm in favor of small government is like, there's just less to be captured. You know? If you have a big government, everybody's trying to influence it and try to get their special favors and it gets you these suboptimal outcomes.

• 1:23:16Shawn Ryan?

  How long do you think it'll be before we start seeing, and maybe we already are, but when will we start seeing people use crypto as currency at Walmart, at the gas station, at the grocery store, everywhere?

• 1:23:33Speaker 03

  Yeah. Well, I think the earliest adopters of it are going to be online, like e-commerce. We, just because they're more digital native, right? Like, we actually just announced this partnership with Shopify. They have like, they have millions of merchants, even if people, almost everybody's actually bought something from a Shopify store. They just, sometimes they don't know they're doing it because it's, each one's like a boutique shop, right? If you go and buy like beef jerky or like apparel or whatever. So we just announced a partnership with them where they're going to accept USD coin and actually give 1% cash back to the customer because the merchants are now saving the 2% to 3% on credit cards. So we're doing things like that.

• 1:24:09Shawn Ryan?

  Oh, that's slick.

• 1:24:10Speaker 03

  Yeah.

• 1:24:11Shawn Ryan?

  To incentivize them.

• 1:24:12Speaker 03

  Yeah. Incentivize people to pay with USDC and get, yeah, get some cash back. Or like that Bitcoin credit card that I gave you at the beginning is allowing people anywhere Visa's accepted or Amex in that case, we also have a Visa debit card. They can start to go spend their crypto. Now, the merchant's still paying 2% to 3% on that, but I'm hoping, you know, we can go to the merchant eventually and say, hey, you know, a lot of people are paying with crypto, you might not even know it. Why don't you do a direct integration? You can kind of save those fees. So there's areas like that where we're starting to chip away at it. But, you know, the credit card companies are a big oligopoly where it's, it's the reason they're able to charge those high fees because like, they've built such a strong network effect that it's hard for new entrants to come in.

• 1:24:55Speaker 03

  So we had to come, you know, a decentralized protocol like crypto is maybe the only way you could go compete with them. It wouldn't be, you wouldn't be able to do it as like, you know, if it was Coinbase versus one of those things, we'd probably lose. But if it's a totally open protocol like the internet versus them, maybe there's a chance to break in.

• 1:25:11Shawn Ryan?

  Do you transact in crypto?

• 1:25:14Speaker 03

  Yeah, I mean, I use my Coinbase card for most purchases and then I use it online too, just to like, just to buy crypto, shop increasing like these things at Shopify and stuff like that. But you know, I'm kind of really trying to live on the frontier. A lot of people, they just, a lot of our customers, they just hold Bitcoin, Ethereum, and they start off with like really an investment use case. And then they slowly add on these other things like this. Alright, well, okay, I have a bunch of Bitcoin. Can I get a loan on that or?

• 1:25:41Shawn Ryan?

  Can you?

• 1:25:42Speaker 03

  Yeah, like you can actually get loans on, there's a lot of people who they bought early Bitcoin, they've got like tons of money and they just, they can go get a loan on our website now. So we're starting payments, lending, earning yield, like it's starting to become like a bank replacement.

• 1:25:56Shawn Ryan?

  Is that through base or through Coinbase?

• 1:25:59Speaker 03

  Uh, that's through Coinbase.

• 1:26:00Shawn Ryan?

  Okay. So I can go on Coinbase and apply for a loan?

• 1:26:04Speaker 03

  Yeah.

• 1:26:04Shawn Ryan?

  Fuck, I didn't even know that.

• 1:26:05Speaker 03

  Yeah. And that's what we ultimately want to do is, you know, it's, it's kind of difficult for a lot of people to get a loan and it's a lot of paperwork and, that's what we're trying to do, update the financial system, like all parts of it, including, including borrowing, lending.

• 1:26:19Shawn Ryan?

  What are you checking when somebody borrows? Are you checking credit or, or is it just what's in their Coinbase wallet?

• 1:26:25Speaker 03

  Yeah. So in that case, it's just the collateral with a Bitcoin in their wallet. Uh, so we don't need to run a credit check or anything, but I think we'd like to find a way to do, what they call like non-collateralized lending too, which would be just based on credit. And I think one thing we're trying to invent is like a decentralized credit score based on, on the blockchain too. So, we could see a, a record of like, let's say that, um, you know, you've been receiving a bunch of money from, I don't know, your pod, different companies you're involved in this podcast or whatever. And, you know, you could actually build a reputation score, like a FICO score, kind of equivalent on chain of all the transactions that person has done and then, probably lend to them based on that. Um, so we're trying to think about how to create things like that too.

• 1:27:10Shawn Ryan?

  Wow. Wow. So a whole new, whole new credit score system.

• 1:27:15Speaker 03

  Yeah. And by the way, I mean, like in the US, people. It's difficult to get a loan sometimes, other times you can. In a lot of emerging markets, there's like, there's no credit system. You, nobody, like, when I was living in Argentina, you know, nobody can get a mortgage to buy a house or get a loan to buy a car. So the only people who can own real estate are rich people who can basically pay the whole amount in cash, because there's no, there's no mortgage industry.

• 1:27:40Shawn Ryan?

  Yeah.

• 1:27:41Speaker 03

  So this is an example where, like, we sort of take these things for granted in the United States sometimes, like, you can get a mortgage to get a house, and that's how people build wealth and all this kind of stuff. I think that we have a chance, again, with the smartphone and this new set of financial services powered by crypto, we can actually provide, like, a lending market to people all over the world. Like, if you, if you live, you're some 20-year-old, like, living in India and you have, you want to start a little business, or like, I don't know, whatever it is, you should be able to get a loan to do it. That's a, lending is a key way that you grow, you have economic growth, and most people in the world do not have access to any credit market. It's kind of crazy.

• 1:28:17Shawn Ryan?

  Interesting, interesting. Let's take a quick break.

• 1:28:22Speaker 03

  Yeah.

• 1:28:22Shawn Ryan?

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

• 1:28:25Speaker 03

  Great.

• 1:28:26Shawn Ryan?

  Perfect.

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• 1:30:09Shawn Ryan?

  All right, Brian, we're back from the break. We're getting ready to get into the journey to innovating Coinbase. But just a couple of questions that came to mind on the break. So we talked about 21 million Bitcoins will only 21 million Bitcoins will ever exist. What do you think will happen when we hit 21 million?

• 1:30:32Speaker 03

  Well, yeah, so right now, there's a smaller and smaller number of Bitcoin being produced over time. And it kind of it hits like a maximum number. It actually takes like 100 years, right? But we're most of the way through that. I think there's probably already 20 million or so already out there. So there's only maybe a million left that'll only that'll ever be created. So right now, the new Bitcoin are created when people, the miners, the Bitcoin miners, verify a new block. And so that's how new Bitcoin are kind of issued to them as like a reward for doing all that computational work, running the network. Once that runs out, they're going to have to be compensated by the small transaction fees

• 1:31:17Speaker 03

  that happen on Bitcoin.

• 1:31:20Speaker 03

  And so, you know, this may be more detailed than you wanted, but

• 1:31:24Shawn Ryan?

  No, I'm going.

• 1:31:25Speaker 03

  You can take it anywhere you want to go. But basically miners are the people that run the Bitcoin network. They run these data centers all around the world. And today, you know, the majority of their revenue is coming from new Bitcoin being issued, and a smaller percentage is the Bitcoin transaction fees. As fewer and fewer Bitcoin are produced and the network grows, it'll shift to be more about transaction fees than new Bitcoin being mined. And eventually, it'll be zero new Bitcoin being mined, but they'll still make money from transaction fees. I think what that basically means is that, you know, the supply of Bitcoin is not going to keep growing. So if you want Bitcoin, you're going to have to buy it from someone willing to sell it, which is how most people do it today already.

• 1:32:09Speaker 03

  But some people mine them to get brand new Bitcoin. So anyway, that's like a simple way to think about it is, once the supply, there's no more ever created, you have to just buy one that already exists from someone else. And so that is the price of Bitcoin is who's willing to sell one.

• 1:32:25Shawn Ryan?

  So is that, is that, how do I say this? Is that like already set up to where when we hit 21 million, then the miners will be incentivized with transaction fees?

• 1:32:39Speaker 03

  Yeah, I'd say that's already happening today. It's just it'll gradually shift more and more to the transaction fees over time.

• 1:32:46Shawn Ryan?

  And then, I mean, does the system ever need to be updated? Like, for example, Bitcoin, nobody knows who it is. And so will it need to be updated? And if it does, who does that?

• 1:32:58Speaker 03

  Yeah, I do think Bitcoin will need to be updated for, to become quantum resistant, right? So quantum computers create this risk that we talked about. And so Bitcoin has a mechanism for it to be upgraded. And the way that it works, since there's no central authority that controls Bitcoin, right? So anybody can propose an upgrade to Bitcoin. There's what are called the core developers, some of the people that work on it, like the open source project, kind of volunteering or they're getting paid by donors. There's also the miners, the people running the network. There's exchanges like Coinbase that play a role. So there's this whole community of different participants in the Bitcoin ecosystem. And for an upgrade to happen, like to make it quantum resistant,

• 1:33:43Speaker 03

  there will be various people who discuss proposals about how to do that. You know, Coinbase might help with that, or the core developers have proposals. And essentially for Bitcoin to be upgraded, everyone has to agree. I mean, not everyone. You actually just need more than 50%. So let's say that 51% of all the people running, you know, the exchanges, the miners, the core developers, um, you know, they all sort of decide, okay, this new proposal is the one we're going to adopt. And that like at least 50% or more moved to that new proposal, that is Bitcoin. That is, that is the chain that has the most people on it, using the most computational power. So it's, it's truly a consensus mechanism. All these people have to come into agreement.

• 1:34:27Speaker 03

  Now, there's pros and cons of that. The downside of it is it's harder to get that many people to agree on something. So it can go a little slower, but the upside is that you're never going to get some small group of people who can take it over and unilaterally do something to harm Bitcoin.

• 1:34:41Shawn Ryan?

  Okay, that, that was actually another question of mine. I mean,

• 1:34:47Shawn Ryan?

  Michael Saylor.

• 1:34:49Speaker 03

  Yeah.

• 1:34:49Shawn Ryan?

  You know, I mean, he is just buying like shit tons of Bitcoin. And so is that, is it good for the, for the Bitcoin market for somebody to, to have that big of a stake in it?

• 1:35:06Speaker 03

  I think it's good. I mean, he's obviously a bull on Bitcoin, but I don't, it's not like he can own like 50% of all Bitcoin or something like that. It's too big right now. Um, like in many trillions, right?

• 1:35:17Shawn Ryan?

  Okay.

• 1:35:18Speaker 03

  So, you know, there's going to be various groups that come in and try to acquire Bitcoin positions. Um, but that's good. I think it's just, it's just driving up the demand.

• 1:35:26Shawn Ryan?

  Okay, okay. And then just another question I had was, you know, will we ever see anything like investing for your kids, like IRAs, Roth IRAs, uh, 529 college tuition thing, like?

• 1:35:45Shawn Ryan?

  Is there anything like that that's gonna come in the future where you can you can you can set aside money for your kids or your grandkids or whoever you want and without opening up all these different wallets?

