Chintan Turakhia (Coinbase Wallet): "Blockchain makes money much more efficient"

The Big Whale: Coinbase has built its success on its exchange platform. Why did you launch a wallet? What's it for?

Chintan Turakhia: Like the exchange platform, it serves to deliver on Coinbase's mission, which is to bring economic freedom to as many people as possible. There are many stories of people who have lost their cryptos, either because they didn't know how to keep them with their wallets, or because they were conned by crooks. That's why we launched Coinbase Wallet.

The blockchain and the crypto universe represent a huge shift away from the traditional financial system. It's a huge mindset shift. With wallets, you hold your digital assets directly, and you have to learn how to do that with the best tools.

This is one of the reasons why we launched the "smart wallet" before the summer, which makes onboarding easier. Before joining Coinbase, I worked for major groups such as Uber and Qualcomm, and our ambition is the same: we want to bring radical innovation to our sector.

Coinbase has its own Exchange, its own wallet, and even its own layer 2 with Base! What's the goal? To become a bank?

The best way to understand what we want to do is to put yourself in our customers' shoes. What do our customers want? They want to pay their bills, their loans and obviously manage their money. So the most important thing is to help them manage all that, and the easiest way in our view is to do it onchain because it's faster and cheaper.

We started with Exchange because, to get started, you need access to digital assets. A lot of people started with bitcoin and now they're buying other assets. Allowing people to buy cryptos easily and securely was the first step.

But very quickly, those who had cryptos started to wonder what they could do with those cryptos. Obviously you can do lots of things: pay, send them to someone, generate a return.

But as you know, the crypto universe is also based on self custody products (you're the only one to hold the assets, editor's note), and so alongside the Exchange, we developed Coinbase Wallet which allows you to manage these products without going through a platform.

You've just launched your Smart Wallet which is supposed to improve onboarding. How exactly does it work?

Onboarding is very complicated in self-custody. You have to download an application, remember the seed phrase, put money on your wallet, which is never easy, not to mention the problem of gas charges on blockchains that force you to use a certain crypto to spend another.

It's for all these reasons that we launched our smart wallet, which is very easy to use, especially for developers. They have an SDK with all the elements they need to develop their applications. What do developers want? They want users, and we offer them the opportunity to create applications in a world in which there are a lot of users.

The second advantage of the smart wallet is that it allows pass keys to be introduced. Everyone has already used a pass key with biometrics; Apple and Google use this technology to allow you to identify yourself and log in. The big advantage is that people no longer have to remember the seed phrase.

On top of that, we allow gas fees to be sponsored for any transaction on an L2, whether Optimism or Arbitrum. Our smart wallet supports all Ethereum-compatible layers, as well as Bitcoin and Solana.

Thanks to pass keys, users of applications on the blockchain can retrieve an NFT or use their cryptos in seconds without going through applications they have to download. What's more, they don't need to have the blockchain's native token.

How many smart wallet users do you have?

We don't disclose this figure, but the numbers are already significant.

Do you think onboarding is the only problem in Web3?

Onboarding is obviously not the only problem to be solved, but it is a huge one. The next stage is the widespread use of what is known as "magic spend".

With magic spend, even if my wallet is empty, I can still carry out the transaction and the wallet will fetch the money from my Coinbase account. I don't have to log on to the Exchange and make the transfer to my wallet to make the transaction.

Facilitating the first transaction is essential for the crypto industry because all crypto services start by buying something or staking crypto. Making that first transaction easier gives a huge boost to the whole industry.

How do you see the future of Coinbase Wallet?

We're moving towards a world dominated by L2s because fees have become very low. We are working hard on integrating the smart wallet directly into Coinbase Wallet.

We understand the advantages of the smart wallet. What uses do you hope to encourage with this?

One of the main advantages of the smart wallet is that it allows users to set their own rules for managing their savings.

What does this mean in concrete terms?

It's not like with banks where you have a series of rules to comply with, on volumes, on what you can spend.

With the smart wallet, there are no arbitrary rules. You can set up the wallet as you wish. You can give a key to someone close to you, set up a multisig (multisignature), create spending limits.

We are creating new possibilities for managing your accounts and savings. With the smart wallet, you can also batch transactions. You can take several assets and swap them into a single transaction in another crypto.

The second advantage of smart wallets is that any Internet user will be able to become a creator and reap the benefits. If you take a photo and put it onchain, anyone will be able to buy it online and you'll immediately get back ethers.

I think the aim is to create a universe in which things are simpler, whether it's creating and selling a photo, buying a coffee with USDC, so no fees, and moreover with the possibility of automatically giving income to producers. Blockchain makes money much more efficient.

Many companies have made progress on onboarding. What do you think of the solutions from start-ups like Cometh and Smooth?

There are lots of really good projects out there and so much the better.

How do you see chain abstraction in the coming years?

I love this question and have a fairly simple approach. As I see it, everything to do with gas fees, the choice of chain, the choice of ERC token, all these issues need to get out of the way. It's the only way to get more users.

The aim is for USDC to be available on all chains without the user having to do anything. We're going to get to a level where users will interact on many blockchains just with USDCs.

Today, if you have an asset on Polygon and you have to move it to Arbitrum because that's the chain the merchant is using, you already have other steps to comply with. That can't work. We need to keep the processes simple and in line with how people use them. Chain abstraction will be fundamental.

How do we convince people in 2024 to use crypto when banks are doing quite well?

The most important thing is to ask ourselves what we bring to users. What is our added value? Take the case of a stablecoin. It's stable, borderless, instantaneous and free. But is it really useful for someone in Europe or the United States who has access to a bank account and can pay with their smartphone?

Most of the time not. Stablecoins solve a real problem but for those who need them. Payment processors often take 1 or 2%, whereas stablecoins take nothing. Thanks to stablecoins you'll be able to develop loyalty programmes by paying back part of the fees and returns to customers.

It's a way of creating a new economy. Many merchants, just about everywhere in the world, give discounts when people pay in cash or they overcharge when people pay by card. If merchants want to reward their customers, it's very easy with stablecoins.

Any merchant will tell you that it's complicated to create a loyalty programme, especially for small businesses, whereas here it's directly linked to currency. In an onchain world, merchants can easily get to know their customers via their wallet, send them NFTs, give them immediate discounts.

What are the main benefits for merchants when using stablecoins?

The main challenge is to offer businesses a web3 experience equivalent to that of Web2. I think for merchants saving thousands, if not tens or even hundreds of thousands of dollars a year is significant.

After stablecoins, we're going to see more and more stablepayment, and we're also going to see more and more payment cards that are linked to wallets. You'll have the benefits of Web3 without even realising it.