Part IThe Story
The trading happened in the bathroom. Fred Ehrsam tells the story without embarrassment, and the detail deserves a moment. He was twenty-two or twenty-three, a foreign exchange trader at Goldman Sachs in New York, seated inside one of the most sophisticated currency operations ever built. And he was slipping away from his desk to buy and sell a currency most of his colleagues had never heard of, on his phone, in a stall. "I started trading crypto around at work, in the bathroom, on my phone," he said a decade later. He said it on a podcast co-hosted by the manager of MrBeast, in the tone people use for the obvious next step in a sequence.
It was 2011. He had found Bitcoin one night on a Georgetown professor's blog. That is how he remembers it, though the encyclopedias, which prefer their origins tidier, call it a paper. He bought his first coin that year. The price is not recorded, but it was low enough that, within months, the arithmetic of the bathroom trades would come to seem absurd. Bitcoin was then a few billion dollars of anything at all. It was a nine-page whitepaper and a mailing list, plus the hope of some unknown number of strangers that the thing would not simply stop.
What drove him into the stall was not greed, or not mainly. It was boredom. He had chosen Goldman because, from the vantage of a college senior who had spent his adolescence in competitive online games, a trading desk looked like "the intersection of a job that seemed like playing a video game and a legitimate career." He discovered that this was only half true.
— Fred Ehrsam, on the Creator Economics podcast, 2021It turns out that game wasn't quite as much fun as I thought it would be. Most of the territory on the map was already explored.
Hold on to that sentence, most of the territory on the map was already explored, because nearly everything that follows can be read through it. Fred Ehrsam has been a co-founder of Coinbase, the largest American cryptocurrency exchange. He has been a co-founder of Paradigm, the crypto investment firm that grew a $760 million fund into $8.3 billion. He is now a co-founder of Nudge, a company that wants to point focused ultrasound at the human brain. In each case he has entered a map before it was drawn. In each case, once the coastlines were charted and the roads named, he has done something rare among the very ambitious. He left.
He did not leave in disgrace, or in a boardroom coup. He left on his own schedule and with his equity intact, generally just as the thing he built had become strong enough not to need him. It is a peculiar kind of ambition, ambition with a built-in exit, and it looks a great deal like something he has written about at length in an entirely different context. He has written about how systems should be designed so that no single participant becomes indispensable.
By the Numbers
Fred Ehrsam, Frontier Operator
$6Approximate price of one bitcoin when Coinbase began in a two-bedroom San Francisco apartment
8.9%Ehrsam's reported Coinbase stake at its April 14, 2021 direct listing
$400MCapital Paradigm called up front in the 2018 crypto winter, roughly 90% averaged into Bitcoin and Ether
$2.5BParadigm One, closed November 2021, then the largest crypto venture fund ever raised
$278MParadigm's investment in FTX, written down to zero in November 2022
$8.3BValue of Paradigm's first flagship fund by end of 2024, from $760M committed
$100MNudge's Series A, July 2025, led by Thrive Capital and Greenoaks
Eight Thousand Hours in the Metaverse
Concord, Massachusetts, is a town that has spent two and a half centuries being the place where something started. The shot heard round the world was fired there. Thoreau went to the woods there. Frederick Ernest Ehrsam III, born in Boston on May 10, 1988, grew up in it and attended Concord-Carlisle High School. By his own accounting he spent a substantial share of his adolescence somewhere else entirely.
"There were three big games for me," he said. The first was "this obscure first person shooter called America's Army," which the U.S. Army had developed as a recruitment tool, and he says, flatly, "I was on the best team in the world at that game." The second was Call of Duty: Modern Warfare, in which he would "scrim with pros." The third was World of Warcraft. His estimate of the total is three or four thousand hours in Warcraft "and then another three or four thousand hours playing the first person shooters." That is something on the order of eight thousand hours. It was around 2005, he notes, "before esports was a thing." He describes himself as having been semi-professional, a word that does a lot of quiet work in the sentence.
The shooters taught him something about coordination, the small-unit discipline of a team that wins because each member knows exactly what the others will do. Warcraft taught him something stranger. The game ran on gold, a virtual currency with no physical existence and no central bank in any meaningful sense. Its value was set by millions of players trading swords, herbs, and mounts, and it was traded, illicitly, for real dollars at rates that fluctuated with supply and demand. A teenager who spent thousands of hours inside that economy learned, without being told, that money is a consensus. It could be a database entry that a large enough group of people agrees to treat as valuable.
"Candidly, I think gaming helped me understand crypto a lot better," he said. "In games there are virtual items and virtual currencies in these games. When you live in the metaverse as a kid, the prospect that everybody might do something like that one day starts to seem a lot less weird."
That last clause carries his whole forecasting method in miniature. Most people's sense of what is weird is calibrated to what they grew up with. Ehrsam grew up with a currency that existed only on servers, so a currency that existed only on a distributed ledger did not strike him as a leap. It struck him as a port.
At Duke he studied computer science with a minor in economics and graduated in 2010 with distinction. The economics department later noted honors and departmental distinctions in both fields. He joined Sigma Alpha Epsilon, which is to say he was not a recluse. Emma Rasiel, one of his economics professors, remembered him as "very driven, and always willing to work hard to achieve his goals." That is the kind of thing professors say about many students, and it happened in this case to be true in an unusually measurable way. When Duke's economics department asked him, in May 2021, to record a message for its graduating class, he was by then a billionaire on paper and had co-founded two of the most consequential institutions in his industry. His advice was three words long: "Follow your curiosity."
He also passed through BlackRock, in portfolio analytics, a line on early bios that almost no one remarks upon. The pattern was already visible. The two largest names in American finance, a bank and an asset manager, were both treated as places to learn the existing map before going somewhere it did not cover.
The Game Was Not Democratic
The foreign exchange market is the largest market in the world. It is also, if you sit inside it at an institutional desk, a revelation about who pays what.
"One thing that trading foreign exchange at an institutional level made me acutely aware of is it really not a democratic process," Ehrsam told a writer from Andreessen Horowitz in December 2013. "It's not difficult for high-net worth individuals or hedge funds to transfer from one currency to another, but when you think of the average person who needs to send money back to their family outside the United States it's a very opaque marketplace, and the fees are significantly, significantly higher."
The doubled adverb is his. It is the most emphatic he gets in print, and it marks the moral center of his early Bitcoin thinking. That thinking was less cypherpunk than it was a trader's observation about spreads. A trader learns to see the cost of a transaction as a number. A trader at Goldman learns that the number is small for the bank and large for the person at the end of the chain. What he found on the Georgetown blog was a system that might collapse those spreads, a ledger that anyone with an internet connection could join, with no correspondent bank taking its cut at each border.
