00:16:47 · Molly O'Shea, S2
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00:17:41 · S2, Molly O'Shea
[00:17:41] S2: Start today at brex.com/sorcery. That's brex.com/sorcery. Turing is training the next generation of AI with tasks that require real expertise and real world judgment. That's why companies like NVIDIA, Anthropic, Salesforce and Gemini partner with Turing. Turing builds realistic reinforcement learning environments and data systems based on real operational traces, the kind of infrastructure frontier labs need to train super intelligence. Visit turing.com/sourcery. [00:18:18] S1: So how is crypto changing financial infrastructure? I recently had Jackie Reese's on and maybe we could talk about the evolution of it. But with Jackie Reese's, she was at Square. She helped stand up Square Capital and banking and that kind of thing. Now she's forming this bank. She said, before going to a bank, you'd sit there for thirty minutes, they'd give you a whole spiel, and then they'd offer you a free toaster. Now, with like, being able to build on rails, she can spin up a million accounts in like two seconds. So I'm curious for your point on that, and like how you've seen crypto evolve over time to today and like where the clarity act is.
00:18:59 · Brian Armstrong
[00:18:59] S0: Yeah. So that's, you know, there's a great couple of examples of just how crypto is updating the financial system. Right? I mentioned one of them earlier, which is now anybody can get an account on a smartphone with an Internet connection, especially if it's a self custodial wallet, do it anywhere in the world. Right? So that's that's pretty unique. Like, they they basically, anybody with a smartphone and Internet can store their wealth in a way that it can't be taken away from them. That sound people would call this basic property rights, right, in economics. That's something that, just most people in the world don't have. We take it for granted here in The US. The second one is payments. Right? You know, with crypto rails, you can now send money instantly, less than a second, anywhere in the world for less than a cent. And you can do that on the base network with USDC, for instance, and that's democratizing payments, right. And just bringing, lowering the friction in the economy for all transactions of value. And then we're getting tokenization of all these asset classes, right? Stocks and bonds and real estate. And so, that makes it easier for everybody around the world to, to participate. So it just, that's the yeah. That's the summary. Mean, the crypto is updating every aspect of the financial system, and you mentioned the Clarity Act. I mean, this this would be another landmark piece of legislation that I think is a massive TAM expansion opportunity for Coinbase and for all of crypto to have more of this built in The United States with clear rules.
00:20:21 · Molly O'Shea, Brian Armstrong
[00:20:21] S1: So of the announcements and everything that's going on, I thought the everything exchange was really interesting. So I want to get your perspective on that and like where you think Coinbase's competitive advantage is. Yeah. [00:20:36] S0: So the Everything Exchange is a great concept. It's how do we get every asset class in the world tradable in one account? And the benefit of that to the customer is that they have better capital efficiency. Because if your assets are all in one place, you can get better margin, more credit. Right? And then, you know, you can, and then you can actually like trade these things twenty four seven if they're really running on crypto rails. And so it really kinda democratizes or updates the the trading infrastructure for everyone. In terms of Coinbase's unique advantage, I mean so we're storing more crypto than any other company in the world. I'd say we're the most crypto native, and so that's, what's allowed us to build a lot of these things on chain and coming to market first. Yeah. And then I think we have really like the most trusted brand. So that's what people are coming to us so far for. [00:21:28] S1: How have you built such a trusted brand? Crypto is pretty sketchy for some people. You've seen some crazy stuff. So, like, how have you built such a trusted brand in a space that is full of some grifters and bad actors?
00:21:45 · Brian Armstrong
[00:21:45] S0: Yeah. So, you know, at the very beginnings of Coinbase, back in 2012, like, I made a couple of decisions, which I think were quite formative. So I said, number one, I'm gonna try to build this company in The US, and instead of going offshore, even though that was harder because you had the lack of rearguatory clarity. Number two, I'm gonna put my name on it publicly and tell people who I am and what I'm doing. I was not pseudonymous. Right? And then number three, we went and actively sought out licenses. And in many cases, the regulators didn't know anything about crypto at the beginning. We had to act as a educational resource for them. We sometimes sought out licenses before they were even required just to sort of demonstrate good faith and help bring the industry along. And then we ultimately became a public company in The United States, and that comes with a large number of controls and financial audits. So you're correct that, unfortunately, we have seen some bad actors in crypto. You see bad actors in the traditional financial system too, you know, the Bernie Madoffs of the world, the Enrons. And so I think that we've really helped legitimize the industry, and that's contributed to our most trusted brand. Trust can come from lots of places, by way. I mentioned a number of them. It can also come from great design. It can come from great customer support. It can come from basically doing what you say you're gonna do. My hope is that as we continue to go along for many decades and just create a sense of stability here, we will we will help level up the crypto industry and make sure that I I think I think in five or ten years, people are gonna be using financial services. A lot of it will be running on crypto rails. They won't even really know or care about crypto itself. They just like, oh, this is a cheaper way to send money abroad to my family, or it's a I wanna just trade this asset class twenty four seven and sign up on my phone in a few seconds. Like, it's just gonna be the easiest way to get done and the cheapest way to get done with it, whatever they wanna do, and they won't necessarily be crypto zealots or something It's like just the best way to do financial services.
00:23:49 · Molly O'Shea
[00:23:49] S1: We've seen hundreds of billions of dollars move through these cycles. You've definitely seen it and felt it, but I'm really curious because we had Web three point and the consumer demand was insane, and people were trading NFTs, there were lots of fun things going on, and then that kind of washed away, and then now we have prediction markets, and hundreds of billions of dollars are being traded in prediction markets. So one, I'm really curious if you have an answer for this or any sort of estimate, how much money do you think is left on the sidelines as dry powder for these big, huge events? And then two, how do you form your product decisions around that? Why did you decide to go into prediction markets? Like, what's your competitive advantage there?