• 1:35:59Speaker 03

  Yeah, well, so in some ways, this is already happening today. In fact, like there's some members of my family, you know, when they were when they were born, I gave them like a Bitcoin, right, that their their parents kind of put in a wallet just to hold on for future. And they were kind of laughing at me, too, because when I did it, it was like $200. And you know, I was like, hey, maybe someday this will pay for their college tuition or whatever. And they they kind of laughed at me. But they haven't they haven't sold it yet. So that's good. So in some ways, it's already happening. But I think, you know, these IRAs and like these different types of tax advantageous accounts, I'd actually I'd have to go look at the specific details on each of them. But there's certain that have permissible types of investments in there that are allowed or not allowed. We're constantly trying to chip away at these rules

• 1:36:44Speaker 03

  to make it easier where, I mean, people should absolutely be able to hold crypto in there just like any other asset class. And actually, we need to make it easier for people to do that on Coinbase. That's something we're still working on is to open up these kind of retirement accounts and tax advantageous accounts. We have some some customers are asking for it now. So we'll probably have to do it soon.

• 1:37:05Shawn Ryan?

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

• 1:37:12Shawn Ryan?

  Bitcoin, I mean, there's a there's a handful of them that seem to be the mainstays that are going to be around for a long time. But then we see all these, for lack of a better term, trash coins coming out. And there's been, you know, there's been some scams in the industry, FTX, Sam Bankman Fried, I mean, had all these big time celebrities vouching for it, turned out to be a complete scam. I mean, how do people navigate that that are new in the industry?

• 1:37:42Speaker 03

  Yeah, so there's no doubt. I mean, crypto has attracted its fair share of scammers, right?

• 1:37:48Shawn Ryan?

  Just like anything else.

• 1:37:49Speaker 03

  Yeah. Yeah, I mean, like the internet, you know, the early internet and even still to this day, right? It's like these emails from Nigerian princes and all kinds of scams on the internet. You know, technology is a double edged sword, right? Like anytime you make a technology, like a shovel, you know, you can use it to build something or hit someone over the head with it or whatever, right? And financial services, technology, I think, does attract some of the wrong actors, but it also attracts like the right people who can build things. My mental model of the world I always try to remember is like, I think, you know, like roughly speaking, 99% of people are good, 1% are bad. So there's always going to be bad people who try to do these things and some of them can attract a lot of headlines and get really big in the public psyche.

• 1:38:32Speaker 03

  But you have to remember, like, there's 99 people behind every one bad one that's trying to do the right thing and build good things in the world. So we have to be careful not to like, just say the technology is bad because 1% of people, bad people, try to abuse it. But I think for the average person coming into the industry, I mean, look, it's a lot of basic stuff, right? It's like, if someone's offering you some crazy yields that sound too good to be true, like it probably is. If you're just learning about something for the first time, you know, don't put all your money into it, like, I would say that's true of crypto, but it's true of anything in life, right? Like, a lot of people who are getting into crypto for the first time, you know, I tell them, all right, put like 1% of your net worth into Bitcoin or something and just see how it goes for a couple of years.

• 1:39:15Speaker 03

  And, you know, if you like it and you want to start trying to trade other ones, you're learning about it, okay, put in 2%, 5%, whatever. There's people who have like 50% or more of their portfolio in crypto too, but they're, they have different levels of risk and comfort with that. And then, of course,

• 1:39:32Speaker 03

  you got to figure out, you know, what company to trust, right? Like, sometimes... This, you know, sometimes there's companies overseas that are offering certain products and services that are not allowed here in the US. And, you know, that can be interesting because it allows you to live on the frontier. But if you're going to live on the frontier, you know what? You might take some arrows too. And so you've got to sort of have more personal responsibility. Like, the government's not going to protect you in that situation. You need to know what you're doing to really look out for yourself. So I'd say, like in investing, there's no, there's no return without risk. If anybody thinks it's like a, this is a risk-free return or whatever, you know, that's, doesn't really exist. So, you know, got to use good judgment, sweet smarts.

• 1:40:15Shawn Ryan?

  And then, just another question. You know, we're, we're talking a little bit about prepping at breakfast.

• 1:40:21Speaker 03

  Yeah.

• 1:40:22Shawn Ryan?

  And the big argument with crypto, which is a little ridiculous to me because is basically, what happens if the grid goes down? You have no access to your Bitcoin. Well, you probably don't have access to your money too, because the financial institutions won't have any power either.

• 1:40:42Speaker 03

  Yeah.

• 1:40:43Shawn Ryan?

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

• 1:40:46Speaker 03

  Yeah. Well, if the, if the electrical grid or the, the whole internet went down, I mean, yeah. So, society's going to be very disrupted at that point. Your Bitcoin won't be going anywhere. It's not like you're going to lose it. If, like, let's say that there's a outage for a month or a year, or like, you know, five years, at least, you know, your, your crypto is still safe. It's not going to go anywhere. There is a hypothetical way, actually, that people could continue to do transactions without any internet, where it's actually using your phone Bluetooth to talk to each other, and you could actually have more of a mesh network, they would call it. So that is possible in that kind of situation, but, you know, I think it would certainly

• 1:41:30Speaker 03

  be disruptive and challenging. That's, in that type of situation where you're talking about that level of societal collapse, probably things like ammunition and gold and start, those start to be a little bit more like your fallback. So I think people should also own gold, right? I don't think it, it's not like exclusively one or the other, but in a world where civilization more or less continues to exist with electricity and things like that, I think, you know, Bitcoin is probably a superior version to gold, so.

• 1:41:58Shawn Ryan?

  Thank you, thank you. All right, let's talk about the road to Coinbase.

• 1:42:02Speaker 03

  Yeah.

• 1:42:02Shawn Ryan?

  So I know you got inspired by the white papers.

• 1:42:05Speaker 03

  Yeah.

• 1:42:07Speaker 03

  Yeah, I think it was December of 2010, I first read that Bitcoin white paper. At that time, I was working as an early employee at Airbnb, a software engineer, trying to help them move money to different countries around the world. And reading that white paper really captivated my attention. I was like, wow, this is fascinating. And I kept, I reread it a few times, went to some of those Bitcoin meetups I mentioned.

• 1:42:27Shawn Ryan?

  How did you come across it?

• 1:42:29Speaker 03

  Well, yeah, I was, I was just cruising, there's this website called Hacker News, which a lot, sometimes like, people in Silicon Valley read, that's like, has just like technology encoder type updates. And yeah, it got posted on there in December 2010, I think is where I first saw it. And, you know, I went and talked to some of my friends about it, who I was working with at that time. I was like, this, this paper is really cool. Like, have you seen it? What do you think? And a lot of my smart friends, they, they were like, I don't get it. This doesn't make any sense. Like, this sounds like a scam or something. And so I kind of had a lot of self doubt about it. I was like, I don't know, I think this is kind of a cool idea. But a lot of people I talked to didn't seem to think that. So for about six months, I was just thinking about it, reading stuff, going and meeting people at these meetups.

• 1:43:12Speaker 03

  And sometimes when I can't get an idea out of my head, and I, I keep thinking about it and going down this rabbit hole, I'm like, okay, I gotta build something. I gotta, I gotta try doing something. Because I don't know what's gonna happen, but if, if I take some action in this direction, like it might produce more information. And later, this kind of created a good thing I like to say to people, which is like, action produces information. You know, if you're ever unsure, just like, do anything. Because like, if you do, even if you do the wrong thing, it'll help you figure out the right thing to do. So I started working on a prototype on nights and weekends while I was, you know, I was at my job at Airbnb. Nights and weekends, I'd come home and work like 7:00 PM to midnight on this prototype. Which was a simple Bitcoin wallet.

• 1:43:56Speaker 03

  And I wasn't really thinking of it exactly like a company. I was just trying to like learn about Bitcoin and figure out if I could make a simpler way for people to use it. The analogy I kind of roughly had in my head was, you know, email is another decentralized protocol. A lot of people don't know this, but underneath, when you're sending emails, it's using a protocol called SMTP, which would be sort of like Bitcoin in this example. And you could, in theory, run your own email server. But most people don't do that. They use like Gmail or Outlook or something. And that's kind of like a hosted server in the cloud. They sort of deal with all the security updates and how these email servers talk to each other.

• 1:44:38Speaker 03

  And so I was thinking, there's probably going to be a company kind of like that for Bitcoin. That's like Gmail, right? Like, I'll run the servers for you, worry about the security and the backups. And the average person is going to benefit from this, but they don't need to have to understand exactly how Bitcoin works and all the complexity behind it. So I started building this as a prototype and I applied to this startup incubator called Y Combinator. Some people might have heard of it, but it's kind of famous in Silicon Valley because they'll give you like a 150K as a check if you have a really early-stage idea for a company. And I applied to this Y Combinator program and I got invited to interview.

• 1:45:22Speaker 03

  I was trying to find a co-founder. I couldn't find the right co-founder. Long story short, I got accepted into this program or offered to join it. And they're like, well, you have to quit your job. We'll give you 150K and you come work on this thing full-time if you want to really, really do it. And so I had kind of a tough decision to make because Airbnb I knew was going to be a big company and I was an early employee there, so I had stock options. You know, that would have been like the comfortable path, right? I think if I had just stayed at Airbnb and... And just let my options vest, I probably would have been worth like tens of millions of dollars, right? And I had like maybe 20 grand in my bank account that time as just being a software engineer in Silicon Valley, traveling a little bit, or you know, I'd made a little bit of money and saved it,

• 1:46:05Speaker 03

  but I could tell I was on a rocket ship and this was going to be a good company. But I was like, I really wanted to try to go build something new in the world and I was willing to take that risk because I was, I think I was 30 years old, unmarried, I didn't have kids. And I had this really deep desire as well. I was like, I want to try to do something important with my life, you know? I don't know if it was like an insecurity that came from like just people not recognizing me, or you know, I wanted girls to like me, or like whatever it was, I was like, I want to go do something important, like in something crazy and something hardcore, you know, that really has an impact. And you know, for whatever reason, I was like, I have to do this and really give it a

• 1:46:46Speaker 03

  shot. And if it fails, like I'll be okay with that, but if I never tried it, I would probably regret it. Right? So I don't know, it might feel similar to like, why were you called to like be in the military, whatever. I never felt like I had taken a risk and really done something that would have greater like significance. So I decided to quit, quit my job. I called my parents, told them that. My mom was like, oh my gosh, like, are you gonna have health insurance? Or like, what did, you know, she, my parents always worry about these, you know, the practical things. And I was like, I don't know, I'll probably get health insurance, it's fine, mom. So this guy gave me 150K, I'm good, right? And so I quit my job to go work on this thing full time and I joined, Y Combinator has

• 1:47:29Speaker 03

  this three month program where you go there and you basically with a bunch of other founders and hackers, and you just grind like 12, 14 hour days, and you try to create a prototype. And at the end of the three months, they put you in a room full of like a couple hundred investors, like Silicon Valley venture capitalists, and you give your like five minute pitch along with like 100 other companies, and then you see who wants to invest. And you know, at that time, I was really just solo by myself, and I didn't really get that much attention from investors. Like I was out, I was trying to, I think they'd given me the 150K check. I was trying to raise a million dollars as my, at the end of the three months from investors. And I think I got like,

• 1:48:10Speaker 03

  Three or 400K. Like, I got a little bit of money, but there wasn't enough interest to get like a million dollar investment at the end of this. And I talked to a bunch of these venture capitalist guys and a lot of them were like, this, you're gonna make like a new kind of money to like compete with the dollar? Like, what? This doesn't, you know, why would anybody trust you? This doesn't make any sense, right? And I was like, no, no, it's not me creating it. It's a decentralized protocol. It's Bitcoin, right? And they, they, some people were just like, get out of my office, you know? They didn't understand what I was doing. But there were a couple people like that had already read about Bitcoin and they were pretty excited about it. They were just looking for the right company to back and I did get some good seed, like seed investments and things like that.

