- Blockchain.com, the world’s largest crypto wallet, focuses on attracting high-value individuals rather than institutions, who are not coming “anytime” soon according to CEO Peter Smith
- Smith shares how the Stellar token airdrop saw 1 million users from emerging markets sign-up in 72 hours
- He discusses the downside of hiring in a bull market and how managers must remain vigilant about bull-hires
Blockchain.com has something of a reputation for two main things. First, as the world’s largest digital-asset wallet service, and secondly, as one of the most secretive firms in crypto. Visitors, for example, must sign a confidentiality agreement upon arrival, and peers have described its management as tight-lipped.
Still, in an interview with The Block, Blockchain.com CEO Peter Smith pulled back the curtain. Over the past eight years, Smith has built out a crytpo-service empire that spans from ICO treasury management to raw class liquidity, custody, and research. At its core, of course, is its free wallet service, which hosts 32 million accounts storing Bitcoin, Stellar, Bitcoin cash, and Ethereum. Users can now also trade their cryptocurrencies; the company’s key to monetization amid its wider ambition to fix a financial system that it considers “broken.”
The Block caught up with Smith to talk Blockchain.com’s future clientele, who’s buying into a crypto-based economy, and the quirks that come with recruiting from Wall Street.
Target the wealthy, not the institutions
The hype around “institutional money” has yet to infiltrate Blockchain.com’s central London offices. There, the consensus is that neither major banks nor investment funds will be joining the market “anytime soon” — at least not until the next bull run, said Smith.
“We are a client of Goldman so we talk to them all the time, and basically what happens is the crypto market goes up, [and it’s like] “Goldman is going to build a business”. Next thing, crypto market goes down…[and it stops]. At one point a TV interviewer called me. She was like, “You’re a real pessimist.” I was like, “Realist.”
Given their underlying “realism” when it comes to institutions, Blockchain.com prefers to target professionals who have already bought into the idea of crypto. There is no need to explain the ideological merits. It’s simply down to pitching Blockchain’s brand ahead of competitors like Bitgo, Bedrock and Bread.
“We think it’s much more likely that large family offices, high-net-worth individuals, and other crypto companies or projects are the end-state constituents,” Smith said.”Our sales and go-to-market approach since we launched the institutional product has been to focus on those three…It’s going to continue to be retail-led and ecosystem-led, even after the first wave of institutions join.”
The firm is not alone in holding this view. Indeed, leading exchange Coinbase has made a similar calculation, winding down its Wall Street-focused strategy, The Block reported earlier this month. As a result, the two companies will be looking at the same market, Smith acknowledged, and their “focuses will now overlap.” Still, he doesn’t seem worried. Blockchain.com (formerly Blockchain.info), was listed among the top 1,000 global websites last year and seems to be making the most of its wealthier clients.
“Quarter four was very strong institutionally. And the end of the year was strong for OTC [over the counter trading]. December was its best month ever,” Smith said. Coinbase Pro introduced its own OTC desk in November, after volumes rose across the board according to Diar.
Young and clueless about crypto … meet Blockchain.com’s average user
Smith is rather forthcoming when describing his platform’s user base. For the most part, he says, they’re novices.
“I can assure you that the vast majority of our customers do not understand crypto when they sign up.” says Smith. True to form, the company has an entire team dedicated to dealing with people who don’t understand digital assets. In fairness, this is to be expected considering the company uses “airdrops” to give away free tokens. Last year, it dropped $125 million worth of XLM tokens. The move saw over a million people join the wait list in the first 72 hours.
“If you care about $25 of free crypto, you’re not a wealthy consumer,” Smith notes, despite most users still falling under the bracket of the “savvy middle class.”
As for the firm’s geographic breakdown, clients span the globe; from India, Indonesia, the Philippines, and Kenya. A large number come from the EU and the US, but this audience is the first to wane in a bear market, Smith says, whereas uptake in countries which lack financial infrastructure is more consistent.
“We are 30 to 40% emerging markets. They are not joining because they’re technically interested. They’re joining because their country is broken,” Smith noted. “We have a very active customer base in Venezuela, Ukraine. We have a very active customer base in Germany whenever EU default news comes up.”
Blockchain’s target customers are also “mostly millennial” or as Smith puts it, the “post-crisis, the post-GFC [global financial crisis] generation.” His rationale for this uptake is that this group has “seen what happens when the financial system falls apart. They are young and technology focused and live more in the internet than they live in the real world.”
The talent paradox
Another question is how crypto-prices affect hiring and performance. Smith says that hiring in a bull market may bring on the best talent – but, there’s a catch.
“You have to be very careful. There’s this conversion process that happens [when the price drops]…Those folks that are coming from equities or Wall Street or big tech now have to buy into the vision and mission because it no longer looks like a quick way to make money…Across the industry, you’re going to see folks who dove into this and then realized that they’re in water that’s a little too deep.”
Blockchain.com itself recruited around 11 people during the last bull run, including two C-suite members. Smith explained the double-edged sword that comes with this.
“A lot of those people will become some of the best people at Blockchain because…when you can recruit the very top level of talent, the ones that make the conversion are going to be your absolute strongest members of the team. [But you] have to have your eyes open that not everyone’s going to convert.”
Still, for now, it looks like the firm and its staff’s work is paying off. According to Smith, Blockchain.com dominates the London scene after a series of “relentless” acquisitions and there are three more global M&A deals in the pipeline – likely centered around talent acquisition. As reported by the Block, it also hopes to add an undisclosed stablecoin partnership to its portfolio.
On top of everything, the company’s revenues have grown every year – an anomaly in crypto, according to Smith.
Still, finding hard numbers on how much its trading services and data-sales make proves a little trickier. “If you’re looking for a breakdown between our retail and institutional business, you’re not going to get it,” Smith responded.
Well, you can’t have it all.