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a16z Podcast | Building Crypto, from Vision to Reality
21 segments available
with Brian Armstrong (@brian_armstrong), Chris Dixon (@cdixon), and Sonal Chokshi (@smc90) Where are we, really, right now -- in terms of what we can/ can't do with crypto today? And what will it take to get from vision to mainstream reality? This episode of the a16z Podcast covers all this and more. It's based on a conversation that took place between Coinbase CEO and cofounder Brian Armstrong and a16z crypto general partner Chris Dixon, interviewed by a16z editor in chief Sonal Chokshi, at our at our annual Summit in November 2018 -- following a series of presentations that covered everything from early adoption, myths, and the global need for crypto; to crypto as seen through the lens of trust; to key terms and concepts that enable entirely new use cases on top of crypto. But what are the missing pieces needed to get us there? Is crypto is too much like a religion... and if so, how does one build a company, culture, community in such an intense environment? Where does the history of open source come in? And finally, what are some of the most interesting applications and trends in the space? --- Please note that the a16z crypto fund is a separate legal entity managed by CNK Capital Management, L.L.C. (“CNK”), a registered investor advisor with the Securities and Exchange Commission. a16z crypto is legally independent and operationally separate from the Andreessen Horowitz family of fund and AH Capital Management, L.L.C. (“AHCM”). In any case, the content provided here is for informational purposes only, and does NOT constitute an offer or solicitation to purchase any investment solution or a recommendation to buy or sell a security; nor it is to be taken as legal, business, investment, or tax advice. In fact, none of the information in this or other content on a16zcrypto.com should be relied on in any manner as advice. You should consult your own advisers as to legal, business, tax and other related matters concerning any investment. Furthermore, the content is not directed to any investor or potential investor, and may not be used or relied upon in evaluating the merits of any investment and must not be taken as a basis for any investment decision. No investment in any fund advised by CNK or AHCM may be made prior to receipt of definitive offering documentation and due diligence materials. Finally, views expressed are those of the individual a16z crypto personnel quoted therein and are not the views of CNK, AHCM, or their respective affiliates. Please see https://a16zcrypto.com/disclosures/ for further information.
Segments Timeline
Welcome to the Crypto Conversation
In this opening segment, Sonal Chokshi introduces the a16z podcast episode featuring Brian Armstrong and Chris Dixon. They discuss the current state of crypto, touching on early adoption, myths, and the evolution of key concepts in the crypto space. This sets the stage for a deeper exploration of what it will take to transition from vision to mainstream reality.
"hi everyone welcome to the a6z podcast I'm sonel today's episode is based on a conversation that I had with a6z crypto General partner Chris Dixon and Brian Armstrong CEO and co-founder of coinbase at..."
The Burning Question: What Can We Do with Crypto?
Brian Armstrong addresses the pressing question of what can be done with crypto today. He highlights that currently, 90% of crypto activity is investment or speculation, while only 10% represents its utility. Armstrong provides examples of innovative applications like Augur and the use of crypto in emerging markets, illustrating the potential beyond mere speculation.
"that a6c crypto is an independent fund managed by cnk Capital Management a registered investment adviser with the SEC the content here is for information only and should not be taken as legal business..."
The Infrastructure Gap in Crypto
Armstrong compares the current state of crypto to the mobile technology landscape of 2005, emphasizing the need for foundational infrastructure to support mainstream adoption. He discusses the importance of scalable smart contract platforms and the ongoing efforts to build essential tools for onboarding and usability, likening it to the early days of the internet.
"please also see a6c crypto.com disclosures thank you guys so I think the burning question that we are all left with here is what can we do with crypto right now from your Vantage Point like today can ..."
Volatility: A Double-Edged Sword
The conversation shifts to the issue of volatility in crypto markets. Armstrong explains how volatility can be a feature for investors but a bug for everyday transactions. He introduces the concept of stable coins as a solution to this problem, discussing their role in providing stability and programmability within smart contracts.
