In Good Company with Nicolai Tangen - HIGHLIGHTS: Brian Armstrong - CEO of Coinbase

Starting point is 00:00:00 Hi, everybody. Tune in to this short version of the podcast, which we do every Friday for the long version. Tune in on Wednesdays. Hi, everybody, and welcome to In Good Company. I'm Nicola Tangian, the CEO of the Norwegian Soban Wealth Fund. And today, I'm joined by Brian Armstrong, the co-founder and CEO of Coinbase, which is America's largest crypto exchange. And increasingly, one of the powerful forces shaping global finance. So, Brian, warm welcome. Thank you for having me. Now, 13 years ago, nobody trusted cryptocurrency.

Starting point is 00:00:30 And today, nobody can ignore it. And so what happened, really? Well, you know, I first read about Bitcoin in December of 2010, and it was describing how there could be a decentralized network to move value around the world, kind of like the internet was for moving information, but this was for moving value. And, you know, it was initially didn't get much attention, only people that were computer science PhDs or, you know, libertarians or anarchists were excited by it in these small forums. on the internet. And it slowly grew over time. And of course, Bitcoin was the first asset. They got created kind of like this digital gold standard. But quickly, the technology evolved to be, you know, blockchain is a broader concept. And so people made all kinds of things. They made ways to trade other asset classes like commodities and equities. They made stable coins

Starting point is 00:01:20 for better payment rails. They made prediction markets. And so now I think we're in a world where crypto is actually up getting all aspects of the financial system. It's not really just about Bitcoin. It's about payments. It's about borrowing and lending. It's about capital formation. And how can this technology actually make financial services more efficient and more global, more fair and more free all over the world? And so it has increased in trust quite a bit. I think the things that have helped that have been, number one, regulatory clarity, which we're seeing emerge now in Europe. In the United States, we got legislation recently passed. for stablecoins. We're also seeing adoption by the largest institutions in the world.

Starting point is 00:02:01 So, you know, there's lots of Bitcoin ETFs now and fund like Black Rock and Apollo have come out and said they want to tokenize all of their funds. Companies like Visa and JPMorgan are running experiments with how to do stablecoin payments. And so I think these trusted institutions coming in has also been another factor in addition to the regulatory clarity. Now, you call it the everything exchange, so stock trading, crypto, custody. So are you building a bridge to traditional finance or is it the end of traditional finance? No, I think it's an evolution of traditional finance. So we are building the Everything Exchange, which is bringing every asset class into one tradable platform. So you have not only crypto assets,

Starting point is 00:02:46 which there are millions now, but you have stocks, commodities, FX. I think prediction markets is another big category that's taken off. And I think you'll actually see all capital formation get changed in crypto here relatively soon where it's easier to raise money and then go through the process of being a private company, eventually being able to go public, totally on chain. And then, of course, it's not just trading. Like crypto is actually updating these other categories of finance as well, right, payments and borrowing and lending and everything. So, yeah, it's a pretty broad technology. Why are stable coins more important than people think?

Starting point is 00:03:25 Well, I think a digital dollar is very still underappreciated and could grow 100 or 1,000 X from here. The reason is that payments are still relatively high friction around the world. Now, you know, in certain countries, like I'd say in Brazil with PICs or in India with UPI, like they've managed to get payments to be quite fast and cheap, but they work only within that one country. Other countries, like in Europe, they have instant bank transfers. that are free essentially, and that's a really good feature. But if you look at most payment methods, whether it's credit card or Swift or anything, and you kind of look at these three dimensions, like the cost, the speed, and then the global reach. So they're, you know, let's take credit cards, for example.

Starting point is 00:04:13 Like they have pretty good global reach, but they have high cost, two to three percent on every transaction, and they're quite fast, right? If you look at Swift, it has good global reach, but it's expensive. And it takes, I think, what, two to three business days or something like that? And so if stable coins are the only payment rail that checks all three boxes. It's fast, cheap, and global. So you can now send stable coins instantly, less than one second, anywhere in the world, for less than a tenth of a cent, US. And so payments are like water.

Starting point is 00:04:48 They kind of flow to the path of least resistance. And I think that's why we're seeing such enormous growth in stable coins. I think it grew about maybe 100% year over year. last year and more and more of the global GDP I think will run on stable coin rails. What is quantum computing going to do for crypto? Well, quantum computing is a big trend that's going to affect, of course, lots of different areas of cryptography and technology. And so if for some reason a, you know, I don't know,

Starting point is 00:05:18 100-cubit quantum computer were just available today, it would affect lots of things much beyond crypto. I mean, all transactions, you know, in the financial system, for instance, but also every login and password, every all encryption data. So it's a much bigger topic. But specifically from a... Will it be the end of crypto?

