Yahoo Finance’s Myles Udland, Julie Hyman, Brian Sozzi, and Dan Roberts speak with ‘Kings of Crypto’ author Jeff Roberts about Coinbase and the crypto economy.
JULIE HYMAN: Jeff Roberts is joining us now. He’s a reporter at Fortune and the author of “Kings of Crypto.” Our Dan Roberts is also joining us. No relation, by the way. Jeff, thanks for joining us. And in particular, you have focused on coverage of Coinbase, I believe, in that most recent book. And recently, Coinbase came under some scrutiny because there was a New York Times story detailing accusations of racial bias with the company. The company came out with a memo trying to front run that story, that then created this feedback loop of controversy. The crypto world has sort of classically been known as being politically incorrect, I think one could say, in certain segments. And bro-ey, perhaps. Does this stuff matter for Coinbase, do you think?
JEFF ROBERTS: I think it does, yeah. I think bro-ey is a good way to describe it, because crypto is the tech industry, but more so. And the tech industry has long struggled with diversity and inclusivity. And I’ve long said that the crypto industry has to figure out if it wants to be a subculture or if it wants to be a mainstream technology. And if you want to be mainstream, I think you have to expand your appeal beyond a small segment of libertarian white dudes.
DAN ROBERTS: Jeff, it’s Dan Roberts here. Let’s follow up on this. The recent controversy. There’s not just the New York Times story about accusations of racism in the culture, as Julie referenced, but there was also the political memo about Brian Armstrong saying I don’t want this to be a political place. I guess what I’d ask you is not whether it matters for the company and whether it could hurt the company, but do you think Brian Armstrong himself cares about all this? Do you think the controversy– he sees it as an issue and is concerned, or do you think he’s just plowing ahead, business as usual?
JEFF ROBERTS: Well, I think he’s drunk deeply from the Silicon Valley ideology, and as a lot of people pointed out when he wrote that memo, saying there’s no politics here, that’s very political statement in its own right. And I think Brian is having to learn to grow. Do I think Brian is a racist? No. But I do think that culture and Brian himself lacks some of the emotional intelligence that can be necessary to steering a big, diverse company, which Coinbase is aspiring to be.
DAN ROBERTS: And let’s Zoom out, Jeff, and talk about Coinbase as a business and where it stands in the cryptocurrency industry. You talk about in the book how when it came along, it was really the first, and the easy mainstream way for crypto newbies to buy Bitcoin. I still think that’s the case, that when you hear from people who don’t follow this stuff closely, and they decide they want to buy a little bit of crypto, Coinbase is usually the only one they’ve even heard of, and they might go to Coinbase.
Now, of course, in the crypto world, it’s known for having very high fees, there are many other exchanges. The Winklevoss brothers have Gemini, there’s Binance. But do you get the impression that any of those is really a challenger for the top spot, or Coinbase is still the top dog, and it’s still the go to place for anyone who decides to dip a toe into this stuff?
JEFF ROBERTS: Yeah, absolutely. And I’m not endorsing Coinbase, but I think the nature of the industry, there’s network effects, and Coinbase was the first mover, and they’ve got such a moat, and they really have branded themselves as the mainstream place to go. I know a lot of the crypto purists have objections with them, but as you said, the reality is, if anyone’s going to buy crypto, the only company they’ve heard of is Coinbase. And that’s been a huge benefit to them.
So for the more ideological people, they have other options. But for the average person who wants to buy a little bit of Bitcoin, almost invariably, Coinbase is where they’re going.
MYLES UDLAND: Jeff, the book is focused on Coinbase, but I’m curious, in reporting out the book and talking to a lot of people in crypto, obviously, where do they think the industry is at, and where is it going? Because I guess it’s like year 10, we’re still doing origin stories about some of the big players, but where do the real adherence see this whole project headed over– maybe let’s just call it the next decade.
JEFF ROBERTS: It’s a tough space to cover, because a lot of people don’t really understand the nuances of blockchain and crypto, and those who do almost inevitably are invested in it, so it’s very hard to get impartial opinions. But I think, unlike the bubble of 2017, what’s different this time around is you’re seeing real institutional players come in. Harvard and Princeton University have devoted part of their endowments to crypto. Big hedge funds, big banks. There’s a lot less antipathy to the technology than there was in the past.
So I think for now, I think we’re in another bubble. The prices are going to drop. But I think they won’t drop as much as before. Bitcoin looks better than it ever has before, and some of the other coins, a lot of them are complete rubbish. But there is some interesting new technology, blockchain-based, coming out.
But I think you make a point saying, we’re still talking about origin stories, and people saying we’re in the first inning, and things like that. But I think it is getting to the point where the crypto industry has to put up or shut up and show the stuff is useful for something besides investing.
JULIE HYMAN: Yeah. And that institutional support that you mentioned is one of the cases that Mike Novogratz made, who’s been a very vocal supporter and buyer of cryptocurrencies, when we recently spoke with him. Jeff Roberts, thanks for your time today. Reporter at Fortune, author of “Kings of Crypto.” Dan Roberts, thank you as well.