Later, in an essay for Americas Quarterly, he would make the case in the register of a development economist. Of Latin America's 600 million people, he wrote, more than 70 percent owned mobile phones but fewer than 40 percent had access to formal banking. "With 8 million Bitcoin users in 2014 (0.1 percent of world population), we may very well be in the '1994' of Bitcoin." It was a characteristic move: take the current number, lay it beside the trajectory of the internet, and let the reader do the projection.
But in 2011 there was no essay, only a trader on his phone. The game he had joined Goldman to play turned out to have been solved by people older and better capitalized than he would be for decades, and the other game, in the bathroom, had a map that was almost entirely blank. He left Goldman in 2012 and moved to California. He did not have a company or a co-founder. He had the conviction, common to gamers and rare in bankers, that the most interesting place to be is the edge of the rendered world.
Two Men in Tucked-In Shirts
Brian Armstrong, born in San Jose in January 1983, was five years older. He had collected three degrees from Rice: computer science, economics, and a master's in computer science. He had spent a year working in Buenos Aires, consulted at Deloitte, built software at IBM, and co-founded a tutoring marketplace on the side. By 2010 he was at Airbnb working on international fraud prevention, which meant he spent his days watching money fail to move across borders. "I got really excited about the potential," he said of the Bitcoin paper he read that year. "This was the first open payment network for the whole world, but it was just way too difficult to use."
So the two men had arrived at the same idea from opposite ends of the same pipe, one watching rich clients' money move frictionlessly and the other watching ordinary people's money get stuck. The Andreessen Horowitz writer who profiled them in 2013 noticed, "coincidentally," that both had studied computer science and economics. It is not quite a coincidence. That pairing produces people who think of money as a protocol.
Armstrong had already begun building in early 2012, under his own name, alone. A British programmer named Ben Reeves, a co-founder of Blockchain.info, had been slated to join him, but the two split just before Y Combinator's funding event over how the wallet should work. Reeves wanted users to hold their own keys. Armstrong wanted something a normal person could use without the burden of self-custody. The disagreement was technical and philosophical at once, and its resolution, toward ease and toward a company holding coins on a customer's behalf, would define Coinbase for the next decade. Armstrong entered YC's summer 2012 batch alone and took the standard check, $150,000.
He was posting on the Bitcoin subreddit. Ehrsam, newly arrived in California, was reading it. The two began exchanging emails, and by the end of 2012 Ehrsam had joined as co-founder. They worked out of a two-bedroom apartment in San Francisco. Bitcoin, by the founders' later recollection, was worth $6.
The company took its name from the coinbase transaction, the special first entry in each block that brings new bitcoin into existence from nothing. It is a technical term familiar to anyone who has read Andreas Antonopoulos's Mastering Bitcoin and almost no one else. It was a good name for a company whose purpose was to be the point where ordinary money entered a new system.
By October 2012 Coinbase let users buy and sell bitcoin by bank transfer. By February 2013 it was moving more than a million dollars of bitcoin a month. In May 2013 Fred Wilson of Union Square Ventures led a $5 million Series A, the largest Bitcoin startup financing to that point. That same week, a reporter from the International Business Times found Ehrsam on "a windy rooftop in San Francisco" and described him, in print, as "the first employee hired by Coinbase." It is the kind of error that tells you something. In the spring of 2013, from the outside, the company looked like Armstrong and the guy who had shown up to help.
On the rooftop, Ehrsam was talking about Cyprus. The European Union had just imposed a levy on Cypriot bank deposits above roughly $100,000, and ATMs on the island had frozen for days. "All of a sudden people are not only starting to question, 'what is this dollar bill I'm holding?' but 'who has power over it and who ultimately actually controls it?'" he said. "In the case of Cyprus, people realized maybe money in the bank isn't what they thought it was." Then he made a second remark, one that would recur in different words at nearly every stage of his career: "Growth was just so fast it sort of brought our timeline up whether we liked it or not."
The first actual employee, hired in 2013, was Olaf Carlson-Wee, a Vassar graduate who cold-emailed the founders asking for a job and was paid in bitcoin for three years. He would leave in July 2016 to found Polychain Capital, a crypto hedge fund. Ehrsam would become one of its advisors. The point is that the habit of leaving was in the company's water supply from the start.
When Andreessen Horowitz led Coinbase's $25 million round in December 2013, its in-house writer visited the office. He found a loft with a neon sign resting on the floor, orange and white tubes forming the Bitcoin symbol above the words "Accepted Here," a joke about something that was not yet true anywhere. Bitcoin had ridden from roughly $15 to as high as $1,200 that year. The founders, the writer observed, were not "your stereotypical hoody wearing entrepreneurs." He reached for a single word. "There is no other way to describe their vibe than 'bankerly,'" he wrote, "pressed shirts (tucked in no less), nice shoes, the whole nine-yards."
The shirts were a strategy. The people Coinbase most needed to convince did not live on Reddit. They worked at banks, insurers, and state regulatory agencies, and the founders dressed for them.
Buying Trust From Lloyd's of London
On January 2, 2014, Paul Krugman's New York Times column titled "Bitcoin Is Evil" received a reply in Vox, under the headline "Bitcoin Is Good." Ehrsam wrote it. It is an unusual document for a twenty-five-year-old to publish in rebuttal to a Nobel laureate. It is not angry, and it does not argue with Krugman on the terms of a currency debate, which was where the economist wanted to have it. It argues instead that Bitcoin is a network and that its currency is a byproduct.
"Approaching bitcoin as a currency or store of value is focusing on a single and secondary application of the bitcoin network," he wrote, "analogous to analyzing a single feature built on top of the Internet, like email." The core claim was an analogy pitched at the precise level of abstraction an economist could not easily dismiss: "Just as the Internet brought the cost of disseminating information down by an order of magnitude, bitcoin brings the cost of transferring ownership down by an order of magnitude." Then, because he had been a trader, he did a back-of-the-envelope valuation. One bitcoin used for ten transactions a year at $100 each, on a network three percent cheaper than the next-best alternative, sustained for ten years, was worth $300. He called the inputs "arbitrary sample" values, which they were. The point was not the number. The point was that a number could be derived at all.
It was the year Coinbase passed one million users. It acquired a blockchain explorer called Blockr and a bookmarking startup called Kippt, the latter for its product and design talent. It signed Overstock, Dell, Expedia, Dish Network, and Time Inc. to accept bitcoin, and added bitcoin processing to Stripe, Braintree, and PayPal. Forbes put Ehrsam on its 30 Under 30 finance list at twenty-five, a year after TIME had named him to its list of 30 people under 30 changing the world. He gave talks with titles like "Bringing Digital Currency into the Mainstream," in which he explained the Byzantine Generals' Problem to rooms full of people who had come to hear about money. "Think about transferring, let's say, $100 from your Bank of America account to somebody else," he told one audience. "You need Bank of America in the middle as a trusted intermediary... That's what Bitcoin removes."
