Brian is one of the key figures in the cryptocurrency world of the early 2010s, as he witnessed the birth of this industry and became involved in popularizing blockchain technologies worldwide. Additionally, he was one of the first to elevate his project to the status of a Unicorn!

Full name: Brian Armstrong.

Date of birth: January 25, 1983.

Place of birth: San Jose, California.

Parents: Both parents were engineers.

Brian had a passion for entrepreneurship from a young age. He was a frequent visitor to the principal's office as he sold candies brought from home on the school playground.

In high school, he became interested in programming. "I was a geek who read Java books," Armstrong recalled. However, even in school, he started earning decent money by creating websites for small businesses in his hometown. To avoid distractions, he made an arrangement with a neighbor and worked from his garage. As he grew older, he made extra money by reselling used computers.

In 2001, Armstrong enrolled to study Computer Science and Economics at Rice University in Houston, Texas.

During his studies, he worked as an intern at IBM for four months and at Deloitte and Touche for five months. However, what mattered most to him was his own business.

He and his dorm mate, John Nelson, provided services to fellow students: they negotiated reservations of venues in bars for parties and shared the discount that the bar owners gave them as people who brought customers to their establishments.

Here are a couple of interesting facts about this educational institution!

– The university has a very rich history and played a significant role in the development of the space industry, contributing to the establishment of the NASA Space Center in Houston.

– On September 12, 1962, John F. Kennedy delivered a speech here announcing the decision to launch a manned mission to the Moon.

– The university is among the top educational institutions in the USA, consistently ranking in the top 20.

Armstrong and Nelson founded the website University Tutor, an aggregator of tutoring services.

In those years, the internet was not as developed as it is now, and a significant portion of clients called the startup, perceiving it as a regular recruitment agency. They had a telephone set up in the founders' dorm room.

"When we had a party going on, we had to disconnect the phone," Nelson recalled.

Armstrong served as the CEO of University Tutor until May 2012 when he founded Coinbase.

Eventually, University Tutor was sold for an amount 21 times its annual revenue, as Nelson disclosed, without revealing the buyer or further details of the deal.

Brian obtained a double bachelor's degree in Economics and Computer Science in 2005, and then a master's degree in Computer Science in 2006.

After completing his education, Armstrong decided to move to Buenos Aires, Argentina. "I decided that since I had never been to Latin America, it would be a good idea to go there for a year and work remotely. It was an adventure," he explained.

While there, he witnessed hyperinflation and started contemplating ways to protect himself from it. Later, he came to the conclusion that one of the best tools for that would be cryptocurrency.

The breakthrough came in 2010 when he was visiting his parents in San Jose. Armstrong stumbled upon the "Bitcoin Whitepaper," a document published two years prior, where the creator of Bitcoin explained the principles of cryptocurrency.

It was around Christmas time, and his mother came into his room, saying, "The whole family is gathered downstairs, come join us." But he got so engrossed in reading that he stayed in his room and finished it.

He bought bitcoins for $1000 when 1 BTC was worth $9. After some time, the value of the main cryptocurrency dropped to $2, but Armstrong still believed in the future of online money and did not sell anything.

Cryptocurrency prices remain treacherous, unpredictable, and highly affecting Coinbase, especially when prices fall, causing cryptocurrency transactions to freeze and the exchange to lose commissions. However, former employees described Armstrong as a resilient guy, whose mood rarely fluctuates with the highs and lows.

In May 2011, Armstrong continued to lead University Tutor while simultaneously working at Airbnb.

Back then, the startup had only 35 people, and he was responsible for fraud prevention and payment processing, which allowed him to learn about payment systems in dozens of countries where Airbnb operated.

Armstrong received several arguments in favor of cryptocurrencies.

Firstly, traditional money transfers were complex and expensive:

1. High fees;

2. Lengthy delays;

3. Lack of transparency.

"We tried to send money to Uruguay and never knew how much of it would reach the recipient. I wanted an open financial system in the world that stimulates innovation and freedom," said Armstrong.

