Dialogue with Coinbase founder Brian Armstrong: The iPhone moment of the crypto world has arrived

Guest: Brian Armstrong, Founder of Coinbase

Compiled by: Kaori, BlockBeats

Editor's Note: Base's TVL has recently surpassed OP Mainnet, becoming the second-largest Layer 2, and it has also launched the Onchain Summer series of events as promised. In this conversation, Coinbase co-founder and CEO Brian Armstrong discusses with Base protocol lead Jesse Pollack how to drive innovation and development in the blockchain space. Brian shares his unique perspective as an engineer and CEO, discussing Coinbase's efforts to help developers and his outlook on on-chain development in the coming years.

Jesse Pollack: Hello everyone! Welcome back to "Onchain Stories." This special episode is hosted by me—Jesse Pollack, founder and head of Base. Today, we are honored to have Brian Armstrong, co-founder and CEO of Coinbase, with us. Welcome, Brian.

Brian Armstrong: Hi, Jesse, great to see you.

Jesse Pollack: Thank you for joining this conversation and inspiring developers. Let's start from the beginning. Ten years ago, you and Coinbase have been working to make cryptocurrency more user-friendly. Can you share your thoughts on how far we've come? What is the on-chain user experience like today?

Brian Armstrong: Yes, we have indeed made significant progress, but I think we still have a long way to go. Initially, we were thinking about some simple questions, like how to send Bitcoin to an email address.

I remember in 2012, when we were developing the early prototype of Coinbase, we were inspired by PayPal—sending money via email address, and we thought maybe we could apply that system to Bitcoin.

At that time, we just wanted to solve some very basic issues, like storing Bitcoin with a username and password without needing to run a node on a laptop. These were very fundamental things back then.

But over time, we have indeed made some progress. For example, we no longer have to send those long addresses that look like passwords; we can send ENS IDs, which are human-readable rather than machine-readable, and that's great. Layer 2 is also a significant advancement, and Base is an important part of that, but there are many other Layer 2 solutions like the Lightning Network that are working to simplify this process.

We need faster confirmation times and lower fees, but I think we still have a long way to go. One major issue is that cross-chain asset transfers are still quite difficult. People are unclear about how to transfer assets between L1 and L2 or between different L2s.

There are many jokes on social media about this, like, "Is my USDC on Ethereum or some L2?" There are too many icons, and I think we need to find a way to make this seamless in the background so that people don't even need to know which chain they are on.

Perhaps there could be some sort of handshake protocol between the sender and receiver, like "This is what I have, what do you accept?" and then automatically complete the exchange on a DEX. Such a mechanism could be helpful. My standard is something like Apple Pay, where you can tap to pay with your phone on a point-of-sale device.

How can we reach that level? For example, paying between two phones or scanning a code to pay in an e-commerce environment. In Coinbase Commerce, we have been working towards a world of "one-click magical checkout," making cryptocurrency the easiest payment method.

Our work on L2 is not fully in place yet; we need to debug some APIs built into hardware and phones, which may involve many details like NFC. But I believe we are gradually getting closer to our goal, and it requires the hard work of many smart people.

Jesse Pollack: Yes, that's right. This summer, many people are building on-chain for the first time, while some have been in this space for a long time. What are your expectations for this summer's on-chain building marathon and some of the projects currently being built on-chain?

Brian Armstrong: Yes, I have a few ideas in mind. Of course, I'm not the judge of these good ideas; I'm often amazed by the creativity proposed by the community. We often talk about these Lego-like pieces starting to come together. For example, we have ENS, stablecoins, L2, as well as identity, NFTs, and social aspects.

Another area I think might be missing is an on-chain reputation system. You can imagine a version that uses the graph structure of the chain to represent trust relationships, like I trust this node, and they send funds to another node, which implies a certain level of trust, similar to Google PageRank algorithms. Building something like this on-chain would be cool.

Another thing I've been thinking about is that in Web2, the biggest business model is advertising. We don't want to repeat all the mistakes of Web2, but how to achieve distribution in Web3 is an interesting question. You can imagine an advertising network or an equivalent of Google Adwords, but not just pay-per-click (CPC); you could pay for an action.

You can envision a world where smart contracts or dApps expose some metadata, like if you refer a user to this function call, passing your referral ID or address, you would earn a 1% reward. You could promote different rates that people are willing to offer, and these rates could be displayed across various wallets or distribution areas.

