As Cointelegraph has reported many times, it’s been a busy autumn for Coinbase. Earlier in November, we had a chance to sit down with Brian Armstrong, the co-founder and CEO of Coinbase, to get his thoughts on how his company will continue growing and what customers can expect in the near and mid futures.
Cointelegraph: How did you first get into Bitcoin? Tell us about the moment you realized you could create a global business on top of the technology.
Brian Armstrong: When I first got into Bitcoin, it was probably late 2010. I was working at Airbnb as a software engineer, and I read a paper on Hacker News. It was the Satoshi research paper, and it kind of immediately grabbed me that this could be an open payment network for the entire world.
I think I might have recognized it a little earlier because I was working at Airbnb on some fraud-prevention tools, some internal tools, and Airbnb was moving money to 190 countries all over the world, so I could see the pain point of integrating with all these local methods all over the world with different fees or geographic reach, or delays in how fast money could move.
So, this got me really excited about Bitcoin when I first read the paper, and I thought this could be an open payment network for the whole world, where everything is fast and cheap and global.
And so to me that was pretty exciting, but it took me another three months to fully wrap my head around it and another six months of thinking about it before I actually got to the point where I was ready to make a prototype.
The first version of that was an Android app. It was called Bitcoin Android. It was a really simple idea. That one didn’t work very well, but I realized in the process of building that, that the world was going to need some kind of a hosted, trusted, secure platform that everyday people — businesses and consumers — would have to use to integrate Bitcoin payments because it was a little bit too technical for most people to understand.
And so that was the idea behind Coinbase. It was easier to use, it was a trusted platform, and it was going to be a place where anybody could come and try to buy their first bitcoin in a really simple manner.
I started working on that on nights and weekends, and that’s what eventually became Coinbase.
CT: What has the customer response to the multisignature vault feature been?
BA: So, the customer response to our multisig vault has been really great, and this is something we were working on for at least six months.
We came out with the first feature, which was our vault product, where Coinbase provides the security to the customer. This was easier to use. This was similar to our previous products like our wallet, where Coinbase has always provided security to the customers instead of putting the burden on them.
But, we really underestimated the amount of demand there would be for a multisig vault where customers could control their own private keys, and this was a really important development that we took as feedback from the community.
And so we decided to offer both. Now, when you create a vault, you can choose to have security managed by Coinbase, or you can store the private keys yourself. This is the multisig vault.
You can also do it with multiple signers on the vault. So, you can have two of three keys required, or three of five, if you have an institution or a family that is all storing money there.
So far, the response has been great. We don’t disclose the exact amount of bitcoin being held in there, but I will say we believe to the best of our knowledge that Coinbase is storing more bitcoin than any other company in the world right now. And that’s a really great vote of confidence from our customers, that they are trusting us to store their bitcoin, and now they have the option where they don’t have to trust us if they don’t want to. That’s a really great thing to have.
We think the future of bitcoin storage is going to be this hybrid approach where some customers are going to want to store their own keys for a savings account — maybe that’s a larger amount of money — but they also want to have easy day-to-day spending of bitcoin.
That will probably be in a wallet-type product where the security of it is managed by Coinbase or a company like us where day-to-day spending is really easy, there’s little friction, there are these really simple and nice to use mobile apps, there are two-click payment checkouts on the web. You can even use APIs to manage those accounts.
Those are all low-friction ways to spend bitcoin, and that’s great for small amounts of money, just like you would carry a small amount of money in your actual wallet as you walked around the city.
But your life savings — if that’s something you feel strongly you want to control and you’re willing to take the responsibility of backing up the keys for it, things like that, that is now an option we provide at Coinbase. We feel really good about that.
- Coinbase co-founders Fred Ehrsam (left) and Brian Armstrong (right)
CT: What is Coinbase's plan for continued growth?
BA: Coinbase plans to continue growing in a few ways. One is that we’re going to continue to enter new countries and markets. And when we say “enter a country,” what we mean is provide an easy way for customers there to convert their local currency into and out of bitcoin. Usually that involves a local bank connection there. It involves working within the regulatory framework there. And sometimes translating the website into people’s local language.
So, right now, Coinbase is available in 19 countries around the world, and we plan to continue that and form new bank partnerships and launch in additional jurisdictions, so that’s an important one.
Another area we plan to grow is offering a wallet-type experience to people in the developing world. This is a longer-term plan that we’re just starting to think about now, but there are several billion people on the planet who have a smartphone, but they don’t have a traditional bank account. We think for a bunch of them, their first “bank account” is going to be a virtual currency wallet on their smartphone.
If you look at the adoption of smartphones, in particular Android, there’s something like 2 million Android devices activated every day. The cost of those devices is getting lower and lower. There’s now a $35 Android smartphone. We think that could be a really interesting area for growth.
And there are others. If you look at remittance, for example, or micro transactions in certain business cases, these are things where we’re just barely beginning to scratch the surface. There are people sending money home to their family or using something like BitPesa to send money to Kenya’s M-Pesa network. Those are great growth opportunities.
There are also people doing things with micro transactions like tipping or monetizing the upvote on Reddit, all the kinds of things that will drive interesting use cases. [Editor’s note: we conducted this interview before Coinbase introduced its tipping feature.] We think in 2015 those are going to be the areas to watch.
CT: What are your predictions for the holiday retail season?
BA: The holiday retail season was great for Bitcoin on Black Friday. I think we saw something like four times the normal volume of sales or commerce happening in Bitcoin. I would expect something similar to happen this year, except things have grown a lot since last year, so it will be a four-times multiple on something even bigger.
We can’t wait for that to happen, and I don’t have an exact number to predict or anything like that, but every year, if we keep doing this, a whole lot of new people are going to find out about Bitcoin for the very first time. And that’s good for all of us.