https://en.wikipedia.org/wiki/Bitcoin_Cashhttps://segwit2x.github.io/segwit2x-announce.htmlhttps://en.wikipedia.org/wiki/List_of_bitcoin_forkshttps://a16z.com/2017/09/28/cryptocurrencies-networks-tokens/https://en.bitcoin.it/wiki/Majority_attackhttps://motherboard.vice.com/en_us/article/newk7m/the-ethereum-network-is-ddos-ing-itselfhttps://www.amazon.com/Antifragile-Things-That-Disorder-Incerto/dp/0812979680https://99bitcoins.com/bitcoinobituaries/page/9/https://www.foreignaffairs.com/articles/africa/calm-stormbitcoin white paper</a> and <a href=https://www.ycombinator.com/"https://github.com/ethereum/wiki/wiki/White-Paper/">Ethereum white paper</a>.</p>\n<p>Our goal in this post is to:<br />\n1&#46; Explain how blockchain development differs from existing development paradigms<br />\n2&#46; Provide context for the opportunities and challenges in this space<br />\n3&#46; Point you to resources that will give you the foundation to start developing in this new paradigm</p>\n<h2>Paradigm Shifts for Developers</h2>\n<p>Internet applications benefit from network effects because they maintain centralized silos of information. Built upon shared, open protocols (e.g. TCP/IP, HTTP), companies like Yelp, Facebook, and Amazon benefit from having all of their users &#8211; and, as a result, data &#8211; in one place. This way they not only have an advantage over competitors with less data but also complete control over the way they monetize the data. <a href=https://www.ycombinator.com/"http://www.usv.com/blog/fat-protocols/">In the words</a> of crypto investor Joel Monegro, the current Internet paradigm captures most of its value through <em>fat</em> application layers, whereas the <em>thin</em>, underlying communication protocols capture minimal value.</p>\n<p>Alternatively, the distribution of value in the blockchain paradigm can be described with <em>fat</em> protocols and a <em>thin</em> application layer. This paradigm shift is possible due to the innovation of cryptographic tokens, which are described well by Albert Wenger of USV:</p>\n<p>“Historically the only way to make money from a protocol was to create software that implemented it and then try to sell this software (or more recently to host it)&#8230; With [cryptographic] tokens, however, the creators of a protocol can ‘monetize’ it directly and will in fact benefit more as others build businesses on top of that protocol.”</p>\n<p>Previously, the creators of open communication protocols for the Internet, largely <a href=https://www.ycombinator.com/"https://en.wikipedia.org/wiki/DARPA/">DARPA researchers and non-profit contributors, could not align financial incentives with protocol development. In contrast, protocol creators today can issue “tokens”, like Bitcoin and Ethereum, that represent the value of their decentralized protocols.</p>\n<p><a href=https://www.ycombinator.com/"http://www.usv.com/blog/fat-protocols/">Monegro believes</a> that this paradigm shift affects the way that developers should think about their applications: &#8220;The combination of shared open data with an incentive system that prevents “winner-take-all” markets changes the game at the application layer and creates an entire new category of companies with fundamentally different business models at the protocol layer.”</p>\n<h2>Ethereum</h2>\n<p>We’ve come to the understanding that in the blockchain paradigm, developers can capture value through protocol innovation. To continue our discussion, we review how blockchain technologies evolved to eventually cater to developers. Eight years ago, Bitcoin was conceived as a virtual currency that removed the need for centralized financial systems. Initially, developers actually tried building applications upon the Bitcoin blockchain by storing data in the blockchain itself, but it turned out to be pretty inefficient (as described in <a href=https://www.ycombinator.com/"http://joel.mn/post/104755282493/the-shared-data-layer-of-the-blockchain/">another old Joel post</a>!). One of these developers, Vitalik Buterin, was frustrated by Bitcoin’s immobilism and risk averse culture for adopting new developer-friendly features. So, he built his own platform, Ethereum.</p>\n<p>While Bitcoin was originally intended to serve as a new medium for financial store of value, Ethereum was invented to serve as a Turing complete developer environment. In Ethereum, developers write smart contracts in the Solidity programming language, and those smart contracts are run in the Ethereum Virtual Machine (EVM). Here, we observe an opportunity for developers to fork and implement their own blockchains to serve different purposes. To do so, however, would require rekindling developer support and network effects that existing blockchain technologies had previously achieved. Today, building on top of existing networks like Ethereum allows developers to become stakeholders in not only their own applications, but also the underlying protocol.</p>\n<h2>Dapps, App Coins, and Smart Contracts</h2>\n<p>Today’s blockchain developers often build decentralized applications, or dapps, on top of existing protocols to address specific markets and end users. In doing so, developers can issue <a href=https://www.ycombinator.com/"https://blog.0xproject.com/the-difference-between-app-coins-and-protocol-tokens-7281a428348c/">tokens, or app coins</a>, that are used to execute certain “functions” of the dapps themselves, not unlike Chuck-E-Cheese tokens are used for specific purposes like skeeball. These “functions” are the “smart contracts” that promise a dapp’s services in return for a digital asset, thereby removing the need for a middle-man to ensure the transaction. In other words, smart contracts promise that for one Chuck-E-Cheese token, you can exchange one game of skeeball.</p>\n<p>As the functionality of the dapp becomes more sought after, the fixed number of app coins increase in value as a function of supply and demand. In other words, if it turns out that the Chuck-E-Cheese experience is truly remarkable and highly-demanded, the fixed supply of tokens become more valuable. This is the underlying principle that informs all ICOs (initial coin offerings), in which dapp developers solicit investment by offering app coins in return for capital to fund their projects.</p>\n<p>But wait, you might ask, “Why not use an existing token as opposed to issuing your own, dapp-specific token in the first place?” Dapp-specific app coins enable small-scale economies that facilitate the application’s purpose. These <a href=https://www.ycombinator.com/"https://ycombinator.wpengine.com/the-token-effect//">tokens serve as scarce resources that can be regulated and governed to more closely align with the functionality of a dapp. This is where Ethereum comes back into the picture &#8212; with Ethereum, developers can very easily issue their own tokens for the specified use of their own dapps.</p>\n<h2>Early Opportunities</h2>\n<p>With an understanding of the underlying mechanisms of dapps, it’s important to think carefully about how decentralization would benefit your end users. Rather than jumping into a list of side projects, swapping relational databases for blockchain implementations, we urge you to consider the benefits of decentralization. For instance, <a href=https://www.ycombinator.com/"https://augur.net//">Augur creates prediction markets by relying on decentralized participants to make correct predictions because they share financial incentives.