Coinbase - The Largest Cryptocurrency Exchange In US

Sarika Anand Sarika Anand Anik Banerjee Anik Banerjee
May 5, 2022 14 min read
Coinbase - The Largest Cryptocurrency Exchange In US

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations. The content in this post has been approved by Coinbase.

With the passage of days, currencies have evolved. The physical currency that we use today, has also undergone a list of transformations in terms of the denominations, metals used, shapes and sizes of the currencies, and more. This currency that is presently in use has a physical form, but they also stay with us, within our wallets, payment apps, and banking accounts, digitally.

The crypto-currency is a step ahead of these currencies that are in vogue today around the world. A cryptocurrency or crypto can be summed up as a collection of binary data that is designed to work as a medium of exchange where the ownership records of the individuals are managed in computerized databases. These records are stored in the form of ledgers secured with strong cryptography, which seals the transaction records, controls the creation of additional coins, and verifies the transfer of the ownership of coins.

The cryptocurrencies, as they work, also need cryptocurrency exchanges, to empower the users to trade these currencies for other assets, including digital and fiat currencies. Coinbase works in a similar way.

Coinbase is an American company that operates an entirely online cryptocurrency trading network with no physical headquarters. The company was founded in 2012 by Brian Armstrong and Fred Ehrsam, and as of November 2021, it is the largest cryptocurrency exchange in the United States by trading volume.

Know more about the Coinbase success story

Coinbase - Company Highlights

Startup Name Coinbase Global, Inc.
Headquarters San Mateo, California, United States
Industry Cryptocurrency
Founder Brian Armstrong, Fred Ehrsam
Founded June 2012
Current CEO Brian Armstrong
Website www.coinbase.com

About Coinbase and How it Works?
Coinbase - Target Market Audience
Coinbase - Founders and Team
Coinbase - Startup Story
Coinbase - Name, logo and Tagline
Coinbase - Products and Services
Coinbase - Vision and Mission
Coinbase - Business Model
Coinbase - Growth and Revenue
Coinbase - Funding and Investors
Coinbase - Investments
Coinbase - Acquisitions
Coinbase - Competitors
Coinbase - Challenges Faced
Coinbase - Future Plans

About Coinbase and How it Works?

The largest cryptocurrency exchange in the United States, Coinbase is a San Francisco-based business, which was established in 2012. It has weathered occasional Bitcoin bubbles to become the go-to place for Americans looking to purchase so-called digital gold and other blockchain tokens. Coinbase is one of the most prominent digital finance upstarts challenging Wall Street, led by Brain Armstrong, a former Airbnb engineer.

Coinbase is an online platform that enables merchants, consumers, and traders to transact in digital currencies. It allows users to build their own cryptocurrency wallets and use their bank accounts to buy and sell cryptocurrency. In addition, the firm provides a range of merchant payment processing systems and tools to support high-trafficked websites on the internet. The company already has a sizable client base in a market that was once dominated by crypto asset enthusiasts.

Coinbase has increased in popularity and become the on-ramp for the mainstream cryptocurrency investors by positioning itself as a safe haven for crypto asset exchanges. Unlike many of its competitors, it has never been hacked. Coinbase has also adhered to existing legislation and law enforcement with zeal, putting it on the right side of the law β€” another significant advantage in a sector in dire need of regulatory oversight.


Coinbase - Target Market Audience

As Coinbase is a crypto-exchange platform, the target audience of Coinbase is primarily the millenials, ranging between 25-45 years from low-tech to high-tech individuals from around the globe.

Coinbase - Founders and Team

Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam.

Founders of Coinbase - Brian Armstrong and Fred Ehrsam
Founders of Coinbase - Brian Armstrong and Fred Ehrsam

Brian Armstrong

Brian Armstrong is known as the Co-founder and CEO of Coinbase. Armstrong is a Rice University alumnus, who completed his Bachelor's and Master's degree in Computer Science, Economics and Computer Science respectively. Before founding Coinbase, Armstrong was an Enterprise Risk Management consultant at Deloitte & Touche, a CEO, and Founder at UniversityTutor.com, and a Technical Product Manager at Airbnb.

Fred Ehrsam

Fred Ehrsam is a Co-founder of Coinbase. Ehrsam is an alumnus of Duke University, from where he obtained a BS in Computer Science and Economics. He was previously a Trader at Goldman Sachs, before being a Founder of Coinbase, who is now also serving as a member of the Board of Directors. Ehrsam is also a Co-Founder of Paradigm.

