Coinbase Smart Wallet and what it means for web3 UX

Transcript

say goodbye to seed phrases on June 5th coinbase launched their revolutionary smart wallet imagine a simple onchain experience that even your mom could use just like apple revolutionized the phones in our pockets coinbase is revolutionizing how we manage invest and send our money now thanks to onchain Summer which started this week the term onchain will be on everyone's lips coinbase isn't just promoting themselves they're educating the world about crypto which lead us to the question of the day is coinbase the best investment in crypto right now we think it might be and today we're going to build the case for why GM good morning welcome to milk Road radio the easiest path to get

smarter about crypto I'm Jay Hamilton joined by Kyle readhead and we believe that onchain is the next online and we're here to help you capitalize Kai on June 5th coinbase announced and launch La their smart wallet could you break this down for us and elaborate on what from this smart wallet got you excited yeah so let's start with the problem the problem in crypto really is the ux right I mean there's two problems one is we don't have enough use cases that people actually want to use if we think about when the internet first started the ux through the internet was even worse than crypto yet people still used it once we had the use cases for it so I actually think that's the biggest problem people always mistaken say it's ux I don't

think it's that but ux is obviously a really big problem for people using it right now and we have wallets metamask coinbase wallets bunch of others and they're okay right you have to you know you download them as your browser extension or some of them are an app you have these like seed phrases that just don't make sense to most people not even Crypton native people I think they're just ridiculous and you got to sign these transactions you need to like make sure there's money on the wallet first you have to have if you want to trade usdc you need eth in your wallet like it's just it's weird right it doesn't make sense and coinbase has noticed that one of the really cool things that coinbase has done over the last few years is they built this wonderful company this exchange and they were like

how can we get this exchange to grow well we need more people on chain right and so the way that they decided to do that was well let's go build on chain and so they launched Bas and they launched base one because they wanted to have a chain that they could build apps on but more the reason they did it was they wanted to figure out all the biggest problems for users for developers Etc and the thing they realized the most when they launch base was the wallet us absolutely sucks to try to onboard someone new into crypto is so damn difficult and confusing and just weird even for Crypton native people and so they set off to build something new now they already have coinbase wallet which is similar to metamask little bit better ux but like not a 10x Improvement which is what you really need here and so what

they launched today as we're recording which was called what's the name of it again I guess just smart wallet coinbase smart wallet yeah it's different than coinbase wallet it's not the same thing this coinbase smart wallet is I mean it's a bunch of things it's essentially an embedded wallet that can go inside of any app so we've talked a lot about privy on the podcast kind of a while ago if you think of like friend Tech if you've ever used that they have an embedded wallet where similar to the web 2 like ux where when you go to create an account inside of friendtech when you create that account with your email or whatever a wallet is just automatically created for you this is what a smart wallet is it's the same idea the difference with what coinbase has just done is it creates this account for you

but it does it with like using features in your actual Apple device or Google device where it's like I created a smart wallet this morning and it made it based off my my I scan which is how Apple tends to create a lot of accounts so same thing it made it that way it embedded it right in the app and I could immediately mint I was minting the coinbase nft to celebrate this smart wallet and so it took me two seconds to make this wallet there's no seed phrases it does it based off my I scan and it's gasless so you don't actually need to load with any crypto so it's gases in the sense that apps can decide if they want to cover gas or not it's on base and if you use base you can send assets for free which is really cool and then

what's really amazing about this that privy and some of the others don't have is I can now take that embeddable wallet and I can use it in other apps that also host the same uh coinbase smart wallet and so I have this wallet that I create through my I scan or an email or whatever I want inside the app that I'm using I don't need to leave the app to go like download metamask or whatever it's just just in that moment takes two seconds and then I can take that with me to other apps when other people ask me to Mint things or do things on chain and then what's also really cool is I can then connect it back to my coinbase wallet or to my coinbase exchange the account that I have on my centralized exchange and so what they've done is created this like I don't even know how

