The first version of Coinbase launched with just a hot wallet - a risky proposition. We were in beta and the app prominently told people not to store any money there they couldn't afford to lose. But the amounts of deposits kept steadily rising.
I realized we needed to build build a cold storage system to improve security (otherwise a single hot wallet breach would mean we were insolvent and the company would die), and called the two cryptography/security experts I knew (@zooko and @octal if memory serves) and asked them what the best architecture would be. They were super helpful and gave me a crash course, since I had never built such a system before. I asked them how long it would take to build and I remember one of them said it might take a team of ~10 people 18 months to get it all up and running and tested.
The problem was we had about 8 weeks until the total deposits on the platform would exceed the total assets of the company, and only 2 engineers (including myself) to build it. We were seeing signs that hackers were already trying to break in, a true do or die moment.
@satoshilite and I buckled down and set about coding the new cold storage system from scratch, and integrating it into the app. We made some reasonable trade offs but what we came up with was fundamentally secure, and a massive improvement. We even unboxed some new laptops for key generation, stored backup material across several safe deposit boxes and locations. With about a week remaining, we started the process of transferring funds over to the new system. We were both extremely sleep deprived (how mistakes happen!), and paired up to double check each others work as we sent over the first test transaction, then a bigger one, and so on until it was fully transferred. We breathed a sigh of relief and went home to sleep for about 12 hours.
This was one of my proudest technical accomplishments from the early days of Coinbase: coding our v2 key storage system with 2 people in about 8 weeks, which should have taken 10 people 18 months. And it worked and served us well for years.
We're now on ~v5 of key storage, and have advanced way beyond what we came up with that day. But if we hadn't gotten it out in time, Coinbase very well may not exist today. It's a great testament to how constraints breed creativity, top talent matters in startups, and teams are often capable of more than they think when there is no other option.
Most products which succeed have early moments like this, where someone has to step up and make a play on the field that defies all the odds. As we face new challenges and deadlines across our many products, I always look out for who on the team is ready to step up and make the game winning play on the field.
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1/ I'm sharing the 10 ideas I'm most excited about in crypto right now. If you're building something in crypto or thinking about doing so - check it out.
We’re building lots at Coinbase, but we don't have time to tackle everything. So I figured I'd share these. Bear markets are the best time for building - why not start today?
2/ We’ll be hosting our inaugural @cbventures summit in Malibu, CA this October where we’ll bring together a small group of builders to discuss these ideas and others. If you already have a startup, or would like to create one, you can apply here: cbvsummit.com
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
2/ Two years ago the SEC reviewed our business in detail and approved Coinbase to go public. Our S1 clearly explained our asset listing process and included 57 references to staking. Coinbase runs a rigorous asset review process and has rejected more than 90% of assets that have… twitter.com/i/web/status/1…
3/ While we understand that this is all part of the journey to reforming our financial system, we are right on the law, confident in the facts, and welcome the opportunity for Coinbase (and by extension the broader crypto community) to get before a court.
1/ @PatrickMcHenry and @RepRitchie have reintroduced the Keep Innovation in America Act, which would clarify crypto tax reporting requirements so that they work with digital assets.
2/ We’re grateful this is a bipartisan effort, and we hope it’s the first of many bills to come this year that will protect consumers and provide clarity on the regulatory environment for crypto.
3/ I recently wrote about how the US is quickly falling behind on defining clear and fair rules, that protect consumers and enable innovation: cnbc.com/2023/03/01/op-…
1/ Today, Coinbase is launching @BuildOnBase, an Ethereum layer 2 that will help improve scalability and usability of crypto, so we can bring economic freedom to 1B+ people.
@BuildOnBase 2/ Base is a platform for developers to build the next generation of decentralized apps in the cryptoeconomy.
It is designed as a secure, low-cost, developer-friendly platform that enables anyone, anywhere, to build.
3/ I wanted to get in on the builder energy, and opened the pull request on github that adds Base to the broader ecosystem of chains
I’m in Washington D.C. and had a meeting canceled. Will be at the Dirksen Senate Office building snack bar for the next hour or so, if anyone wants to come chat about crypto and how we get crypto legislation + regulatory clarity this year.
Woah soft serve ice cream. Tempting. Need more low sugar options though, this place is carb central. twitter.com/i/web/status/1…