And yet the most revealing thing Ehrsam did in 2014 involved an intermediary of the oldest kind. Coinbase secured insurance on the bitcoin it held on its servers. Six years later, writing about decentralized finance, he mentioned in passing who had obtained it: "In 2014 I personally secured the first ever crypto insurance (I believe) from Lloyds of London." The parenthetical, I believe, is the most Ehrsam thing in the sentence. It is the hedge of someone who would rather be accurate than impressive.
The irony was not lost on him, or it should not have been. The company existed to remove trusted third parties, and to make customers trust it, it had gone to a three-hundred-year-old insurance market in the City of London. But he understood something that the purists on the subreddit did not. Trust is adopted in layers. The early adopters, with their high risk tolerance, barely cared. The mainstream would care more. Institutions, when they finally came, would require it. In the same essay, written in 2020, he described the adoption arc of insurance as "material but not critical for early crypto adopters," "increasingly important for mainstream users," and "a requirement for institutions when they eventually onboarded." He had bought, in 2014, the thing the market would demand in 2018.
The same logic governed regulators. "At Coinbase we spared no expense in figuring out our regulatory strategy before regulators came knocking," he wrote later. In January 2015 the company raised $75 million in a round led by Draper Fisher Jurvetson. The investors also included the New York Stock Exchange, USAA, and several banks, the very institutions bitcoin had been invented to route around. Ehrsam reportedly reached out to Duke to participate in that round. The university's investment would grow about a hundredfold.
Then the cycle turned. The price that had touched $1,200 in late 2013 collapsed with the Mt. Gox exchange in early 2014 and did not recover for years. What followed is a period Ehrsam has described more frankly than most founders describe anything: "At Coinbase, we were riding high in 2013, only to experience 3 long, gut-wrenching down years until 2017. Many employees became dejected and over a third of the company turned over."
— Fred Ehrsam, 'Surviving Crypto Cycles,' a private note to Paradigm portfolio founders, 2021Being a founder felt incredibly challenging and lonely.
The loneliness is worth registering because it is the one admission of private cost in a public record otherwise composed of essays, metrics, and theses. The man who spent his teens on the best team in the world at a war game spent three years in his late twenties watching a third of his team walk out. He did not, it seems, take it as a verdict. He took it as data about how cycles work. Throughout the long winter the company launched a professional exchange, entered Canada and Singapore, and spent what felt to Ehrsam "like an eternity" obtaining New York's BitLicense.
The Four-Function Calculator
By 2016 Ehrsam was writing on his own blog in a voice quite different from the explainer he gave conference audiences. He was writing in a speculative voice, and the speculation was mostly about Coinbase's competitive environment, specifically the possibility that the thing Coinbase was built on was not the most interesting thing in the room.
"We have sat here for the last 3 years seeing only infrastructure apps like wallets and exchanges emerge on top of Bitcoin," he wrote on May 24, 2016. "Why is that?" His answer was that Bitcoin's scripting language was too restrictive. Then came a sentence that would be quoted for years: "Ethereum has taken what was a four function calculator of a programming language in Bitcoin and turned it into a full fledged computer." Bitcoin, seven years in, had a market capitalization of roughly $7 billion "and no 'killer apps' beyond store of value and speculation." Ethereum, nine months old, already had faster application development. A decentralized organization called The DAO had raised $150 million, "the largest crowdfunding ever."
This was the president of a Bitcoin company telling the world, in public, that Bitcoin was falling behind. He was careful: "I don't think this needs to be a contest between Bitcoin vs. Ethereum and Coinbase plans to strongly support both." Coinbase added retail support for Ether two months later. But the essay is the work of a person whose curiosity had begun to outrun his job. A month after it appeared, The DAO was drained by an attacker, and the episode dissolved into one of the most contentious governance fights in the industry's history. Watching from Coinbase, Ehrsam noticed that the hardest problem in crypto might not be technical at all.
In August he wrote about tokens. "Then something odd started happening over the last 4 months," the post begins. "A handful of blockchain-based projects have raised a combined $250m+, but none of that money has come from venture capitalists. So what the heck is going on?" He walked through Storj, a decentralized storage project that had raised $500,000 in bitcoin by selling Storjcoin, then trading at about eleven cents. He walked through Steem, Augur, IPFS, and Filecoin, and through Ethereum itself, which had raised $18 million in a crowdsale. His conclusion was that these were not apps but protocols, and that tokens solved the oldest problem in protocol design, namely that no one had ever been paid to build HTTP or SMTP. The token was "an entirely new business model that is being created and tried for the first time: a decentralized business model." Two days before announcing his departure from Coinbase, on January 16, 2017, he published a follow-up defending the model against its sharpest critics. "Tokens align incentives between developers, contributors, users, and investors," he wrote.
On January 18, 2017, he told the company at an internal meeting that he would step back from day-to-day duties at the end of the month and remain on the board. The blog post was short. "I plan to take my first real time off in 7 years and then start tinkering again." Coinbase had onboarded more than five million people and was adding 300,000 a month. It held close to $1 billion in digital currency. "To Brian: I cherish the life-long friendship we've forged through amazing ups and downs."
The interview he gave Fortune that week is worth reading for its rhythm alone. "Starts out with a heavy hitter," he laughed, when asked why everyone seemed to be leaving. "First of all, everyone is not leaving. The reason I feel comfortable leaving now is because the company is doing really dang well." He listed three conditions, the way a trader lists the reasons for closing a position. Revenue had grown more than two and a half times in 2016. The executive team had strengthened: a VP of engineering, and a chief legal and risk officer named Mike Lempres, a former U.S. attorney and former general counsel of Silicon Valley Bank. "The last point is we finally got the dang BitLicense." Would he start a hedge fund like Olaf? "Probably not a hedge fund."
To CoinDesk he offered a framing that sounded at the time like a founder putting a gloss on attrition. "If you look at the really successful companies, the big ones that emerge in a whole new industry, the most successful ones throw off entrepreneurs," he said. "It's like the PayPal mafia. We're creating the Coinbase mafia." It turned out to be a description, not a gloss. Within a few years the phrase would be standard in financial journalism, attached to a "tight circle" of Coinbase alumni who, Bloomberg reported, held sway over Bitcoin.
