HIGHLIGHTS: Brian Armstrong - CEO of Coinbase

0:01Hi, 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 Nicolai Tangen, the CEO of the Norwegian So-and-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 crypto. And today, nobody can ignore it. And so, what happened really? Well, you know, I first read about Bitcoin in December of 2010.

0:40And 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 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 that got created, kind of like this digital gold standard. But quickly, the technology evolved to be blockchain as a broader concept. And so people made all kinds of things.

1:14They made ways to trade other asset classes like commodities and equities. They made stable coins for better payment rails. They made prediction markets. And so now I think we're in a world where crypto is actually updating 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.

1:52In the United States, we got legislation recently passed for stablecoins. We're also seeing adoption by the largest institutions in the world. So, you know, there's lots of Bitcoin ETFs now and funds like BlackRock and Apollo have come out and said they want to tokenize all of their funds. Companies like Visa and JP Morgan 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 this the end of traditional finance?

2:33No, 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, which there are millions now, but you have stocks, commodities, FX. You know, 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.

3:13Like 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 stablecoins more important than people think? Well, I think a digital dollar is still underappreciated and could grow 100 or 1 ,000x from here. The reason is that payments are still relatively high friction around the world, right? Now, in certain countries, like I'd say in Brazil with PIX or in India with UPI, they've managed to get payments to be quite fast and cheap, but they work only within that one country.

3:52Other 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 let's take credit cards, for example. They have pretty good global reach, but they have high cost, two to 3 % 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.

4:31And so stablecoins are the only payment rail that checks all three boxes. It's fast, cheap, and global. So you can now send stablecoins instantly at less than one second anywhere in the world for less than a tenth of a cent US. And so payments are like water. They kind of flow to the path of least resistance. And I think that's why we're seeing such enormous growth in stablecoins. I think it grew about maybe 100 % year over year last year. And more and more of global GDP, I think, will run on stablecoin 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.

5:14And so if for some reason a, you know, I don't know, 100 qubit 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. Will it be the end of crypto? No, it won't be the end of crypto. The reason is that all systems will need to upgrade to post-quantum cryptographic algorithms. And so just like in banking or in how Google stores data or anything, all these will have to be upgraded in that environment.

5:55And so what we've done at Coinbase is we've made a big effort to get ahead of this. The important thing is you don't want a 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 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.

6:36And 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? yeah i mean these stories always get um they get better every time you tell them but um what i did do is i said hey i want 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 now almost all the engineers are using it every day but um at that time i think there was just like anything people were a little hesitant it's a new thing i have the thing that i know how to do every day.

7:18Why 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 workflow 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. 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, I said, like, everybody just sign up and try this out by the end of the week.

7:49And 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 have if you don't show up for that meeting, or you don't have a good reason, you know, I, I didn't say this in the message. But, you know, about 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 so I was like, hey, you're not a good fit for the company.

8:20So I think only one person got fired, but it did create a very clear tone from the top 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, yeah, you mentioned long-term. On the side, you are running a longevity biotech company. So 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. But 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.

9:00But 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 snake oil and less serious companies. And so I hosted a series of dinners, was lucky enough to find the other co-founders, Blake Byers, Jacob Kimmel, and Greg Johnson, who helped create the company in the early days too.

9:40And yeah, put some money in. And I think it's doing something very exciting, which is called epigenetic reprogramming, which essentially it's reprogramming your cells 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.