to explain it yet I feel like it's still so new so I got to figure out the best like examples to give but basically it's like creating an account in like a web 2 fashion but then it can move with you to any application and then connect to all the existing wallets and the existing centralized exchanges accounts that you have so you can fund it you can make payments from others you don't have to sign transactions it's an amazing experience I recommend anyone who is listening to this right now to go try it because it's unlike anything you've used in crypto so far and what's amazing is it's coinbase who launched this so they're about to push this to their 10 million active users they have on coinbase Exchange and their millions of users they already have on coinbase wallets so I think this is a really

really big deal and it couldn't come from a better company because they're the ones that are going to market the most and get it out there so I think this is a I don't want to call it a Broadband moment for crypto uh but obviously you know moving from ethereum to layer twos and plus salana was a Broadband moment for crypto because now we could have very very cheap transactions but now with the smart wallet we can have onboarding to those cheap transactions very very easy plus we can have no gas needed no signing needed because it's so cheap that companies can just cover that gas for you so it really completely flips the ux of crypto on its head and I think we'll see this really take off in the coming months to years so clearly you're very bullish on the new smart wallet which

they just announced today now a week ago you put out a tweet saying that you believed that coin coinbase is shares which is not a token just to be very clear it's a an equity that you would buy through a you a typical Stock Exchange you said was one of the best investments in crypto why yeah I there's so many reasons why I think the first is this I when I look at coinbase I see it as sort of two things it's big Tech think like your Apple your Google whatever and then it's also your big Bank all in one and it's kind of converging to be both and I think coinbase can actually become one of the biggest companies in the world in the next few years if crypto does what I think it's going to do I say that it's big Bank pretty obvious because right

now it's an exchange but it's also becoming a place where you do all the things you need with your money you can put your Fiat in there you can do things with Fiat and then you can also put your crypto in there and do things with crypto right and whether that's done in the coinbase app or moved over to base and done on chain doesn't really matter regardless coinbase is the one that controls that ux and generates the revenue from it and so you could look at coinbase and value versus other Banks whether that's you know some of the biggest banks in the world you could value vers those those are worth like hundreds of billions of dollars in terms of market cap coinbase I think is I'm not sure exactly what is right now but below 100 billion so in terms of just valuing against Banks it's got a lot of

room to grow there but then also see it as big Tech because it's what is enabling this whole new crypto world the onchain world right whether that be through bass again or through its wallet or through its various other products that it has it has coinbase Commerce it has wallets it has smart wallets it has its own chain it literally controls so much of the ux of crypto and it reminds me a lot of apple with the internet if you think about when the internet started to take off it really became a possibility because of one computers and because of mobile devices right as those became more usable and a better experience people could access the internet better but then when it really took off is when your experience to download music or to browse the web was all under the same brand and so if you

think about what happened in like the early 2000s you had an Apple computer right and you used Safari to get onto the internet and then you used iTunes to download music and then you put that music onto your iPhone when that became a thing before that it was the iPod and so it was like it was all the same brand so the ux was controlled by one company and it made it just so easy for consumers to like figure out how to navigate the internet that is the one of the biggest problems I think we have in crypto right now is it's a different brand for everything you want to do a different website for everything you want to do coinbase seems to be kind of honing in and like becoming the ux that controls it all right you can take your Fiat put it in coinbase turn it into

crypto and then you can use their wallets you can use their chain and like you can basically use the coinbase or base ux the whole way through it's still ear early days for that but I think that's the route they're going and so I see coinbase as being big Tech Plus big bank so that's one reason the second reason I'm so bullish on coinbase is to me they're like the most Diversified play in crypto so there's a big debate right now is ethereum going to be the main smart contract platform that wins is it salana is it going to be Bitcoin if they start to build l2s and so you could either invest in all three of those or do you know who wins regardless of whichever one of those wins coinbase whatever we end up doing on chain coinbase is the ux to bring an onboard

