About a month ago, I was talking with one of my best friends about the state of crypto. He was actually one of the first people that I ever talked about Bitcoin and Ethereum with back in 2017. I remember it vividly, we sat in his living room and talked about all the different things that smart contracts could enable someday. It was a light bulb moment for both of us. Yet it was pre "DeFi", pre "NFTs", pre a boom in self-custody wallets, pre much of what we know today to be "crypto". At that time it was mostly guessing how the technology could evolve. Similar to how we do today, but with much improved networks, applications, and UX. We still have a long way to go, I don't think many would disagree. Yet what we're seeing are the budding seeds of a new technology with highly disruptive potential. That doesn't mean everything will succeed, just as most internet companies from the 90s didn't succeed. What does succeed, however, I would bet that it's transformational.
So how do we onboard a friend or family member to crypto? How do we talk about the technology versus the investable assets? How do we explain simply the good (and the bad) that occurs when we have a decentralized technology that allows for digital ownership and complete control of digital value? These are difficult topics, especially for those who are just starting out. I think showing them the technology helps them draw comparisons and come up with mental models for what it is. Here's what I did with my friend:
First I had him download a Coinbase Wallet straight from the app store on his iPhone. He still held a small amount of crypto on the Coinbase Exchange, so this made it easy. Mobile is important because "it's just another app". After downloading, it's time to send some ETH from Coinbase into the Coinbase Wallet. He wasn't staking his ETH at Coinbase, so by moving it onchain he can buy a liquid staking token and start earning some yield. During the process, explaining the debacle that happened with FTX in 2022 helps. "You now custody your own assets. You own them digitally. Like you would self-custody physical cash in a wallet, only this time it's ETH and it's on a blockchain." Light bulb moment one, "No one can take this away from me?". Just like that, we're onto the next.
Coinbase Wallet makes it fairly easy to stake and also swap assets in the app, without needing to go to the browser tab. "You're going to earn some yield on this asset by staking it. Staking is essentially earning for participating in the network functionality." Light bulb moment number two: yield. I know, I know, there are all these DeFi applications that they could use and it could be explained how these are controlled by code, sometimes user-owned, etc. Oh and we could explain how Layer 2 blockchains are making it more cost friendly to use these applications and that there are so many thriving ecosystems right now. Oh and Farcaster, a decentralized social network that I absolutely love. All amazing, and we'll get to these eventually, but the goal here is just to help them self-custody for the first time and understand what that means. Onto the next.
Now that they participated briefly on the Ethereum network, let's just move right over to Solana. A potentially even better user experience for the beginner today in many aspects. It's time to download a Phantom Wallet now. While both of these activities could have been done entirely on Coinbase Wallet or Phantom, versus both of them, I decided to have them download both. So they could see which they liked better. Phantom is another mobile app, beautiful. Something I hope more and more DeFi apps build out over time versus just wallets building to mobile. I think this could be coming as embedded wallets and smart wallets make their way deeper into developer tooling. Sorry for the brief side track. So he downloaded the Phantom wallet app and here's what happened:
I asked him to click the receive button in the app and send me the Solana address. I told him I was going to send him a few dollars in USDC, but I wanted him to let me know when he was ready so he could watch for it the moment I sent it. In the process of downloading the wallet and writing down the seed phrase (this won't be standard practice for much longer in my opinion), I was briefly explaining to him what Circle the company does and what USDC is. I won't go into that here, but this set the foundation for the onchain "dollars" I was about to send him. When I sent the transaction, his response: "WTF" and then "This is way better and faster than Venmo". Light bulb moment number three.
Safe to say we talked for another hour or so about what all this meant and could mean going forward. We talked about how blockchains operate 24/7/365, we talked about ownership versus IOUs, we talked about stateless and permissionless systems, we talked remittances, middle man fees, the whole gamut. Just like it did back in 2017 when we sat on his couch and talked crypto for the first time, it felt like we were back in that place, but with technology to actually use and applications to try out. It reminded me of how far the space has come, but also how far it has to go. It clicked for him that the technology itself is valuable, and it's not just an asset class to invest in.
While it takes some time and there are hundreds if not thousands of topics to explain. I believe if we start simple, we can onboard millions to this amazing technology. These are the times we'll hopefully be talking about down the road, when the magic of the technology itself fades into the background, similar to how the internet did.