The Coinbase he left would become, a year later, a place Fortune described as "a glass fortress." It had three floors high above Market Street and no logo on the building or in the lobby, just fortified metal doors and an intercom. Staffers explained that they kept a low profile because many of them were multimillionaires in cryptocurrency, and a kidnapper, one said, might "pull out their fingernails" to learn where the keys were. By then the neon sign was gone from the loft floor.
Programming the Mechanism for Change
The essays of 2017 are where Ehrsam's mind is most fully on display, and where the theory that would explain his own career gets written down, in a context that seems to have nothing to do with it.
On November 27, 2017, eighteen minutes of reading long, he published "Blockchain Governance: Programming Our Future." He opened with biology. "As with organisms, the most successful blockchains will be those that can best adapt to their environments." Then came the sentence on which the essay turns: "Assuming these systems need to evolve to survive, initial design is important, but over a long enough timeline, the mechanisms for change are most important." He thought governance was "the most vital problem in the space" and that scalability itself was best approached "by using governance to set the right incentives for people to solve them."
The essay is ambitious in a way that would be grandiose if it were less careful. Satoshi's nine-page whitepaper, he noted, had produced a $150 billion currency and a computer network bigger than the top 500 supercomputers by a factor of 10,000. That was "arguably one of the highest leverage actions in human history." Blockchains could let "thousands of governance systems and monetary policies" be tried "at the speed of software." There would be "a Cambrian explosion." And then a line that only a former FX trader would write: "With millions of algorithmic central banks we will have millions of crypto George Soroses trying to break the Bank of England." His conclusion: "blockchains may teach us more about governance in the next 10 years than we have learned from the 'real world' in the last 100 years."
A week later, on December 5, at a conference called Token Summit II in San Francisco, he gave a fireside chat. He told the room he valued tokens using an equation he had learned at Goldman, MV = PQ, the quantity theory of money, money supply times velocity equals price times output. "Through this equation, I think you can start backing into how much a token is actually worth," he said, while conceding that the model needed more research. Velocity, he said, was "the most sensitive measurement in the crypto industry." He was asked what the ecosystem needed. "It seems clear to me that developers in this space would want a scalability solution or a stable coin." Stablecoins would grow, by Paradigm's later count, from $500 million in circulation to more than $200 billion. In 2024 they processed $5.6 trillion in payments.
His closing line that day: "I think it's really critical that people get the game theory around their end goal absolutely right."
Three years later, writing with Dan Robinson, he partly recanted the governance essay. "Those who read my blockchain governance post from 2017 know I was excited about crypto exploring different forms of governance, especially on-chain governance." He had changed his mind. The most widely used protocols, he now argued, "will trend towards governance minimization." The reason was something he called credible neutrality: "a stakeholder (e.g a user or a developer) can use or build on a protocol with confidence it will not change against their interests." Central banks lacked it because "a subset of stakeholders can decide to print money at will." Facebook and Twitter lacked it because a subset of stakeholders "can make changes that kill entire developer ecosystems." Formal governance tended toward capture over time. "Creating a perfect governance system is like designing a perpetual motion device."
Laid side by side, the two essays describe a progression. First: what matters most is the mechanism for change. Later: the best mechanism is the one that makes any single party, including the people who built it, unnecessary. It is a theory of protocols. It is also, if you watch what he did with Coinbase, with Paradigm, and with his own job title, a fairly exact theory of Fred Ehrsam.
Forty Emails to Sequoia
In 2017 Ehrsam published a blog post arguing that crypto was the metaverse, which, given the boy who spent eight thousand hours in virtual worlds, was less a thesis than a memoir. It drew a response from a partner at Sequoia Capital named Matt Huang. Ehrsam's private reaction, as he later recounted it, was not strategic: "I know I'm not going to build a company around this, but it would be hilarious to pitch Sequoia on the idea for fun."
Huang deserves his own compression, because his story rhymes with Ehrsam's at nearly every joint. His father, Chi-fu Huang, was the only son among four sisters in Taiwan, sent to America alone on his parents' savings. He became an MIT economics professor, built fixed income derivatives research at Goldman Sachs, and moved the family to Tokyo in 1997 to open the Asia office of Long-Term Capital Management. The fund's collapse in 1998 wiped out the family's savings. The elder Huang then co-founded Platinum Grove with Myron Scholes and grew it from $45 million to $6 billion. The son, nine years old in Tokyo, navigated an hour-long round trip to school alone through the city's side streets. He was expelled from Chinese weekend school, competed semi-professionally at StarCraft, and played online poker at eight tables at once during a semester off from MIT.
In 2012, on a week's vacation from Twitter, he sat at an old Ikea table in a Beijing apartment and watched a founder named Zhang Yiming speak through a translator. He wrote checks into ByteDance at $20 million and $30 million valuations. He doesn't keep spreadsheets, so he cannot say precisely what it is now worth. When a Sequoia recruiter emailed him in 2014, he assumed it was spam. His interview assignment was a one-page memo on a company Sequoia should back. He wrote about Coinbase, which then had seven employees.
So a Coinbase founder who had been a semi-pro gamer was corresponding with a Sequoia partner who had been a semi-pro gamer and whose first venture memo was about Coinbase. The emails ran to forty. "Nothing felt quite right until I met Matt," Ehrsam would say. He had explored starting a crypto fund with several other potential partners. Over six months they tested alignment on investment philosophy and fund structure, and settled on a principle that "drove some people nuts": everything split 50/50. Huang left Sequoia, which was wrenching for him. Michael Moritz, by several accounts, called him "the only regrettable loss in Sequoia's history." Doug Leone said he was the first person in his career to leave Sequoia of his own volition.
They founded Paradigm in June 2018, into a market that had fallen more than 70 percent that year. Graham Duncan advised them at the start. Duncan is the founder of East Rock Capital, a man who will conduct as many as twenty-five reference calls on a single person and who interviewed twenty-seven chefs before hiring one for a restaurant. One profile called him "the guy who picks the guy who picks the guy." He was struck by the scale of what the two of them assumed.
— Graham Duncan, founder of East Rock Capital and early advisor to ParadigmThey were consistently planning for what could happen from a size perspective in a way that seemed almost absurd to me. It blew my mind, but it was not cockiness at all. Their time horizon was just so different, and what they planned for ended up happening.
Four weeks in, when Paradigm still rented office space by the week, they hired Alana Palmedo. She had managed operations at Boston University's endowment and at Bill Gates's investment office through the 2008 crisis, and she was not "deeply into crypto." She was won over partly by the founders' seriousness about building an institutional-grade firm and partly by a value investor's reflex: with Bitcoin down so far, "this must be the low." Duncan would later call her "Matt and Fred's third partner, totally building the firm."
