Brian Armstrong Convinced Coinbase Will Be Scandal- and Fraud-Free
Brian is convinced that Bitcoin is a powerful tool that could solve some of the problems of Argentina such as the dire lack of confidence in the Argentine peso and the informality of its economy.
Highlights
Cryptos like Bitcoin offer a way to check government control over currency by relying on math rather than trust in institutions.
Coinbase CEO believes Bitcoin can solve economic issues like inflation, particularly in countries like Argentina.
Coinbase COIN 0.00%↑ stands out by following US laws strictly, advocating for regulation, and avoiding shortcuts, even if it means sacrificing some adaptability.
Cryptos are much like spinach: you either love or hate them. Although their popularity grows with each bull cycle, many high-profile investors still fiercely resist the adoption of cryptos in their portfolios. Among them are the prominent Warren Buffet and the late Charlie Munger. Let's see what Coinbase CEO Brian Armstrong says when interviewed on the podcast, Uncommon Knowledge, hosted by Peter Robinson of the Hoover Institution.
Is Crypto evil?
It is not newsworthy that the late Charlie Munger was extremely apprehensive about the whole crypto deal. His reasoning goes like this: as crypto adoption grows, more people hold cryptos, and fewer people hold dollars, limiting the Federal Reserve's ability to control the currency and manage the economy. This is a very serious accusation, supported by Warren Buffet, one of the most influential investors of the last 50 years.
However, Brian navigates these criticisms deftly. Bitcoin, like other well-established options in the crypto ecosystem, allows for checks and balances on the American government's management of its national currency, and it's not unique to America; it applies to many countries around the world.
"Bitcoin is provably scarce, you don't have to trust the good intentions of mankind; it is trusting the laws of math."
Coinbase's mission and goals
"Bitcoin is destined to change the world," says Brian confidently. He colorfully illustrates his vision using the case of Argentina, where he lived for a year after graduating. A country that was once a powerhouse has transformed into a decadent nation due to inflation, economic mismanagement, and corruption. Brian is convinced that Bitcoin is a powerful tool that could solve some of the problems of this South American country, such as the dire lack of confidence in the Argentine peso and the informality of much of its economy.
Eleven years ago, Brian co-founded Coinbase to harness the power of cryptocurrency and create more freedom in the world. Today, as the CEO of this company, he walks the thin edge of fulfilling the inspiring mission of bringing economic freedom to emerging markets while being responsible for leading the company in maximizing returns for his investors.
Scandals, fraud, and legal problems
FTX blew up, and the CEO, Sam Bankman-Fried, is now in prison. Binance pleaded guilty to violating U.S. money laundering laws. In the face of a wave of scandals affecting the largest crypto exchanges, it is impossible not to question whether Coinbase is any different.
Brian is convinced it is. Coinbase is an American company, advancing slowly but steadily, complying with all U.S. laws, and not cutting corners to take advantage, as is the case with the competition. In a fast-developing market like this, most companies see every bull market as a compulsory opportunity to get rich or die. However, Coinbase's stance is different: they encourage functional government regulation so that cryptocurrency adoption grows sustainably in the future. Of course, sticking to the letter of the law and treading lightly around loopholes means losing the agility to adapt to the ever-changing world of cryptos, but this is a key point to set yourself apart from the competition and their legal scandals.
Crypto's outlook for the future
Many strong arguments favor cryptocurrencies, from security against attacks on the traditional banking system to decentralization and economic freedom. But the strength of these arguments begs the question: if cryptos are so convenient, why haven't they been massively adopted yet? Brian answers this sensitive issue in detail:
Demographic and generational reasons are also reflected in the slow progress in legislation. In the next elections, this may change when U.S. lawmakers notice the 40 million Americans who have used cryptos in the last two years.
Ease of use. Just as in the early days of the internet, a maturation of the technology is required for the end user to feel comfortable using cryptos. Today, Coinbase's website is as intuitive to use as any traditional bank, if not more so.
Volatility. More investors in crypto mean less volatility in the up and down cycles of the asset. The day will come when it will be like gold; because of its provable scarcity and its underlying technology, it will function as a mainstream store of value.
Despite a tumultuous and volatile market, scandals, arrests, bankruptcies at rival digital exchanges, and social problems disrupting his own company, Coinbase CEO Brian Armstrong is a fervent believer in digital currencies and the power of blockchain. Watch the full interview to hear how Armstrong co-founded Coinbase, the fundamentals of digital currencies, and his response to Warren Buffett's and others' criticisms of cryptos.
Financial Outlook COIN 0.00%↑
On the Q1 2024 earnings call, Coinbase generated $1.6 billion of total revenue and $1.2 billion of net income and adjusted EBITDA was $1.0 billion – more than they generated in all of 2023.
Technology & development, sales & marketing, and general & administrative expenses were collectively $744 million, up 5% Q/Q.
In April, Coinbase generated over $300 million of total transaction revenue and expect Q2 subscription and services revenue to be within a range of $525-$600 million, assuming crypto asset prices stay in the range they have seen year to date. They anticipate Q2 transaction expenses will be in the mid-teens as a percentage of net revenue.
Read their Q1 2024 earnings here.