people there and they are going to be the way to get your Fiat onto crypto especially if you're in the US and they're also moving to other jurisdiction so to me it's like if you don't know who's going to win salana eth Cosmos Bitcoin you just buy coin and it's going to win regardless and so I think the big Tech the big bank and then just Diversified play to me makes the most sense and then also I guess for a lot of Institutions a lot of Boomers who want to invest in crypto and they don't know how to do it on chain just yet well they can start with either the ETFs or they can start with coin and I think a lot of Institutions are going to love that coin has real revenues it's an actual company they understand and so I think a lot of people a lot of big

institutions anywh are going to go well I get that crypto's the next big thing but I still don't really understand what Unis swap is or what cow protocol is or whatever and I don't understand staking I don't understand this but I understand a business and coinbase seems to be the leading business in this space and it's in the US and it's already public and so it's just got so many things that so many narratives that it can run with and so many fun mental reasons why it can do really well as well and so I mean I've been calling coin since it was at I bought it at $38 which was near the very bottom one of my luckiest bets I think I've ever had and one of the best investments I ever had but we put it out in our newsletter in the Pro report when

it was below $60 again when it was below $80 it's currently at 20 I don't know $40 or something like that um 248 yeah and I think it's still has I mean it's not even near all-time highs yet and I think it's still got a ton of way to go so I think for a long term bet in crypto it's one of the easiest ones you could do and you could do it in your like taxfree savings account so like who doesn't want that yeah following up by you said earlier below a 100 billion market cap 61 billion market cap for coinbase so still so small super bullish now you made a comparison between Apple and coinbase another thing that apple and coinbase have in common not only they great at building ecosystems they also

have the best marketing teams in the world and they're suppor by multi-million doll budgets let's just talk a little bit about what's the impact of coinbase's multi-million dollar marketing campaigns on the crypto space and the broader Community is at large yeah good question one of the things I think that's actually key for the listeners to understand is if you don't really know the history of coinbase they have been in this space building since I think 2012 maybe 2011 when it was just Bitcoin there was nothing else so they have been through the whole thing so if there's one company in the world that knows crypto more than any other company it is coinbase and that team has gone through three Cycles right three massive crazy

cycles of crypto they have built and shipped products through all this at one point we thought everything would be built on bitcoin then we had like colored coins which were these random Forks of Bitcoin and they kind of navigated that then ethereum came and they navigated icos and what was going to happen with smart contract platforms then we had all these other layer ones that came out and it's just consistently navigated this and just shipped products that have just stayed ahead of the curve of crypto and so um one I think Apple has done the same so I think that's one big comparison there and then I think as you said especially now that they've ipoed they've got a ton of capital they have so much money plus they make like I don't know I think they made $1.8 billion dollar last quarter so like

these guys have tons and tons of money and they have an done an incredible job at marketing using that money to like help people understand what the heck onchain means I mean we say it before every episode onchain is next online that line was created by Jesse Pollock who is one of the big people in coinbase that launched base so these guys have just like all they do is think about how can we onboard more people on chain which was exactly what Apple did how can we get more people online and using the internet uh and so there's just so much comparisons there and so one of the things to understand is they want to bring people on chain because the more people that hold assets the more people will trade and then they make more money through their exchange right plus I mean

they make revenues from a bunch of different ways so by launching bass yes they've made a ton of money from from Bas the L2 that wasn't their original plan it was actually just to figure out how to get more people on chain and so now they have all this marketing dollars that go to onchain summer which they're starting right now if you've seen the videos that they put out commercials I think in the NBA Playoffs they've obviously had commercials in the Super Bowl these are all ways of helping more people understand why onchain is more important they do a lot of talk around stable coins as well and help people understand and wrap their heads around that use case so there really isn't other any company in crypto that has this kind of marketing budget I mean binance is bigger than coinbase but like they don't really do much to like try to