The company recently hired Snap India Head Durgesh Kaushik. The former CEO of Snapchat was appointed as the Senior Director for Market Expansion of Coinbase, effective from May 9, 2022. The company is strongly looking forward to its expansion in countries like India, which is a significant part of the reason of this appointment. Besides, Coinbase is also striving to debut in many other markets as well in the Asia Pacific, Africa, Europe, the Middle East, and the Americas.

Coinbase has a considerably large team, which consists of more than 3K employees. Β 

Coinbase - Startup Story

Coinbase was initially created by Brian Armstrong, a former Airbnb engineer, in July 2011 and was started to be funded by Y Combinator. After co-founder Fred Ehrsam, a former Goldman Sachs trader, joined the group, Coinbase finally launched its services to buy, sell, and store bitcoins in 2012.

"Armstrong and Ehrsam first met on Reddit and shared a bullish view on bitcoin and the cryptocurrency space as a whole," said Ehrsam on Twitter. After this, they decided to launch Coinbase with the β€œmission” to β€œmake crypto easy to use.”

Ben Reeves, a British programmer and co-founder of Blockchain.info, was supposed to be a member of the Coinbase founding team, but he split with Armstrong shortly before the Y Combinator funding round over their conflicting views on how the Coinbase wallet should function.

The company began offering services to buy and sell bitcoins via bank transfers in October 2012.


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Coinbase - Name, logo and Tagline

Coinbase is a cryptocurrency exchange network that is entirely online, as the name implies. The company's name was influenced by Coinbase transactions, which are special transactions that put cryptocurrency into circulation in proof of work cryptocurrencies.

Coinbase's Company Logo
Coinbase's Company Logo

β€œWelcome to the Future of Money,” read the slogan at the top of Coinbase's website in 2013. This was changed to β€œBuy and Sell Digital Currency” in 2017.

Coinbase - Products and Services

Coinbase offers both retail and institutional investors cryptocurrency products, as well as other cryptocurrency-related services.

The following are some of the company's retail trade products:

  • Coinbase is a user-friendly app for purchasing, storing, and exchanging cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin.
  • Coinbase Pro is a sophisticated asset trading platform that lets users exchange a wide variety of digital assets.
  • Customers can use Coinbase Wallet to access decentralized crypto apps (dapps) through a dapp browser.

Coinbase's products for institutional traders include:

  • Coinbase Prime, a platform dedicated to institutional customers.
  • Coinbase Custody is a collection of tailored services for businesses that hold bitcoin and other cryptocurrencies on the Coinbase platform. As part of the program, Coinbase members have access to an SEC-qualified custodian, third-party auditing, and financial reporting confirmation.

Other cryptocurrency-related products offered by the business include:

  • USD Coin is a digital stablecoin that allows customers to swap US dollars for a cryptocurrency with the same value but faster trading.
  • Customers can spend cryptocurrency wherever Visa cards are accepted with the Coinbase Card, a debit Visa card.
  • Coinbase Commerce, a retailer payment program.

Using the company's API, developers and merchants can build applications and accept payments in both digital currencies. As of 2018, the cryptocurrency wallet was available in 190 countries, and the company's buy/sell trading functionality was available in 32 countries. Coinbase has a mobile app for both iOS and Android.

Coinbase - Vision and Mission

Coinbase's mission statement says, "our mission is to build an open financial system. We're doing this to increase the amount of economic freedom in the world, a measurable concept that can be greatly accelerated with the adoption of cryptocurrency."

"We started in 2012 with the radical idea that anyone, anywhere, should be able to easily and securely send and receive Bitcoin", says the Coinbase website, which can be considered the vision of Coinbase.

Coinbase - Business Model

The business of coinbase is built around the B2C and B2B models. The company targets two primary customer groups:

  • Those who use the platform for buying and selling digital assets with the help of the wallet that Coinbase (B2C) offers.
  • The next are the merchants, who use the Coinbase platform (B2B) to store their digital assets (transferred by consumers) as a kind of payment from their customers.

Coinbase's network is used by both retail and institutional customers to buy, sell, and shop cryptocurrencies like Bitcoin and Ethereum. Customers can use the Coinbase, Coinbase Pro, and Coinbase Wallet apps, as well as the company's websites, to contact them. Coinbase had approximately 56 million retail users as of Q1 2021.

As an online marketplace, Coinbase allows the consumers to trade in numerous cryptocurrencies (over 20 different cryptocurrencies), which they can buy and sell like:

  • Bitcoin
  • Ether
  • Litecoin
  • XRP and many others.

