Brian Armstrong
Brian Armstrong is the chairman of Coinbase, a leading US cryptocurrency exchange. He started his career at IBM, Airbnb, and Deloitte.
He was born in 1983 in San Jose, California. Armstrong has been interested in technology since high school, so he started learning Java and CSS at a fairly young age. He got his first job while still in school: he created websites for local companies.
In 2001, Armstrong entered Rice University in Houston, where he studied economics and computer science. After graduation, he received two degrees: in economics and computer science.
Brian’s only childhood photo on the Internet
Career
In 2003, Armstrong co-founded UniversityTutor.com with John Nelson, which allowed users to search for a tutor by several parameters: education, location, and subjects. Armstrong was the CEO of University Tutor until May 2012, when he founded Coinbase. University Tutor itself was eventually sold for 21 times its annual revenue, Nelson said. The details of the deal and the buyer are not known.
After graduating from university in 2006, Armstrong lived in Buenos Aires, Argentina, for a year. He observed hyperinflation with his own eyes and thought about how to protect himself from it. Later, he came to the conclusion that one of the best tools was cryptocurrency.
The insight came in 2010 when he was visiting his parents in San Jose. Armstrong came across Satoshi’s White Papers, a document published two years earlier, where the author of Bitcoin explained the principle of cryptocurrency.
After that, Armstrong bought $ 1000 worth of bitcoins. At that time, 1 bitcoin was worth $ 9. After a while, the price dropped to $ 2, but Armstrong still believed in the future of online money.
Cryptocurrency rates are still treacherous, unpredictable, and feverishly affecting Coinbase, severely affecting its revenues (when the rate falls, cryptocurrency transactions freeze and the exchange does not receive commissions). But former employees described Armstrong to the FT as a stress-resistant guy whose mood rarely changes due to ups and downs.
In May 2011, Armstrong, while continuing to run University Tutor, took a job at Airbnb. Back then, the startup had only 35 employees. He was responsible for fighting fraud and processing payments. This gave him the opportunity to learn about payment systems in dozens of countries where Airbnb operated.
Working in the evenings and on weekends, Armstrong wrote a smartphone app that allowed him to buy and store bitcoins. However, it was unreliable due to the weak security of phones. In addition, due to the insufficient computing capabilities of mobile phones, transactions were extremely slow. However, the application became popular anyway.
Coinbase
In June 2012, Armstrong resigned from Airbnb and then, together with Fred Ersam, founded his own cryptocurrency exchange, Coinbase, in his apartment in San Francisco. The idea behind Coinbase was to create a platform for buying bitcoin.
At the time, the use of bitcoin in everyday life and in trade was simply absurd.
Brian, together with Fred Ersam, co-founder of Coinbase
The startup received an investment of $ 150,000 and entered the Y Combinator business incubator program.
Coinbase was generally lucky to have investors who largely contributed to the growth of its popularity, according to Blockonomi. Thus, in 2013, it received $ 5 million from Union Square Ventures and another $ 25 million from venture capital funds Ribbit Capital and Andreessen Horowitz. And in January 2015, Coinbase became the first crypto exchange to receive direct investment from a major financial institution, which attracted new customers: The New York Stock Exchange, together with several banks and Draper Fisher Jurvetson, invested $ 75 million in the crypto exchange. However, the success is also explained by the fact that Coinbase «betrayed» the ideals of cryptocurrency.
It would seem that this company’s business is the exact opposite of a traditional bank, but in fact, Coinbase behaves like a bank. The company uses bank transfers to receive and withdraw customer funds. It stores its assets (digital keys) in digital vaults. In addition, the exchange boasts insurance from Lloyd’s. Coinbase has more than 40 security officers who assess the risks of both physical intrusion and online hacking.
Cryptocurrencies are designed to be the antithesis of the financial system, but Armstrong cooperates with government inspectors. The company has more than fifty employees whose duty is to monitor compliance with regulatory requirements. The crypto exchange detects signs of money laundering and sends 1099-K reports (and since last year, 1099-MISC reports instead) to the US tax office.
Why do cryptocurrency fanatics like Coinbase, which «knocks» on the fiscal authorities? The exchange still tries to maintain the anonymity of users. In 2016, the tax authorities demanded that the exchange provide information about all its clients, including personal correspondence with Coinbase employees. The exchange fought fiercely. After almost two years of lawsuits, the court finally forced it to hand over information about the registration data and transactions of users who conducted more than 200 transactions totaling $ 20,000 or more in 2013−2015. There were 13 thousand of them. The tax authorities did not get the data of 480 thousand other users. After this story, the exchange introduced a service that allows clients to transfer bitcoins to a personal wallet, thereby relieving the exchange of the obligation to know its client.
However, at the time of writing, the media reported that Coinbase was sharing customer location and transaction histories with the U.S. Immigration and Customs Enforcement (ICE). According to the Tech Inquiry research group, in August 2021, Coinbase sold ICE a license to use analytical software. A month later, the exchange signed an agreement with the government to transfer the software worth more than $ 1 million. As a result, the US authorities gained access to various functions of the Coinbase Tracer user data tracking platform.
Representatives of the exchange emphasized that its Coinbase Tracer application was developed in accordance with government requirements and provides information only for the investigation of crimes such as terrorist financing and money laundering. Coinbase emphasized that the data they provide to the government is also available in publicly available sources and does not constitute a disclosure of personal information of customers. Most users are now concerned — no one wants their personal data to be obtained by a third party.
The future belongs to crypto
Coinbase commissions can reach 3.99%, which allows you to earn good money. Last year, thanks to the bitcoin rally, the number of Coinbase users increased by 34% to 43 million. The exchange’s net profit for the year amounted to $ 322 million.
Coinbase is looking for other ways to make money to reduce this dependence. A year and a half ago, the exchange received permission from Visa to issue debit cards linked to a cryptocurrency account.
The exchange issues its own cryptocurrency, USD Coin, pegged to the dollar. It also offers paid cryptocurrency storage services to companies (according to Forbes, it has been entrusted with $ 8 billion worth of assets). And after Coinbase hired COO Emily Choi, the exchange started investing in other businesses. Currently, its portfolio includes more than fifty companies whose business is somehow related to cryptocurrencies. For example, it has a stake in the Chinese Amber Group, which teaches artificial intelligence to trade cryptocurrencies.
Armstrong’s other achievements
- Since its founding, Coinbase has managed to serve more than 10 million customers from 32 countries. Armstrong’s company provides storage of digital assets worth more than $ 10 billion.
- All this gives him the opportunity to be on Fortune’s list of the 40 Most Influential Businessmen Under 40, which also includes Vitalik Buterin and Pavel Durov.
- In addition, Armstrong was included in the 2017 Recode 100 list, where there is no other representative of the crypto industry.
- In 2021, the American Forbes estimated that the fortune of the co-founder and CEO of Coinbase grew to $ 11.8 billion. At that time, Armstrong, who owns 20% of Coinbase, rose from 404th to 187th in the Forbes global billionaire ranking in one day.