Jan 2, 2019 · 32m · a16z
a16z Podcast | Building Crypto, from Vision to Reality
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z podcast, host Sonal Chokshi leads a conversation with Coinbase CEO Brian Armstrong and a16z Crypto General Partner Chris Dixon on the evolution of cryptocurrency from speculative investment to global utility. They discuss core technical infrastructure, company building, protocol composability, and historical open-source analogies.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 25% of the talking time here. How this is scored →
The host as informed peer 4.7 Guest teaching 4.3 Guest disagreement 1.2 The host pushing back 3.2
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 12:03 Chris Dixon rejecting anti-crypto mis-framings
Chris forcefully rejects conventional public narratives around crypto being anti-government or environmentally harmful, explaining how new proof-of-stake models render those criticisms inaccurate.
Hardest push from the host ▶ 4:46 Host channeling Paul Krugman's stablecoin skepticismSonal challenges the logic of stablecoins by directly invoking Paul Krugman's criticism, forcing the guest to justify why backing abstract tokens with fiat makes economic sense.
Biggest teaching moment ▶ 26:33 Chris explaining platform lock-in and protocol composabilityChris provides an extensive technical explanation on platform risk, contrasting how Web2 platforms shut down open APIs due to ad revenue with how open-source crypto Lego bricks enable exponential developer innovation.
The host holds their own ▶ 6:28 Host framing corporate theory via Ronald CoaseSonal demonstrates notable intellectual authority by grounding her question in Ronald Coase's landmark 1937 economic paper on firm theory and referencing Fred Ehrsam's cult analogies.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Current State of Crypto Utility and Mainstream Adoption | 2 | 4 | 1 | 1 | The host opens with an open-ended question about practical utility today, allowing the guests to set the narrative around speculative versus utility phases. Brian and Chris outline the 90/10 split and draw comparisons to 2005 mobile infrastructure. The conversation is highly collaborative with minimal host challenge. | |
| Solving Volatility with Stablecoins and DAOs | 6 | 5 | 2 | 7 | Sonal actively pushes back on stablecoins by invoking Paul Krugman's debate with Katie Haun, challenging the premise of pegging dollars to crypto assets. Brian and Chris educate the host on collateralized structures like DAI and MakerDAO mechanics. The dynamic displays strong host framing counterbalanced by guest technical explanations. | |
| Building Coinbase Culture in a Tribal Industry | 8 | 3 | 1 | 3 | Sonal demonstrates strong intellectual domain authority by referencing Ronald Coase's 1937 Theory of the Firm paper and drawing parallels between crypto culture and religion. Brian responds by detailing Coinbase's four cultural pillars and corporate ethos. The segment highlights host expertise in framing organizational dynamics rather than aggressive confrontation. | |
| Overcoming Misconceptions and the Open Source Analogy | 6 | 4 | 2 | 2 | Sonal showcases industry knowledge by citing IBM's acquisition of Red Hat, Microsoft acquiring GitHub, and Steve Ballmer's historical comments on open source. Chris reframes common misconceptions around crypto's political and environmental reputation. The exchange remains conversational and supportive. | |
| The Roadmap from Investment to Utility Phase | 3 | 5 | 1 | 2 | Sonal asks a straightforward directional question regarding missing infrastructure, prompting Brian to lay out a detailed roadmap from fiat rails to global utility dApps. Brian delivers an educational monologue on financial friction and GDP costs. Host involvement is light and receptive. | |
| Scalability Bottlenecks and Centralization Tensions | 5 | 4 | 2 | 6 | Sonal introduces direct pushback regarding the chicken-and-egg scaling problem and later questions Coinbase's token listing strategy given user confusion. Chris addresses throughput bottlenecks while Brian clarifies centralization choices versus user autonomy. The host effectively presses on structural contradictions. | |
| Beyond Finance: NFTs and Creator Economics | 4 | 5 | 1 | 2 | Sonal prompts a rapid-fire discussion on non-financial crypto applications, leading into NFTs and creator economics. Chris provides an instructive breakdown of gaming micropayments like League of Legends to explain digital merchandising models. The dialogue is harmonious and forward-looking. | |
| Prediction Markets and Protocol Composability | 5 | 6 | 1 | 5 | Sonal explicitly challenges the premise of prediction markets like Augur, asking what crypto actually enables that legacy systems could not. Brian explains global permissionless payments while Chris elaborates on open protocol composability and Web2 platform risks. The segment features constructive host questioning met with deep technical schooling. | |
| Founder Origins and Tech Wave Continuity | 3 | 3 | 0 | 1 | Sonal asks personal origin questions about how Brian founded Coinbase and got into Bitcoin. Brian shares anecdotes from Argentina's hyperinflation and building payment systems at Airbnb, followed by Chris reflecting on historical tech cycles. The atmosphere is purely reflective and friendly. |
Statements from this episode (20)
Armstrong: 90% of 2018 crypto activity is investment and speculation
“I think still 90% of what people are doing with crypto is investment or speculation, and that's great as an initial way to get people's interest into crypto, but it's more interesting to think about, you know, the utility phase, which is this 10%”
Dixon: Crypto in 2018 is equivalent to mobile in 2005
“I kind of think this is mobile in 2000 five or something.”