"had like there's just a lot of basic missing infrastructure the same way there was right so like a scalable smart contract platform so a lot of stuff you guys are building around like the wall wets an..."
Decentralized Autonomous Organizations: The Future?
Armstrong explores the concept of decentralized autonomous organizations (DAOs) and their implications for the future of companies. He highlights Maker as a prime example of a DAO that operates autonomously, discussing its innovative mechanisms for stability and the potential for new organizational structures in the crypto space.
"programmable dollar that can be a part of these smart contracts like one thing that's important in all contracts is that you need the settlement amount to be in something relatively stable so now that..."
Building a Company in a Crypto Culture
The discussion turns to the challenges of building a company like Coinbase within the intense and often tribal environment of crypto. Armstrong reflects on the mission of creating an open financial system and how Coinbase fosters a culture that aligns with this vision, emphasizing the importance of clear communication, positive energy, continuous learning, and efficient execution.
"organizations do yeah that's great to see that it's already out there and there already are Dows and Dax decentralized autonomous corporations in existence and it's even more fascinating because if yo..."
The Coinbase Way: Culture and Values
Armstrong outlines the core values that define the Coinbase culture, which include clear communication, optimism, continuous learning, and efficient execution. He discusses how these principles guide the company's operations and contribute to its mission of transforming the financial landscape, hinting at the potential for a more detailed exploration of these values in the future.
"what we've done to create I guess our All Hands meetings are a little bit like the sermon at church or something like that well you actually are operating a classic company I've actually read a post b..."
Clearing Misconceptions in Crypto
Chris Dixon addresses the misconceptions surrounding cryptocurrency, likening it to the early days of open source. He emphasizes the need to broaden the understanding of crypto beyond its association with crime and volatility, advocating for a clearer message to attract a wider audience and more diverse talent to the ecosystem.
"your Vantage Point um as an investor you're on the board of coinbase but you also meet with a ton of companies as well as very early projects in crypto what do you think is the biggest missing piece t..."
From Investment to Utility: The Crypto Journey
Brian Armstrong discusses the phases of cryptocurrency development, from investment to utility. He envisions a future where a billion people use an open financial system daily, highlighting the importance of infrastructure and accessibility in making crypto a mainstream reality. He outlines the need for better fiat-to-crypto bridges and institutional involvement.
"the browser you know to the web or something the browser needs more websites right like we just need more people building stuff hopefully there'll be all this other stuff kind of flourishing around it..."
Overcoming Scalability Challenges
The conversation shifts to the scalability issues facing crypto networks, with a focus on Ethereum's limitations. Armstrong discusses the potential for software solutions to address these challenges and the importance of reaching a tipping point for widespread adoption. He envisions a future where digital services are seamlessly integrated into everyday life.
"get the longtail of payment methods set up and all over the world where people can just easily get Fiat into crypto that's like retail people then institutions are starting to come into this space in ..."
Rethinking Internet Economics
Armstrong reflects on the historical misalignment in internet economics, criticizing the ad-based model that has dominated. He argues for the need to create new, internet-native economic systems that align better with user interests, suggesting that the future of crypto could provide a solution to these longstanding issues.
"and the world will be better yeah well it strikes me as a bit of a chicken egg thing though because the network effect is that the network becomes more valuable than more users that use it but there i..."
Centralization vs. Decentralization
In this segment, Armstrong addresses the tension between centralization and decentralization in the crypto space. He explains how Coinbase operates as a centralized entity while still supporting an open financial system, emphasizing the importance of user choice and the interoperability of crypto wallets and exchanges.
"are a centralized company and we actually custody a lot of crypto you know 10 billion or more of crypto so the way I think about that is that you know there can still be pockets of centralization in a..."
Emerging Trends in Crypto
Armstrong shifts the conversation to exciting projects in the crypto space beyond finance. He mentions the potential of fractional ownership of physical assets and the innovative use of crypto for seamless Wi-Fi access, highlighting how these applications can address current limitations in the financial system.
