Kaori, BlockBeats
Editor’s Note: Base TVL has surpassed OP Mainnet in recent days to become the second largest Layer 2, and has kicked off the Onchain Summer series as planned. In this conversation, Coinbase’s co-founder and CEO, Brian Armstrong, and Base Protocol’s head, Jesse Pollack, discuss how to drive innovation and development in the blockchain field. Brian shares his unique perspective as an engineer and CEO, discussing Coinbase’s efforts to assist developers and his outlook on on-chain development in the coming years.
Jesse Pollack: Hello everyone! Welcome back to “Onchain Stories”, a special program hosted by me, Jesse Pollack, founder and head of Base. Today, we are fortunate to have Coinbase’s co-founder and CEO, Brian Armstrong, with us. Welcome, Brian.
Brian Armstrong: Hi, Jesse, great to see you.
Jesse Pollack: Thank you for joining us for this conversation and inspiring developers. Let’s start from the beginning. Ten years ago, you and Coinbase have been dedicated to making cryptocurrencies more user-friendly. Can you share your thoughts on how far we have come? How is the user experience on-chain today?
Brian Armstrong: Yes, we have indeed made great progress, but I believe we still have a long way to go. Initially, we were pondering over 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, inspired by PayPal – sending money via email addresses. Perhaps we could apply this system to Bitcoin.
At that time, we were just trying to solve some very basic problems, such as storing Bitcoin with usernames and passwords without the need to run nodes on laptops, which were very basic at the time.
But over time, we have 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, which is great. Layer 2 is also a significant advancement, with Base being an important part of it, but there are many other Layer 2 solutions like the Lightning Network that are striving to make this process simpler.
We need faster confirmation times and lower fees, but I believe we still have a long way to go. One major issue is the difficulty of cross-chain asset transfers. People are unsure how to transfer assets between L1 and L2, or between different L2s.
There are many jokes on social media about this, such as, is my USDC on Ethereum or on some L2? There are too many logos, I think we need to find a way to make these seamless in the background, so people don’t even need to know which chain they are on.
Perhaps there could be some kind 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 may be helpful. My standard is like Apple Pay, where you can tap your phone to pay at a point of sale device.
How can we reach this level? For example, paying between two phones, or scanning a payment in an e-commerce environment. In Coinbase Commerce, we have been working towards creating a world of “magical one-click checkout,” making cryptocurrencies the simplest payment method.
We are not fully there yet in our work on L2, we need to fine-tune some APIs built into hardware and phones, which may involve details like NFC. But I believe we are gradually getting closer to the goal, which requires the hard work of many intelligent people.
Jesse Pollack: That’s right. This summer, many people are building on-chain for the first time, while others have been in this field 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 am not the judge of these good ideas, I am often amazed by the ideas proposed by the community. We often talk about these building blocks like LEGO pieces coming together. For example, we have ENS, stablecoins, L2, as well as identity, NFTs, and social aspects.
Another aspect that I think may be missing is a reputation system on-chain. You can imagine a version that uses the graph structure of the chain to represent trust relationships, such as I trust this node, they send funds to another node, implying a certain level of trust, similar to Google PageRank algorithm, this would be cool on-chain.
Another thing I have been thinking about is that in Web2, the biggest business model was 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 equivalent to Google Adwords, but not just pay-per-click (CPC), you can pay for an action.
You can imagine a world where smart contracts or dApps expose some metadata, like, if you refer a user to this function call, pass your referral ID or address, you will receive a 1% reward. You can advertise different rates that people are willing to offer, these rates can be displayed in various wallets or distribution areas.
Jesse Pollack: So, I think we might see the development of advertising networks in this dimension. I’ll 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 can do all of this on-chain, such as dispute resolution, mediation, rating, and review systems, building more of these on-chain systems will make these markets more resilient and globalized. These are some ideas I have been thinking about, and I am excited to see what people come up with.
Brian Armstrong: What excites me is that in the past, the technology was not ready yet, we did not have the right components, the fees on the chain were too high, we did not have something like ENS, and the wallets were too difficult to use. But now it feels like we finally have these components, which will make the next wave of use cases possible. For example, now you can really build reputation systems, advertising networks, or deposit and withdrawal systems, and they are affordable and easy enough for everyone to use.
I have two ideas. The first is that 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, allowing everyone to use them.
The second is that thinking about how these things can truly come together is very interesting. To have a good advertising network, you need to know if the people participating and viewing the ads are real people, this is reputation. To have a good P2P network, you need to know if the people in the network are good actors, this is also reputation.
Therefore, I believe we are now at a stage where the on-chain infrastructure has been built, and we are beginning to see the opportunity for this application layer identity infrastructure, which will support P2P, advertising, and better commerce, helping the world move towards on-chain.
Jesse Pollack: I know you are increasingly involved personally in Coinbase, making it easier for people to go on-chain, not only from a user perspective but also from a developer perspective. I know you are also an engineer yourself, can you tell us what Coinbase is doing now to help developers, and what is driving you to invest time and effort?
Brian Armstrong: Well, if you haven’t checked it out yet, you should take a look at CDP, the Coinbase Developer Platform. The website is cdp.coinbase.com. We are trying to provide many tools built internally at Coinbase to third parties for building their applications.
Over the years, we have built many things, whether it is a simple way to store cryptocurrencies, staking, trading, or 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 great video introducing many on-chain builder tools. We integrated Base nodes and Paymaster features, where fees have no impact on your customers. Obviously, the launch yesterday was.The innovation of smart wallets is a significant event. I believe that we are now witnessing a shift where users no longer need to use a 12-word mnemonic phrase to access their wallets. Instead, they can simply use biometric recognition or YubiKey to enter, making the use and access of wallets much simpler.