• 1:48:51Speaker 03

  And that's when I, I raised that initial seed round and then I was lucky enough to meet my co-founder, Fred Ursom. I can, I can keep going, but some of the pieces started to come together in the early stages of like finding the right investors, finding the right early people to work with, finding a co-founder. And we also made a big decision at that time to actually go and try to get licenses to operate in the United States and be like a trusted legal business. Cause a lot of, a lot of the crypto people I met at that time, they were kind of trying to fly under the radar. They were trying to build these offshore entities because they hated the US government.

• 1:49:28Speaker 03

  And I was like, you know what? The company that wins in this space, you can't just be like underground flying under the radar. Like, you know, if you eventually it gets big enough, like the government's gonna come talk to you and ask you why you're doing this without a license or whatever. So we went and got money transmitter licenses, they're called in the US. This is the same thing that like PayPal has and these different companies. So we decided to build it in the US, take a trusted and compliant approach. And, uh, you know, that was the early days. Like, I can tell you, there's, there's lots of good stories about like finding product market fit. How did, you know, cause a lot of times you're building these prototypes and nobody cares. You put it out there in the world and like people come and look at it and nobody gives a shit, right? And, um, yeah, I mean, I don't know. You wanna hear that story? I can tell you.

• 1:50:10Shawn Ryan?

  Yeah, I wanna hear it.

• 1:50:11Speaker 03

  Yeah, I mean, so this is the hard thing about starting a company, right? Is like, you, you try to, this could be, it could be anything, like a podcast, a coffee shop, but it's certainly true in tech startups too. You know, you you make your your version one and you put it out there in the world. And usually like no one cares, right? That's that's the default. There's so much noise of things that people are going on. This is trending and this is, you know. And so how do you? How do you break through the noise? And so I had put out this prototype of a simple Bitcoin hosted Bitcoin wallet, along with my co-founder Fred Ursim. And we posted it just on the on the Internet, like on Reddit and some of these forums. And like 100 people would come sign up and then no one would. No one would stick around and use the product.

• 1:50:54Speaker 03

  And so they teach you this thing in Y Combinator, which is like how to find product market fit. Like, how do you get your initial users to want to actually come back and use the product on a recurring basis? And what you basically do is you just like go and talk to them and get their ideas and feedback. And then you go try to improve your product. And then you go talk to them again and you improve it again. And you talk to your customers again and you improve the product. It sounds simple, but like a lot of people don't do that. They're when they're trying to start a company, especially tech entrepreneurs in Silicon Valley. They get caught up in all this other bullshit. They're like going to fancy conferences and like trying to write really amazing blog posts and try to sound smart. And, you know, just they over optimize on talking to every venture capitalist.

• 1:51:37Speaker 03

  It's like, no, you got to just like talk to your customers and improve the product. Talk to customers. And that's how you get a product to actually find product market fit. So, long story short, so I.

• 1:51:46Shawn Ryan?

  How would you? How would you talk to? How many customers were there at the beginning?

• 1:51:50Speaker 03

  Yeah, so when we put out the first version, it's like maybe a couple hundred people came and signed up. And then they but they didn't stick around. They didn't. They didn't keep using the product. And so I remember I was just emailing random people who had signed up. And I'm like, hey, I built this app. I'd love to get on the phone and talk to you about it. So I would just call these people out of the blue. And and I remember this one guy I was talking to on the phone. I was like, hey, I noticed you signed up for the app and you didn't come back like any feedback. And he's like, well, yeah, I mean, I it was pretty cool. Like, I would use the app, but I don't really have any Bitcoin. And I was like, oh, that's interesting. Well, when you signed up, if there had been like a buy button right in the app, would you have used that? And he's like, I don't know, probably. And it sounds so obvious, but at the time you couldn't actually buy Bitcoin on Coinbase.

• 1:52:34Speaker 03

  You had to if you already had Bitcoin, you could put it in there and use it. I don't know why I didn't think about this beforehand. Some of these talking to customers, sometimes you have these like obvious moments come back to you, but. So I was like, okay, well, let's try to just put like a buy Bitcoin button in the app. And to make that work, I had to go get a bunch of stuff done. We had to hook up like a payment method. We had to get a bunch of legal things figured out. We had to hook up to one of the early Bitcoin exchanges to source the Bitcoin. Anyway, long story short, we got that launched and like people started using it, right? Like, and it was like every day, more people would use it than the prior day. Because it became the simplest way to buy Bitcoin and people started to spread the word about it.

• 1:53:15Speaker 03

  Like, back in that time to buy Bitcoin, you had to go to like one of these overseas exchanges like Mt. Gox in Japan. You had to like wire money and it was inconvenient. And so just through that process of like talk, and that, by the way, that was not like the first thing we tried. There was like probably a dozen other things we talked to customers about, tried to improve the product that didn't work. And eventually we hit on, we hit on one of them and the product became good enough that there was more people coming back every week trying to use the product than had the prior week. Not because we were manually talking to them, they were just word of mouth, they were starting to tell other people. And that was the minute we were like, oh, the metrics started to go up. And the biggest problem became not trying to find product market fit. It became, how do you keep up with demand?

• 1:54:00Speaker 03

  And how do we scale this company? How do we start to hire more people? Because we were getting a bunch of customer support tickets. How do we go raise more money? Because we were using all of our working capital to try to source the Bitcoin on these exchanges and moving tons of money around the world. So that was the moment we were like, okay, we're ready to go raise the next round of financing. And we felt like we had the kernel of something that was now starting to grow. People actually cared about it.

• 1:54:25Speaker 03

  And that, and it came with, it like solved one problem and then it brought along a whole another set of problems to go deal with. Wow, wow. How, how fast did you see it grow? You know, that's, when, when product market fit, especially with tech companies starts to work, it's, it's shocking how fast it can grow because it's not like, like a local business, you know, a sandwich shop or something. Only a certain number of people will drive by it every day or whatever. But it went from like 100 people using it every day to

• 1:54:57Speaker 03

  Or it was maybe easier to talk about in terms of people signing up every day. It was like, instead of like a hundred people signing up today, it was, it would be like a thousand. And then it was like 10,000. And then I remember, one day it was like 25,000 people signed up in one day. And I went to, you know, if you look at these different state, sports stadiums, and I was Googling sports, like that stadium holds 50,000 people. It looks like a ton of crazy number of people. I'm like, holy shit, all 50,000 people signed up in one day, you know? And then, to give you a sense of the kind of problems we started to encounter at that point was like,

• 1:55:33Speaker 03

  you know, you can imagine if you have 50,000 a day, people signing up, you're getting a lot of customer support tickets. We had no customer support team. So between like 9:00 PM and midnight, my co-founder and I and our first employee, we would answer all these customer support tickets.

• 1:55:47Shawn Ryan?

  Holy shit.

• 1:55:48Speaker 03

  Yeah, so we were, and we had, we were developing a backlog of like, 10,000, 20,000 customer support tickets where like, nobody was hearing from us. And this was a big problem. And then, you know, we had a bunch of hackers come in and try to start to hack into our webs, into the app, because they realized, oh, more people are storing money here. And we had to create a whole, that cold storage system I told you about earlier, where we started to store all the funds offline. We had to build that rapidly, because, you know, if we had gotten hacked at that point, like, we would have been insolvent, out of business. And I'll tell you like a little story actually from that day, because, you know, you can imagine, we're kind of sleep deprived. We were like, working 14-hour days, seven days a week, trying to keep up with all this.

• 1:56:30Speaker 03

  And I remember, we were in the office one day and eating lunch. And there was just like, maybe three or four of us around the table. And somebody is looking at their computer and they're like, hey, there's a lot of like refunds going out to customers. That's weird, like, we all looked around, none of us are doing it. Who's sending all these refunds? We realized, this hacker had broken into one of our systems that, like an admin interface on the backend that allows you to issue refunds to customers. And he was just sending refunds to himself as fast as he could, right? And we're like, oh shit. So we go in there, we shut down the site temporarily. Customers can't access it either. And we're like, how did he get in here?

• 1:57:14Speaker 03

  We start trying to debug it. We find the way that he accessed this particular system. And we patch it and we come back online. In the time that he was able to send out all these refunds as fast as he could, you know, I think we had lost maybe $50,000 or something like that. Now, at that time, we had only raised, I think, the 300,000 or 400,000 that I mentioned. And so 50,000 out of 300,000, 300,000 or 400,000, we were still alive, you know? But if he had started doing that at midnight while we were all asleep, we would have been out of business by morning.

• 1:57:53Shawn Ryan?

  Wow.

• 1:57:54Speaker 03

  You know, because we caught it within like 10 minutes.

• 1:57:56Shawn Ryan?

  Yeah.

• 1:57:57Speaker 03

  And it's just pure, it's pure luck that like Coinbase would not exist today. That was, that was like a coin flip. That if, if that hacker had waited till midnight to start doing it and we hadn't noticed, we would have been insolvent by morning.

• 1:58:08Shawn Ryan?

  Wow.

• 1:58:09Speaker 03

  Yeah.

• 1:58:10Shawn Ryan?

  Wow. Damn. I mean, what was the, what was the moment that really got you? When you were like, holy shit, this is gonna work?

• 1:58:25Speaker 03

  Well, there was a lot of moments along the way where I, I knew that we had a chance to, to really make this big, but it was not guaranteed. Like, there was a lot of ways we could fuck it up along the way. I mean, that, that's an example where we were seeing a lot of demand. We were starting to generate revenue. But like, were our systems hardened enough where these attackers couldn't get, get in? Obviously not. There were some gaps right at that time. So that was a risk, like the cybersecurity risk was very real. That was how a lot of crypto companies died, right? And then the other big one was compliance and, and like government. We thought the government might just come by and shut it down, the whole thing. So those were probably two of the biggest risks. And then there were also competitors, right?

• 1:59:11Speaker 03

  So we, you know, we were off to the races, but then we started to see really solid companies pop up overseas and in the US. You know, I, yeah, I mean, there was definitely, we also thought that, by the way, there could have been like a flaw found in the Bitcoin algorithm or something like that. That would have just blown up the whole thing. You know, we had looked at it. We couldn't find any flaw in the algorithm. We thought, okay, this will, this will work. It'll stand the test of time, but who knows? Like, maybe some smart mathematician came up with something we didn't think of, right? Now, so anyway, all those risks, we were able to mitigate over time. And I think, I think it got big enough where enough Americans started to use it that the government now can't shut it down, you know?

• 1:59:53Speaker 03

  It's just, it'd be political suicide to try to shut it down. Like, people want freedom in the United States. They want the ability to own gold, guns, they want Bitcoin, like, all these things. Yeah, so, but in the early days, when it was small, somebody, somebody in the government, if they had had their act together, could have tried to kill the whole thing. I mean, Elizabeth Warren and Gary Gensler tried to, right?

• 2:00:13Shawn Ryan?

  Yeah.

• 2:00:14Speaker 03

  But it was too late. So, those were the risks along the way where we didn't know if it was going to work.

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• 2:01:18Shawn Ryan?

  I mean, we talked a lot about economic freedom here and there on the first segment here. So I just want to ask you, now, what is, what does economic freedom mean to you?

• 2:01:29Speaker 03

  Yeah. Well, I think economic freedom to me is, it's your money, right? You should be able to do whatever you want with it. There's a lot of middlemen in society that are blocking payments, taking fees, slowing things down.