proliferate crypto through the mainstream coinbase is like the company doing this right now circle is just starting as well and I think that just can't be understated I think it's massive for the whole industry but obviously coinbase is going to find ways to to capitalize on that yeah and you mentioned well first of all I just have to say that all I've seen from binance is another nft project with Cristiano Ronaldo which come on we don't need that that's for sure that's not helping at all but you mentioned Jesse and Jesse and the team have been cooking over at coinbase and base just launched onchain summer the second round of onchain summer this year onchain summer is three months long just think about that for a second that's three months of daily

onchain activity that's three months of them being on billboards doing events this is IRL this is digital this is a crossplatform you're going to see the words on chain summer everywhere I mean particularly if you're in the US but everywhere for the next three months and that starts to make a difference and gets more people into the mindset for those that don't know onchain summer is a marketing campaign that coinbase does they did this when they launched bass last summer and basically was like every day they highlight a different project different protocol or a different Creator and they just do a good job of like kind of proliferating onchain use cases and they're doing it again this summer they've said that they're going to do this every summer um and so as Jay said it's three months of just like a

blitz of teaching people about onchain and experimenting and innovating and bringing more developers in and it's like it's a massive boost to the ecosystem I think you'll see base do really well over the summer because they they they use incentives to bring people in they use marketing they use so many different tactics and so I think we we'll see it in in in bases results well and and the evidence came last year let's remember onchain summer was really only maybe it was like six weeks last summer I can't remember exactly how long it was but two big apps that exploded as a result of onchain Summer first was parallel the game absolutely exploded during onchain summer and then the second was friend Tech which did so well now right now is build month is part of archain summer so if you're a builder

you can go and sign up for build month and they have base has $2 million in prizes in Grants and op has committed 600,000 in op tokens which is worth about $1.5 million in op grants because why Bas is on the super chain and they want to support anybody that's building on the super chain I think the thing to keep your eye on the most if you're trying to understand like what is the thing that coinbase is going to do that's going to onboard so many people on chain it's going to be through payments and we talked about the wallet experience already how you can use coinbase to get your fee out into crypto then move it on chain into the coinbase wallet or now the smart wallet one of the things they actually launched I think it was this week as well was the ability to send transactions via

text so basically in your coinbase wallet today you can send over a 100 different tokens and you can do it by you basically it creates a link Auto creates the link for you and you can just text it to someone and someone just clicks on that link they can either sign into their wallet or they can create a coinbase wallet and boom they can accept that money and this ux is when people complain about crypto ux if you think about any other way to do this think of if you want to send someone money around the world if you're in the US for example and you have a venmo account okay you can do this as long as they have a venmo account but if I'm in Canada right now well actually I'm in Nicaragua right now but I'm Canadian so I don't have a venmo account I can't

tell you how many times Americans go I want to send you money do you have venmo and I'm like no I'm not I'm not American and so they can't just can't send me it they have to then like I have to go and create a PayPal account and then they have to move their money from venmo over to PayPal and then they can send it to me PayPal they pay 3% like and then for me to get that money from PayPal out into like my bank account cost me 3% as well if not more so it's an absolute pain in the ass and that's an one of that's an easy scenario Canada US is not that bad now think about someone in Russia or whatever else right that doesn't have access to PayPal so if you think about this now you have a self- custodial wallet anyone can download

this in one second to any device you want does not matter there's no kyc needed there's no permissions there's no anything you just can download it and now I can just send it to you through WhatsApp or text you it and you can get your usdc right away and it's free there's no cost to do this this I think is going to be one of the most like exciting things in the space because it is so much better than trafi rails is so much better than what we do in web 2 not to mention that is just transfers from one person to another Merchants I think this is massive coinbase already has like coinbase Commerce where you can like pay employees and buy things using this and again no fees if you're using bass if you're using usdc and I think

they're going to double down on this even further and so transfers from person to person and then payments for products and things digitally I think they're going to go after that using usdc because they also own a stake in circle the provider of usdc and I think you're going to see them really peripher the idea of using stable coins as payments and transfers and I think this is just going to make it so easy for US dollars to just circulate around the world and it's going to be free for everyone and accessible to everyone and I just I don't know how like I don't know that people have wrapped their heads around how big this is there have been this has been the promise of crypto for a long time but it's been very hard to actually like execute and make this ux good but with the combination of usdc

