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Democratizing the Crypto Economy with Manish Gupta, EVP of Engineering at Coinbase

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There’s an obvious tension in the crypto world between decentralization and centralization. Of course, Bitcoin was a reaction against the power of the entrenched banking systems and a move toward individual economic empowerment. The essential element of blockchain technology is a distributed ledger, so it’s a reasonable desire for those who care about the technology to want the scale tipped toward decentralization. It’s also undeniable that some centralization often proves useful with scaling and building trust. But living within the tension between decentralization and centralization may be the key to empowering individual people by providing them with economic access. Manish Gupta, the EVP of Engineering at Coinbase, makes the case that Coinbase is equipped to democratize the crypto economy.

Main Takeaways

  • Tension Between Decentralization and Centralization: Coinbase is living between the binary of a centralized versus a decentralized system. Fundamentally, by maintaining a balance between both paradigms, it has an opportunity to further democratize the crypto economy,
    • Seeing Opportunity Instead of a Problem: When the crypto economy has boomed in the past, the Coinbase site has gone down, at times, due to the volume of users on the site. Trust is essential for Coinbase customers, so being able to solve for capacity issues is essential for sustaining that trust. In part, the solution to handling traffic issues has been to institute a series of tests to be proactive rather than leaning on a spike in the market to test the system. For Coinbase and Manish Gupta, these platform issues became an opportunity to strengthen the platform. 
  • Leaning into Decentralizing Technologies: Coinbase has made a strategic decision to lean into decentralized products. Overall, Coinbase plans to focus on decentralizing its workforce, products, and what it builds on the blockchain. One example of offering increased decentralization on the platform is creating wallets where assets can be individually held rather than combined into a larger pool of assets. 

For a more in-depth look at this episode, check out the article below.

Article:

There’s an obvious tension in the crypto world between decentralization and centralization. Of course, Bitcoin was a reaction against the power of the entrenched banking systems and a move toward individual economic empowerment. The essential element of blockchain technology is a distributed ledger, so it’s a reasonable desire for those who care about the technology to want the scale tipped toward decentralization. It’s also undeniable that some centralization often proves useful with scaling and building trust. But living within the tension between decentralization and centralization may be the key to empowering individual people by providing them with economic access. Manish Gupta, the EVP of Engineering at Coinbase, makes the case that Coinbase is equipped to democratize the crypto economy.

“I joined Google when it was tiny,” Gupta said. “It was just 200 people and I saw it grow from where it was at the time to a hundred thousand plus people in the company. Google has always been about this very long-term vision and mission about democratizing information. I see strong parallels to that in Coinbase. It’s a very long-term mission about democratizing finance by building this open financial system and increasing economic freedom. And I feel Google played a big part in not only evolving, but accelerating the adoption of the internet of information. And Coinbase, similarly at this point, has the opportunity and I would say responsibility of evolving and accelerating the adoption of the internet of value.” 

With an already broad reach and the potential for even more growth, Coinbase finds itself in an extremely unique position — as a trusted centralized institution creating access for decentralized products while being committed to more decentralization across the company.

On a recent episode of IT Visionaries, Gupta discussed how Coinbase is reinvesting in the promise of decentralization by focusing on a decentralized workforce, products, and the way it builds on the blockchain. He also explained that Coinbase is creating opportunities for developers to build upon its work as well as an application marketplace so that developers can speedily make secure apps and then push them out to Coinbase’s immense user base. 

In order to pursue these lofty goals, Coinbase had to shore up the capacity on its platform.

“One of the things that we as a company really care about is trust, right?” Gupta asked. “Because this is a financial services company in some ways in addition to being a technology company, and trust has been one of our core tenants. When the site is down, when the markets are volatile, that can hit straight at that core tenet. People can start to distrust.” 

Coinbase increased its site capacity and tested it proactively.

“So what we did is we instituted a very regular load testing framework,” Gupta said. ”We said that we are going to load test our site proactively rather than letting the markets load test for us and proactively testing on a very regular basis. First, once a week. Then, twice a week. And trying to find out the next choke point and the next choke point and fixing it as if it is happening in the real world like an incident and make sure that we continue to remain available and reliable even as the traffic goes multi-fold. So we set a goal of being able to have ten times the capacity than what we had when we first started. And it took us a while, but we are there. But in many ways, I would say we are just beginning.” 

Gupta described a three-tiered plan for Coinbase. The first level is an investment platform and the second phase is becoming a financial system unto itself.

“In terms of crypto as an investment, we started with a very few assets, but we are continuing to add assets at a breakneck pace,” Gupta said. “We have more than a hundred assets that you can buy, sell, [and] trade on Coinbase at this point…And currently we have let’s say tens of millions of users who have a Coinbase account, who use us on a regular basis, but that is just the beginning. We think we can get to a billion plus; in fact, even multiple billions of users who will be able to use crypto as an investment through Coinbase. Once you have that, the next prong of the strategy is crypto as a new financial system. This is when new applications start to emerge: products like borrow, lend, payments even, direct deposit, earn like payroll, debit card, credit card, [and] P2P payments. 

The third phase involves creating opportunities for developers to more easily build apps and then share them.

“This is what we call crypto as an app platform…” Gupta said. “We are building a bunch of primitives internally for our own products. What if we exposed all of them externally so that people, like other enterprises and other developers, can build amazing applications on top of that? This is where we truly accelerate the crypto ecosystem, right? Because we are taking away the complexity of some core primitives that are very security sensitive, for example, and making them available in a very easy to use way for other developers and entities that can just unleash the power of crypto and just accelerate and multiply the speed at which crypto gets adopted.” 

Coinbase has recently made a renewed commitment to promote more decentralization within the company.

“So we did some introspection a few months ago and we said, ‘We are going to embrace decentralization even further,’” Gupta said. “And there are many aspects of this. One is of course the decentralization of the workforce; there is a decentralization of the product, and there is a decentralization even in terms of building products on the blockchain itself.” 

Living between tensions is where real growth occurs. If there must be some centralization along with decentralization, the goal should be to democratize economic access to benefit all people.

To hear more about how Coinbase is opening access to the crypto economy, check out the full episode of IT Visionaries!

To hear the entire discussion, tune into IT Visionaries here

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Episode 325