Jesse Pollack: So I think we might see the development of advertising networks in this dimension. I want to bring up another question I've been thinking about, which is on-chain P2P deposits and withdrawals. Many emerging markets need to transfer funds in and out of platforms, and these centralized versions are often shut down or under pressure. If we could do all of this on-chain, like dispute resolution, mediation, rating, and review systems, building more such on-chain systems, these markets would become more resilient and globalized. These are some thoughts I've been pondering, but I'm looking forward to seeing what creative ideas people come up with.

Brian Armstrong: What excites me is that previously, the technology was always not ready; we didn't have the right components, the costs of the chain were too high, we didn't have something like ENS, and wallets were too hard to use. But now it feels like we finally have these components, which will enable the next wave of use cases. For example, now you can really build reputation systems, advertising networks, or deposit and withdrawal systems, and their costs are low enough and easy enough for everyone to use.

I have two thoughts: first, the technology is finally ready to support reputation systems, advertising networks, and deposit and withdrawal systems. This will make these use cases cheap and accessible for everyone.

Second, it's fascinating to think about how these things can truly come together. To have a good advertising network, you need to know whether the people participating and seeing the ads are real, which is reputation. To have a good P2P network, you need to know whether the people in the network are good actors, which is also reputation.

So I think we are at a stage where the on-chain infrastructure has been established, but we are starting to see opportunities for this application-layer identity infrastructure that will support P2P, advertising, and better commerce, helping the world move on-chain.

Jesse Pollack: I know you are increasingly getting personally involved at Coinbase to make it easier for people to go on-chain, not just from the user's perspective but also from the developer's perspective. I know you are also an engineer; can you talk to us about what Coinbase is currently doing to help developers and what drives you to invest your time and energy?

Brian Armstrong: Well, if you haven't checked it out yet, you should take a look at CDP, the Coinbase Developer Platform. The URL is cdp.coinbase.com. We are trying to provide many of the tools built internally at Coinbase to third parties for building their applications.

Over the years, we have built a lot of things, whether it's a simple way to store cryptocurrency, staking, trading, or even indexing a large number of NFTs or handling ENS and different assets. We hope to reduce the workload for developers by providing these features through very easy-to-use APIs.

Jesse, you released a fantastic video introducing many on-chain builder tools. We included Base nodes and Paymaster features, allowing you to make fees completely unaffected for your customers. Clearly, the smart wallet launched yesterday is also a significant event. I think now we see users not needing to use a 12-word mnemonic to onboard but can enter with a single tap using biometrics or a YubiKey, making wallet usage and onboarding much simpler.

I'm very passionate about this; I believe Coinbase has a great opportunity to help thousands of developers build applications, which is one of the reasons I am deeply involved in the Coinbase Developer Platform CDP product, trying to see how we can make it easier to use.

As a developer, I always loved those magical moments, like the first demo of using Ruby on Rails, when I could create a blog with real-time comments and RSS feeds in five minutes; it was amazing. These tools enhance productivity. We hope to provide developers with a suite of such tools to make it easier for them to get started and lower the barriers to innovation.

Jesse Pollack: I completely agree. If anyone doesn't know, Brian was an engineer when he founded Coinbase, and he still is an engineer. Recently, we had a three-day weekend for Memorial Day. On Sunday, I received a message from Brian asking, "What’s the best way to learn how to write smart contracts?" I recommended some resources, and later we discussed it in messages, and he said, "Can we code together?" Then he and Wilson Cusack spent their holiday coding smart contracts.

I think it's very inspiring for me that as a CEO of a public company, Brian is personally involved in writing smart contracts and improving developer tools. Over the past year, almost no one thought Coinbase was doing anything for developers, but now Base is the leading L2 for developers, and the Coinbase Developer Platform is a very powerful developer tool where you can find everything you need to start building on-chain applications. We are just getting started, and I believe all of this stems from having a leader like Brian who understands technology and can write code personally to make everything possible.

Brian Armstrong: Thank you for saying that, Jesse. I feel like my programming skills are declining each year, but I hope my CEO skills are improving each year. I mainly want to lead the team by example; I have to personally understand these fundamentals. Everyone feels a bit intimidated when learning a new language or building applications.