• 2:01:44Speaker 03

  Economists would call it this idea of property rights, which is basically, can you actually own stuff or can it be taken away from you without your permission? Right? And in many countries of the world, actually, like the money in your bank account can just be yanked out by the government. There in Cyprus in the 2010s, there was an incident like this where the government passed some, they're like, the government was having deficits and they had some law they passed where they just took like 50% of the money out of everyone's bank account. So obviously you don't actually own it, right? When was that? I think it was in the 2010s. Yeah, or maybe the 2000s. Yeah. So there's, and then there's examples like that in history. Same thing in Argentina, by the way.

• 2:02:29Speaker 03

  There's times where, you know, the government has just printed so much currency that it devalued. That's another form of theft, basically, is high inflation, where they devalue everyone's assets to just give the government more money. Right? So property rights is this kind of like, it's a foundation that's required for all progress in civilization. Like if you, if you can't actually keep what belongs to you, or like, you know, if there could be some gang that wrote, runs through the neighborhood and just like kicks you out of your house and takes all your stuff. You know, it's hard to like make a real plan for the future and try to build a company or like do anything good for society if your shit can just be taken from you at any given time. Right?

• 2:03:13Speaker 03

  And it's the same thing with what we would call like sound money. Right? Can the value of your money or your wealth just be eroded or seized from you? So property rights, sound money, these are foundational to all progress in society. And most people in the world actually don't have very high economic freedom. We sort of take it for granted in the US. Even in the US, I'd say it's a little under threat. Like we talked about the inflation of the dollar. You know, there's, there's incidents where like people have felt like their property rights are under threat here. You know, eminent domain or like whatever you want to talk about. But in general, like the US is pretty good. We have pretty good rule of law.

• 2:03:52Speaker 03

  Most countries in the world, that's not the case. And so that's what economic freedom means. I think crypto is like a it's the key piece of technology that can give economic freedom to anybody in the world, as long as they have a smartphone. They can sort of opt out of that local system that they're in if it's corrupt or not meeting their needs.

• 2:04:11Shawn Ryan?

  Why do you think crypto, or excuse me, why do you think Coinbase is the most trusted exchange out there?

• 2:04:18Speaker 03

  Yeah.

• 2:04:19Shawn Ryan?

  What have you done that's different than the other ones?

• 2:04:21Speaker 03

  Yeah, it's a great point. When we do surveys by third parties or just blind surveys, we do come back at the most trusted brand of crypto. I think it's a few things. One is that companies are a reflection of their founders, right? And I think the fact that I was willing to put my name behind it, I'm based in the United States, you know, I'm American, I'm an American citizen. I think just my demeanor, like I'm, I try to just be like, do the right thing, kind of tell the truth. You know, people may or may not like me, I don't know, but they, at least they're like, this guy, I don't think he's like full of shit or a scammer, right?

• 2:04:57Speaker 03

  And I think we've also tried to follow like a compliant and regulated approach. You know, I, like, in general, I'm like, probably more for like deregulation and like free markets. But we fought, we've like followed the law, we've gone and got every license that we needed to do in the US, in other countries where we operate. So I think those things, we also, we've reached a certain size and scale now where we have a track record of doing this successfully, right? Like, you know, we're, we're storing crypto for like 140 different government institutions now. If you look at federal, state and local, you know, we work with like the US Marshal Service, for instance, at the federal level. There's other federal agencies we work with, but that we, that we can't talk about.

• 2:05:41Speaker 03

  But, you know, we work with some of the largest institutions in the world too, like, like BlackRock and these, these folks. We're a public company, so our financial statements have been audited by the big, you know, the big four accounting firms. They can come in there and validate that we're actually saying what we're saying is true. The money is really there, you know, these kind of things. So I think all those things have contributed to our brand having a lot of trust. And like, you have to earn it every day. I mean, there's, there's times where, you know, we got backed up on customer support tickets and we, and we like, didn't invest enough in customer support. Or there's times where we've had hackers try to break into our systems and we've had to make customers whole, right? Or they'll call customers and

• 2:06:22Speaker 03

  try to impersonate Coinbase support and trick them into moving their, their crypto somewhere, right? And in general, we try to like, stand, stand behind our customers and, you know, reimburse them when things happen that are our fault. And we try to go push back on the government when it does something unethical and tries to take our customers' rights away. So people, I think they really appreciate that as well. So those are probably all factors that contribute to trust.

• 2:06:47Shawn Ryan?

  How do you, I mean, how do you lead your company?

• 2:06:52Speaker 03

  Well, it's a broad question. I mean, there's kind of the tactical, which is about once a week, I get together, usually on Mondays, we get together as an executive team and we just do a deep dive on anything that needs to get worked out and decided. I try to push decision-making down into the organization so that I'm not a bottleneck to things getting done. Like oftentimes, we're about 5,000 people now, and in, in these organizations, as they grow, oftentimes, like, people get frustrated with, I don't know, there's like seven people who have input on this thing, no one's in charge. Like, if, if everything has to go up to Brian as the CEO, like, you're just not going to be able to execute quickly. So I try to name who's the decider and push it down in the organization so stuff can

• 2:07:33Speaker 03

  just keep moving. Try to have a really high bar for talent, you know, like, be very selective on the way in, performance manage people out, make it merit-based.

• 2:07:46Speaker 03

  And then, you know, we have a healthy balance, I think, of we're investing in our core business today, but we're always trying to like build the next thing on the frontier. And we try a lot of small bets and some of them don't work. And that's okay. Like in a lot of big, a lot of bigger companies, you can actually, they get risk averse. Right? Like if somebody tries some new project and it doesn't work, it's like a black mark against them. And it's fucks up their career. Coinbase, that's not the case. We want people who are willing to try innovative ideas on the frontier with small teams, like, you know, two to five people, it's almost like a startup within the company. And if they try it, it doesn't work, try another one, you know? And eventually these things break through and you can have innovation happen in big companies that create lots of products that people want to use.

• 2:08:29Speaker 03

  So it's not just like, we found one thing that works and that's all we're going to do forever.

• 2:08:33Shawn Ryan?

  What are some of the things that your special teams have innovated?

• 2:08:38Speaker 03

  Well, an example would be like USDC, you know, we, we co-created that, digital dollar. Another one is Base, which is like a very fast, cheap blockchain that allows all these payments to happen instantly over the world. And we just released a new app that lets these content creators get paid directly.

• 2:08:58Speaker 03

  You know, another one is that we are creating a platform where anybody can create, integrate crypto into their company. So you might be familiar with like, you know, Amazon Web Services, right? It's like Amazon's the retail shop, but they also said, hey, all this computing and data centers, maybe if other companies want to use it, they can, they can plug into it. We've similarly created something called Coinbase Developer Platform, CDP. And for people who want to integrate crypto custody, payments, trading, et cetera, they can just use the services that we've built and plug crypto into any company they want. So there's various products like that that we've built over time, which are, I think, hopefully continuing to push on the frontier.

• 2:09:37Shawn Ryan?

  You know, another thing that, that I like about you is you don't, you don't bend to the, the culture wars.

• 2:09:44Speaker 03

  Yeah, yeah, let's talk about that.

• 2:09:47Shawn Ryan?

  Let's talk about it.

• 2:09:48Speaker 03

  Yeah. Well, okay, I think what you're referring to is I put out a blog post a while back called Mission First, which was said, we're going to be apolitical here at Coinbase. We're just going to focus on the mission of the company and not any of the other activist kind of social justice warrior policies that were running rampant at that time. And it had a big impact, not on Coinbase, but also I think a lot of the tech industry. I'll give you kind of the backstory on that. So, yeah, it was around 2020, I believe.

• 2:10:23Speaker 03

  You know, we, as CEO, you always host these open, open mic sessions and town halls at the company. And normally people would be asking questions about our products and competitors and regulators and like, how are we going to win? And around that time, I noticed we started to get more questions from the employees at these town halls about issues in society that were totally unrelated to our business. You know, they were asking about like police brutality or guns or Middle East stuff or, you know, social issues, right? I remember thinking this was kind of strange at the time because I was like, you know, that's not why we're here. Like I, I'm just like anybody else. I'm trying to understand these issues. I read about it sometime. But why are they asking me what I think about police brutality or something like that?

• 2:11:08Speaker 03

  That's not what our company is focused on. And it got to kind of like a fever pitch at a certain point where it almost was like they were trying to put, see who could make the executives on stage like squirm the most with like the most uncomfortable, you know, difficult question. And this culminated with, at one point, an employee stood up and they, and they said, I want to know if this company is going to support Black Lives Matter. And I, and I kind of, I didn't really know much about Black Lives Matter at that time and what that organization stood for. And I declined to answer. I was like, I don't know. Well, I'm happy to look into that, but I'm not going to commit at this moment. And they, they did like a little bit of grandstanding and they kind of held the mic. And they said, that's not good enough. I need to know, like, are you as a CEO going to support Black Lives Matter? This was kind of in the fever pitch of George Floyd and all this kind of stuff.

• 2:11:54Speaker 03

  And I declined to answer. And so after the town hall, 300 employees did a walkout where they basically like refused to work and they kind of went on protest and left.

• 2:12:06Shawn Ryan?

  Are you serious?

• 2:12:06Speaker 03

  Yeah. This was, I didn't realize the extent to which this had happened, but like a bunch of kind of this activism mindset had infiltrated the company. And a lot of this originated, I later, I later learned a lot of this originated in the universities. They were kind of teaching about like Marxism and how to speak truth to power and like be an activist inside these organizations. So culturally, this was like reaching a fever pitch and

• 2:12:31Shawn Ryan?

  How many, how many employees did you have at the time when 300 walked out?

• 2:12:34Speaker 03

  Probably 1 to 2,000 or something. So, so Good Charm did a walkout. And actually, it's funny, I remember there was one guy in our team, John, who he's, he's actually a veteran and all these guys were like posting in Slack about, I'm, I'm, I'm walking out and I'm holding the counter. And he, he just, he was one of the only people who posted. He's like, you guys can leave if you want. I'm staying here to support our customers. So he had, he had the balls to like, stand up to this in the moment, which was hilarious. But I always appreciated him for that. But anyway, all these people walked out. And so I pulled the executive team together and I had never, I had, I had never experienced something like this as CEO. I was like, what is going on? Like, what the hell is Black Lives Matter? Like, you know, and somebody on my team

• 2:13:17Speaker 03

  came in and they were like, I think it's just like, it's just asking for like equality amongst all people. And I was like, okay. Later, of course, I found out they wanted to like defund the police and they had all this kind of like crazy misallocation of funds. There was all kinds of issues with BLM. But you might remember at that time, like every company in America, it felt like was putting out these flags and it was

• 2:13:38Shawn Ryan?

  Oh, I remember.