</p>\n<p>At a meta-level, there are also opportunities for innovation in the developer stack. Many blockchain developers liken the maturity of the blockchain tools and frameworks to those of the web during early days of the Internet. We spoke to Ben Yu of <a href=https://www.ycombinator.com/"https://streamtoken.net//">Stream, who described this as a new opportunity for developers: “There is extremely low-hanging fruit in making the field more accessible, and a lot of technical infrastructure needs to be built up to bring blockchain from 1994, in internet terms, to 2017.”</p>\n<p>With the innovation of the blockchain, many have identified the opportunity to build a new, decentralized web stack that does not depend on centralized government or corporate entities. The traditional web stack is composed of building blocks like TCP/IP, DNS, databases, web servers, authentication systems and CDNs, and we are in the midst of replicating these components by using platforms like Ethereum as the base layer.</p>\n<h2>Challenges of Immutability</h2>\n<p>Unfortunately, a technology that is likened to the early iterations of JavaScript almost certainly comes with challenges, the most apparent of which is related to the immutability of new protocols. Developers cannot change the underlying blockchain or higher-level smart contracts. Libraries or contracts cannot be easily versioned. The recent Parity bug that <a href=https://www.ycombinator.com/"http://mashable.com/2017/11/08/ethereum-parity-bug//">locked 150MM USD in funds</a>, among many other similar incidents, reminds us of the urgent need to build “future-proof” architectures.</p>\n<p>Brandon Millman, an <a href=https://www.ycombinator.com/"http://0xproject.com/">engineer at 0x</a>, described how blockchain immutability affects the way he thinks about security concerns: “Being in this space means being a lot more careful, especially because people&#8217;s money is at risk. Part of the benefit of the blockchain paradigm is that if you&#8217;re holding onto your private key, it&#8217;s hard for people to take money from you, but a lot of scams are getting you to willingly send your money to the wrong place instead of reaching in to steal money from your wallet.”</p>\n<p>Developers, especially those accustomed to the fast pace of the startup world, are forced to consider tradeoffs between speed and security. As Ben Yu of Stream describes, “You have to move extremely fast, because the space is going enormously fast, but you can&#8217;t move fast and break things, which is the traditional philosophy for development being done now. If you break things, you lose hundreds of millions of dollars.”</p>\n<p>Building on the blockchain requires a different level of planning. Developers can no longer apply hot-fixes or overnight patches, because they no longer have centralized control over entire systems. Instead, introducing system changes often involves hard forking entire protocols, or in some cases, providing separate sources for protocol parameters that aren’t tied directly into the blockchain.</p>\n<h2>Ethereum’s Limitations</h2>\n<p>Beyond the general challenges of immutability, Ethereum includes several limitations that blockchain developers might encounter. For one, Ethereum is unable to access real time data from outside the blockchain. Developers need to rely on trusted third party data providers, <a href=https://www.ycombinator.com/"http://www.oraclize.it//">called oracles</a>, to provide smart contracts with outside information like weather, random numbers, or currency values.</p>\n<p>Moreover, Ethereum’s specification prevents real-time computations. Processing of block transactions takes upwards of 15 seconds (which is lightning fast compared to Bitcoin’s 10 minutes). As a result, developers need to write asynchronous code with front-end frameworks that can update states accordingly (like React).</p>\n<p>With Ethereum, you are also tied to paying for your transactions by the operation with gas that translates into Ethereum’s ether. As a result, using the current version of Solidity, you could very feasibly find yourself hitting a transaction limit if the computation you intend to perform is too expensive (like verifying checkmate in a <a href=https://www.ycombinator.com/"https://medium.com/@graycoding/lessons-learned-from-making-a-chess-game-for-ethereum-6917c01178b6/">game of chess</a>). As a result, on-chain computations because become costly in terms of money and network bandwidth. There are interesting alternatives like <a href=https://www.ycombinator.com/"https://truebit.io//">Truebit to perform more intensive computation off-chain.</p>\n<h2>Getting Started</h2>\n<p>In general, it can certainly feel overwhelming getting into this space. It’s an interdisciplinary field, spanning domains of economics, game theory, finance, computer science, math, cryptography, and more. However, that also means that there’s a lot of surface area to contribute.</p>\n<p>Brandon of 0x recommends diving into areas where you have some interest or experience instead of trying to learn everything at once: “If you’ve done JS development beforehand, there are a lot of JS libraries that you can contribute to. While you will definitely need to know [how everything fits together] eventually, you don&#8217;t need to feel like you need to take an entire course initially.”</p>\n<p>In the spirit of decentralization, most of the code for projects on the blockchain are also available through open-source. There are a number of good resources to get your hands dirty:</p>\n<ul>\n<li>The <a href=https://www.ycombinator.com/"http://solidity.readthedocs.io/en/latest//">official Solidity docs</a> are a good place to start. </li>\n<li>The <a href=https://www.ycombinator.com/"http://truffleframework.com//">Truffle Framework</a> is one of the best solidity frameworks. </li>\n<li>See how tokens and token sales are developed in the <a href=https://www.ycombinator.com/"https://github.com/OpenZeppelin/zeppelin-solidity/">zeppelinOS repo</a>, one of the most trusted libraries to build dApps. </li>\n<li>Blockgeeks also provides an in-depth <a href=https://www.ycombinator.com/"https://blockgeeks.com/guides/ethereum-token//">Ethereum token guide</a> with code samples and high-level concepts. </li>\n<li>You can even learn from Crypto Kitties and <a href=https://www.ycombinator.com/"https://medium.com/loom-network/how-to-code-your-own-cryptokitties-style-game-on-ethereum-7c8ac86a4eb3/">create your own digital game on the blockchain</a>. </li>\n</ul>\n<p>In addition, the developer communities are remarkably receptive and helpful. Check out:</p>\n<ul>\n<li><a href=https://www.ycombinator.com/"https://www.reddit.com/r/ethereum//">/r/ethereum </li>\n<li><a href=https://www.ycombinator.com/"https://www.reddit.com/r/ethdev//">/r/ethdev </li>\n<li><a href=https://www.ycombinator.com/"https://blockgeeks.com//">https://blockgeeks.com//n/n