Secondly, he witnessed how, at the request of the US authorities, Airbnb instantly ceased operations in Cuba. Armstrong concluded that cryptocurrencies enable trading services and goods with less risk when governments cannot easily intervene. Airbnb returned to Cuba only in 2015.

Working evenings and weekends, Armstrong developed a smartphone app that allowed buying and storing bitcoins. However, it was unreliable due to weak phone security, and transactions were slow due to limited mobile computing power. Nevertheless, the app gained popularity.

"I realized we needed to create a reliable cloud service – that's where the future lies," explained Armstrong.

In June 2012, Armstrong resigned from Airbnb and co-founded Coinbase together with Fred Ehrsam in his apartment in San Francisco.

Ehrsam became a fan of computer games in school, then studied computer science at Duke University in Durham, North Carolina. However, he ended up working in a completely unrelated field, becoming a currency trader at Goldman Sachs.

Feeling bored in the office, he would explore the internet for interesting things after work. When he learned about Bitcoin, Ehrsam instantly fell in love with the new money. He bought his first cryptocurrency from his phone as soon as he discovered it, even while taking a bath.

During that time, the primary trading platform for cryptocurrencies was the Japanese exchange Mt. Gox, which had significant transaction delays and occasionally fell victim to hackers.

One of the first hacking attacks on the Mt. Gox exchange occurred on June 19, 2011. The attacker forcibly bought $BTC from the exchange's customers at a reduced rate, acquiring around 2,000 coins for only 1 cent each, while the pre-attack prices were around $17.

Observing all this, Ehrsam realized the need for a simpler and more reliable way to buy and sell cryptocurrencies. Through a Reddit thread, he connected with Armstrong, and together they decided to create their own cryptocurrency exchange, which they launched in October 2012.

Thanks to his experience at Goldman Sachs, Ehrsam was able to establish relationships between Coinbase and banks.

In 2018, Ehrsam stepped back from the operational management of the cryptocurrency exchange to start a new business venture - Paradigm Operations, an investment fund specializing in crypto startups. However, he still serves on the Coinbase board of directors to this day.

The startup received $150,000 in investments when it entered the Y Combinator business incubator program. Private startup investor Harry Tan also invested $300,000 in Coinbase, but we'll come back to that later.

In 2013, Coinbase secured $5 million from Union Square Ventures and another $25 million from venture capital firms Ribbit Capital and Andreessen Horowitz, known for their connections in the business world. Then, in January 2015, Coinbase became the first cryptocurrency exchange to receive direct investments from a major financial institution, attracting new clients, including the New York Stock Exchange and several banks. Draper Fisher Jurvetson also invested $75 million in the cryptocurrency exchange.

However, Coinbase's success can also be attributed to the fact that it adhered to the ideals of cryptocurrencies.

Coinbase could have had another co-founder. While creating the app for buying bitcoins, Armstrong often sought advice from a cryptocurrency enthusiast and British programmer, Ben Reeves, who had successfully launched an online cryptocurrency wallet called Blockchain.info in 2011, which is still in operation. However, when it came to creating Coinbase, they had different views on the mission of Bitcoin.

The main point of contention was whether the cryptocurrency exchange should have access to the security keys (passwords) that allow owners to confirm their ownership of bitcoins. Armstrong believed that owners should have the ability to recover their keys with the help of the exchange, as there was a significant risk that they might forget or lose a 64-character password and lose access to their funds.

Reeves argued that centralized data storage contradicted the spirit of cryptocurrencies. Armstrong decided to go his own way, parting ways with Reeves, but this decision made Coinbase more user-friendly for beginners.

Coinbase purchased an office for its headquarters, seemingly being the complete opposite of a traditional bank both in essence and spirit. However, in reality, Coinbase behaves like a bank.

1. It uses bank transfers to accept and withdraw funds from its customers.

2. It stores its assets (digital keys) in digital wallets.

3. It can boast insurance from Lloyd's.

4. Coinbase has over 40 security personnel, including a veteran of the Iraq War, who assess risks related to physical intrusion and online hacking.