It's complex stuff, so you have to approach it with a beginner's mindset, go through some frustrations, and I have asked many seemingly silly questions. Thanks to Wilson Cusack for doing some pair programming with me; that was really cool. In Singapore, some officials, like the former Prime Minister, have even written some things on GitHub. This attempt to deeply understand the fundamentals demonstrates good leadership within the company, and I believe we need every engineer at Coinbase to build on-chain. If I don't lead by example, I can't expect others to do so.

Jesse Pollack: I completely agree; your role model effect is being seen and felt, and it is changing the company. About a year ago, we didn't have many developer products, and there weren't many teams building on-chain internally. But today, there are many teams at Coinbase building on-chain, and we say we want to create the best smart contract on-chain engineering team in the world.

If you had asked us a year ago if we could do it, we might have thought it was too crazy, but now we are gradually achieving that goal, pushing the boundaries of possibility, and setting an example for ourselves, internal teams, and the entire ecosystem, showing how big companies can enhance their on-chain building capabilities.

I'm curious about how you see the future of on-chain in the coming years. How fast do you think all of this will happen?

Brian Armstrong: I think these things always feel very incremental when they are happening, but in hindsight, they seem sudden. People think the release of the iPhone was a sudden turning point; from a historical perspective, it was, but people at the time didn't feel that way. After the iPhone was released, there wasn't even an app store for a year or two, and it only ran on AT&T's 3G network. So at that time, it felt very incremental, and only in retrospect do we see how significant those changes were.

I believe we are at such a turning point, but it feels incremental while we are in it. L2 is a huge advancement; it reduces the friction of building different applications. I've been thinking recently about how all these decentralized protocols can come together in on-chain super applications. We need moments like Netscape or the iPhone, not just limited to payments.

We see decentralized social media like Farcaster rising, and interesting messaging applications like XMTP launching. How to embed these into people's daily lives, like their livelihoods, paying for basic necessities, daily operations, etc. Content creators, social media, journalism, and even the ways organizations are created, voted on, and governed could all be impacted. I find that very exciting.

If we can achieve this, there could be an on-chain super application that combines these protocols, which would be very interesting, and I look forward to seeing what you all are doing. It really feels like all the infrastructure is in place, but the user experience hasn't truly brought them together yet, and there's a significant opportunity here. I look forward to continuing to build content around developers and builders and seeing what Coinbase will do on the consumer side.

Jesse Pollack: One last question, we are running a hackathon, with thousands of developers signing up for the summer building event. You are a very successful founder who has been doing this for a long time, and I wonder what advice you have for those developers building during this marathon?

Brian Armstrong: The early stages of innovation often don't look glamorous; it's just a few people tinkering in their apartments, which is exactly how Coinbase started, along with some of the ideas I tried in the past that didn't succeed—this is the norm.

I remember my friends would call me and say, "Hey, come out to this party." I would always respond, "I don't know; I'm just at home tinkering with my laptop." But at that time, I didn't feel like I was changing the world; in fact, most of the time, I was struggling to solve some bug, possibly because a semicolon was in the wrong place.

So much innovation is like this: you need to stick with it, allow yourself to be a beginner, allow yourself to slow down, and not understand how it works. If you are in a cutting-edge field, there won't be many manuals to refer to. You can learn to make an LLM in five minutes, but if you really want to build something new, that material doesn't exist. Therefore, you have to overcome these challenges through perseverance. Perseverance may be the biggest determinant of success in entrepreneurship and building.

I think many startups, when a few people come together to try something, after three months, if the first product they launch doesn't succeed, or if there are some internal partner disputes, they collapse at the starting line. In my view, this approach almost never succeeds; almost nothing succeeds on the first launch; that's very rare.

Coinbase's first product certainly didn't succeed; you have to launch a very embarrassing version 1, releasing something that isn't actually ready yet. If you don't feel embarrassed about it, it means you've waited too long. Many people never release anything because they can't overcome the hurdle of launching something that feels slightly embarrassing.

Once you release version 1, no one will care; publish it on Farcaster, get 10 people to take a look. Then you have to keep looping: talk to customers, improve the product, talk to customers, and improve the product again, continuously doing this for two or three years, four years, ten years, etc., and eventually, there may be breakthroughs. This is the game of entrepreneurship; you don't know if it will succeed. You have to be willing to step into the unknown, continuously try enough ideas, and eventually, something will succeed. And 99% of people give up, or they never start. That's the way.

Jesse Pollack: I love this summary; it's a great closing statement. If you're building, don't give up; you're just on day one. The most important thing is to stay determined, stay focused, and keep your eyes on the goal. Stay Based.