• 2:13:38Speaker 03

  Yeah. So I was, I initially, I was like, okay, well, if it's just about equality or something, like put out some statement and let's get people back to work. And people came back to work, but I, I felt like something was very wrong here. I was like, we have a fundamental misunderstanding about what we're doing here. I thought we were here to kind of build, create more economic freedom with crypto. And these people think that this company should be, become an activist company for social justice. And BLM, like we are not on the same page. And what I realized is I, I had failed as a leader. Like this, it was one of those kind of moments where the frog was slowly getting boiled. Like people were sometimes asked me these things in the company and I was kind of walking on eggshells around it because I was like, I didn't really

• 2:14:21Speaker 03

  know how to deal with it. I was like, oh, yeah, yeah. Like we're, we're, we're just kind of trying to be good for everyone. And I made a lot of very vague statements. And it culminated in this walkout. And the more I started to think about it, I was like,

• 2:14:36Speaker 03

  okay, either I need to go as CEO, because this is how companies are run now, like where you have to answer all these social justice things, or they need to go. Because I don't want to work in a company like this, where we're just jumping to whatever the current issue is, trying to virtue signal and touch on some giant, you know, whether it's whatever, Hamas, or whatever it is that day, you know, and like, we should be focused on one thing. It's hard enough to change one thing in the world. We can't be like, jumping around to some new issue every, every month. And I don't like this, this environment where like, the company, the employees feel like they can come in and hold the company hostage to whatever their current thing is. So I drafted this post, which basically said, hey, guess

• 2:15:20Speaker 03

  what? At Coinbase, we're going to focus on the mission, increasing economic freedom. It's okay if you can have whatever political beliefs or anything you want outside of that, but like, keep it outside of work, right? We're here to focus on work, at work, which sounds like kind of an obvious statement. But at that time, this was a highly contrarian. Let's just put it that way. And I knew that this was going to be controversial if I put it out. In fact, there were people inside the company who begged me not to post this. They, they said, this will destroy the company, like, you know, an underrepresented person will never work at this company again. And I was, and I was like, as, as, as a young CEO, I was kind of like, is that true? That doesn't sound right. So I went and talked

• 2:16:01Speaker 03

  to like, groups of employees, like, including our black employees and other groups. And I kind of asked them, and I was like,

• 2:16:09Speaker 03

  do you care if we're like, a social justice company? And they were like, no, no, we just want to like, come in here, do good work, like, learn things, you know, have an impact, like, make more money, like, that's, it's the kind of stuff everybody wants. And so my instinct was telling me, the level of fear is like, totally out of proportion to reality. And some people told me, if you post this, like, 50 or 60% of all employees are going to quit, or they're going to walk out again in protest, it's going to be an even bigger protest. And it was like, this kind of like, moment where I was like, have I lost control of the company? Or am I willing to stand up to this nonsense? And so I decided to post it. And I posted it and I announced it to the company. I was scared shitless, to be honest with you.

• 2:16:54Speaker 03

  Normally, when I'm up there talking in front of the company, I can like, I feel fine. Like, my leg was shaking, my voice cracked like I was a teenager. I felt, I was like, I don't know if you ever have that moment where you're like trying to give a talk to somebody and then there's like a voice in your head kind of evaluating how you're doing at the same time. You're like, oh, I'm fucking it up, you know?

• 2:17:14Speaker 03

  So it was like the most awkward presentation I've ever given to the company. I almost like was like, wanted to cry. I was like, this is gonna, I knew it was gonna like piss off a ton of people. And afterwards, I said, anybody who's not on board with this will give you like a three month severance and like, you know, help you find your next job, like totally, you know, it's on, it's my fault. Like, I didn't make this clear upfront, but this is the kind of company we're gonna be going forward, so we gotta all be on the same page. And 5% of the company quit. They took the exit package. And 95% of the company was aligned. We were all

• 2:17:48Shawn Ryan?

  Nice.

• 2:17:49Speaker 03

  ready to get shit done, go in the same direction. Best thing we ever did for the company. And suddenly, like, a few things happened after that, like, one, New York Times and a bunch of mainstream journalists started writing hit pieces on the company about how we were racist and all this nonsense.

• 2:18:04Shawn Ryan?

  Oh, go figure.

• 2:18:05Speaker 03

  Yeah. By the way, a year later, it didn't change the demographics of the country, the company at all. We had some, it was either the same or better metrics across all the things you look at, by the way. We just, we just try to go on merit now. Who cares like what your sexual orientation is or whatever. I don't, I don't care. Like, we just try to hire people based on merit. But all of their accusations about racism and stuff, it's, it's like, it was completely false. And then, yeah, and then all these like other CEOs of other companies started calling me and be like, holy shit, how did you do that? Like, I wanna do that.

• 2:18:40Speaker 03

  And I, and I was like, well, you can just do it. And like, they'll, but you know, people were just kind of scared to do it. Some of them did do it. And I think a lot of companies moved, moved in that direction. So, you know, we took some arrows for it to be kind of early on this, but I think it was great and I loved it. Like, it made us such a stronger company. And I've now, we've actually been able to hire a lot of the best people who've come in and they're like, I joined Coinbase because of that blog post. Like, I wanna

• 2:19:06Shawn Ryan?

  That's awesome.

• 2:19:07Speaker 03

  Yeah.

• 2:19:07Shawn Ryan?

  I mean, where, where do these people go? I mean, you did it, Elon did it with X, and now we're starting to see it at Google, Facebook.

• 2:19:18Shawn Ryan?

  Lots of tech companies like followed suit on that. Where did these people go? And that's a black mark. I mean, for anybody, I mean, the Silicon Valley tech network seems to be pretty tight. You guys all seem to know each other and so, and everybody knows what's going on and that hit the New York Times and everything. So, I mean, if you see somebody that left Coinbase at that time era, or left Twitter during that time, I mean, it's like a black mark. It's like, oh, you weren't, oh, until that date. Okay. So you're one of those. Where do they go?

• 2:19:56Speaker 03

  Yeah. You know, I haven't really like spent a lot of time tracking that, but you're right. I mean, we do look at that of when people worked at different companies and you can kind of draw a story. And you can go talk to them as an individual and get more nuance, but I mean, look, there were some companies that just leaned even harder into it. And they're like, hey, we, I know we make suitcases or like CRM software, whatever, but we're actually about some bigger thing in the world. And if people wanted to work at these social justice companies, they're welcome to go do that.

• 2:20:27Shawn Ryan?

  Not to mention, I mean, talking about social justice and what you're trying to do is economic freedom. Like, okay, like, what the fuck are you complaining about?

• 2:20:36Speaker 03

  Exactly. Like if somebody's really into like Marxism and socialism, it's like not a good fit. You should not work at Coinbase. So there was, I think we've been much more clear with people now when they join the company. And so that's what I had failed to do was just create clarity because I was afraid of upsetting people. And that was a good moment for me as a leader to be like, okay, your job is not to be liked. It's to be clear about what we're doing here. And then people can opt in or not. That's fine.

• 2:21:08Shawn Ryan?

  Let's talk about. There was one other thing. Took on the SEC. We talked about that. And then extortion by hackers. What was that all about?

• 2:21:20Speaker 03

  Yeah, well, this has been a more recent one where um so we've always had hackers trying to break into our systems and we spent a lot of time building secure storage. And I mentioned earlier, kind of like how we divide up keys and they're never touched the internet and they're like distributed all over the world in these like super secure locations and we pen tested and everything. But there are hackers who tried to do something a little different recently, which was they actually started contacting our customer support agents and trying to bribe them to turn over customer information. Now, our customer support agents don't have access. They can't like move your money, right? But they can turn over things like, you know, people's personal

• 2:22:02Speaker 03

  information, like their name, address, um maybe their balance or something like that because they're looking at that to try to help customers with their problem. And, you know, we started getting customer support agents get offered like 250 grand bribes for some of these things, which is crazy, right? And unfortunately, especially in some of our facilities we operate overseas on this, if you ask 1,000 people, you offer 1,000 people 250K to turn over some information like that, they're going to find one or two bad apples. And so that's what started happening. Some of these agents were actually, you know, because they're not allowed to use their own computer. They're not allowed. It's a lockdown

• 2:22:42Speaker 03

  system. They're not even allowed to bring in their own phone. They have to use like a work phone. But what some of these folks started doing was smuggling in a personal phone and taking photos of the screen with some of the customer information and giving it to these attackers. And then attackers would call up our customers and say, hey, this Coinbase support, like, are you blah blah blah who lives at this address? And it would create credibility. And they would try to tell them, hey, your account has been compromised. Like, you need to move your funds immediately. And like, can you send it to this address and sort of trick people into sending their funds to the attacker?

• 2:23:17Speaker 03

  So we noticed that this was happening and we start, by the way, we refunded the customers who were affected by this and none of them had any loss. So the attacker who had gotten this information, they were, the information they had gotten was starting to get less and less useful because we were cracking down on it and hardening our systems. There's a whole bunch of ways we can do that, by the way. But what happened is they basically, once the information started to be less useful, they sent us a ransom demand and they said, hey, we're gonna leak all this customer information, send it to journalists, and if you don't pay us $20 million. So we kind of got together as a team, our chief security officer, and these guys are

• 2:24:01Speaker 03

  great, been working on this stuff for a long time. And they kind of said, look, we shouldn't pay the ransom because, yeah, maybe they'll hold off releasing the information for a few months, but guess what always happens? They come back and demand more, like three months later, six months later. And how good are we gonna feel if we give $20 million to these criminals and it just funds their next attack and like, you know, just emboldens them, right? And so we came up with this idea in the room. Why don't we flip the ransom on them? We'll put out a $20 million bounty for any information leading to their arrest and conviction. And this was kind of a controversial idea in the Nice. Yeah. In the security community, a lot of people later told me like, oh, we always wanted

• 2:24:44Speaker 03

  to do that, but we were kind of afraid to do it. And this was a great moment where I was like, let's turn the tables on them and try to catch these bastards, right? So that's exactly what we did. We put out this $20 million bounty. By the way, when Osama bin Laden, you know, took down the trade towers, I think the US government put out a $25 million bounty for information on him. So this was like a pretty substantial bounty, right? And it's one of the, you know, you heard that expression, like, there's no honor amongst thieves.

• 2:25:13Speaker 03

  So all these hackers started sending in tips. A lot of them were, some of them were regular people, but others were actually other threat actors. And they're like, guess what? I know the guy who did that attack, like, you know, because they have some beef with this guy or whatever. We got like 5,000 tips that came into this tip line because people wanted $20 million, right? And, you know, maybe like a couple hundred of those were like really solid leads. We had a team start to work down the list.

• 2:25:41Speaker 03

  We don't have anything like to announce today on it, but I think, I think like we're making really good progress towards a couple arrests here. And the long story short is it's not just like one person involved. Like there's, it's as with everything, it's more complicated, but

• 2:25:57Speaker 03

  we've gotten to build some really good relationships with law enforcement and it's going to feel really good to catch some bad guys.

• 2:26:04Shawn Ryan?

  That's awesome, man.

• 2:26:04Speaker 03

  Yeah.

• 2:26:05Shawn Ryan?

  I can't wait till you get them.

• 2:26:06Speaker 03

  Yeah.

• 2:26:07Shawn Ryan?

  That's good thinking. Great thinking. Let's talk about the, I mean, I know you were instrumental in the Genius Act, correct?

• 2:26:14Speaker 03

  Yeah.

• 2:26:15Shawn Ryan?

  What is that?

• 2:26:16Speaker 03

  The Genius Act is a piece of legislation that helps stable coins be allowed to be used in the United States. Stable coins are these digital dollars. It allows payments to happen quickly and cheaply anywhere in the world with the US dollar. You know, I mentioned some of these other payment methods, right? Like credit cards, two to 3% fee every time the merchant swipes your card. Like wire transfers, they work internationally, but they cost like $50, they're kind of slow. You know, there's lots of different payment methods, but they, none of them are like fast, cheap and global, right? And so stable coins are the only ones that check that box. They can send them anywhere in the world for under one cent in one second or less.

• 2:26:55Shawn Ryan?

  Wow.