Security became another competitive advantage for Coinbase, especially after the stories involving the Japanese Mt. Gox or the Canadian cryptocurrency exchange QuadrigaCX.

QuadrigaCX customers were unable to access $150 million after its founder traveled to India and unexpectedly passed away in December 2018. It turned out that he held all the keys. The affected parties' lawyers even demanded the exhumation of the body to verify if the QuadrigaCX founder had indeed died or had absconded with the money, substituting another body at the cemetery.

If you're interested in this story, I recommend watching this video and reading this article.

Coinbase's services may cost customers more than many competitors, but unlike its competitors, it doesn't operate in the murky world of offshore finance. Coinbase has obtained licenses for money transfer services in various US states. Moreover, as soon as a special license for working with cryptocurrencies was introduced in the state of New York, Coinbase obtained it, in addition to its existing broker's license.

Bitcoin was conceived as an antithesis to the financial system, yet Armstrong collaborates with government regulators.

The company has over fifty employees whose duty is to ensure compliance with regulatory requirements.

The cryptocurrency exchange detects signs of money laundering and submits 1099-K reports (and since last year, 1099-MISC reports) to the U.S. tax authorities.

Coinbase can generate significant profits as its fees can reach up to 3.99%.

The number of Coinbase users has significantly increased following the recent bull rally in all markets, and currently, the exchange has around 50 million active users. The exchange's net income for 2021 amounted to approximately $3.1 billion. However, as mentioned earlier, when cryptocurrencies decline in value, user activity and, consequently, commission revenue also decrease. Coinbase is actively seeking other avenues to reduce this dependency.

A couple of years ago, Coinbase obtained permission from Visa to issue debit cards linked to cryptocurrency accounts. The exchange also launched its own cryptocurrency, USD Coin ($USDC), which is pegged to the U.S. dollar.

After the $UST depeg and various rumors surrounding $USDT, the capitalization of Coinbase's stablecoin increased by 6-7 billion dollars (~10-15%).

Coinbase also offers paid cryptocurrency custody services to companies. After Emily Choi was appointed as the Chief Operating Officer, the exchange started investing in other businesses. Currently, its portfolio includes over fifty companies whose businesses are somehow related to cryptocurrencies. For instance, Coinbase holds a stake in the Chinese company Amber Group, which teaches artificial intelligence to trade cryptocurrencies.

Coinbase became the first public cryptocurrency exchange with its shares listed on NASDAQ.

In January 2021, Coinbase started selling its shares on Nasdaq Private Markets. While at the end of 2018, after a venture funding round, the cryptocurrency exchange was valued at only $8 billion, its valuation reached $54 billion in January 2021.

In early February of the same year, the platform sold several more batches of shares, with the last one being sold at a price of $373 per share. This raised the company's valuation to $100 billion.

At that time, there was a possibility that Coinbase would go public with the highest valuation since Facebook's IPO. However, in mid-February, the company stated that, based on recent deals, its valuation was approximately $68 billion.

Coinbase chose a direct listing as its way to go public, bypassing the traditional IPO process. Unlike an IPO, in a direct listing, the company does not issue new shares; instead, existing shares held by investors and employees are sold on the exchange. This helps to reduce costs associated with investment banking services.

As I mentioned earlier, let me elaborate on Harry Tan.

He managed to invest $300,000 in Coinbase in 2013 and acquired each share for approximately $0.15. At the time of the listing, his investment was valued at $2.4 billion.

Harry Tan declared that his $300,000 investment in Coinbase was the best of his entire career.

As you may recall, Union Square Ventures invested in the cryptocurrency exchange at a price of $0.20 per share, turning their initial investment of $5 million into approximately $8 billion.

Ribbit Capital also acquired shares at $0.20, and their profit ranged from $5 billion to $7 billion.

The venture firm Andreessen Horowitz, or a16z, invested in Coinbase at a price of $1.00 per share, and their earnings from this investment amounted to approximately $7.5 billion.

The biggest money is made by funds you haven't even heard of and investors you haven't even seen.