If you learn primarily by coding up your own projects, here are some ideas to get started:</p>\n<ul>\n<li>Build your own wallet. It can be a be a web, mobile app or desktop app. </li>\n<li>Create your own ERC-20 token and deploy it on the test net. </li>\n<li>Modify crypto kitties (dogs, tanks, zombies&#8230;) and deploy it on the test net.</li>\n</ul>\n<h2>Looking Forward</h2>\n<p>In its current state, yes, blockchain development is messy. No, there aren’t clean frameworks and tools analogous to those that exist for modern web development. But why not see the blockchain’s nascent state as an opportunity to impact a paradigm-shifting technology?</p>\n<p>On the blockchain, you don’t need to deploy any centralized servers, which means that there’s no single point of failure. If your whole stack is decentralized, there is no trusted third party involved making it censorship resistant, and your database is publicly verifiable. As the new paradigm offers opportunity to publicly share data, we observe a supreme advantage to decentralizing databases. This is the future we’re building towards on the Blockchain— where information and power are distributed systematically by cutting out the middleman.</p>\n<p><a href=https://www.ycombinator.com/"https://news.ycombinator.com/item?id=16107597\%22>Comment on Hacker News</a>.</p>\n<hr />\n<p><em>Thanks to Ben Yu (Stream) and Brandon Millman (0x) for lending their time to be interviewed, and thanks to Niharika Bedekar, Craig Cannon, Claire Shu for reading drafts of this post.</em></p>\n<!--kg-card-end: html-->","comment_id":"1101697","feature_image":null,"featured":false,"visibility":"public","email_recipient_filter":"none","created_at":"2018-01-09T03:28:17.000-08:00","updated_at":"2022-02-03T16:40:50.000-08:00","published_at":"2018-01-09T03:28:17.000-08:00","custom_excerpt":"If you’re here, we assume that you’re a developer/hacker who’s intrigued by the blockchain. You’re convinced that you understand how it works and now you’re itching to figure out what the blockchain means for you and your developer skill set.","codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"61fe29e3c7139e0001a710cf","name":"Vincent Chen","slug":"vincent-chen","profile_image":"/blog/content/images/2022/02/vincent-chen.jpg","cover_image":null,"bio":"Vincent Chen is a student at Stanford University studying Computer Science. He is also a Research Assistant at the Stanford AI Lab.","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/vincent-chen/"}],"tags":[{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},{"id":"61fe29efc7139e0001a7118d","name":"Paths","slug":"paths","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/paths/"}],"primary_author":{"id":"61fe29e3c7139e0001a710cf","name":"Vincent Chen","slug":"vincent-chen","profile_image":"https://ghost.prod.ycinside.com/content/images/2022/02/vincent-chen.jpg","cover_image":null,"bio":"Vincent Chen is a student at Stanford University studying Computer Science. He is also a Research Assistant at the Stanford AI Lab.","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/vincent-chen/"},"primary_tag":{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},"url":"https://ghost.prod.ycinside.com/building-for-the-blockchain/","excerpt":"If you’re here, we assume that you’re a developer/hacker who’s intrigued by the blockchain. You’re convinced that you understand how it works and now you’re itching to figure out what the blockchain means for you and your developer skill set.","reading_time":8,"access":true,"og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"email_subject":null,"frontmatter":null,"feature_image_alt":null,"feature_image_caption":null},{"id":"61fe29f1c7139e0001a71905","uuid":"15bceaf8-f687-4d2a-b46e-cce465a2103f","title":"Employee #1: Coinbase","slug":"employee-1-coinbase","html":"<!--kg-card-begin: html--><p><strong>A conversation with Olaf Carlson-Wee, Coinbase&#8217;s first employee.</strong></p>\n<p>Employee #1 is a series of interviews focused on sharing the often untold stories of early employees at tech companies.</p>\n<p>Olaf Carlson-Wee was the first employee at Coinbase. He currently runs Polychain Capital, a hedge fund which invests in a portfolio of blockchain-based assets. He is also an angel investor and filmmaker, based in San Francisco.</p>\n<p><strong>Discussed:</strong> The Early Days of Bitcoin, Interviewing at Coinbase, Finding Employees on R/Bitcoin, Scaling Support at Coinbase, Spotting Fraud, Vetting Founders in a New Field, Launching Polychain Capital.</p>\n<p>You can <a href=https://www.ycombinator.com/"http://eepurl.com/cbJZnj/">subscribe to The Macro newsletter</a> to receive future conversations.</p>\n<hr />\n<p><span class='t-orange'>Craig :</span> What are you currently working on?</p>\n<p><span class='t-orange'>Olaf :</span> I actually launched a company yesterday.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] Whoa, congrats.</p>\n<p><span class='t-orange'>Olaf :</span> Yeah, thank you. I don&#8217;t feel like celebrating quite yet because it’s just the beginning but it’s called Polychain Capital, “chain” here referring to the blockchain. It&#8217;s a hedge fund that invests in a diversified portfolio of cryptocurrencies.</p>\n<p><span class='t-orange'>Craig :</span> Man, that&#8217;s wild. Is it a big team at this point? Is it just you?</p>\n<p><span class='t-orange'>Olaf :</span> Just me.</p>\n<p><span class='t-orange'>Craig :</span> And how are you picking the currencies?</p>\n<p><span class='t-orange'>Olaf :</span> So I&#8217;m looking at things like novel uses of cryptography in the protocol. Or is the protocol attempting something that a blockchain has never done before. I&#8217;m also looking at core developer team quality, the developer ecosystem, and asking questions like are there a lot of apps being built on this, with GitHub forks, GitHub stars, and then looking at the community ecosystem. What&#8217;s the size of the forum? How often do people post relative to other forums? Is it an active community? Stuff like that. So part is core analysis of protocol, and part is quantitative metrics surrounding the use of the protocol.</p>\n<p>I’ve launched with five million under management so mostly right now I&#8217;m focused on operationally executing the portfolio perfectly. And then making sure that I&#8217;m tracking the space and developments at the protocol level. Keep in mind, my last day at Coinbase was eight weeks ago.</p>\n<p><span class='t-orange'>Craig :</span> Wow. Did you raise the five in that eight weeks?</p>\n<p><span class='t-orange'>Olaf :</span> Yeah, I&#8217;ve been on the phone a lot. I have this stupid headset that I wear all the time. [Laughter]</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] You&#8217;re one of those guys?</p>\n<p><span class='t-orange'>Olaf :</span> Yeah. It&#8217;s really embarrassing.</p>\n<p><span class='t-orange'>Craig :</span> We’ll let it slide. Ok, so let’s talk about Coinbase. How did you find out about them?</p>\n<p><span class='t-orange'>Olaf :</span> So I wrote my undergraduate thesis about Bitcoin and the larger implications of open source finance in 2011. I was Coinbase&#8217;s 30th user and now we have four million. I literally cold emailed jobs@coinbase and said, &#8220;I love bitcoin. Here&#8217;s my thesis. I&#8217;ll do any job.&#8221;</p>\n<p><span class='t-orange'>Craig :</span> So you cold emailed these guys a document that was like 60 pages long?</p>\n<p><span class='t-orange'>Olaf :</span> Yeah, like 90 pages long. [Laughter] But, to be fair, I clipped the 30 page chapter that was specifically on Bitcoin and cryptocurrency. But yeah, I did. I emailed an annoyingly long and annoyingly academic document.</p>\n<p><span class='t-orange'>Craig :</span> And they responded?