The first hire was Charlie Noyes, nineteen. Huang met him in a Telegram chat about Bitcoin Cash forks and assumed from his messages that he was "a 40-year-old with a beard, very cynical and craggy." Noyes had found Bitcoin through gaming circles at twelve, won Intel's science competition twice, dropped out of high school for MIT, and then dropped out of MIT. He arrived at his first 10 a.m. meeting five hours late. He became a general partner.
The fund they raised in late 2018 was strange by venture standards. It was open-ended, with no fixed date to return capital, so it could hold liquid tokens alongside private equity. Harvard, Stanford, and Yale committed, the universities' first significant crypto investments, as did Sequoia. Then the founders did something almost no venture firm does. Instead of calling capital gradually over years, they asked for the full $400 million at once and began averaging into Bitcoin and Ether through a trading desk called Tagomi, which they had invested in. Those two assets made up roughly 90 percent of the fund at the outset. The average Bitcoin purchase price was around $4,000 to $5,000. In mid-2019 the same investors committed about $360 million more.
By October 2020, thirteen of Paradigm's twenty-eight startup investments had already raised money or circulated tokens at higher valuations. By the end of 2024 the first flagship fund had grown from $760 million to $8.3 billion, and the firm had returned more than $1 billion to its limited partners. The bet had been made in the depths of a winter, by a man who had already lived through one and had written down, in private, what it felt like.
Senators With Lasers for Eyes
In March 2021, Ehrsam sent a private note to Paradigm's portfolio founders. It was later published under the title "Surviving Crypto Cycles," and it opened on a note of almost comic alarm.
"In the first 2 months of 2021, crypto prices have already doubled and continue to hit new all-time highs. Bitcoin has crossed $1 trillion in market capitalization. Pixelated crypto art regularly sells for millions. Senators even have lasers for eyes! Euphoria abounds."
He had been through three prior cycles at Coinbase, 2011, 2013, and 2017, and he wrote about them the way a veteran writes to recruits. Cycles are "highly emotional." They "attract massive public attention," so that "family members ask you to explain what's going on. Friends press for investment advice." They "wash out weak companies." They "draw regulatory attention." They "push infrastructure to the limit," because exchanges go offline and fees rise tenfold or a hundredfold. He told founders to stress-test their systems for spikes of 10 to 100 times normal usage, to consider raising while capital was available, and to warn new hires about what was coming. And beneath the warnings he set a claim of faith that was really a claim about data: "Crypto has exited every cycle stronger than it entered." Cycles, he wrote, "can be reframed as volatile periods around a relatively consistent adoption curve."
It is a curiously calm document for its moment, written by someone standing on top of the largest pile of paper wealth in his life.
On April 14, 2021, Coinbase listed directly on the Nasdaq. Nasdaq set a reference price of $250 a share, implying roughly $47 billion, and the stock closed its first day at $328.28. Ehrsam held approximately 8.9 percent and had been placed on the audit committee ahead of the listing. He went on CNBC's Closing Bell that afternoon. Nine years earlier, Bitcoin had been worth $6 in a two-bedroom apartment. Weeks later he recorded his three-word commencement message for Duke's economics graduates.
In June, sitting with Emily Chang on Bloomberg's Studio 1.0, he described crypto as "the next Internet-sized opportunity for the United States," one that "has the potential to create as many if not more jobs than the Internet." He also said something that sounded like a hedge and was really a warning to Washington: "Crypto is a nuanced issue, and that it's possible the U.S. gets crypto wrong." He noted that China was testing its own digital currency and was cracking down on the Bitcoin mining it then dominated, and that this opened a window for American miners.
In November 2021 Paradigm closed Paradigm One at $2.5 billion, twice its target. It was the largest crypto venture fund ever raised, surpassing the $2.2 billion Andreessen Horowitz had announced earlier that year. Around the same time, Paradigm and Sequoia jointly put $1.15 billion into Citadel Securities, the first outside investment that firm had ever taken. The firm that rented its office by the week in 2018 was now writing ten-figure checks to Ken Griffin.
And here the essay and the man diverged, because euphoria is more persuasive than a memo. Huang would later describe what happened with unusual candor. "When you over-focus on a rival, you become more like the rival." Watching a16z raise vast funds, Paradigm wondered whether it needed to match that scale. Headcount rose from 18 to 62. "We definitely let the quality bar slip," Huang said. "I remember instances of making that compromise, feeling like if we don't do this, or hire that person, we're going to fall behind. In hindsight, those were all wrong decisions." Among the investments of that season was a co-lead of OpenSea's $300 million Series C at a $13.3 billion valuation, at the top of the NFT market. OpenSea's trading volume has since fallen 98 percent.
Ehrsam had warned everyone else. The warning, as the Colossus account put it, "proved prophetic but insufficient."
What Diligence Cannot Buy
Paradigm put $278 million into FTX, among the largest investments in the firm's history. The relationship ran in both directions: Sam Bankman-Fried, through Alameda Research, was an investor in a Paradigm fund. In October 2022 Bankman-Fried gave the keynote at Paradigm's annual limited partner meeting. Weeks later FTX collapsed amid revelations that customer funds had been misappropriated. In November 2022 Paradigm wrote its stake down to zero.
The detail that matters most is that Paradigm had seen it. During diligence, the team identified the key risk, the relationship between FTX and Alameda. They asked direct questions. They received false assurances. Emails surfaced at Bankman-Fried's criminal trial showed, in Fortune's summary, that he had "toyed with Paradigm VCs, who had misgivings but gave him nearly $300 million anyway." Huang testified. In February 2023 Paradigm was named alongside Sequoia and Thoma Bravo in a class action accusing them of lending FTX legitimacy. BlockFi, another portfolio company, went bankrupt on its FTX exposure.
Huang's later diagnosis was not about the balance sheet. "It was pretty clear, even at the time, that he didn't share our vision for making crypto better," he said. "For him, it was a way to make a ton of money and then give it away." Paradigm cut its investing and research team from 20 to 11 and added an explicit filter to every new deal: the founder must align with the mission of advancing crypto's frontier. Diligence can find a risk. It cannot make a counterparty want what you want.
In the same period Ehrsam made a trade that the record states in the dry language of a Form 4. On May 13, 2022, after Coinbase reported weak earnings, he bought more than 706,000 Coinbase shares through Paradigm at an average of about $70, nearly $50 million. On May 17 he bought another 385,000 at about $65, roughly $25 million more. The stock was down more than 70 percent for the year and more than 80 percent from its post-listing high. Ehrsam and related entities had been "consistent sellers" since the listing, unloading several hundred million dollars of stock near the top. Now they were buying near the bottom. A month later Coinbase laid off about 18 percent of its staff. In January 2023 it cut roughly 950 more.
