Banking

Peter Smith built Blockchain.com from nothing into a $5 billion business in 10 years. The CEO of the Baillie Gifford-backed startup shares 4 assets he’s following, and why he’s given away crypto to thousands of people.

  • Peter Smith is the CEO and cofounder of the Baillie Gifford-backed crypto startup Blockchain.com.
  • Smith shared how, in 10 years, he built the firm from nothing to a business valued at $5 billion.
  • He also laid out the four crypto trends and assets on his radar these days.
  • See more stories on Insider’s business page.

The crypto market is tumbling. But Peter Smith, the chief executive and cofounder of Blockchain.com, is “hodling.”

“Ten years in crypto and I still haven’t figured out how to sell,” Smith said in an interview. “I’ve never been more convicted that bitcoin and crypto generally are where I should be spending all my time.”

To Smith, time is perhaps the only thing that is more valuable than crypto, which he still thinks is “probably the best investment opportunity in the world today.”

Similar to many crypto entrepreneurs, he became interested in cryptocurrencies while moving constantly across borders for a few years.

Though still in his 30s, Smith has lived, studied, and worked in the US, Europe, the Middle East, Africa, and Asia. He recalled visiting an internet café in Thailand almost 14 years ago to call home via Skype and marveled at how much of a hassle that was compared to today.

“I was watching that all happen, but at the same time communicating was getting easier, money was not getting easier,” he said. “That was the one thing that seems like, ‘Well, technology is going to have to fix this.'”

When blockchain technology did come out, Smith was fortunate to have been there in 2011, almost right from the start. In fact, he was given his first bitcoin by Gavin Andresen, a computer scientist and early adopter of bitcoin who worked alongside its creator, Satoshi Nakamoto, to maintain and promote the cryptocurrency.

“I was like, ‘Wait a minute, this is a system designed from the ground up for the internet. It’s secure. It has a really interesting monetary policy,'” he said. “I just got completely fascinated by it.”

Nowadays, Smith has made a habit out of giving away cryptocurrencies. He estimated that he has given away crypto to between 3,000 and 4,000 people at this point.

“People don’t understand the magic of cryptocurrency until they see a transaction happen,” he said.

A $5 billion business backed by Baillie Gifford

Smith’s fascination with “magic internet money” led him down the crypto rabbit hole and eventually to cofounding Blockchain.com.

The company started out offering a block explorer (an online tool to view transactions, hash rate, and other critical information on the blockchain) and expanded into a crypto wallet, exchange, and institutional services, including custody, execution, and lending.

“Blockchain.com started with a pretty simple idea, which was just to build tools to make using bitcoin and other cryptocurrencies easier,” Smith said. “We don’t build something and hope people will come to use it. We go out and build it because customers are coming to us and asking for it.”

The firm’s demand-driven business model has paid off. Most recently, it closed a $300 million fundraising round led by DST Global Partners, Lightspeed Ventures, Vy Capital, and the storied Scottish fund manager Baillie Gifford, which itself committed $100 million.

The round valued the crypto startup, which was founded in 2011, at $5.2 billion. The valuation is in part backed by the huge growth in the number of verified users, which stands at 31 million.

“I remember when we got to the stage where we had so many customers that there was no longer a stadium you could put them all in,” he said. “When you step back and think about that, it’s just pretty incredible.”

Crypto trends and assets on his radar

Despite Blockchain.com’s turbocharged growth over the past year, the company, like many crypto startups, now has to face the possibility that the

bull market
may be coming to an end as over $1 trillion in value has been wiped out from the crypto market since the peak in mid-April.

Smith, who said he has “been through so many of them,” chooses to take each wild fluctuation in the market as a test of the firm’s systems.

“The markets are going to go up and down, but zoom out and look at where the markets have been headed over the last 10 years,” he said. “And I think that’s the difference between an investor, an entrepreneur, and a trader. A trader is having a terrible day today. An investor or an entrepreneur is having a fine day.”

As a huge believer in bitcoin and ethereum, Smith does not have any big, bold price predictions, but he does think of crypto as the financial system for the internet.

“I think the internet is going to be the world’s most important economy, and that opportunity is measured in the trillions of dollars,” he said. “I think there will be at least one if not multiple trillion-dollar companies in crypto.”

Although there is hype around almost everything in crypto right now, Smith said he is “spending a good deal of time” investigating emerging trends and assets in the space.

One of them is what he calls non-fungible-token protocols, which refers to specialized protocols that power the NFT economy, as opposed to existing NFT auction platforms that are mostly built on top of the ethereum network, for example.

Smith is also digging into the bitcoin cash ecosystem, which he believed is “doing really cool stuff” around efficient payments. Bitcoin cash (BCH) forked from bitcoin in 2017 amid concerns around the latter’s scalability.

“It’s become one of my favorite cryptos to give away because I can send it to someone instantly for like a penny,” he said. “I can’t really give away ether or bitcoin anymore because the transaction fees are so high.”

Two other assets he follows closely are algorand (ALGO) and polkadot (DOT).

The algorand blockchain was launched by Silvio Micali, an MIT professor, in June 2019 to speed up transactions, lower transaction fees, and solve the energy-usage problems from mining that other cryptocurrencies, such as bitcoin, have.

Polkadot, which makes it easy to transfer any data or asset cross-chain, allows for different types of blockchains to become interoperable with each other.

“That comes down to the quality of the engineering work,” Smith said. “I think parachains, which is where polkadot is headed, as that rolls out, that’s going to be just an incredibly interesting economic and engineering experiment.”

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