</p>\n<p><span class='t-orange'>Olaf :</span> Fred [Ehrsam] replied in five minutes and said, &#8220;Hey, can you hop on Skype?&#8221; That’s when I started learning how things work in Silicon Valley. The pace of things.</p>\n<p>We got on Skype and talked for 20 minutes. Then I got an email from him that said, &#8220;Okay, we wanna do an in-person interview. You&#8217;re going to come to the office tomorrow. I want you to have two finished presentations, 15 minutes each. The first should explain something complicated you know very well. The second should outline your vision for Coinbase.&#8221;</p>\n<p>So I got to work. At the time I was on a road trip and actually was crashing on a friend’s couch in Oakland so the scheduling worked out well.</p>\n<p><span class='t-orange'>Craig :</span> Did you study CS in school?</p>\n<p><span class='t-orange'>Olaf :</span> I majored in sociology so I&#8217;m self-taught on computer science. Though I&#8217;m not a great coder. If I&#8217;m a building a website, I&#8217;m not very good at that. But I do know cryptography pretty well and, in particular, I know game theory well, which is really important in cryptocurrency.</p>\n<p><span class='t-orange'>Craig :</span> Gotcha. So what were your presentations?</p>\n<p><span class='t-orange'>Olaf :</span> Okay. So the first one was on the pharmacological induction of lucid dreams. It is complicated, but it&#8217;s a mechanism to induce lucidity in your dreams. You can control your dream by waking up in the middle of the night and taking an over-the-counter supplement called galantamine, which increases levels of the neurotransmitter acetylcholine in the synapse. Fun fact is that I’ve been writing down my dreams for 11 years.</p>\n<p>The second presentation was on Coinbase and my high level strategy for the company. Coinbase had a lot of problems at that time. When I was applying, there were really bad bugs. Actually, on the first day of my work trial, there was <a href=https://www.ycombinator.com/"https://news.ycombinator.com/item?id=5427985\%22>a top Hacker News post</a> that said, &#8220;My balance is wrong. I lost all this money.&#8221; <a href=https://www.ycombinator.com/"https://news.ycombinator.com/item?id=5245847\%22>Everything was broken</a>.</p>\n<p>My strategy was to clean up PR problems but focus 100% on security. Bad customer experiences will eventually be forgotten but a security incident will not be forgotten. I basically was saying, &#8220;Listen, people want us to move faster than we can.&#8221; I mean, Brian [Armstrong] was literally building everything. I was saying to Brian, &#8220;We cannot hack something together that ends up leading to a security incident. Even though everything is on fire, let&#8217;s do this very carefully.&#8221; And I think that resonated with them.</p>\n<p>But Coinbase, especially in its early days, had a lot of hard tradeoffs between moving really quickly like a traditional startup and operating as a financial institution. Even then we were storing tens of millions of dollars of people&#8217;s money. And of course there were security incidents. Fraud was a big problem. People trying to buy bitcoin with stolen identities. We wanted to give good customers high limits and we we wanted to give scammers low or no limits. There are a lot of hard tradeoffs. I basically took the perspective that we need to be a security juggernaut and any bad customer experiences will long-term be forgotten.</p>\n<p>On the other hand, if you get hacked or you have a massive fraud incident and lose all your money, it’s catastrophic. The main thing is avoid the catastrophic events. And what&#8217;s funny is looking back, that&#8217;s really what Coinbase has done. A big way that Coinbase is the leader in the space is just that we didn&#8217;t get hacked, honestly. We did many things right. But that is honestly the number one thing.</p>\n<p><span class='t-orange'>Craig :</span> Ok, so you do the presentations. Is this to both of them?</p>\n<p><span class='t-orange'>Olaf :</span> This is just to Fred. Fred and I probably talked for 45 minutes–a long time. Then Fred gave me a really brutal mathematics problem and said, &#8220;Okay, why don&#8217;t you figure that out while I go talk to Brian?&#8221;</p>\n<p>So I knew I had at least on some level passed the first part. I knew he&#8217;d walk me out without meeting Brian if it definitely wasn&#8217;t working out.</p>\n<p>Do you want to know the problem?</p>\n<p><span class='t-orange'>Craig :</span> Yeah, absolutely.</p>\n<p><span class='t-orange'>Olaf :</span> Okay. So there are 100 lockers in a row. They&#8217;re all closed, okay? A kid goes by. He opens every single locker. A second kid goes by. Now he closes every other locker, every second locker. Third kid comes by, every third locker. If it&#8217;s open, he closes it. If it closed, he opens it. Then the fourth kid goes by. Every fourth locker, he changes the state. And now 100 kids go by. What is the state of the lockers after 100 kids go by?</p>\n<p><span class='t-orange'>Craig :</span> Oh man, I’d definitely need some time for that.</p>\n<p><span class='t-orange'>Olaf :</span> Yeah, so don&#8217;t try to figure it out because it may take a while. So I&#8217;m sitting there and thinking like, &#8220;Okay, focus Olaf. If Brian comes down and the first thing you have is the answer to this problem, this is gonna seal the deal.&#8221; At least in my head I thought that. In retrospect, that was getting ahead of things a bit much.</p>\n<p>To be honest, I don&#8217;t know what happened but I had this crazy flash of insight and had the answer. And when Brian came back, we started talking through it and I just figured it out way faster than I reasonably should have.</p>\n<p><span class='t-orange'>Craig :</span> Whoa. So what’s the answer?</p>\n<p><span class='t-orange'>Olaf :</span> The answer is perfect squares are open. The reason being, they&#8217;re the only numbers that have an odd number of factors. So the number of factors determines whether a locker is open or closed because that&#8217;s the number of kids that interacted with it. And so the odd number of factors means it&#8217;s open and even number of factors means it&#8217;s closed. And the only numbers that have an odd number of factors are perfect squares like 16, 25, 36.</p>\n<p><span class='t-orange'>Craig :</span> How long were you given to solve that?</p>\n<p><span class='t-orange'>Olaf :</span> Oh, probably like three minutes.</p>\n<p><span class='t-orange'>Craig :</span> Holy shit, okay.</p>\n<p><span class='t-orange'>Olaf :</span> Yeah. It was probably three minutes. I don&#8217;t believe in divine intervention or anything. But that was a time in my life when I had an uncanny flash of insight that I would never pretend I could recreate. But anyway, then Brian grilled me for another hour.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter]</p>\n<p><span class='t-orange'>Olaf :</span> Brian&#8217;s questions were really intense. “What do you wanna do with your life?” “What drives you as a person?” “What&#8217;s a belief you have that is extremely unpopular?” He wanted to really know me.</p>\n<p>I think Fred had gone up to Brian and said, &#8220;Listen, Olaf&#8217;s at least sort of qualified for this. I talked to him. I think he could do the job. Now we need to figure out do we want to actually work with him.