Brian is one of the key figures in the cryptocurrency world of the early 2010s, as he witnessed the birth of this industry and became involved in popularizing blockchain technologies worldwide. Additionally, he was one of the first to elevate his project to the status of a Unicorn!

Full name: Brian Armstrong.

Date of birth: January 25, 1983.

Place of birth: San Jose, California.

Parents: Both parents were engineers.

Brian had a passion for entrepreneurship from a young age. He was a frequent visitor to the principal's office as he sold candies brought from home on the school playground.

In high school, he became interested in programming. "I was a geek who read Java books," Armstrong recalled. However, even in school, he started earning decent money by creating websites for small businesses in his hometown. To avoid distractions, he made an arrangement with a neighbor and worked from his garage. As he grew older, he made extra money by reselling used computers.

In 2001, Armstrong enrolled to study Computer Science and Economics at Rice University in Houston, Texas.

During his studies, he worked as an intern at IBM for four months and at Deloitte and Touche for five months. However, what mattered most to him was his own business.

He and his dorm mate, John Nelson, provided services to fellow students: they negotiated reservations of venues in bars for parties and shared the discount that the bar owners gave them as people who brought customers to their establishments.

Here are a couple of interesting facts about this educational institution!

– The university has a very rich history and played a significant role in the development of the space industry, contributing to the establishment of the NASA Space Center in Houston.

– On September 12, 1962, John F. Kennedy delivered a speech here announcing the decision to launch a manned mission to the Moon.

– The university is among the top educational institutions in the USA, consistently ranking in the top 20.

Armstrong and Nelson founded the website University Tutor, an aggregator of tutoring services.

In those years, the internet was not as developed as it is now, and a significant portion of clients called the startup, perceiving it as a regular recruitment agency. They had a telephone set up in the founders' dorm room.

"When we had a party going on, we had to disconnect the phone," Nelson recalled.

Armstrong served as the CEO of University Tutor until May 2012 when he founded Coinbase.

Eventually, University Tutor was sold for an amount 21 times its annual revenue, as Nelson disclosed, without revealing the buyer or further details of the deal.

Brian obtained a double bachelor's degree in Economics and Computer Science in 2005, and then a master's degree in Computer Science in 2006.

After completing his education, Armstrong decided to move to Buenos Aires, Argentina. "I decided that since I had never been to Latin America, it would be a good idea to go there for a year and work remotely. It was an adventure," he explained.

While there, he witnessed hyperinflation and started contemplating ways to protect himself from it. Later, he came to the conclusion that one of the best tools for that would be cryptocurrency.

The breakthrough came in 2010 when he was visiting his parents in San Jose. Armstrong stumbled upon the "Bitcoin Whitepaper," a document published two years prior, where the creator of Bitcoin explained the principles of cryptocurrency.

It was around Christmas time, and his mother came into his room, saying, "The whole family is gathered downstairs, come join us." But he got so engrossed in reading that he stayed in his room and finished it.

He bought bitcoins for $1000 when 1 BTC was worth $9. After some time, the value of the main cryptocurrency dropped to $2, but Armstrong still believed in the future of online money and did not sell anything.

Cryptocurrency prices remain treacherous, unpredictable, and highly affecting Coinbase, especially when prices fall, causing cryptocurrency transactions to freeze and the exchange to lose commissions. However, former employees described Armstrong as a resilient guy, whose mood rarely fluctuates with the highs and lows.

In May 2011, Armstrong continued to lead University Tutor while simultaneously working at Airbnb.

Back then, the startup had only 35 people, and he was responsible for fraud prevention and payment processing, which allowed him to learn about payment systems in dozens of countries where Airbnb operated.

Armstrong received several arguments in favor of cryptocurrencies.

Firstly, traditional money transfers were complex and expensive:

1. High fees;

2. Lengthy delays;

3. Lack of transparency.

"We tried to send money to Uruguay and never knew how much of it would reach the recipient. I wanted an open financial system in the world that stimulates innovation and freedom," said Armstrong.