Armstrong: Volatility is a feature for investors but a bug for payments
“Volatility is actually a feature if you want to be an investor, but it's a bug if you want to just have a medium of exchange.”
Dixon: DAI has stayed stable for over a year despite volatile collateral
“DAI, for example, has been live for over a year. The underlying assets have been super volatile, and it's remained stable.”
Armstrong: Open financial networks will expand global economic freedom and property rights
“We think that's going to bring about all kinds of benefits for the world, you know, a lot of innovation, quality of opportunity, economic freedom, strong property rights for people all over the world.”
Dixon: Crypto enables community-owned services over corporate control
“I think the same thing's happening with crypto, where it's really a new way to build digital services that are owned and operated by Communities instead of being owned and operated by companies.”
Dixon: All new crypto networks avoid proof-of-work consensus
“All the new networks don't use proof of work, and don't have that impact”
Dixon: Open-source powers 90% of software and every startup data center
“I haven't met a startup in 15 years, doesn't use all open source data center software, I mean, it's 90% of the software in the real world”
Armstrong: One billion people will use open finance within 20 years
“There's a billion people using the open financial system on a daily basis, and, you know, I think that could be done in five years, like, without a lot of hard work, it could be 10 years, 20 years.”
Armstrong: 90% of global capital resides in institutional hands
“90% of the capital out there is actually in institutions”
Armstrong: Future generations will never own traditional checkbook bank accounts
“There's going to be this whole generation of kids that grow up, and their phone is the only bank account they've ever known. They're never going to have a bank account in the way we think of it with a checkbook or something like that”
Dixon: Ethereum processes 10 tx/sec and cannot be world computer yet
“So like Ethereum is a good example where you can run any kind of arbitrary code in that crypto network, but the network can only handle, like, 10 transactions a second or something, and so it's just not at all ready to really be the world computer.”
Dixon: Native internet money will emerge between 2023 and 2028
“And I think at some point, I think over the next five to 10 years, we'll have this sort of internet money, and it'll either be Ethereum or Bitcoin or something, or some stable coin or something else, but”
Armstrong: Coinbase custodies $10B+ of cryptocurrency
“And we actually custody a lot of crypto, you know, ten billion or more of crypto”
Armstrong: Adding more coins is Coinbase's top customer request
“Actually, the number one request we get from our customers is, hey, there's more coins that I want to start trading.”
Dixon: League of Legends generated $2.5B purely from cosmetic purchases
“League of Legends is a game that I think did two and a half billion in revenue last year, and it was all in-app purchases of, specifically of items that are cosmetic only, right?”
Dixon: NFT adoption by creators will spread like wildfire
“So there's going to be a whole bunch of experiments of creative people using crypto assets as ways to, you know, kind of think about new business models, and all you need is one or two of those experiments to work, and then suddenly a new thing, you know, goin…”
Dixon: Centralized platforms inevitably capture all value from third-party developers
“You would never build on top of, you know, a centralized protocol, because people have now learned, after 2030 years of this, that when you do that, that the platform changes the rules, and you ask everyone who built on top of, you know, Twitter, all these dev…”
Dixon: Open-source crypto protocols will win just like Linux did
“The fact that it's open, and anyone can take it, and hack it, and fork it, and look at it, and audit it, and do all these things, like, this is why Linux won, right? And this is why all this stuff is going to win.”
Armstrong: Global payment systems are non-innovative, expensive national oligopolies
“It's this patchwork quilt of different countries. They all have their own proprietary system for pay-ins and pay-outs, and they don't really have an incentive to innovate. It's like a little oligopoly in each country with high fees and slow movement of funds a…”