&#8221; And Brian went super deep on a lot of really intense questions about my life, what drove me, what mattered to me, why I wanted to do this, all that stuff. And we had a very intense conversation about what it meant to want to do things, what it meant to be a human trying to go about the world.</p>\n<p><span class='t-orange'>Craig :</span> Did you feel prepared to answer those questions?</p>\n<p><span class='t-orange'>Olaf :</span> I definitely had to think about each question but I tend to have a pretty crystallized ideology about the way I think about the world. It changes, but at any given moment, I know what it is. So yeah, I think it was pretty reasonable for me to say, &#8220;Here&#8217;s why I wanna do this.&#8221;</p>\n<p><span class='t-orange'>Craig :</span> Okay, and then how does it wrap up?</p>\n<p><span class='t-orange'>Olaf :</span> They say, &#8220;Okay, great. We&#8217;ll let you know.&#8221; And then they walk me out. I heard back, I wanna say, four days later. They said, &#8220;You should come in for work trial.&#8221; And that was a two week paid trial. I worked really hard because I knew this was the final test. At the end of those two weeks they said, &#8220;Okay. You have a formal job offer.&#8221;</p>\n<p><span class='t-orange'>Craig :</span> What was the actual job?</p>\n<p><span class='t-orange'>Olaf :</span> Customer support. Like I said, I came in and was willing to do anything. I did customer support by myself until we had 250,000 users.</p>\n<p>It was a marathon. It was like 12-hour days of fast replying. And, to be clear, we did not have good support during that time. I&#8217;ll say that as the person who was doing it. You would get an email. It wouldn&#8217;t necessarily come right away. It wouldn&#8217;t necessarily perfectly answer your question. But we were replying. [Laughter]</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] Okay. So then did you become involved in hiring future people?</p>\n<p><span class='t-orange'>Olaf :</span> Yes. So basically what happened was we were trying to hire more customer support people, because it was not scaling with just me. We did four work trials for our customer support people to join me in San Francisco. We rejected all of them. Meanwhile the problem is getting worse and worse and worse, right?</p>\n<p>The delay in replies and the quality of replies is just going down in a bad way. I think at the peak, the average time to reply was five days. And this is a financial institution. It&#8217;s really inappropriate.</p>\n<p>So I got really desperate and I posted a Bitcoin SAT on Reddit. What this was was a test, a Bitcoin aptitude test so to speak. And it had questions like, &#8220;What is the hash of the genesis block?&#8221; That was the first question. And the idea there was if you&#8217;re asking yourself, &#8220;What does that mean?&#8221; this isn&#8217;t the job for you. If you have no idea what that is then get out of here.</p>\n<p>It was a bunch of Bitcoin-style brainteaser-y questions and <a href=https://www.ycombinator.com/"https://www.reddit.com/r/Bitcoin/comments/1oj0l2/olaf_from_coinbase_here_were_building_a_remote//">I just posted it</a> on Reddit’s <a href=https://www.ycombinator.com/"https://www.reddit.com/r/Bitcoin//">/r/bitcoin and <a href=https://www.ycombinator.com/"https://bitcointalk.org//">Bitcoin Talk</a> and I said, &#8220;If you get a perfect score, you get an interview for remote customer support.&#8221;</p>\n<p>And we got like 250 people to take this test. Skip ahead maybe four months. I have 43 people reporting to me in a distributed team.</p>\n<p><span class='t-orange'>Craig :</span> Whoa.</p>\n<p><span class='t-orange'>Olaf :</span> This team covers merchant integrations, API support, anti-fraud investigations, compliance investigations, and did customer support. We now have all of these teams at Coinbase. They mostly came from this one Bitcoin SAT. It was so successful that I posted it a second time at some point and got a new round of candidates.</p>\n<p>It was a globally distributed team. The first person I hired was in New Caledonia. It&#8217;s weird how these things work. Skip ahead two years, he works at Coinbase in San Francisco and is the director of customer support. He’s an amazing guy. He started remote and I remember thinking when we had our first talk &#8211; he had a master&#8217;s in computer science from George Washington University &#8211; and I was like, &#8220;Why do you wanna do customer support?&#8221;</p>\n<p>And he said, &#8220;I&#8217;m in New Caledonia. This is the best job I could hope for and I love Bitcoin.&#8221; And I was like, &#8220;Well, you&#8217;re hired.&#8221;</p>\n<p>And that was when I realized that the remote structure was actually going to work really well. There were hard things about it, but I now feel very confident running remote teams. This was when we were using HipChat–before Slack. Then Slack came out and that helped a lot. And then we had Google Hangouts. Basically the tooling was good enough. Like Google Docs where we can all edit something. The tooling really was good enough, just at that moment. I think if were to try to do this distributed team two or three years before, it would&#8217;ve fallen on its face.</p>\n<p><span class='t-orange'>Craig :</span> So you were managing support but then you eventually ran risk, right? How does that happen?</p>\n<p><span class='t-orange'>Olaf :</span> Yup. So I was kind of managing what was really like the whole operational part of the company and it was really burning me out. This was a year and half of 12-hour days without any vacations. I took Sundays off. We scaled to probably 30 or 40 people in San Francisco before I hired a Director of Support and became the Head of Risk.</p>\n<p>So as Head of Risk the main things I focused on were account security and fraud prevention. It wasn’t like infrastructure security around preventing hackers. It’s user-facing, like they enter their password on a phishing site.</p>\n<p>Basically with security there are two angles: We can get your coins stolen or you can get your coins stolen.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] Right.</p>\n<p><span class='t-orange'>Olaf :</span> [Laughter] So yeah, I was responsible for the latter and anti-fraud, i.e. people buying bitcoin with stolen identities. While I was running support I had a huge part in handling all that stuff. And when fraud had gotten bad in early 2013, I designed the Risk Queue that would review people that we thought were stolen identities. At one point I would review every single buy on the website–one by one.</p>\n<p><span class='t-orange'>Craig :</span> Whoa.</p>\n<p><span class='t-orange'>Olaf :</span> These are things that absolutely don&#8217;t scale, but you can build it in one day and start working on it that day. So Brian built it and I would review every single buy. As a result I started to get an incredible eye for stolen identities. Like I had a sixth sense for whether an account was a stolen identity or not.</p>\n<p><span class='t-orange'>Craig :</span> Can you explain that a little bit? What are you looking for?</p>\n<p><span class='t-orange'>Olaf :</span> Ok, so there are a couple tiers of scammer. Let&#8217;s pretend you&#8217;re a unsophisticated scammer. You sign up. The email you use is Edward.Fitzgerald@whatever.com and the name you use is Laura Johnson. Then the bank account you use is Alexander Smith. Obviously something’s going on there. So big name mismatches are the easiest to spot.