Kaori, BlockBeats
Editor’s Note: Base TVL has surpassed OP Mainnet in the past two days to become the second-largest Layer 2, and as expected, it has kicked off the Onchain Summer series of events. 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 talk about your views on how far we have come and the current user experience on-chain?
Brian Armstrong: Yes, we have indeed made significant progress, but I believe we still have a long way to go. Initially, we were pondering some simple questions, such as 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 looking to solve some very basic problems, like storing Bitcoin with usernames and passwords, without the need to run nodes on laptops, which were very basic at that 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 working hard 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, like, 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 sort of handshake protocol between sender and receiver, like “This is what I have, do you accept it,” and then automatically exchange on a DEX. Such a mechanism could be helpful. My benchmark is something like Apple Pay, where you can tap your phone to pay at a point of sale device.
How can we reach that level? Like paying between two phones or scanning for payments in an e-commerce setting. In Coinbase Commerce, we have been working to achieve a “one-click magical checkout” world, making cryptocurrencies the simplest form of payment. We are not fully there with our work on L2, we need to debug some APIs built into hardware and phones, which may involve many details like NFC. But I believe we are gradually nearing our goal, requiring the hard work of many intelligent people.
Jesse Pollack: Yes, indeed. This summer, many people are building on-chain for the first time, while others have been in this field for a long time. Do you have any expectations for this summer’s on-chain building marathon and some of the current projects in on-chain development?
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 creativity of the community’s proposals. We often talk about these things like Lego blocks 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 using the graph structure of the chain to represent trust relationships, like I trust this node, they send funds to another node, implying a certain level of trust, similar to Google PageRank’s algorithm, which would be cool to build 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 problem. You can imagine an advertising network or the equivalent of Google Adwords, but not just paying for clicks (CPC), you could 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, and you will receive a 1% reward. You can advertise different rates that people are willing to offer, which 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 have been thinking about, which is P2P deposits and withdrawals on-chain. Many emerging markets need to transfer funds in and out of platforms, and these centralized versions are often shut down or pressured. If we can do all of this on-chain, including dispute resolution, mediation, ratings, 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 pondering, and I am looking forward to seeing what people come up with.
Brian Armstrong: What excites me is that in the past, the technology was never ready, we didn’t have the right components, the fees on the chain were too high, we didn’t have something like ENS, and the wallets were too difficult to use. But now it feels like we finally have these components that will make the next wave of use cases possible. For example, you can now truly 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 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 easily accessible, so everyone can 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 participants viewing the ads are real people, which is reputation. To have a good P2P network, you need to know if the people in the network are good actors, which is also reputation.
Therefore, I believe we are now at a stage where the on-chain infrastructure has been established, but we are starting to see opportunities 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 that you are increasingly involved personally in Coinbase, making it easier for people to get on-chain, not only from a user perspective but also from a developer perspective. I know you are also an engineer yourself, can you talk to us about what Coinbase is doing to help developers and what drives you to invest time and energy?
Brian Armstrong: Well, if you haven’t checked it out yet, you should go see CDP, the Coinbase Developer Platform. The website 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 many things, whether it’s 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 user-friendly APIs.
Jesse, you released a fantastic video introducing many on-chain builder tools. We have added Base nodes and Paymaster features, where you can make fees completely transparent to your customers. Obviously, the one launched yesterday.The rise of smart wallets is a significant development. I believe that we are now witnessing a shift where users no longer need to use 12-word mnemonic phrases to access their wallets. Instead, they can simply use biometric authentication or YubiKey for seamless access, making wallet usage and access much simpler.
I am enthusiastic about this advancement, as I see Coinbase having a great opportunity to assist thousands of developers in building applications. This is one of the reasons why I am deeply involved in the development of the Coinbase Developer Platform CDP product, striving to make it more user-friendly.
As a developer, I always appreciate those magical moments, like the first time I saw a Ruby on Rails demo. In just five minutes, I could create a blog with real-time comments and an RSS feed, which was truly impressive. These tools enhance productivity. We aim to provide developers with a range of such tools to make it easier for them to start and lower the barriers to innovation.