Secondly, he witnessed how, at the request of the US authorities, Airbnb instantly ceased operations in Cuba. Armstrong concluded that cryptocurrencies enable trading services and goods with less risk when governments cannot easily intervene. Airbnb returned to Cuba only in 2015.

Working evenings and weekends, Armstrong developed a smartphone app that allowed buying and storing bitcoins. However, it was unreliable due to weak phone security, and transactions were slow due to limited mobile computing power. Nevertheless, the app gained popularity.

"I realized we needed to create a reliable cloud service – that's where the future lies," explained Armstrong.

In June 2012, Armstrong resigned from Airbnb and co-founded Coinbase together with Fred Ehrsam in his apartment in San Francisco.

Ehrsam became a fan of computer games in school, then studied computer science at Duke University in Durham, North Carolina. However, he ended up working in a completely unrelated field, becoming a currency trader at Goldman Sachs.

Feeling bored in the office, he would explore the internet for interesting things after work. When he learned about Bitcoin, Ehrsam instantly fell in love with the new money. He bought his first cryptocurrency from his phone as soon as he discovered it, even while taking a bath.

During that time, the primary trading platform for cryptocurrencies was the Japanese exchange Mt. Gox, which had significant transaction delays and occasionally fell victim to hackers.

One of the first hacking attacks on the Mt. Gox exchange occurred on June 19, 2011. The attacker forcibly bought $BTC from the exchange's customers at a reduced rate, acquiring around 2,000 coins for only 1 cent each, while the pre-attack prices were around $17.

Observing all this, Ehrsam realized the need for a simpler and more reliable way to buy and sell cryptocurrencies. Through a Reddit thread, he connected with Armstrong, and together they decided to create their own cryptocurrency exchange, which they launched in October 2012.

Thanks to his experience at Goldman Sachs, Ehrsam was able to establish relationships between Coinbase and banks.

In 2018, Ehrsam stepped back from the operational management of the cryptocurrency exchange to start a new business venture - Paradigm Operations, an investment fund specializing in crypto startups. However, he still serves on the Coinbase board of directors to this day.

The startup received $150,000 in investments when it entered the Y Combinator business incubator program. Private startup investor Harry Tan also invested $300,000 in Coinbase, but we'll come back to that later.

In 2013, Coinbase secured $5 million from Union Square Ventures and another $25 million from venture capital firms Ribbit Capital and Andreessen Horowitz, known for their connections in the business world. Then, in January 2015, Coinbase became the first cryptocurrency exchange to receive direct investments from a major financial institution, attracting new clients, including the New York Stock Exchange and several banks. Draper Fisher Jurvetson also invested $75 million in the cryptocurrency exchange.

However, Coinbase's success can also be attributed to the fact that it adhered to the ideals of cryptocurrencies.

Coinbase could have had another co-founder. While creating the app for buying bitcoins, Armstrong often sought advice from a cryptocurrency enthusiast and British programmer, Ben Reeves, who had successfully launched an online cryptocurrency wallet called Blockchain.info in 2011, which is still in operation. However, when it came to creating Coinbase, they had different views on the mission of Bitcoin.

The main point of contention was whether the cryptocurrency exchange should have access to the security keys (passwords) that allow owners to confirm their ownership of bitcoins. Armstrong believed that owners should have the ability to recover their keys with the help of the exchange, as there was a significant risk that they might forget or lose a 64-character password and lose access to their funds.

Reeves argued that centralized data storage contradicted the spirit of cryptocurrencies. Armstrong decided to go his own way, parting ways with Reeves, but this decision made Coinbase more user-friendly for beginners.

Coinbase purchased an office for its headquarters, seemingly being the complete opposite of a traditional bank both in essence and spirit. However, in reality, Coinbase behaves like a bank.

1. It uses bank transfers to accept and withdraw funds from its customers.

2. It stores its assets (digital keys) in digital wallets.

3. It can boast insurance from Lloyd's.

4. Coinbase has over 40 security personnel, including a veteran of the Iraq War, who assess risks related to physical intrusion and online hacking.