</p>\n<p>Then there are patterns. So, for example, scammers would buy dumps–some guy will a hack a site, he&#8217;ll get a bunch of bank account numbers and then he&#8217;ll use them all. And those dumps will often share certain traits. For example, I’d suddenly see like 20 SunTrust bank accounts get added in 20 minutes and they all share certain formatting rules or the email domain is the same, or something like that. So again, it&#8217;s basically pattern recognition.</p>\n<p>But then it gets way more complicated because for sophisticated scammers, their entire job hinges on me looking at something and saying, “that’s legit.”</p>\n<p>And it can mean massive payouts for them. Our limits at that time were 50 bitcoin a day. So, if you could sneak past me, you could buy 50 bitcoin every day until the real account holder called their bank and said, &#8220;I&#8217;m seeing all these crazy charges.&#8221;</p>\n<p>But yeah, I learned a lot very quickly. I learned a lot about traditional payment mechanisms. Before I knew a lot about bitcoin. Now I know a lot about credit cards. And ACH. And bank wires. And all that stuff.</p>\n<p><span class='t-orange'>Craig :</span> Yeah, it sounds like you’ve dug in. I assume not everyone who works at Coinbase now has the same degree of knowledge. How do you scale understanding at a company that is based around something inherently technical?</p>\n<p><span class='t-orange'>Olaf :</span> In the early days, everyone was a cryptocurrency fanatic. The first two engineering hires were these absolutely brilliant people who basically came to Coinbase because they wanted to work on cryptocurrency. And what&#8217;s interesting is a lot of our anti-fraud people are also super into Bitcoin. They&#8217;re not people who worked anti-fraud at Stripe. They&#8217;re Bitcoin people first.</p>\n<p>So yeah, we’d sort of filter for smart people that were passionate about Bitcoin. It&#8217;s my opinion that if you&#8217;re smart you can learn a new skill and all the details. But passion and innate interest cannot really be learned. We tended to hire people who said, &#8220;I love this company. I don&#8217;t quite have the experience.&#8221; Versus people that said, &#8220;I have the experience, but I&#8217;m looking at four other places and maybe I&#8217;ll pick Coinbase.&#8221;</p>\n<p>My belief is that the inexperienced, interested person will outperform the experienced, uninterested person over time.</p>\n<p>That said, when we started scaling we did have to start trading between interest in Bitcoin and domain experience. The person who runs Compliance, for example, can’t just be winging it.</p>\n<p><span class='t-orange'>Craig :</span> What was it that made you want to join Coinbase?</p>\n<p><span class='t-orange'>Olaf :</span> Before I was gonna apply, I read all about the founders. There were a bunch of competitors at the time. The massive market share was MtGox, <a href=https://www.ycombinator.com/"https://en.wikipedia.org/wiki/Mt._Gox/">which ended in tragedy</a>, as you may know. And then like there were bunch of other companies that were bigger. BitInstant, Tradehill, these are all defunct. Every single one of them is dead now. But at the time, Coinbase was like the new little company.</p>\n<p><span class='t-orange'>Craig :</span> Okay, so the underlying question is how do you vet founders in a new field?</p>\n<p><span class='t-orange'>Olaf :</span> Yeah. I have pretty strong feelings on that. I’d say meet them and make sure 100% that you like them, that you could work for them, and that you will run the whole marathon with them. Running a company and scaling a startup is so much stress, so much work. And they&#8217;re gonna be sitting next to you the whole time</p>\n<p>If you don&#8217;t feel like they&#8217;re in it 110% and that you can work with them and be friends with them, it&#8217;s not gonna work. Especially in a very micro team. I mean, once a company is 40 people, that&#8217;s still like a startup but the founder matters for you personally a little less. It does for the company&#8217;s success but not for you personally. But if you&#8217;re joining like a sub-10-person startup you really need to make sure that the founder is gonna drive this all the way. This needs be a grand slam.</p>\n<p>So much of it is about personality and drive. Even if you&#8217;re technically brilliant, there are these dark times. And dark like bad things are happening. There&#8217;s always gonna be bad events.</p>\n<p>You have to ask, are they gonna focus in and just move forward, or are they gonna give up? And it doesn&#8217;t matter if they&#8217;re technically competent if they&#8217;re in the latter category. They could be the best person in the world at this but if at the end of the day they don&#8217;t have the drive and spirit to make this happen, it doesn&#8217;t matter. So to me the technical competency of course is vital. But if you met someone and said, &#8220;Wow, that guy is the number one expert in the world at this,&#8221; but you felt like he&#8217;s kind of flakey. Pass. Always pass.</p>\n<p>With Brian and Fred, they’re two of the smartest, most focused and driven people I have ever met. And I knew that after the interview. I was like, &#8220;These guys are really not fucking around.&#8221; Seriously, it really made me wanna work there.</p>\n<p><span class='t-orange'>Craig :</span> So to your point of the bad things always happening, what were the bad things that happened?</p>\n<p><span class='t-orange'>Olaf :</span> Oh, man. I think in 2013 our user base increased 100x. And the price of bitcoin went up 100x. Our volumes went up I think even more than 100x. You know when people talk about like rapid aggressive scaling? That&#8217;s exactly what it was and a tiny number of us were scaling all of it. At the beginning of that year it was two people. At the end of that year, just eight.</p>\n<p><span class='t-orange'>Craig :</span> Wow.</p>\n<p><span class='t-orange'>Olaf :</span> Brian and Fred are very careful about hiring. They only hire people that they truly think are superstars. At Coinbase one thing that gets said a lot is, &#8220;On a candidate if you&#8217;re not a ‘hell yes’, you&#8217;re a ‘no’.&#8221; If you&#8217;re like, &#8220;I like them. I think they&#8217;re smart. I think they&#8217;re great.&#8221; That&#8217;s a &#8220;no.&#8221;</p>\n<p>You really have to fight to keep that up. You have to feel like if this person does not get hired, we&#8217;re crazy. That&#8217;s how you have to feel for someone to get hired at Coinbase.</p>\n<p>And that early team was really unique individuals. Like, it was the perfect puzzle pieces. But anyway, the scaling during that time was brutal. It was absolutely brutal. And we had bugs that were really bad.</p>\n<p>Here’s the thing, it’s not like having bugs on Twitter where maybe something gets retweeted wrong. When you have a bug on Coinbase, balances are incorrect in what are essentially bank accounts. And transactions that are time sensitive aren&#8217;t getting sent out. The stakes are way higher yet you’re still just five people in a room making the whole thing.</p>\n<p>One time the ACH file we use with banks got duplicated. That’s means that if you bought $100 of Bitcoin we duplicated the transaction so you&#8217;re buying $200 of Bitcoin. When something like that happened I would get a thousand emails in 20 minutes because these are bank accounts and people definitely notice that stuff.