Bitcoin OG Erik Voorhees: Coinbase Is Part of Crypto Industry’s ‘Hydra Strategy’

Erik Voorhees is a “big fan” of Coinbase. That may come as a surprise since Voorhees, an early Bitcoin entrepreneur, is a radical advocate of decentralized power—so much so that he recently dismantled the company he founded, ShapeShift, and turned it into a DAO.

But as Voorhees explained on the latest episode of Decrypt‘s gm podcast, he likes Coinbase because it represents part of the crypto’s industry’s “Hydra strategy”—a reference to the mythical nine-headed serpent that grew a new head whenever one was cut off.

“I consider myself a purist, and I’m in this for the principles of decentralization. And yet, I am a big fan of Coinbase,” Voorhees said. “Why is that? It’s because Coinbase is one of the heads of the Hydra. They’re making a heavily centralized product that looks like a traditional fintech app. And they’ve achieved immense success with that. There’s also projects that are completely anonymous, that are totally decentralized, and everything in between. And I think that’s really the best way for this industry to develop. If it was all Coinbases, then we haven’t really changed anything at all. If it was all secret, anonymous, niche crypto, decentralized projects that look shady to regulators, then there’s going to be a lot more heat on the industry unnecessarily.”

His point is that crypto opponents, particularly the U.S. government, can go after certain elements of the industry, but other efforts will quickly rise up to take their place—and it’s going to be difficult for the government to slay the entire Hydra.

Voorhees speaks from personal experience. Regulators have put pressure on two of his companies (before ShapeShift, he ran the early Bitcoin game Satoshi Dice), but the industry he believes in so fiercely has flourished all the same.

The ShapeShift founder, one of the crypto world’s most influential political theorists, also told Decrypt about the perils posed by the U.S. government debasing the dollar, and the role of power and leaders in a DAO or decentralized autonomous organization.

“The ‘a’ [in DAO] is problematic,” Voorhees said. “The ShapeShift DAO is not autonomous. It is decentralized, but I don’t know a better term, and that term has stuck so well that I don’t know if it’s going to change. ‘Autonomous’ should really be reserved for the realm of smart contracts themselves. Those are autonomous, but any organization of humans is not.”

Voorhees also shared how the former employees of ShapeShift reacted to their company becoming a DAO. Some of them, he said, “immediately got it, and they had indeed been wanting us to go in this direction for a while… Other employees, the whole thing felt just too weird. And understandably, some people would prefer a steady paycheck and a normal W-2 role at a company, and for those types a DAO is a scary thing, and they’re probably not going to get comfortable with it. And then the majority were in between those extremes.”

Listen to the full conversation on iTunes or Spotify. And make sure to go back and listen to the inaugural gm podcast episode featuring FTX CEO Sam Bankman-Fried.