"you're going to have a new process for listing even more coins and as it is people cannot even tell Bitcoin and ethereum apart so I'm curious about what drove you to this decision and how you're helpi..."
Revolutionizing Digital Value
Armstrong discusses the concept of non-fungible tokens (NFTs) and their potential to transform various industries, including gaming and music. He draws parallels between the evolution of gaming revenue models and the opportunities for creators to monetize their work through digital assets, emphasizing the democratization of creation on the internet.
"tokens and there's so many interesting things out there and we could go on for hours about this but since we only have 15 minutes left I'd love to hear sort of like a lightning bullet style list from ..."
The Future of Prediction Markets
Armstrong explores the significance of prediction markets in the crypto landscape, explaining how they can harness collective knowledge without revealing participants' identities. He highlights the challenges of global payment systems and how cryptocurrency can facilitate real-time participation in prediction markets.
"apps daps some people are calling them on the Internet um to Chris's point about the traditional apps that have succeeded today anything that's like a like button an upvote you know a star a follower ..."
Building on Decentralized Protocols
In this segment, Armstrong emphasizes the importance of building on decentralized protocols rather than centralized platforms. He discusses the lessons learned from past experiences with centralized systems and the need for a robust infrastructure that allows for innovation and value creation in the crypto space.
"side like steam you've saw the kind of micro payment model right and so like League of Legends is a game that I think did 2 and a half billion in Revenue last year and it was all inapp purchases of sp..."
The Power of Prediction Markets
In this segment, the discussion revolves around the significance of prediction markets in the crypto space, particularly in the context of recent elections. The speakers explore how crypto enables a new form of collective intelligence, allowing individuals worldwide to contribute their insights anonymously, thus enhancing the accuracy of predictions. They highlight the challenges of traditional payment systems and how crypto can streamline global participation in these markets.
"internet and not only in terms of creators making money but fans can monetize as well and you know even influencers on Instagram who are not Kim Kardashian can monetize their followings and there's so..."
Building on Open Protocols
The conversation shifts to the advantages of building on decentralized protocols like Augur. The speakers emphasize the importance of open-source technology, which allows entrepreneurs to innovate without the constraints of centralized platforms. They discuss how this new infrastructure fosters creativity and enables the development of diverse applications, likening it to the foundational elements of the internet.
"that payments are hard right especially on a global scale like think about how many companies have been able to have Global reach of all their payin with like Army of uh payment engineers and lawyers ..."
Combinatorial Innovation in Crypto
This segment highlights the concept of combinatorial innovation within the crypto ecosystem. The speakers discuss how various projects and startups are emerging, utilizing existing protocols as building blocks to create new services. They draw parallels to past technological revolutions and emphasize the potential for exponential growth in the number of innovative applications as the community continues to collaborate and build upon each other's work.
"right there's already like a whole wave of startups doing that and they have all these cool ideas and they're using this building block it's like what's really cool it's happening now we call it compo..."
Brian Armstrong's Journey to Crypto
Brian Armstrong shares his personal journey into the world of cryptocurrency, detailing his background in computer science and economics. He recounts his experiences in Argentina during hyperinflation, which shaped his understanding of the need for a decentralized financial system. Armstrong reflects on his time at Airbnb and how it exposed him to the complexities of global payments, ultimately leading him to discover Bitcoin and the potential it held for transforming financial transactions.
"happen on web 2 you can go back and this is interesting Fred Wilson used to blog about this all the time about how web 2 every service was going to have an API and like you know Twitter had one and Ne..."
The Future of Computing Waves
In this closing segment, the speakers discuss the broader implications of cryptocurrency and its intersection with other emerging technologies like AI and virtual reality. They reflect on the cyclical nature of technological innovation and the opportunities that lie ahead. Armstrong emphasizes that while the crypto space is still in its early days, it presents a unique chance for individuals across various industries to rethink their approaches and adapt to the evolving landscape.
"Patchwork quilt of different countries they all have their own proprietary system for payin and payouts and they don't really have an incentive to innovate it's like a little oligopoly in each country..."