It is possible to read the two episodes, FTX and the Coinbase shares, as contradictory, the same firm wrong about a stranger and right about a company. It is more accurate to read them as the same lesson approached from opposite directions. Ehrsam knew Coinbase the way you know a game you've played for eight thousand hours. He knew FTX only through answers.
Then, in the spring of 2023, came an episode that would be trivial in any other industry. Two Paradigm researchers complained that AI collaborators weren't returning their emails after seeing the word "crypto" on the firm's homepage. The firm quietly rewrote the page to describe itself as a "research-driven technology investment firm." A month later, on the last Thursday of May, reporters at The Block noticed, via the Wayback Machine, and the industry treated it as apostasy. "We don't want to work for you anymore," one portfolio company tweeted. Paradigm put the word back. Then it added a flashing neon ticker across the homepage that read, in effect, a vow of loyalty: crypto crypto crypto.
There is something touching in the image of the neon sign returning. In 2013 it had sat on the floor of the Coinbase loft, the Bitcoin symbol and "Accepted Here," a promise made before it was true. A decade later it was on a homepage, three repetitions of a single word, a promise made after a scare.
Born and Bred to Run It
In October 2023 Ehrsam stepped down as managing partner of Paradigm and became a general partner. Bloomberg reported the reason he gave: he wanted to devote more time to exploring scientific areas of personal interest. Huang would remain managing partner. Palmedo would join him in that role.
The way Ehrsam explained the handoff is revealing for what it concedes. He and Huang had founded the firm as equals; the 50/50 split had been the founding principle that drove people nuts. Ehrsam did not frame his departure as a disagreement or a sabbatical. He said, in the Colossus account, that Huang was "born and bred to run Paradigm." It is a generous sentence. It is also the sentence of a man who has recognized that the institution he co-founded has become credibly neutral with respect to himself. The firm can be depended upon without depending on him. He wrote that this was the primary value proposition of a well-designed protocol. He seems to believe it is also the primary value proposition of a well-designed founder.
The pattern by now has a shape. Goldman, after two years, when the map was explored. Coinbase, after five, the day after the BitLicense, with revenue up two and a half times and a former U.S. attorney arriving the following week. Paradigm's managing role, after five more, once the firm had survived its worst year and tightened its standards, and once he could name, with conviction, the person who should run it. Each departure occurred not at a peak and not in a crisis but at the moment the system had developed a mechanism for continuing without him. He remained on Coinbase's board. He remained a general partner at Paradigm. He kept his equity. He simply stopped being the load-bearing wall.
His old partner, it turned out, was drifting in the same direction. Brian Armstrong co-founded ResearchHub in 2020 to accelerate scientific research, and in 2022 co-founded NewLimit, which aims to extend human healthspan through epigenetic reprogramming. The two men who had met on a Bitcoin subreddit, both trained in computer science and economics, both partial to pressed shirts, were each, a decade on, walking out of finance and into biology.
The Unexplored Territory
Nudge was incorporated in 2024. Ehrsam co-founded it with Quintin Frerichs and Jeremy Barenholtz, the latter a former vice president of product and technology at Neuralink. In June 2025, Bloomberg reported that Ehrsam was hiring Neuralink employees. The company's premise is that you need not open the skull to talk to the brain. It works with low-intensity focused ultrasound, sound waves aimed through bone at precise regions of tissue, to stimulate and image neural activity without surgery.
In April 2025 Nudge unveiled its first device, the Nudge Zero, a wearable ultrasound headset built for brain stimulation and imaging in research settings. In July 2025 it raised $100 million in a Series A led by Thrive Capital and Greenoaks. By mid-2025 it reported that the Nudge Zero was in near-daily use in research studies, with patient applications expected to follow. The longer-term ambition, the company has said, is a consumer product, something shaped like a headset that a person might wear to improve mood, cognition, and sleep.
In March 2026 the White House named him to the President's Council of Advisors on Science and Technology. The trader who discovered Bitcoin in a bathroom stall was now advising a president on science. In between, the industry he helped build had gone from a $6 coin to an exchange custodying nearly 12 percent of all bitcoin in existence, an S&P 500 company holding $516 billion in assets for more than a hundred million people.
What strikes you, reading back across the record, is how little he says about any of it. He has written thousands of words about governance and tokens and cycles, about MV = PQ and credible neutrality. He has published almost nothing about himself beyond one paragraph about video games. The game of his adolescence had virtual gold and a map whose edges were still being drawn. The game at Goldman had real money and a map that was finished. Crypto was a new map, and he helped draw it until other people could draw it better. And then, at thirty-five, a man who had always been happiest at the edge of the rendered world went looking for the one territory no one has ever fully charted.
Somewhere in a research lab this morning, someone is fitting a headset over a stranger's skull, adjusting the straps, aiming sound at the dark interior of the brain, and pressing start.
Part IIThe Playbook
Ehrsam's career is often summarized as "crypto pioneer," a description that is accurate and almost useless. What follows is an attempt to extract the operating logic beneath the résumé: how he decided where to go, how he built trust in a trustless industry, how he timed capital against cycles, and, most unusually, how he engineered his own departures. These principles are drawn from the record above: his essays, his interviews, his trades, and the testimony of his partners. Where the evidence cuts against him, as it does on FTX and the excesses of 2021, it is included.
The principles
- 1.Leave maps that are already explored.
- 2.Turn the old system's spread into your product.
- 3.Buy trust before the market demands it.
- 4.Let your weird become the world's normal.
- 5.Value the mechanism for change over the initial design.
- 6.Make yourself governance-minimized.
- 7.Exit on conditions, not on feelings.
- 8.Find the complement, then split it evenly.
- 9.Deploy into the despair you have already survived.
- 10.Write the warning at the top, then obey it yourself.
- 11.Diligence finds risk; only alignment resolves it.
- 12.Plan for a size that seems absurd.
Principle 1
Leave maps that are already explored
Ehrsam's most quotable self-diagnosis, that Goldman's FX desk was a game where "most of the territory on the map was already explored," is a sorting function, not a complaint. The prestige of an institution tends to be inversely correlated with the amount of unclaimed ground left in it. Goldman's currency desk was among the most prestigious seats a twenty-two-year-old could hold, and that was precisely why its edges had already been mapped by people with decades of head start.
The useful insight is not "take risks." It is that a young operator's comparative advantage is greatest where incumbents' experience counts for least. In 2012, a trader with eight thousand hours of virtual-economy intuition knew more about how crypto might behave than most senior bankers. Nowhere else was that true. He went where his peculiar preparation was worth the most, which meant going where almost nobody else wanted to be.
