On March 9, 2020, the Dow Jones Industrial Average dropped a record 2,000 points amid fears over oil prices and the Covid-19 pandemic that had begun to consume the world. Three days later, the Dow fell another 2,350 points, and the following Monday it lost 3,000 more. It was a once-in-a-century financial calamity, and nothing in the market was spared—stocks, bonds, commodities, and even precious metals suffered a dizzying plunge.
So did bitcoin.
Its price dipped below $5,000 on March 16. Only weeks before, the currency had sat above $10,300. Crypto haters gleefully pointed out that, far from being a superior form of gold—something traditionally coveted to protect against financial shocks—bitcoin had choked in this critical moment.
Then, as it did so many times before, bitcoin came roaring back. By June, the price topped $10,000 again, and the original cryptocurrency was posting a better 2020 performance than gold and nearly every other asset. For those who had owned it for years, the episode was yet more proof that bitcoin was the honey badger—able to take any beating and emerge even stronger. Coinbase, meanwhile, rode the volatility to trading riches on the scale of what it enjoyed during the peak of the 2017 bubble.
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In San Francisco, Coinbase’s founder waited out the pandemic in his penthouse in the city’s tallest building, where his neighbors included NBA star Kevin Durant and other members of the Golden State Warriors. Brian had grasped the implications of the Covid-19 crisis early, and Coinbase’s work-from-home blueprint had been shared widely among companies in the Valley and beyond.
But he was hardly the first from the crypto world to warn about what was coming as coronavirus emerged—that designation belonged to Balaji Srinivasan, Coinbase’s former CTO who had almost burned the company to the ground in order to save it.
Months before the virus hit the United States with full force, Balaji had been tweeting like a maniac about the disease spreading out of Wuhan, China. His campaign led a tech journalist to mock him as “bubble boy” and, upon being vindicated, Balaji did not respond with quiet satisfaction. Instead, he embarked upon a ruthless grudge match against the media and egged on others to do the same—underscoring how the crypto world, and the Valley at large, has a knack for fostering people with wealth, brilliance, and incredibly thin skin.
The broader crypto community responded to the economic fallout from the disease with—what else—memes. Twitter handles, websites, and other corners of crypto land all adopted a version of the moniker “Fed go brrr,” a snarky nod to the US Treasury’s mass money printing during the crisis. Many showed the slogan alongside of a bureaucrat cranking out dollars from a printing press.
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By 2020, the early team that had helped Brian built Coinbase had long since scattered to other ventures, but nearly all remained immersed in crypto. This included the company’s second employee, Craig Hammell, who took up a deep study of bitcoin’s code as part of a plan to use crypto to help impoverished communities. Employee number three, Charlie Lee, had given himself over to creating new privacy features for Litecoin, the bitcoin rival he had created a decade before.
Olaf Carlson-Wee, who had arrived to join Coinbase with lumberjack sap on his clothes and only a friend’s couch to sleep on, had transformed from jester to king. His crypto hedge fund, Polychain Capital, had moved from improvised, ramshackle offices in San Francisco’s Mission District to a palatial suite of offices on the city’s waterfront. It’s hard to avoid such trappings when you control more than a billion dollars of investor funds. But Olaf refused to renounce his eccentricities entirely, dedicating nooks of his corporate palace to his literary hero, David Foster Wallace.
Olaf was not the only early Coinbase vet to undergo a transformation. Adam White was the earnest Californian who had tried to sell old-money powerhouse Cantor Fitzgerald on bitcoin in early 2017, only to be laughed out of the room by a phalanx of Wall Street guys. Three years later, he was a Wall Street guy himself. As president of Bakkt, the New York Stock Exchange’s crypto venture, he had become one of the most prominent faces of bitcoin in the traditional finance world. In doing so, he and Coinbase had helped bridge what was once a grand canyon between Silicon Valley and the East Coast financial establishment.
Coinbase alumni were not only spreading the crypto gospel to Wall Street, but to Washington, DC, as well. The company’s chief legal officer, Brian Brooks, would come to lead the Office of the Comptroller of the Currency, which oversees the country’s banking laws. Meanwhile, two other Coinbase lawyers, Dorothy Dewitt and Andrew Ridenour, would take roles at the CFTC, the nation’s powerful commodities regulator.
Their arrivals coincided with a growing realization among some regulators and members of Congress that crypto was not simply a front for crime and chaos, but a powerful technology that could transform money. Slowly, the federal government’s antipathy to bitcoin is lifting. Meanwhile, some states are working to welcome it. These include Wyoming, which has passed a series of banking laws that encourage crypto companies to set up shop.
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All this doesn’t mean crypto has lost its outlaw side, of course. A report revealed that scammers took in a record $4 billion in 2019 as a result of crypto hustles, most notably through Ponzi schemes. On social media, the scams became so bad that crypto firm Ripple filed a lawsuit against YouTube over a series of send-us-your-money videos that hijacked the image of its CEO Brad Garlinghouse. Meanwhile, teenagers would hack into Twitter in July of 2020, hijacking the accounts of everyone from Brian to Elon Musk to Michelle Obama in order to invite their millions of followers to send bitcoin. And, in the fifth season of Billions, the Showtime series beloved by finance junkies, a key plot point turns on an illegal bitcoin mining operation run by the main character’s teenage son.
Overall, though, bitcoin’s reputation is better than it’s ever been. This is reflected in the mainstream news media, which for a long time ignored crypto stories unless they involved something criminal or salacious. Today, a typical headline is more likely to focus on news like the VC fund Andreessen Horowitz’s new $200 million crypto fund, which was launched in April 2020 and is overseen by former prosecutor turned Coinbase board member, Katie Haun.
And while Wall Street and Silicon Valley continue to move to meet each other in the middle with cryptocurrency, some of the old rivalries still flare up. As late as May of 2020, slides from a Goldman Sachs presentation to investors sneered at bitcoin, comparing it to the tulip bulb mania and pointing to its use by criminals. Crypto Twitter shot back immediately, pointing to examples of Goldman’s sketchy business dealings and reminding the bank of its abortive attempt to set up a crypto desk of its own, staffed by a pair of young executives with ill-advised man-buns.
Battles between bitcoin believers and analysts at firms like Goldman Sachs are likely to be a permanent part of crypto culture, it seems. That culture, lively as it is, also continues to suffer from an ongoing inability to bring women into its fold. Nathalie McGrath, Coinbase’s early head of people who founded a boutique firm dedicated to helping startups with corporate culture, observes that crypto needs “more diversity and representation to truly thrive”—a challenge that is likely to become more pressing as inclusion and social justice issues move to the forefront of US society.
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Making predictions about crypto can be hard, especially since those who do are so often wrong. Many people have wrongly predicted bitcoin’s demise, while a good number of others have made equally off-the-mark assurances about the digital currency hitting $100,000 before long.
But one of the better predictions comes from Coinbase cofounder Fred Ehrsam. By 2020, Fred has lost most of his hard-charging “run through brick walls” demeanor, while taking up activities like vipassana, a silent meditation technique. He describes one ten-day retreat that obliged him to reflect without talking, paper, or possessions. The process led him to ruminate about life and ideas that would change the world, and most particularly about crypto.
“The hardest part about getting a new network effects-based technology is the start, and crypto seems to have overcome that initial inertia,” says Fred. “The next twenty years, much like the internet, is likely to awe us in ways no one can predict.”