Starting point is 00:05:38 No, it won't be the end of crypto. The reason is that, like, all systems will need to upgrade to post-quantam cryptographic algorithms. And so just like in banking or, you know, in how Google stores data or anything, all these will have to be upgraded in that environment. And so what we've done at Coinbase, is we've made a big effort to get ahead of this.

Starting point is 00:06:00 The important thing is you don't want to rush at the end. You want to get ahead of these kinds of issues. So we put together this advisory council of cryptography experts to make sure that we're making progress towards the upgrade of the Bitcoin network and the Ethereum network. And of course, we don't control those networks. They are truly decentralized, but we can try to help where it's helpful

Starting point is 00:06:20 and make sure that the industry and the community really comes together with these upgrades. So there's actually regular meetings already happening in the Bitcoin development community, for instance, about the next algorithms that the Bitcoin network could upgrade to. And it will be, you know, quantum resistant. And it will require the network to upgrade, essentially. Did I read somewhere that you, in order to get people to really adopt AI in the company, just said, hey, either you use it within a week or you're out?

Starting point is 00:06:52 Yeah, I mean, these stories always get a... They get better every time you tell them. But what I did do is I said, hey, we want every engineer to onboard to this tool, you know, cursor and Claude and these different things. And at least try it, right? Like this was about a year ago. Now almost all the engineers are using it every day. But at that time, I think there was just like anything, people were a little hesitant.

Starting point is 00:07:15 It's a new thing. I have the thing that I know how to do every day. You know, why are you telling me how to do this? And what I told them was, I want to see everybody sign up and at least try it out. You don't have to switch your entire workful every day. But if you haven't at least signed up and tried it out, I start to question your eagerness to learn the latest tools in your career and your profession. And so I was watching the numbers of adoption of this inside,

Starting point is 00:07:39 and it was like, okay, we got 60% of engineers to try it and 70%. And at some point, I just got impatient. And I said, I just sent a note to the engineer. And I said, everybody just sign up and try this out by the end of the week. And if you can't, I'm going to host a meeting on Saturday with the CEO for anybody who hasn't tried it. and I want to hear from you why you haven't tried it. And if you don't show up for that meeting or you don't have a good reason, you know, I didn't say this in the message, but, you know, about,

Starting point is 00:08:05 I think maybe only one person got fired, actually, because they refused to sign up for it and they didn't come to the meeting. And they didn't have a good reason like they weren't on vacation or parental leave or something like that. They just refused to do it. And I, so I was like, hey, you're not a good fit for the company. So I think only one person got fired. But it did create a very clear tone from the top.

Starting point is 00:08:24 that we need to stay on top of these things to be relevant as a company. I call that a very clear tone from the top. Oh, you mentioned long term. On the side, you are running a longevity biotech company. Is that in order to be properly long term, that you do that? Well, I do think very long term. The person running it every day is Jacob Kimmel, who is a brilliant scientist and operator of that business.

Starting point is 00:08:54 I co-founded it. I put some of my own money in as an investor. I'm on the board. I helped them early on get it off the ground. But just to give you maybe a sense of why I did that, because it may be atypical, I started to think about what are the big technology trends that would change the future in the coming decades? And I'm sure you think about lots of them, right? There's AI and there's cheaper energy, fusion energy. There's space. There's brain machine interfaces. I felt like there were good people working on a lot of the other big technology trends, but I didn't see a great company or team in the longevity space. In fact, there was a lot of kind of snake oil and kind of less serious companies. And so I hosted a series of dinners, was lucky enough to find

Starting point is 00:09:32 the other co-founders, Blake Byers, Jacob Kimmel, and Greg Johnson, who helped create a company in the early days too. And yeah, put some money in. And I think it's doing something very exciting, which is called epigenetic reprogramming, which essentially it's reprogramming yourselves to restore function they had when they were younger. And New Limit is, yeah, it's gone faster than I thought. I thought it would have been, you know, five, six, seven years of kind of basic research. But within three years, they were able to demonstrate successful reprogramming of human cells to restore function they had when they were younger. And so they're on track now to get their first drug into clinical trials next year.

In Good Company with Nicolai Tangen - HIGHLIGHTS: Brian Armstrong - CEO of Coinbase

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