Tactic: Once a year, list the unexplored areas of your field, and ask honestly whether your current seat gives you access to any of them.
Principle 2
Turn the old system's spread into your product
Ehrsam's case for Bitcoin was born at an FX desk, and it was about spreads. Hedge funds converted currencies cheaply. The person wiring money home did not, and paid fees "significantly, significantly higher." Coinbase's founding insight, shared with Armstrong, who had watched cross-border payments fail at Airbnb, was that the gap between those two experiences was a product waiting to be built.
This is a more reliable source of company ideas than technology-first thinking. Each founder had seen, from inside an incumbent, the precise point where the existing system extracted rent from people who couldn't avoid it. The Vox essay against Krugman makes the same move at the level of economics: Bitcoin's value is "the sum of the cost savings of using the bitcoin network for payments rather than alternative payment networks." The insider who has seen the margin knows where to cut it.
Tactic: Identify the single largest fee your current employer charges people who have no alternative, and ask what it would take to make that fee unnecessary.
Principle 3
Buy trust before the market demands it
In 2014, a company built to eliminate trusted intermediaries went to Lloyd's of London for insurance, which Ehrsam "personally secured." It also "spared no expense" on regulatory strategy "before regulators came knocking." He later laid out the logic in a three-stage arc: trust measures are "material but not critical" for early adopters, "increasingly important for mainstream users," and "a requirement for institutions."
The non-obvious part is the timing. Insurance and compliance are cheapest to acquire and least valuable at the moment of acquisition, which is exactly why competitors skip them. By the time institutions arrive, the capability takes years to build, as the "eternity" of the BitLicense showed. Coinbase came to be described as "a conservative and law-abiding cryptocurrency exchange" because its founders bought respectability at a discount, years ahead of demand.
Tactic: Identify the trust requirement your eventual largest customer will impose, and begin meeting it now, while it is cheap and nobody is asking.
Principle 4
Let your weird become the world's normal
"When you live in the metaverse as a kid, the prospect that everybody might do something like that one day starts to seem a lot less weird." Ehrsam's forecasting edge was autobiographical. A teenager who traded Warcraft gold for thousands of hours had already internalized that a consensus database could be money. To him, Bitcoin was a port of a familiar system to a larger server, not a leap of faith.
Paradigm institutionalized this. Huang played StarCraft semi-professionally. Noyes found Bitcoin through gaming circles at twelve. Georgios Konstantopoulos, now CTO, came in as a self-described World of Warcraft addict. The firm recruits people whose formative experiences make the future seem obvious. Your intuitions about what is strange are calibrated by what you grew up with, and the most valuable people for a frontier are those whose calibration is already set to it.
Tactic: When evaluating a new technology, seek out the people for whom it already feels normal, and weight their intuitions above the experts who find it strange.
Principle 5
Value the mechanism for change over the initial design
"Initial design is important, but over a long enough timeline, the mechanisms for change are most important." Ehrsam wrote this about blockchains in 2017, and it is the most generalizable sentence he has published. Any organization, protocol, or career that cannot adapt will eventually be outcompeted by one that can, however elegant its starting configuration.
He also demonstrated the principle by revising himself. In 2017 he championed on-chain governance. By 2020, with Dan Robinson, he argued that the most successful protocols would "trend towards governance minimization," and he said so plainly. The willingness to publish your own reversal is a mechanism for change applied to one's own beliefs. Most founders protect past positions. Ehrsam treated his like versioned software.
Tactic: For every strategic plan you write, add a section specifying exactly how and when the plan itself will be revised.
Principle 6
Make yourself governance-minimized
Credible neutrality, as Ehrsam defines it, means stakeholders can "use or build on a protocol with confidence it will not change against their interests." A protocol achieves it by avoiding "capture by any particular group." The founder's equivalent is avoiding a dependence on the founder. Ehrsam has repeatedly built institutions and then removed himself as the point of control: Coinbase in 2017, Paradigm's management in 2023.
This is the most counterintuitive pattern in his career, and arguably the most valuable. A company that depends on one person carries a single point of failure that investors, employees, and partners all price in. By stepping back while keeping a board seat or GP role, he converted his presence from a dependency into an option. He also named his successor's fitness explicitly: Huang was "born and bred to run Paradigm."
→
A Career Built of Deliberate Exits
Each departure occurred once the system could continue without him.
2012
Leaves Goldman Sachs after two years on the FX desk; moves to California and co-founds Coinbase.
2017
Steps back from Coinbase operations at the end of January, the day after announcing the BitLicense and a new chief risk officer; keeps a board seat.
2018
Co-founds Paradigm with Matt Huang on a strict 50/50 basis.
2023
Steps down as Paradigm managing partner in October, becomes general partner; Huang continues as managing partner.
2024
Incorporates Nudge, a non-invasive brain-computer interface company.
2026
Appointed to the President's Council of Advisors on Science and Technology.
Tactic: Measure your own indispensability quarterly, and treat any increase as a design flaw to correct rather than a status to protect.
Principle 7
Exit on conditions, not on feelings
When Ehrsam left Coinbase, he gave Fortune three specific reasons, delivered like a trader's checklist: revenue up more than two and a half times in 2016, a strengthened executive bench including a chief legal and risk officer with prosecutorial experience, and the "dang BitLicense." His blog post repeated them. The departure was not framed around burnout or ambition. It was framed around the state of the system.
This is how to leave without damaging what you built. A founder's exit is a signal to every stakeholder, and an exit tied to observable conditions reads as a mark of health, while an exit tied to mood reads as a warning. The conditions also served as an internal discipline. He did not leave during the three "gut-wrenching" down years, when departure would have looked like flight. He left when leaving would read as confidence.
Tactic: Write down, in advance, the three measurable conditions under which you would step back from your current role, and do not leave before they are met.
Principle 8
Find the complement, then split it evenly
Ehrsam explored a crypto fund with several potential partners before meeting Huang. "Nothing felt quite right until I met Matt." The complementarity was explicit: one had operated crypto's most important company, the other had trained at what he called "the highest-standards place I've ever experienced." They spent six months testing alignment before committing.
Then they split everything 50/50, a principle that "drove some people nuts." The even split forecloses the slow-burning resentment that kills partnerships, and it forces the partners to resolve disagreements on the merits rather than by fiat. It also made the 2023 transition cleaner. When one equal hands operating control to another and calls him "born and bred" for it, the move reads as judgment rather than defeat.
Tactic: Before forming a partnership, spend months stress-testing alignment on philosophy and structure, and default to equal economics unless there is an overwhelming reason not to.