• 2:26:56Speaker 03

  So USDC is, you know, I think the biggest legitimate one that's out there. And all the, all the dollar stable coins are backed by US treasuries, which means that we can actually pay like four and a half percent to people holding these things. Which I mentioned earlier, you can't really get on your checking account or savings account. So anyway, the Genius Act, it took a lot of work by members of Congress, Senate, a bunch of companies, including us, have been kind of advocating for this legislation. And it just creates like clear rules around how these things can be issued and used. And now that there's clear legislation that just got passed last Friday, I was at the White House for the signing ceremony with President Trump.

• 2:27:37Speaker 03

  I think you're gonna see more and more businesses start to accept stablecoins. It just saves them money. Like if you're, I don't know, as an average consumer, you might think, oh, 2% to 3% fee. That's not that much. I don't pay it. The merchant pays it. But if you're like a grocery store or something, your margin might be like only 5%, right? So if you have to pay 2% to 3% to the credit card companies and your margin's 5%, that's like a huge chunk of your profit margin, right? Your margin. So anyway, I think it's just another way that crypto is updating the financial system. And the Stablecoin Act is a huge first step, this Genius Act. The other big piece of legislation we need to get done is called the Clarity Act, which is about the other kinds of crypto assets that are not stablecoins, like Bitcoin, Ethereum.

• 2:28:20Speaker 03

  And it's kind of helping determine which of these are commodities or securities. There's, this is the lack of clarity that got weaponized by Gary Gensler and Elizabeth Warren in the prior administration. If we have laws passed that make it clear how these things are regulated, they can't come attack it and try to kill it again in the future.

• 2:28:40Shawn Ryan?

  Makes sense. Makes sense. I mean, what do you, I think I read that the Federal Reserve put Bitcoin, Cardano, Ethereum, XRP. The Federal Reserve is gonna hold some. What does that, I mean, what does that mean for us?

• 2:28:55Speaker 03

  Yeah, well, President Trump passed this executive order creating a strategic Bitcoin reserve and then a crypto asset stockpile to hold some of these other ones as well. A lot of people don't know, but you know, the US actually holds strategic reserves of a number of different assets. So gold is probably the most famous one. But there's a bunch of other ones that they hold, like, you know, there's an oil strategic reserve. There's like palladium. I think there's a bunch of like rare minerals. And so it's kind of a historic step where the United States government is saying, actually, we think Bitcoin is another strategic asset which should be held by the US government. This would have been unthinkable, by the way, like five years ago, where the government was so skeptical of it. And now like the United States government is holding a stockpile of these Bitcoin assets. So

• 2:29:40Speaker 03

  That was a huge moment. It kind of, by the way, now that the US is doing this, I think the rest of the G20 countries and central banks are all starting to look at this. It just kind of instantly legitimized it. And, you know, President Trump, to his credit, he said he wants to be the first crypto president in the United States and certainly in the world. Like, he's all in on this. He's like, "America has to lead here. This is a technology to update the financial system and become a financial center of the world, which is important for American power." So he's kind of gone all in on it. And I think the rest of the G20 are now looking at this as a model to follow.

• 2:30:14Shawn Ryan?

  Man, nice work again.

• 2:30:17Speaker 03

  Yeah.

• 2:30:19Shawn Ryan?

  So let's move into, I want to talk a little bit more about the, about Base. So Jeremy, my producer, who met at breakfast, says it's the Amazon of crypto. What all is going to be wrapped up in this?

• 2:30:37Speaker 03

  Yeah, so Base is an app that we just launched, the beta of it last week. You know, people started off with cryptocurrency, they're buying it like Bitcoin, like for investment purposes. Then we started to make other types of financial services like payments and borrowing and lending with things like USDC, stable coins. Base is kind of the third act here, where we actually want to make a way for applications on the internet to use crypto natively and allow value transfer between users that's totally permissionless. So like, if you're a content creator, either you have a podcast, or maybe you put out, like, you're a musician, you're putting out music, or you just post on social media, like text content or anything, you can have a direct relationship with your audience and actually

• 2:31:20Speaker 03

  monetize from them directly. So, an example is like, if you make a post on Base, and you put out a photo, or a text, or audio, video, anything, people, every post is a coin. Right, so people can buy that coin. If they think it's cool, they like it, they think it's going to go up in value. It's like, it's literally every, every social media post on base. The minute you post it, it has a coin with a market cap that people can trade. And they can also buy a coin of you as the content creator. And they can say, okay, I like that post. I think Sean's going to put out a lot more banger, banger content. Like, let me buy his, his token and you have a market cap. Like, your, your thing can go up and down.

• 2:32:02Speaker 03

  And so it's allowing content creators to basically directly monetize their audience or their customers. It breaks, you know, there's, there's traditionally in the internet, there's been kind of like an ad, an ad business model for everything. Sponsorship on podcasts is one example of that. But even like Google and Facebook, they always have these ads, right? Because payments are so high friction on the internet, most of the big companies got built on the ad business model. And that means that they're collecting all your information, trying to sell it to advertisers. That's sort of how the internet happened. Now the internet has a native layer for money. And value transfer can be super seamless, like microtransactions, giant transactions, whatever. And so we think it's going to actually put this whole ad business model, like flip it

• 2:32:47Speaker 03

  on its head where, um, yeah, people can directly have a relationship with their, their audience. There's no middlemen. And like, instead of 95% of the value going to the platforms, it's going to go to the content creators. It's going to totally flip that value equation on its head.

• 2:33:01Shawn Ryan?

  Wow. What kind of creators are on there right now?

• 2:33:04Speaker 03

  So it's all early stuff. It's some people that are, you know, they're, they're putting out like video content, kind of like TikTok. Some people are putting out music. I think that you're also going to see, uh, kind of like communities formed that are due to like around specific interests, right? It might be people who are like tech entrepreneurs or really into fitness or whatever, like. So it's early days. It's kind of like the early days of the internet. A lot of it's like kind of quirky and weird and. But people are experimenting with it and coming in at a pretty rapid clip. There's like, I think, I don't know, I think there's like 300,000 people on the waitlist right now. So we're slowly giving out invites as it, as it ramps up. But yeah, it's cool. And by the way, I should mention base is a self custodial wallet too.

• 2:33:49Speaker 03

  So everybody owns their own coins and their own, all the content they're posting and everything. They, they fully own it. They can take it with them anywhere. If they, if they don't like the base app, there's like, it's all based on open protocol. So you can basically, you can move to another app that supports the same thing. There's no lock in to that one. And you own your own coins, like it's not Coinbase storing it for you. It's a self custodial wallet, so we can distribute it to 190 countries from day one. It's not, it's not a regulated financial service business.

• 2:34:18Shawn Ryan?

  How do I get on the waitlist?

• 2:34:21Speaker 03

  I'll send you an invite. Yeah, I mean, actually, I mean, you're, you got, your, your audience would probably exceed our capacity. But yeah, we, I mean, we can give you an invite code or something. If you want to give it to Patreon members or something like that.

• 2:34:33Shawn Ryan?

  Yes, I would love that.

• 2:34:34Speaker 03

  Okay, yeah, we could do that.

• 2:34:35Shawn Ryan?

  Hell, yes. Thank you.

• 2:34:37Speaker 03

  Yeah. How many Patreon members do you have?

• 2:34:40Shawn Ryan?

  We got about 90,000.

• 2:34:41Speaker 03

  Okay, okay. That's even bigger than I thought.

• 2:34:43Shawn Ryan?

  But we can break it up.

• 2:34:44Speaker 03

  Yeah.

• 2:34:45Shawn Ryan?

  Break it up.

• 2:34:45Speaker 03

  Okay.

• 2:34:46Shawn Ryan?

  We'll put it at the top tier.

• 2:34:47Speaker 03

  Okay.

• 2:34:48Shawn Ryan?

  Man, thank you.

• 2:34:50Speaker 03

  Yeah, that'd be great.

• 2:34:51Shawn Ryan?

  And then, you know, I know you're, so you're, you're venturing into some stuff that's, has nothing to do with crypto. What is that?

• 2:35:00Speaker 03

  Yeah, well, I mean, just zooming out like my, I guess the thing I'm most interested in the world. And I feel like the best way to help the world is to accelerate technological progress and try to build cool things that are useful to people. And so when Coinbase went public, you know, I was, I got some liquidity from that, some money. And I was trying to think about, in addition to going and buying a house and some things like that. I was like, all right, what do I want to try to do in the world? Still pretty young.

• 2:35:24Speaker 03

  And so I started to look at some of the, what are the big challenges on the frontier of science and technology? That I could try to put some money towards, right? Like honestly, I was kind of inspired by Elon, right? I, you know, he made some money early from PayPal. And he was like, you know, rockets and electric cars and, you know, it's sometimes it's hard to raise money from venture capitalists for like the really crazy ideas because it's, it's higher risk, right? And so I feel like in some ways, if you're a software entrepreneur and you manage to have some success, you almost kind of owe it to society to like, put some of that capital back into the frontier. Like try to do hard things which are high risk in the world of atoms, not just bits, right? Which would be like software, etc. So I remember I reached out to a couple of smart friends of mine.

• 2:36:08Speaker 03

  We started hosting some dinners and I would kind of go around the table and ask people like, you know, what are the coolest things on the frontier of technology right now that need more investment and smart people working on it? And, you know, of course, like people talked about AI, crypto, brain machine interfaces, fusion energy, and one of the topics that came up was human longevity, right? And we were thinking like, okay, people have been trying to live longer forever. This is kind of like, you know, most of it's snake oil. But we're a couple of like interesting trends are happening right now where this might start to be tractable like in the next decade or two. One of those trends is that like AI is coming on the scene, right?

• 2:36:51Speaker 03

  And we can actually use AI to test a lot of hypotheses and help drug discovery be more efficient. The second big trend is that there's something called a single cell sequencing where you can like take an individual cell and read out the state of it. Like, you know, what genes are turned on and off and like what kind of proteins are going on in there? And you can, the cost of sequencing in a cell, like its entire state, has been falling, falling like crazy. Are you familiar with like Moore's law? With the, in the computer revolution, there was a thing called Moore's law where like the number of transistors that you could get on a computer chip, it like doubled every 18 months for a certain price point. And that's why computers kept getting more and more powerful at like an exponential pace.

• 2:37:32Speaker 03

  So there's a, there's a phenomenon kind of like that in biology where to read out the state of a single cell, human cell, the cost is like falling by half every 18 months or something like that. And so we can now read out the entire state of a single cell for like five cents US. It used to be like $500 to do it per cell. Now it's like five cents and it's just going to keep getting cheaper and cheaper. So these two trends were happening and You know, we, some of these scientists and folks that we invited over, they, they, they told me, you know, you should go look at this field called epigenetic reprogramming, where you can essentially reprogram the state of a cell. Like if you had a cell that's an older cell, maybe you could restore function that it had when it was younger. Or if you had a cell,

• 2:38:15Speaker 03

  like a skin cell, you could turn it, turn it into like a muscle cell, or a different stem cell, or like a neuron, like a different type of cell. And so we went to go look into this, and kind of like reading that Bitcoin white paper in 2010. And the more I started to read about epigenetic reprogramming, I was like, there's something interesting here. This is an underfunded, kind of novel area of science that could be really high potential. Like, imagine if your metabolism, or your immune system, or some, or your skin cells, like, we could go in there and reprogram it to be, restore function it had when it was younger, right? Like, who wouldn't want to have, like, the metabolism of a 20-year-old, or maybe your muscle recovery from, like, injury or the gym, or your immune system

• 2:38:58Speaker 03

  could be like a 20-year-old, right? Like, if you get the flu when you're 85, it could be fatal. But if you get the flu when you're like 20, it's fine, you just take a week off, right? So we, we, we found a couple of the right scientists and people to start this with. I co-founded the company along with Jacob Kimmel, who is a brilliant scientist in this area, and Blake Byers, who had worked in biotech for a decade. Because, you know, it wasn't, my background was not in the science piece, but I had capital and I had some experience building companies. And so we decided to kick off this company just a few years ago, and it's had some really exciting initial progress, where we've been able to demonstrate for the first time taking human cells and restoring function they had when they were younger. Wow.