I am very enthusiastic about this development. I think Coinbase has a great opportunity to assist thousands of developers in building applications. This is one of the reasons why I am deeply involved in the Coinbase Developer Platform (CDP) product, trying to make it more user-friendly.
As a developer, I always enjoy those magical moments, like the first time I saw a demo of Ruby on Rails, where I could create a blog with real-time comments and an RSS feed in just five minutes. These tools enhance productivity. We hope to provide developers with a range of such tools to make it easier for them to start and lower the barrier to innovation.
Jesse Pollack: I completely agree. If you didn’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 is the best way to learn how to write smart contracts?” I recommended some resources to him, and later we discussed in messages, he said, “Can we code together?” Then he and Wilson Cusack spent their holiday time coding smart contracts.
I feel very inspired that as a CEO of a public company, Brian personally engages in writing smart contracts and improving developer tools. A year ago, almost no one thought Coinbase was doing anything for developers, but now Base is a leading L2 for developers. The Coinbase Developer Platform is a very powerful developer tool, where you can find everything you need to start building on-chain applications. We’re just getting started, and I think it all stems from having a leader like Brian who understands technology and can personally write code to make everything possible.
Brian Armstrong: Thank you for saying that, Jesse. I feel like my coding skills are declining every year, but I hope my CEO skills are improving every year. I mainly want to lead the team by example, I have to understand these basics myself. Everyone feels a little scared when learning a new language or building an application.
It’s complicated, so you have to approach it with a beginner’s mindset, experience some setbacks, and ask a lot of seemingly stupid questions. I am grateful to Wilson Cusack for pairing up with me for some programming, which was very cool. In Singapore, some officials, like former prime ministers, even write code on GitHub. This attempt to delve into the basics showcases good leadership within the company. I believe that every Coinbase engineer should be building on-chain, and if I don’t lead by example, I can’t expect others to do so.
Jesse Pollack: I completely agree; your role model is being seen and felt, and it’s changing the company. About a year ago, we didn’t have many developer products, and there weren’t many teams internally building on-chain. But today, there are many teams within Coinbase building on-chain, and we aim to create the best on-chain engineering team in the world.
If you had asked us a year ago if we could do this, we might have thought it was too crazy, but now we are gradually achieving this goal, challenging the boundaries of possibilities, and setting an example for ourselves, internal teams, and the entire ecosystem on how a big company can enhance its on-chain building capabilities.
I’m curious about your thoughts on 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 gradual as they happen, but looking back, they seem sudden. People thought the release of the iPhone was a sudden turning point, and historically it was, but the people involved 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 ATT’s 3G network. So it felt very gradual at the time, and only in hindsight do we see how monumental these changes were.
I believe we are at a similar turning point now, but it feels gradual as we go through it. L2 is a huge step forward, reducing the friction of building different applications. I have 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 platforms like Farcaster emerging, as well as interesting messaging apps like XMTP going live. How to integrate these into people’s daily lives, such as their livelihoods, payment for basic necessities, daily operations, etc. Content creators, social media, news industry, and even the way organizations are created, voted on, and governed could be influenced. I find this very exciting.
If we can achieve this, we might see an on-chain super application that combines these protocols, which would be very interesting. I look forward to seeing what you are working on. It does feel like all the infrastructure is in place, but the user experience hasn’t truly integrated them yet, there is a huge opportunity here. I look forward to continuing to build content for developers and builders, to see what Coinbase will achieve on the consumer side.
Jesse Pollack: One last question, we are conducting hackathons, with thousands of developers signing up for the summer building activities. You are a very successful founder, having done it for a long time, I’m curious to know what advice you have for developers building in hackathons?
Brian Armstrong: The early stages of innovation may not look glamorous, just a few people tinkering in their apartments, that’s where Coinbase started, and some of the ideas I tried in the past that didn’t succeed, that’s the norm.
I remember my friends calling me to go out and party. I always replied, “I don’t know, I’m just at home messing around 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 a bug, maybe because a semicolon was misplaced.
So a lot of innovation is like this: you have to persevere, allow yourself to be a beginner, slow down, not understand how it works. If you’re on the cutting edge, 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 information doesn’t exist. So you have to overcome these challenges through perseverance. Perseverance is probably the biggest determining factor for success in entrepreneurship and building.
I think many startups, a few people come together to try something, three months later, the first product launched wasn’t successful, or there might be some internal partner disputes, and they collapse at the starting line. In my opinion, this approach has hardly ever worked; almost nothing succeeds on the first try, it is very rare.
Of course, Coinbase’s first product wasn’t successful either; you have to release a very embarrassing version 1, launch some things that aren’t actually ready. If you’re not embarrassed by it, then you’ve waited too long. Many people just can’t get past the hurdle of releasing something slightly embarrassing, and end up never releasing anything.
Once you release version 1, no one cares, post it on Farcaster, get 10 people to check it out. Then you have to keep iterating: talk to customers, improve the product, talk to customers, improve the product, keep doing this for two or three years, four years, ten years, etc., and eventually there might be a breakthrough. That’s the game of entrepreneurship, you don’t know if it will succeed. You have to be willing to enter unknown territory, try enough ideas, and eventually something will succeed. And 99% of people give up, or they never start. That’s the method.
Jesse Pollack: I love that summary, it’s a great ending. If you’re building, don’t give up, you’re just on the first day. The most important thing is to stay determined, stay focused, keep your eyes on the goal, Stay Based.