Security became another competitive advantage for Coinbase, especially after the stories involving the Japanese Mt. Gox or the Canadian cryptocurrency exchange QuadrigaCX.

QuadrigaCX customers were unable to access $150 million after its founder traveled to India and unexpectedly passed away in December 2018. It turned out that he held all the keys. The affected parties' lawyers even demanded the exhumation of the body to verify if the QuadrigaCX founder had indeed died or had absconded with the money, substituting another body at the cemetery.

If you're interested in this story, I recommend watching this video and reading this article.

Coinbase's services may cost customers more than many competitors, but unlike its competitors, it doesn't operate in the murky world of offshore finance. Coinbase has obtained licenses for money transfer services in various US states. Moreover, as soon as a special license for working with cryptocurrencies was introduced in the state of New York, Coinbase obtained it, in addition to its existing broker's license.

Bitcoin was conceived as an antithesis to the financial system, yet Armstrong collaborates with government regulators.

The company has over fifty employees whose duty is to ensure compliance with regulatory requirements.

The cryptocurrency exchange detects signs of money laundering and submits 1099-K reports (and since last year, 1099-MISC reports) to the U.S. tax authorities.

Coinbase can generate significant profits as its fees can reach up to 3.99%.

The number of Coinbase users has significantly increased following the recent bull rally in all markets, and currently, the exchange has around 50 million active users. The exchange's net income for 2021 amounted to approximately $3.1 billion. However, as mentioned earlier, when cryptocurrencies decline in value, user activity and, consequently, commission revenue also decrease. Coinbase is actively seeking other avenues to reduce this dependency.

A couple of years ago, Coinbase obtained permission from Visa to issue debit cards linked to cryptocurrency accounts. The exchange also launched its own cryptocurrency, USD Coin ($USDC), which is pegged to the U.S. dollar.

After the $UST depeg and various rumors surrounding $USDT, the capitalization of Coinbase's stablecoin increased by 6-7 billion dollars (~10-15%).

Coinbase also offers paid cryptocurrency custody services to companies. After Emily Choi was appointed as the Chief Operating Officer, the exchange started investing in other businesses. Currently, its portfolio includes over fifty companies whose businesses are somehow related to cryptocurrencies. For instance, Coinbase holds a stake in the Chinese company Amber Group, which teaches artificial intelligence to trade cryptocurrencies.

Coinbase became the first public cryptocurrency exchange with its shares listed on NASDAQ.

In January 2021, Coinbase started selling its shares on Nasdaq Private Markets. While at the end of 2018, after a venture funding round, the cryptocurrency exchange was valued at only $8 billion, its valuation reached $54 billion in January 2021.

In early February of the same year, the platform sold several more batches of shares, with the last one being sold at a price of $373 per share. This raised the company's valuation to $100 billion.

At that time, there was a possibility that Coinbase would go public with the highest valuation since Facebook's IPO. However, in mid-February, the company stated that, based on recent deals, its valuation was approximately $68 billion.

Coinbase chose a direct listing as its way to go public, bypassing the traditional IPO process. Unlike an IPO, in a direct listing, the company does not issue new shares; instead, existing shares held by investors and employees are sold on the exchange. This helps to reduce costs associated with investment banking services.

As I mentioned earlier, let me elaborate on Harry Tan.

He managed to invest $300,000 in Coinbase in 2013 and acquired each share for approximately $0.15. At the time of the listing, his investment was valued at $2.4 billion.

Harry Tan declared that his $300,000 investment in Coinbase was the best of his entire career.

As you may recall, Union Square Ventures invested in the cryptocurrency exchange at a price of $0.20 per share, turning their initial investment of $5 million into approximately $8 billion.

Ribbit Capital also acquired shares at $0.20, and their profit ranged from $5 billion to $7 billion.

The venture firm Andreessen Horowitz, or a16z, invested in Coinbase at a price of $1.00 per share, and their earnings from this investment amounted to approximately $7.5 billion.

The biggest money is made by funds you haven't even heard of and investors you haven't even seen.