Base coinbase wallet and coinbase exchange they have the full ux it is free for everyone to use this and accessible for everyone to use this and I think it's just like it's unheard of so I think they're going to just nail that over the next little bit well and you mentioned kyc and let's I think for a lot of us people might say oh well no big deal if you have to kyc maybe you don't want to kyc but at least you can but let's not forget there's three billion people in the world who can't kyc they do not have a government identification that will allow them to kyc and those are the people that need dollars the most right they have infl currencies or don't have bank accounts exactly and those are the ones that are

going to be using this now the other thing that you mentioned is it is not only is this I think a lot of people look at say okay great I'm going to send money from my coinbase wallet to somebody else that also has a coinbase wallet but here's the great thing you're sending this over text so I could send this to my mom who has never used crypto before in her life she would get a text with a link that would explain to her and take her through the simple steps to receive the money into a wallet that she can go set up and now that's with smart wallets where they don't even need to know about seed phrases and it just scans their eyes like they do with their phone so and then I just want to go back to the very beginning where we talked

about the opportunity of coinbase in terms of valuation I said you you can compare it to Apple which is what A2 three trillion dollar company you could compare it to the big US Banks because coinbase is obviously in the US which are like hundreds of billions of dollars in valuation but what we just explained is bringing the unbanked and giving them basically a bank account but in crypto form and that is a a total adjustable Market of8 billion people right the US Banks their total adjustable Market is a 360 million people however many people are in the US that's it they don't get to go to the rest of the world what coinbase is building is a bank for the entire world that is a 10x Improvement versus every other bank that exists in the world and so you think about how big

this company could get and it is just so exponential from here and I think a lot of people are sleeping on this now I want to be clear this does not happen in the next year okay or the next two years it happens over the next decade and so coinbase is one that I think does really well in the short term here with the the crypto cycle we're in as we talked about was that yesterday but as a long-term bet I think coinbase is one of the most exciting equities that you could possibly invest in right now Kai thanks so much for joining us today and breaking down the bull case for coin everybody stick around for in case you missed it on today's news before we jump into today's news I want to tell you guys about a great opportunity for anybody that is looking to Market and

reach crypto natives milk road is currently looking for sponsors for Q3 for our newsletter which goes out to 300,000 of the finest folks in crypto every day click the link in the show notes there's a form you can fill out and somebody from our team will get in touch to tell you all about the opportunities to sponsor milk road now in case you missed it the IRS is letting FTX off the hook with a 99% tax reduction initially the IRS claimed 44 billion Tax Claim for FTX which was later revised down to $24 billion now under

this new proposed settlement FTX would pay the IRS just 200 million upfront and then an additional 685 million as a junior subordinated claim contingent upon Court approval also wck brands has launched a share claim program for wrecked nft holders becoming the first project to offer equity to nft Holders through a regulated Us distribution process by granting equity on chain W Brands is setting a new standard for nft projects demonstrating how they can provide tangible value to their communities finally Dapper Labs the company behind NBA topshots nfts has

reached a $4 million settlement in a class action lawsuit alleging their nfts were unregistered Securities the settlement suggests that NBA top shot nfts are not considered Securities Dapper Labs has maintained that the nfts exist on a decentralized network the flow blockchain slim are to trading cards and are not under their direct control a big win for daffer labs thanks so much for listening in everybody we'll see you tomorrow thank you for listening to milk Road radio the easiest path to get smarter about crypto if you like this episode share it and hit subscribe or follow so you don't miss out on the next one there's also a link in the description to our free five minute daily newsletter where we simplify

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