• 2:39:42Speaker 03

  Yeah. And there's some cool videos I can show you of just like, you know, like, we, we have these like humanized mice model, where we actually put human cells inside the mouse, and then, like, if you have an old mouse and a young mouse, and you give them both a certain amount of alcohol, like, the old mice take longer to sleep it off, you know, it's kind of like, like people. And we've been able to like restore the liver of these older mice and they they wake up like the young mice with no hangover kind of thing. So again, getting this working in humans is is like a big challenge. It's like definitely this could take another decade to like start to see drugs and therapies that humans could take, but it's early stage. It's it's an exciting company. It's like thirty five people in South San Francisco.

• 2:40:27Speaker 03

  You know, I put like a hundred million of my money into it, committed to it. And, you know, we've raised some money from some really amazing people too. So anyway, that's an example of the kind of thing I've been working on.

• 2:40:37Shawn Ryan?

  What kind of, what kind of, what kind of things is that going to be able to to solve?

• 2:40:43Speaker 03

  Well, yeah, so imagine, you know, we all kind of lose function in our bodies as we get older, right? Like the big things that if you look at the big, the biggest killers, it's like heart disease, cancer, diabetes. So a lot of, a lot of medicine is targeting, how do you treat that disease? But there's another theory, which is like, maybe the the root cause of all those things is that, you know, our cells are just losing function as we get older. And so you're more susceptible to get these diseases like, let's I'll give you an example. So if you're in, if you're like, let's say you're in your twenties or thirties and, you know, you have some damage to your cells, like you, you have some, you drink too much

• 2:41:26Speaker 03

  or you, you get sick or like, you know, and and there's a kind of like this insult or damage to your cells. Your cells have the ability to recover from that.

• 2:41:36Speaker 03

  When you get older, your cells don't really have the ability to respond as well to these kinds of threats or like, you know, it could be viruses or, you know, eating or drinking too much or what, not getting enough sleep or whatever, they start to lose their function. And so instead of treating like the effects of these diseases, why don't we just try to restore the function your cells had when you were younger?

• 2:41:58Speaker 03

  And it may actually be like kind of a root cause of a lot of these diseases that manifest later in life. Like, if you look at all those diseases I mentioned, they're basically highly correlated with age, the older, the older you are, the more you're likely are to get it, right? Like, once in a while, you'll see a kid, like a young person who gets cancer or something, but it's very rare. It's almost all people later in life. And so it's kind of like what you might call.

• 2:42:22Speaker 03

  Like a root cause or a meta, like solving a meta problem. Like if you can solve this problem, it automatically like knocks out or minimizes the effect of a bunch of later diseases that you get in life. Like you might be familiar with the GLP ones, like these Ozempic type drugs, you know? And that's the first time we've seen a drug that's like a trillion, a trillion dollar drug where people, even healthy people are taking it now because they just want to have, they want to lose weight. I think that the exciting thing about these longevity drugs is that if these start to work, and again, it'll take like another 10 years or more, no, for sure. If these start to work, like everybody over a certain age is going to take these because like, who wouldn't want to feel like you had the metabolism or immune system or whatever, or the muscle system of like a younger person, right?

• 2:43:07Speaker 03

  That would just be more years of healthy life, you know, to get stuff done. So anyway, I think we're on the cusp of potentially being able to make a breakthrough in this area. And it's a, it's high risk, but I think this is exactly what people should be doing. Like if you have some success in business, like try to push the frontier, right? Do something that's really challenging.

• 2:43:26Shawn Ryan?

  So is, I mean, how, is this like, how does it work? Is it like stem cell where they inject cells into you or?

• 2:43:32Speaker 03

  It's related to that. So, so yeah, the, the science of behind it, I'll give you the high level version. So there's a guy, Shinya Yamanaka, who won the Nobel Prize, Japanese guy in around 2006. And he showed you could take a skin cell and reprogram it into a stem cell, like you were saying. So, and he threw a bunch of work. He showed that if you basically put these four proteins in the cell, it kind of reverts back to a earlier state where it's, it's a stem cell. And then it can re-differentiate into being a skin cell again, but with younger properties. So this was like a breakthrough in the field. He got a Nobel Prize for it. Subsequent to that, people have shown that you could turn a skin cell into a different kind of cell, like a neuron or a muscle cell.

• 2:44:15Speaker 03

  What we're trying to do is not change the type of the cell. We're trying to just change the functional age of the cell. Like if it starts as a skin cell, stay as a skin cell, but just be like a younger version of yourself. And so we're searching the vast space of different sets of proteins. These are called transcription factors, which basically turn on and off different genes in the cell. There's like a massive number of combinations of these that are potential. We've developed a high throughput screening system that can test like millions of hypotheses. And we're looking for interesting targets that come out. Like, to be honest, our understanding of the biology of it is not very good. We actually don't know why, like even if this guy won the Nobel Prize, we don't even really know how it works. Like and why it works, but he he found something that did work.

• 2:44:58Speaker 03

  And so that's what we've done at this lab in South San Francisco. We've set up this high throughput screening system that's testing millions of different combinations of these, looking for novel sets of proteins you can put in these cells that that change the state of it back to like a younger cell. And we know that

• 2:45:14Shawn Ryan?

  So you're injecting proteins?

• 2:45:16Speaker 03

  Yeah.

• 2:45:17Shawn Ryan?

  It would be an injection of proteins into the body that the cells absorb?

• 2:45:21Speaker 03

  Yeah, and they're delivered via this thing called lipid nanoparticles. But yeah, yeah, yeah, it's basically a way to deliver proteins into these cells and it causes them to turn on and off different genes.

• 2:45:30Shawn Ryan?

  Wow.

• 2:45:32Speaker 03

  Yeah.

• 2:45:33Shawn Ryan?

  How far out do you think you are?

• 2:45:35Speaker 03

  I mean, we're going to start clinical trials on our first program, probably in the next year or two in humans. And that's where you have to go through FDA or different countries you can do it in. And then we have two or three other programs coming along. So I think within like five to 10 years, we'll hopefully have candidates ready for, you know, potentially someone could actually go get it prescribed by their doctor and like, hopefully like less than 10 years. But, um, you know, these are kinds of things that sometimes you need to try a lot of shots on goal to get something that works, right? And it can start to get expensive the later you are down doing these human trials. Like some, it costs something like $2 billion and takes about 10 years to get a drug to market. And that's with a lot of failures along the way.

• 2:46:20Speaker 03

  So, you know, we're, we're putting a lot of capital to see if we can come up with a breakthrough here.

• 2:46:25Shawn Ryan?

  So you're getting ready to be introduced to a whole nother type of bureaucracy.

• 2:46:30Speaker 03

  Yeah, the FDA, I mean, actually, inside the current FDA, they are trying to find ways to optimize this. Because like, by the way, China is making very quick progress on how they run clinical trials. And there's a phenomenon happening where sometimes someone will publish a paper, like a research paper in the US, and then apply for a clinical trial. And before their clinical trial starts, there's already patients in China with that drug in their body. Because they're kind of seeing all of our papers get published, and then they can run the trial faster. So there's people like in the current FDA that are trying to think about,

• 2:47:05Speaker 03

  you know, I'll give you an example of how we could make it more efficient. So right now, there's three, there's phase one, two, and three trials. The first phase one trial is all about safety, like, is this thing even safe to put in a human body? And phase two and three are about what they call efficacy, meaning, does it even work? So first, you check if it's safe. Second, does it, does it work? One thing we could do is like, if you pass phase one trial and you know it's safe, allow a doctor to prescribe it to patients while it's going through phase two and phase three. I mean, if someone's at the end of their life, like, they're literally, they're gonna die, like, in a month.

• 2:47:37Shawn Ryan?

  Yeah.

• 2:47:37Speaker 03

  And they have no other option, and we know it's safe, dude, allow them to take it, you know, especially if a doctor.

• 2:47:42Shawn Ryan?

  We had something like that, right?

• 2:47:43Speaker 03

  Like a right, right to try.

• 2:47:44Shawn Ryan?

  Yeah.

• 2:47:45Speaker 03

  Those kind of things, but it's still, it hasn't gone far enough. That would be an example where we could really start to accelerate it. So I hope we get some of those things put through the FDA as well. Otherwise, like, these companies are gonna start running clinical trials overseas, just to get faster data back.

• 2:47:59Shawn Ryan?

  Yeah, I mean, I know you're in very early stages, but I'm just curious, I mean, how much,

• 2:48:07Shawn Ryan?

  maybe you have a target, maybe not, I don't, do you have any idea how much more life somebody could experience by taking something like that?

• 2:48:17Speaker 03

  Yeah, so the initial, the initial drugs that'll come through, you know, we hope they could add something like five to 10 years of life. But the, the, the real moonshot goal here is that if we get this working in one cell type, we can get it working in another cell type, and another one, and eventually, you'll be able to take a cocktail of these, like, of these that kind of help improve like a dozen cell types, especially your brain, like, that's the, that's the holy grail, kind of.

• 2:48:45Speaker 03

  And if that works, I mean, the goal is to get to like, Indefinite, right? Like, you're not going to be immortal because you could still get hit by a bus or something, or, you know, shot or something, right? But if you, if you don't have something like a physical thing that takes you out, you should, in theory, I, I can't see any law of nature that's getting broken that would not allow you to become perpetually, kind of renew, renew, right? And it is all kinds of crazy implications of this downstream, if this works. I mean, I'm, I'm kind of in purely hypothetical land here, right? I, I don't want to overstate this. But we might start to see these people that, you know, they, they look kind of young, but they look different. They, they, you know, they're, it's like the vampire movies or whatever. Like, they look like they're in their 30s, but they kind of look different, like they're like

• 2:49:30Speaker 03

  a thousand years old or something, right? So you get into all kinds of interesting sci-fi type analogies and people come up with all these philosophical debates about, you know, should we even want to live longer? Anyway, I, I think that curing disease, giving people the option just to live longer if they want to, these are all unequivocally good things. And so it's worth pushing on this frontier, but if it ultimately works, how it changes society could be quite profound.

• 2:49:55Shawn Ryan?

  Yeah, I mean, do you think, do you think it would, would it make in, would it make an older person look younger? Or would it kind of stunt aging and you, like, if you, if you're 42 years old, are you gonna stay 42 years old? Or are you gonna look like you're 32 years old in a year, however long it takes to work?

• 2:50:18Speaker 03

  Yeah, the answer is, we don't know for sure. I mean, there are now examples of human cells that we've been able to restore. It's not just stop the aging. We've been actually able to restore function they had when they were younger. So in some sense, you can call it like reversing the aging, right? But, you know, I'll give you an example. So like, your skin, when you're, when, you know, we all start as like a single cell, like a fertilized egg, right? And we're Dividing and our skin and bones and like brain, everything kind of develops. Like in our skin, we have this thing called the extracellular matrix, which is kind of like this protein structure. It's not the, it's not the cells themselves, but it's kind of like, you know, you've probably heard about collagen and these different. So it kind of gives your skin like that flexibility and springiness.