Jesse Pollack: I completely agree. If you didn’t know, Brian was an engineer when he founded Coinbase, and he still is one today. Over the recent Memorial Day weekend, I received a message from Brian on Sunday asking, “What’s the best way to learn how to write smart contracts?” I recommended some resources to him, and later, we discussed the topic further. He said, “Can we code together?” So, he and Wilson Cusack spent the holiday coding smart contracts.
I find it inspiring that as the CEO of a publicly-listed company, Brian is personally involved in writing smart contracts and improving developer tools. Almost no one believed over the past year that Coinbase was doing anything for developers, but now, Base is a leading L2 for developers. The Coinbase Developer Platform is a powerful tool for developers, where you can find everything you need to start building on-chain applications. We are just getting started, and I believe 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 diminishing every year, but I hope my CEO skills are improving each year. My main goal is to lead by example and understand the basics firsthand. When everyone is learning a new language or building applications, they can feel a bit intimidated.
It’s complex, so you have to approach it with a beginner’s mindset, experience some setbacks, and ask seemingly silly questions. Thanks to Wilson Cusack for pairing with me in some coding sessions; it was great. In Singapore, some officials, like former prime ministers, even write things on GitHub. This attempt to delve into the basics demonstrates good leadership within the company. I believe 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 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 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 it, we might have thought it was crazy, but now we are gradually achieving this goal, pushing the boundaries of possibility and setting an example for ourselves, internal teams, and the entire ecosystem on how a large company can enhance its on-chain building capabilities.
I am curious about how you see the future of on-chain in the coming years. How fast do you think all this will happen?
Brian Armstrong: I think these things always feel very gradual when they are happening, but they seem sudden when we look back. The launch of the iPhone was perceived as a sudden turning point from a historical perspective, but 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 did we see how significant the changes were.
I believe we are at such a turning point now, but it feels gradual when we are in it. L2 is a significant advancement, reducing friction in building different applications. I have been pondering how all these decentralized protocols will 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 launching. How to integrate these into people’s daily lives, such as their livelihoods, essential payments, daily operations, and more. Content creators, social media, journalism, and even organizational creation, voting, and governance could be affected. I find this very exciting.
If we can achieve this, there may be an on-chain super app 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 has not truly integrated them yet, presenting a significant opportunity. I look forward to continuing to build content for developers and builders and seeing what Coinbase will do for consumers.
Jesse Pollack: One last question, we are hosting a hackathon, with thousands of developers signing up for the summer building event. You are a very successful founder who has been in the industry for a long time. I am wondering 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, which was the starting point for Coinbase and some unsuccessful ideas I tried in the past. This is the norm.
I remember my friends calling me to go out and party, and 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 fix a bug, maybe because a semicolon was misplaced.
So, a lot of innovation is like this: you need to persevere, allow yourself to be a beginner, slow down, not understand how it works. If you are at the forefront, 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, those resources don’t exist. Therefore, you must overcome these challenges through perseverance. Perseverance may be the biggest determining factor for success in entrepreneurship and building.
I think many startups, a few people coming together to try something, three months later, the first product launched is not successful, or there might be some internal partner disputes, and they collapse at the starting line. In my view, this approach has hardly ever succeeded; almost nothing is successful when first launched, which is very rare.
Coinbase’s first product certainly wasn’t successful; you have to launch a very embarrassing version 1, release things that aren’t actually ready yet. If you’re not embarrassed by it, you’ve waited too long. Many people just can’t overcome the hurdle of releasing a slightly embarrassing product and end up never releasing anything.
Once you release version 1, no one will care. Release it on Farcaster, find ten people to check it out. Then you have to keep the cycle going: talk to customers, improve the product, talk to customers, improve the product, keep doing this for two to three years, four years, ten years, 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, some will succeed. And 99% of people give up, or they never start. That’s the method.
Jesse Pollack: I love this summary; it’s a great way to conclude. If you’re building, don’t give up; you’re just on day one. The most important thing is to stay determined, stay focused, keep your eyes on the goal, Stay Based.