</p>\n<p>The one thing that&#8217;s so lucky is we never had an incident where someone gained access to our infrastructure and pulled out Bitcoin from the hot wallet. That was just the blessing. I think even Brian would probably tell you that there were times in Coinbase&#8217;s history that were sort of coin flips. But we survived them. Other companies had incidents like that and had to shut down. We caught things fast enough.</p>\n<p><span class='t-orange'>Craig :</span> That’s funny. It’s exactly the same thing <a href=https://www.ycombinator.com/"http://www.themacro.com/articles/2016/09/employee-1-dropbox//">Aston said about Dropbox</a>. Basically, &#8220;Shit went wrong all the time but the one thing we never did was lose a ton of files.&#8221;</p>\n<p><span class='t-orange'>Olaf :</span> Exactly. This is exactly Coinbase&#8217;s story. In those early days everything went wrong except the one thing that couldn’t go wrong.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] Exactly. So at what point were you like, &#8220;Okay. I&#8217;m ready to do something else?&#8221;</p>\n<p><span class='t-orange'>Olaf :</span> Yeah. So I basically saw what, for me, has been the biggest trend in the space I&#8217;ve ever seen, and I&#8217;ve been in this heads down for five years. People are doing this new behavior where they&#8217;re actually raising capital and issuing what is essentially network ownership of their network on the blockchain. So these are like bits of equity in peer-to-peer networks that are built on the blockchain.</p>\n<p>A crude example here is imagine if an early user of Facebook gets a thousand shares of Facebook. Now, instead of just normal network effects, there&#8217;s also monetary incentive network effects built into this protocol. And these new types of protocols are built on new blockchains or as subtokens of existing blockchains. The opportunity for me was too big to pass up. The trend was too strong. Plus I needed a new adventure. So I left to start Polychain.</p>\n<p>And it&#8217;s only been eight weeks but Polychain has seen a lot of interest because this trend is really strong. I think that over the next year, there&#8217;s gonna be amazing opportunities here. The alternative thing that I could&#8217;ve started is a venture fund that invests in companies built on the protocols.</p>\n<p>But in this new model, there&#8217;s really no place for traditional VCs because the protocol tokens themselves are the issuance of ownership. Not shares on a piece of paper. And as the company wants to raise their Series A, their Series B, their Series C, all that is them holding say 5%, 10% of the protocol tokens and those going up in value as their network becomes more valuable. And then they can sell tokens and become diluted to get liquid cash. It works very well. It&#8217;s a lot of similar mechanics to venture capital fundraising, but they can do it all with this native protocol units and crowdfunding, and there&#8217;s just no place for paper shares or VCs.</p>\n<p>So, instead of betting in companies built on protocol, I&#8217;m actually buying units of the protocol. I&#8217;m buying scarce blockchain tokens and creating a portfolio of those tokens. I&#8217;m basically buying ownership in all of these new 2.0 peer-to-peer protocols.</p>\n<p><span class='t-orange'>Craig :</span> That&#8217;s wild.</p>\n<p><span class='t-orange'>Olaf :</span> Yeah, that&#8217;s why Polychain is a hedge fund instead of a venture fund. Because I&#8217;m holding solely protocol tokens. To a normal person what I’m doing is extremely esoteric.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter] Uh, yes.</p>\n<p><span class='t-orange'>Olaf :</span> It absolutely is. That said a lot of smart people in Silicon Valley think it&#8217;s on that edge where this is going to grow substantially over the next five years.</p>\n<p><span class='t-orange'>Craig :</span> You’re definitely in the right place. Ok, random question. Aside from the Bitcoin readings you recommended, what books do you recommend?</p>\n<p><span class='t-orange'>Olaf :</span> I have a couple that come to mind. So I love David Foster Wallace and <a href=https://www.ycombinator.com/"https://www.amazon.com/Infinite-Jest-David-Foster-Wallace/dp/0316066524/">Infinite Jest</a> is probably my favorite book. His short stories are also amazing.</p>\n<p>Another book that comes to mind is <a href=https://www.ycombinator.com/"https://www.amazon.com/House-Leaves-Mark-Z-Danielewski/dp/0375703764/">House of Leaves</a>. The premise is crazy. So the actual book is a manuscript written by an old man. With annotations by a narrator who has found and reconstructed this book. With annotations by an omnipotent editor. Who is finding the annotations of the person who reconstructed this old man&#8217;s book.</p>\n<p><span class='t-orange'>Craig :</span> Oh my god.</p>\n<p><span class='t-orange'>Olaf :</span> And now this is where it gets even crazier. The old man&#8217;s book is a analysis of a movie that doesn&#8217;t exist.</p>\n<p><span class='t-orange'>Craig :</span> [Laughter]</p>\n<p><span class='t-orange'>Olaf :</span> And the narrator who&#8217;s annotating and reconstructing this old man&#8217;s book is being driven crazy because there&#8217;s so much detail and he can&#8217;t find this movie. And it like actually doesn&#8217;t appear to exist. And the old man, all his sources are fake articles and things. It gets really weird but it&#8217;s much more of a page turner than David Foster Wallace.</p>\n<p>Anyway, I’d recommend both because they&#8217;re super long and once you get into them, they completely consume your brain. They’re my favorite kind of books.</p>\n<p><span class='t-orange'>Craig :</span> Right on. Ok, let’s end there. Thanks for your time.</p>\n<p><span class='t-orange'>Olaf :</span> Sure thing.</p>\n<hr />\n<p><strong>Olaf’s Suggested Reading</strong><br />\n<a href=https://www.ycombinator.com/"https://www.amazon.com/Blood-Meridian-Evening-Redness-West/dp/0679728759/">Blood Meridian</a> by Cormac McCarthy &#8211; Probably my other favorite book along with Infinite Jest.<br />\n<a href=https://www.ycombinator.com/"https://www.amazon.com/Programming-Metaprogramming-Human-Biocomputer-Experiments/dp/0692217894/">Programming and Metaprogramming in the Human Biocomputer</a> by Dr. John Lilly<br />\n<a href=https://www.ycombinator.com/"https://www.amazon.com/Journey-Ixtlan-Lessons-Don-Juan/dp/0671732463/">Journey to Ixtlan</a> by Carlos Castaneda<br />\n<a href=https://www.ycombinator.com/"https://www.amazon.com/Steppenwolf-Novel-Hermann-Hesse/dp/0312278675/">Steppenwolf by Herman Hesse</p>\n<p><strong>Here are three posts that explain the Polychain thesis well:</strong><br />\n• <a href=https://www.ycombinator.com/"https://medium.com/the-coinbase-blog/app-coins-and-the-dawn-of-the-decentralized-business-model-8b8c951e734f#.d9kebtd31\">App Coins and the dawn of the Decentralized Business Model</a><br />\n• <a href=https://www.ycombinator.com/"http://avc.com/2016/07/the-golden-age-of-open-protocols//">The Golden Age Of Open Protocols</a><br />\n• <a href=https://www.ycombinator.com/"http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol/">Crypto Tokens and the Coming Age of Protocol Innovation</a></p>\n<!