• 2:51:01Speaker 03

  And over time, that the ECM, the extracellular matrix kind of can deteriorate, right? So this is like a big open question. If we, if we restore your skin cells to be like they were when they were 20, are they actually going to go in there and maintain and repair the extracellular matrix? So your skin stays like really springy? Or are they just going to be like aged, uh, sorry, are they just going to be young cells, but on an aging extracellular matrix? We don't really know. We got, we got to go run these experiments.

• 2:51:31Speaker 03

  Another example would be like, you know, people who they have like scarring on their liver. It's called like fibrosis, right? If you damage your liver, it develops this kind of like scar tissue. And one of the experiments we've kind of been running recently is like, if you, if you reprogram your liver cells to back when they were younger, maybe your liver cells are young, but it's the scar tissue is still there. This is still too early to say, but like some of the data we've been seeing indicates that the young cells can actually like, repair or disintegrate the scar tissue. Wow. So we, we don't know yet, but like, there's a possibility that if we actually are able to successfully restore these cells back to the younger state, that they'll just like kind of maintain and restore.

• 2:52:15Speaker 03

  Like, I'll give you one other kind of interesting data point, like, um, you know, baby, there, there's such, there's a thing called like, um, I think it's called like prenatal surgery, right? Like where a baby in the womb can actually get some kind of surgery to repair something. And when the baby's born, they don't have any scars from the surgery. Um, or even you see this sometimes with like really young kids, like if they get like a, part of their finger chopped off or something, it looks like a kind of horrific thing, but there are accidents like this. If it happens when they're really young, like two years old, a lot of it will grow back. Right? And so our bodies, like there is something in our biology, which has the ability to like regenerate tissue, to even regrow like a piece of a finger.

• 2:52:59Speaker 03

  And if we can unlock that capability in adults, like we know it's possible because it's happening when we're younger. So why can't we turn that back on? It might be possible in adults. I mean, it's not like some completely, it's impossible thing. They're sort of an existence proof. It happens at some point in our life. So why couldn't it happen later in our life? That's what we're trying to find out.

• 2:53:19Shawn Ryan?

  Do you think it could be a cure to diseases like Alzheimer's, stuff like that?

• 2:53:26Speaker 03

  Again, we're in highly speculative land here. I don't want to like over promise, but in theory, yes, it's possible because we don't know exactly the cause of Alzheimer's. I mean, people talk about these amyloid plaques building up and things, but when you're younger, why don't they build up? I don't know. Maybe you're, you're, there's certain cells in your brain that are not like the neurons, but they're basically helper cells trying to clear out those plaques and things. So if we can reprogram them to have the function they had when you were 20, maybe it does help with that. We don't know. We haven't started, we want to actually start a program on Alzheimer's and brain and like brain cells. We haven't started it yet because it's one of the most expensive ones to do in terms of how you run clinical trials. So, but we'll get to it eventually. I think that's one of the

• 2:54:09Speaker 03

  most exciting ones to figure out because ultimately if our, if our bodies are still functional, but our brains are going, it's kind of like, what's the point? Right?

• 2:54:18Shawn Ryan?

  Yeah.

• 2:54:18Speaker 03

  There's no reason to live if you, if your brain's not there.

• 2:54:21Shawn Ryan?

  Sorry to pepper you with questions.

• 2:54:22Speaker 03

  It's great.

• 2:54:23Shawn Ryan?

  You know, newborns, I mean, stuff like Down syndrome, things like that. Is that something that this could prevent?

• 2:54:34Speaker 03

  So that's kind of a different area of science, but I think, because that's really more about the DNA, like if you have an extra chromosome, that that's what causes Down syndrome. But I do think there's a whole other field that's emerging around embryo editing, right? So you know, you're probably familiar with like people using IVF, right? And you can have these embryos frozen and then you can kind of sequence them and see if they have diseases or Down syndrome or anything like that. And this is kind of controversial because people, you know, people have all kinds of beliefs on this about what should or shouldn't be allowed. Is the embryo a living thing or not? There's a lot of fraught territory here, but I think what's happening is that First, we're getting to a world where people can choose, like sequence these embryos and choose the one that they feel like has the best chance.

• 2:55:21Speaker 03

  Then what's going to happen is people are going to have a lot more embryos to choose from. There's a technology called in vitro gametogenesis where you can turn skin cells into embryos. So you don't have to like harvest them from the eggs, like from a woman, which can be a quite invasive procedure. So then you'll be able to have like thousands of embryos to choose from. Then what will happen after that is people will choose the best ones and then they can start to make a few edits to it. Like it to prevent, it'll start off initially to prevent disease. Like there's like sometimes a single base pair of DNA can cause you to have like heart disease or higher risk for Alzheimer's. Like there's different single base pair changes. And then there'll eventually be like multiple base pair changes where, I don't know, anything, you know,

• 2:56:04Speaker 03

  like depression, you know, like IQ, you know, there's all kinds of things people might want to edit in the future. And it's an interesting thing society is going to have to figure out is do we feel okay with that? Like, you know, we are, we already sort of go out of our way to try to give as much benefit to our children as we can. Like what food we give them, where we send them to school, where we, where they live. And so I think if you have a choice about, okay, like this embryo has a 50% chance of

• 2:56:35Speaker 03

  depression, but they might also be like a great artist, you know? And this embryo, they're less likely to have these bad things and they spike really high on these other things I care about. People, parents are going to have choices to make, like which, which embryo do I want to implant? Which one, what do I want to bring to fruition? So, you know, in some ways that's, for a lot of people, that's probably like really scary and playing God and like all kinds of things. I think for other people, it's, it's saying, okay, how are we going to start to shape evolution and like take control of it? Because AI is taking off at a crazy pace. Like how is, how is human intelligence going to keep pace? And we already kind of, we already choose this by who we choose to marry and who we choose to have children with.

• 2:57:17Speaker 03

  Has a huge impact on what our kids are and where you send them to school and et cetera, et cetera. So why wouldn't we also kind of give them the best chance they can genetically? I think eventually it'll become like. Weird not to do this, like in 50 years. It'd almost be like risky, like rolling the dice to not take a look at the data. So that's another interesting area that'll, it could come to fruition. I'm not doing anything currently in that area today, but just kind of intellectually interested in it.

• 2:57:44Shawn Ryan?

  Wow. Fascinating stuff.

• 2:57:46Speaker 03

  Yeah.

• 2:57:47Shawn Ryan?

  What, we're wrapping up the interview, but I just got a couple of questions left. What, what advice do you have for new innovators and founders?

• 2:57:57Speaker 03

  Well, there's a lot of different areas like people could get advice on. I think the biggest, the big picture advice I would give people is it's action produces information. Right? A lot of people are sitting there thinking, ah, I kind of want to start a company, but I'm not sure exactly what to do. And this area could be interesting, but what if that happens? And what if the government shuts it down? What if this competitor does it? I, you can kind of have this analysis paralysis.

• 2:58:24Speaker 03

  You just need to get started with something and just anything you can think of to do, like just, just go try and do it. It'll probably be the wrong thing, but just the fact that you tried it, it'll give you an idea about what to do next. And there was many times in Coinbase's history where, where that was the case. Like the first version of the Coinbase app that I built, I, I built it totally wrong. Right? And almost like the, the minute that I released it, I was like, oh, now I realized how I should have done it. But if I hadn't actually gone and stepped into the unknown, I never would have figured out a better way to do it. And there's an analogy I love to think about, which is kind of like, imagine you're looking at a mountain. You want to try to summit the mountain and it's shrouded in fog and clouds and you can't really see the top of the mountain. In fact, you can only see like six feet in front of you.

• 2:59:08Speaker 03

  The, the fog is so thick, but you know, there's some mountain up there. You can't just sit down on the ground and think about how the right path, you got to take a few steps into the fog, into the unknown. And you might get stuck on some ledge that's like, oh, I got to backtrack. Like that was the wrong way. Right? And sometimes you'll be able to see a little farther in distance. Sometimes you can only see a few feet ahead, but if you don't take steps into the unknown, like that action, you'll never know the better path to go. And most people, they don't have, I don't know if it's the risk tolerance or the fear of looking stupid or like doing the wrong thing or whatever it is. I think, you know, they never take that step into the unknown. Sometimes people ask me, like, why do a lot of tech founders have autism?

• 2:59:49Speaker 03

  You know, I think like one of the reasons, I'm probably somewhere on that spectrum myself, by the way. But I think one of the reasons like people with on the spectrum or have autism like are tech founders is that

• 3:00:03Speaker 03

  they don't really have social anxiety about people thinking that they're looking stupid or dumb. Like it's, it's not that they don't know what's happening or that they, but they just don't care. It's like, and so

• 3:00:14Shawn Ryan?

  Fear is gone.

• 3:00:15Speaker 03

  Yeah, like, and it's like a social, um, they're kind of blind to it socially, which can be funny in certain situations, like, you know, if they just do something that they don't, everyone else thinks it's weird, but they don't know that it's even weird. But in, in entrepreneurship, that tends to help you a lot. Because you're willing to just take steps into the unknown, unafraid of looking stupid, to try lots of things. And eventually you find something that works. So that, I don't know, that would be my biggest piece of advice is just like, action produces information. If you have any kind of an idea of what to do, just do it, even if it's the wrong thing and it'll produce more information.

• 3:00:46Shawn Ryan?

  I love that. I love that. Last question. If you had three people you'd like to see on the show, who would they be?

• 3:00:58Speaker 03

  There's so many good ones. I think, and you've, you've met with a bunch of them already.

• 3:01:08Speaker 03

  Let's see, have you had Elon on?

• 3:01:10Shawn Ryan?

  No.

• 3:01:10Speaker 03

  Okay, could be a good one. I mean, everybody wants to interview him. That's maybe an obvious one. I'm trying to think about ones that would be less obvious.

• 3:01:19Shawn Ryan?

  Who are you excited about?

• 3:01:21Speaker 03

  Yeah, I think, I am excited about people building on the frontier of technology. So I'll give you a couple of names. I think there's a guy Keller Renato, he started a drone delivery company that's really amazing called ZipLine. He's also working on another biotech company. I think he's, he's really impressive.

• 3:01:43Speaker 03

  Have you had, I know you had Palmer on, have you had Brian Shimp from Androl? He's the CEO, he's, he's a rock star as well. I mean, they're building like nuclear submarines, all kinds of crazy stuff now.

• 3:01:57Speaker 03

  Let's see.

• 3:02:02Speaker 03

  Um.

• 3:02:07Speaker 03

  I mean, do you want to talk to like government people? And you'll talk to anybody.

• 3:02:10Shawn Ryan?

  Government people?

• 3:02:13Shawn Ryan?

  We talk to a lot of those.

• 3:02:17Shawn Ryan?

  Could be anybody. How about the crypto space?

• 3:02:19Speaker 03

  Yeah.

• 3:02:21Shawn Ryan?

  Who's doing something new and innovative than that?

• 3:02:23Speaker 03

  Well, I think Jesse Pollak on our team, who created the base protocol on the base app, he's great.

• 3:02:32Shawn Ryan?

  Perfect. That's three.

• 3:02:33Speaker 03

  Yeah, that's a good start.

• 3:02:35Shawn Ryan?

  All right. Brian, thank you for coming, man.

• 3:02:38Speaker 03

  Thanks for having me.

• 3:02:38Shawn Ryan?

  I really appreciate the time and I hope to see you again.

• 3:02:41Speaker 03

  Thanks for being interested in what we're up to.

• 3:02:43Shawn Ryan?

  Thank you.

• 3:02:43Speaker 03

  Yeah. Cheers.