Principle 9
Deploy into the despair you have already survived
Ehrsam's two boldest capital moves both happened at the bottom. In late 2018, with Bitcoin down more than 70 percent, Paradigm called its full $400 million at once and averaged roughly 90 percent of it into Bitcoin and Ether at about $4,000–5,000. In May 2022, with Coinbase shares down more than 80 percent from their high, he bought roughly $75 million of stock through Paradigm after having sold near the top.
What made these trades possible was not courage in the abstract. It was memory. He had lived through 2014–2017 at Coinbase and watched "over a third of the company" turn over, and he had concluded that cycles are "volatile periods around a relatively consistent adoption curve." Lived experience of a recovery gives you the stomach to buy the next collapse. Huang put the corollary plainly: "Down years are easier than up years. Signal to noise is very high."
◷
Ehrsam Across the Cycles
His actions in each phase, as documented in the record.
| Period | Market condition | What Ehrsam did | Mode |
|---|---|---|---|
| 2013 | Bitcoin from ~$15 to $1,200 | Raised $5M then $25M; dressed "bankerly" for institutions | Build |
| 2014–2017 | Long downturn; a third of staff turns over | Secured Lloyd's insurance; pursued BitLicense; raised from NYSE and banks | Build |
| 2017 | Recovery and ICO boom | Stepped back from Coinbase; wrote on tokens and governance | Exit |
| 2018 | Bitcoin down 70%+ | Called $400M up front, ~90% into BTC and ETH | Deploy |
| Early 2021 | Prices double in two months | Sent "Surviving Crypto Cycles" to founders | Warn |
| 2021 | Peak euphoria | Raised $2.5B fund; firm grows from 18 to 62 people | Risk |
| May 2022 | COIN down 80%+ from high | Bought ~$75M of Coinbase stock via Paradigm | Deploy |
Tactic: Write down, during each downturn, what you see and feel, so that in the next one you can buy on the strength of evidence rather than nerve.
Principle 10
Write the warning at the top, then obey it yourself
"Surviving Crypto Cycles" is a model document. It names the euphoria precisely ("Senators even have lasers for eyes!"), draws on specific lived experience, and converts it into concrete instructions: stress-test for 10–100x usage, consider raising while capital is available, warn new hires. Sending it in March 2021, near the top, was an act of leadership toward an entire portfolio.
The harder lesson is that the warning was "prophetic but insufficient." Paradigm itself scaled from 18 to 62 people, let its "quality bar slip," and co-led OpenSea at $13.3 billion. Knowing the cycle is not the same as being immune to it, especially when a rival's fundraising creates pressure to keep up. Huang's diagnosis, "when you over-focus on a rival, you become more like the rival," is the missing paragraph of Ehrsam's letter.
Tactic: When you write a cautionary memo to others, append a list of the specific actions your own organization will refuse to take, and review it monthly.
Principle 11
Diligence finds risk; only alignment resolves it
Paradigm's FTX diligence worked, in the narrow sense. The team identified the critical risk, the relationship between FTX and Alameda, and asked direct questions about it. The answers were false, and $278 million went to zero. The firm's response was not to add more diligence checklists. It added a filter: the founder must align with the mission of advancing crypto's frontier.
This is a subtle and important correction. Diligence assumes a counterparty who answers honestly and whose incentives can be modeled. Alignment asks a prior question: does this person want what we want? Huang's verdict on Bankman-Fried, that crypto was "a way to make a ton of money and then give it away," was a statement about motive, not about controls. Ehrsam's own 2017 line applies: "it's really critical that people get the game theory around their end goal absolutely right." That includes the end goals of your partners.
Tactic: Before any large commitment, write one paragraph describing what the counterparty actually wants in ten years, and decline if it diverges from what you want.
Principle 12
Plan for a size that seems absurd
Graham Duncan, a man who professionally interrogates other people's judgment, said Ehrsam and Huang planned "from a size perspective in a way that seemed almost absurd to me," and that "what they planned for ended up happening." A firm renting office space by the week structured itself, from day one, as if it would manage billions. It eventually managed $12.7 billion.
The scale of the plan shaped every early decision: an open-ended fund structure that could hold liquid tokens for years, institutional-grade operations under Palmedo before they were strictly necessary, and recruiting standards Palmedo summarized as "every single person must be in the top 1% of their domain." Planning for absurd size is not optimism. It is choosing structures that will not have to be torn down if you succeed. The same instinct is visible at Nudge, whose research headset is explicitly a step toward a consumer device.
Tactic: Design your legal, operational, and hiring structures for the outcome a hundred times larger than your current plan, so that success does not force a rebuild.
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Part IIIQuotes and Maxims
In their words
— Fred Ehrsam, interviewed by Andreessen Horowitz, December 2013One thing that trading foreign exchange at an institutional level made me acutely aware of is it really not a democratic process. It's not difficult for high-net worth individuals or hedge funds to transfer from one currency to another, but when you think of the average person who needs to send money back to their family outside the United States it's a very opaque marketplace, and the fees are significantly, significantly higher.
— Fred Ehrsam, 'Bitcoin Is Good,' Vox, January 2, 2014Just as the Internet brought the cost of disseminating information down by an order of magnitude, bitcoin brings the cost of transferring ownership down by an order of magnitude.
— Fred Ehrsam, 'Blockchain Governance: Programming Our Future,' November 27, 2017Assuming these systems need to evolve to survive, initial design is important, but over a long enough timeline, the mechanisms for change are most important.
— Fred Ehrsam and Dan Robinson, 'Governance Minimization,' November 28, 2020Creating a perfect governance system is like designing a perpetual motion device.
— Fred Ehrsam, 'Surviving Crypto Cycles,' 2021Crypto has exited every cycle stronger than it entered.
Maxims
- Read the map. When most of the territory is explored, the prestige is high and the opportunity is gone.
- Find the spread. The best products eliminate the fee an incumbent charges people who have no alternative.
- Buy trust cheap. Acquire insurance, licenses, and regulatory credibility years before customers demand them.
- Trust your childhood. What you lived inside as a kid may be what everyone else lives inside in twenty years.
- Version your beliefs. Publish your reversals; a mind that cannot revise itself is a protocol that cannot upgrade.
- Minimize yourself. An institution that does not depend on its founder is worth more than one that does.
- Leave on conditions. Name the measurable state of health that will let you step back, then step back when it arrives.
- Split it evenly. Equal partnership forces disagreements to be settled on the merits.
- Buy what you've survived. The memory of the last recovery is the only reliable courage in the next collapse.
- Check the motive. Diligence tells you what can go wrong; alignment tells you whether the other side cares if it does.