--kg-card-end: html-->","comment_id":"1096678","feature_image":null,"featured":false,"visibility":"public","email_recipient_filter":"none","created_at":"2016-09-28T03:32:34.000-07:00","updated_at":"2022-02-03T16:45:08.000-08:00","published_at":"2016-09-28T03:32:34.000-07:00","custom_excerpt":"A conversation with Olaf Carlson-Wee, Coinbase's first employee.","codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"61fe29e3c7139e0001a71084","name":"Craig Cannon","slug":"craig-cannon","profile_image":"/blog/content/images/2022/02/Craig-1.jpg","cover_image":null,"bio":"Craig is the Director of Content at YC. ","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/craig-cannon/"}],"tags":[{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},{"id":"61fe29efc7139e0001a71184","name":"Employee #1","slug":"employee-1","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/employee-1/"},{"id":"61fe29efc7139e0001a71175","name":"Interview","slug":"interview","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/interview/"}],"primary_author":{"id":"61fe29e3c7139e0001a71084","name":"Craig Cannon","slug":"craig-cannon","profile_image":"https://ghost.prod.ycinside.com/content/images/2022/02/Craig-1.jpg","cover_image":null,"bio":"Craig is the Director of Content at YC. ","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/craig-cannon/"},"primary_tag":{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},"url":"https://ghost.prod.ycinside.com/employee-1-coinbase/","excerpt":"A conversation with Olaf Carlson-Wee, Coinbase’s first employee.","reading_time":19,"access":true,"og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"email_subject":null,"frontmatter":null,"feature_image_alt":null,"feature_image_caption":null},{"id":"61fe29f1c7139e0001a7150c","uuid":"811bb1bc-a39c-4cdd-a1b0-2bc588106c8f","title":"Coinbase (YC S12) in the New Scientist: Launching instant Bitcoin micro payments off-blockchain","slug":"coinbase-yc-s12-in-the-new-scientist-launching-instant-bitcoin-micro-payments-off-blockchain","html":"<!--kg-card-begin: html--><div class=\"posthaven-post-body\">\n<div class=\"posthaven-gallery\" id=\"posthaven_gallery[573248]\">\n<p class=\"posthaven-file posthaven-file-image posthaven-file-state-processed\">\n <img class=\"posthaven-gallery-image\" src=https://www.ycombinator.com/"https://phaven-prod.s3.amazonaws.com/files/image_part/asset/983881/jB3NSibl69HfBvAZKkNzZw5Oa2E/coinbase_office2-8768d8dc2de699632d457ba51584c71d.jpg/" />\n </p>\n</p></div>\n</p>\n<p>The New Scientist, in the recent magazine edition writes: &#8220;<a href=https://www.ycombinator.com/"http://www.newscientist.com/article/mg21929304.300-micropayments-now-ready-to-slash-price-of-online-news.html#.UhJaxGSBeCg\" target=\"_blank\" rel=\"nofollow\">Micropayments now ready to slash price of online news</a>&#8220;:</p>\n<blockquote>\n<p>The digital currency <a target=\"_blank\" href=https://www.ycombinator.com/"http://www.newscientist.com/article/mg21028155.600-future-of-money-virtual-cash-gets-real.html/">Bitcoin could help. Coinbase, a digital wallet and platform that lets anyone with a US bank account buy and trade Bitcoin currency, announced last week that it is now supporting instant, free micropayments, in Bitcoins, with none of these drawbacks. In a blog post, Coinbase CEO and founder Brian Armstrong <a target=\"_blank\" href=https://www.ycombinator.com/"http://blog.coinbase.com/post/57483182558/you-can-now-send-micro-transactions-with-zero-fees/" title=\"Link: http://blog.coinbase.com/post/57483182558/you-can-now-send-micro-transactions-with-zero-fees\">wrote that Coinbase would start handling small – typically under $1 – Bitcoin transactions</a> &#8220;off-blockchain&#8221;. That means each one wouldn&#8217;t have to go through the algorithmic validation process across the whole Bitcoin network, which can take a few minutes or more, but would instead be sent directly between two Coinbase accounts and validated later.</p>\n<p>These microtransactions could let users read the rest of a <i>New York Times</i>article for a few cents instead of signing up for a full monthly subscription, Armstrong wrote, or &#8220;pay for Wi-Fi internet metered by the minute (or second!) if you just need to check one email&#8221; or &#8220;support your favorite artists or coders with a tip&#8221;.</p>\n</blockquote>\n</div>\n<!--kg-card-end: html-->","comment_id":"595940","feature_image":null,"featured":false,"visibility":"public","email_recipient_filter":"none","created_at":"2013-08-19T10:53:00.000-07:00","updated_at":"2021-10-20T14:34:18.000-07:00","published_at":"2013-08-19T10:53:00.000-07:00","custom_excerpt":null,"codeinjection_head":null,"codeinjection_foot":null,"custom_template":null,"canonical_url":null,"authors":[{"id":"61fe29e3c7139e0001a710d1","name":"Y Combinator","slug":"y-combinator","profile_image":"/blog/content/images/2022/02/1200px-Y_Combinator_logo.svg.png","cover_image":null,"bio":"Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200).\r\n\r\nThe startups move to Silicon","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/y-combinator/"}],"tags":[{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},{"id":"61fe29efc7139e0001a71173","name":"YC News","slug":"yc-news","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/yc-news/"}],"primary_author":{"id":"61fe29e3c7139e0001a710d1","name":"Y Combinator","slug":"y-combinator","profile_image":"https://ghost.prod.ycinside.com/content/images/2022/02/1200px-Y_Combinator_logo.svg.png","cover_image":null,"bio":"Y Combinator created a new model for funding early stage startups. Twice a year we invest a small amount of money ($150k) in a large number of startups (recently 200).\r\n\r\nThe startups move to Silicon","website":null,"location":null,"facebook":null,"twitter":null,"meta_title":null,"meta_description":null,"url":"https://ghost.prod.ycinside.com/author/y-combinator/"},"primary_tag":{"id":"61fe29efc7139e0001a7118f","name":"Blockchain","slug":"blockchain","description":null,"feature_image":null,"visibility":"public","og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"codeinjection_head":null,"codeinjection_foot":null,"canonical_url":null,"accent_color":null,"url":"https://ghost.prod.ycinside.com/tag/blockchain/"},"url":"https://ghost.prod.ycinside.com/coinbase-yc-s12-in-the-new-scientist-launching-instant-bitcoin-micro-payments-off-blockchain/","excerpt":"\n \n ","reading_time":1,"access":true,"og_image":null,"og_title":null,"og_description":null,"twitter_image":null,"twitter_title":null,"twitter_description":null,"meta_title":null,"meta_description":null,"email_subject":null,"frontmatter":null,"feature_image_alt":null,"feature_image_caption":null}]},"url":"/blog/crypto-evolution","version":"aa5cc48c512ec693ec60765a0397dfe59cf5da82","encryptHistory":false,"clearHistory":false,"rails_context":{"railsEnv":"production","inMailer":false,"i18nLocale":"en","i18nDefaultLocale":"en","href":"https://www.ycombinator.com/blog/crypto-evolution","location":"/blog/crypto-evolution","scheme":"https","host":"www.ycombinator.com","port":null,"pathname":"/blog/crypto-evolution","search":null,"httpAcceptLanguage":"en, *","applyBatchLong":"Summer 2025","applyBatchShort":"S2025","applyDeadlineShort":"May 13","ycdcRetroMode":true,"currentUser":null,"serverSide":true},"id":"ycdc_new/pages/BlogPage-react-component-4674e023-b7d1-4ab1-80ba-bfba8417ab0e","server_side":true}" data-reactroot="">