Furthermore, Coinbase also boasts of the Coinbase Pro and Prime platforms that help individuals and institutional clients to trade in a more sophisticated manner. Besides, the traders can also plug into the Coinbase API in case they want to retrieve real-time market data and develop programmatic trading bots.

Along with the Coinbase trading platform, also known as exchange wallet, the Coinbase customers can also choose to use the Coinbase Wallet, often referred to as the crypto wallet. The latter is designed as a standalone app via Android or iOS and is more secure than the exchange wallet. Moreover, the wallet facility also enables the users to exchange goods and services effortlessly.

Along with the trading platform that Coinbase offers, the company also brings in a whole suite of other products both for the businesses and the consumers.

Furthermore, Coinbase also offers a wide range of courses on cryptocurrencies, such as Dai or EOS. The platform grants these currencies as rewards for the users who manage to successfully complete the courses.

Coinbase also helps the users order a physical VISA debit card called the Coinbase Card, via which they can spend their earned cryptocurrencies and can also track their spending.


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Coinbase - Growth and Revenue

Coinbase is hailed as the largest crypto-exchange by trading volume in the United States, and has seen huge growth already since it was founded in June 2012 by Brian Armstrong and Fred Ehrsam. When the started, in around 2012, the worth of a bitcoin was $6, and the knowledge of the same was limited to only a "few nerds on the internet", tweeted Ehrsam. From that to today's awareness of bitcoin, Coinbase has a huge hand in it. Β  Β 

Over the first two years in business, Coinbase grew to be a company with 1000+ employees, which is a huge milestone indeed.

The company has rolled out an NFT marketplace in beta, went the May 25, 2022 reports. What was announced 7 months earlier, in October 2021, the marketplace for the non-fungible tokens (NFTs) is now available in beta version.

Coinbase earns its revenue from a range of different sources, as mentioned in the above section of the Business Model.

Trading transaction fees and services such as storage and analytics accounted for about 90% of the Coinbase revenue (as of 2020). Customers are paid transaction fees (roughly 0.5%) based on the size of their trades, with smaller trades incurring lower fees.

Coinbase takes a share of any bitcoin trade, according to its website. It made $1.28 billion in revenue in 2020, with transaction fees accounting for 86% of that total. In 2020, Coinbase was responsible for roughly 0.57% of the $193 billion in cryptocurrency trading value.

Sales will rise by 139% in 2020, according to Coinbase's prospectus, from $534 million in 2019. From about $80 billion in 2019, Coinbase's trading volume increased nearly 142% in 2020.

In 2020, Coinbase profited $322 million, compared to a $30 million loss in 2019. Yet faster growth was seen in the first quarter of 2021. Coinbase posted $1.8 billion in sales for the year, up 906% from $179 million in the first quarter of 2020. The trading volume in the first quarter was $335 billion, which was 60% higher than the entire year of 2020. In the first year, Coinbase anticipates a profit of $730 million to $800 million.

Coinbase - Funding and Investors

Coinbase has raised a total of $567.3M in funding over 17 rounds. Here's a list of the last 12 rounds that the company has seen.

Date Round Amount Lead Investor
Jan 18, 2021 Secondary Market $20M -
Oct 1, 2020 Venture Round - -
Jan 1, 2019 Secomdary Market - -
Dec 21, 2018 Secomdary Market $22M -
Oct 30, 2018 Series E $300M Tiger Global Management
Aug 1, 2018 Venture Round - -
Feb 1, 2018 Venture Round - -
Aug 10, 2017 Series D $108.1M IVP
Jul 7, 2016 Series C $10.5M Mitsubishi UFJ
Jan 13, 2015 Series C $75M DFJ Growth
Jan 13, 2015 Series C - -
Dec 12, 2013 Series B $25M Andreessen Horowitz

Coinbase - Investments

Coinbase has made many investments to date. Here are some of the prominent recent investments of Coinbase:

Date Organization Name Round Amount
May 4, 2022 Amberdata Series B $30M
Apr 26, 2022 Ox Series B 70M
Apr 13, 2022 Dfns Seed Round $13.5M
Apr 12, 2022 Nomad Seed Round $22.4M
Mar 22, 2022 Yuga Labs Seed Round $450M
Feb 22, 2022 Zebec Protocol Series A $28M
Jan 14, 2022 AMIS Grant -
Sept 5, 2021 Balt Financial Holdings Seed Round $100M
June 28, 2021 Qredo Initial Coin Offering $16M
May 18, 2021 Cortex Seed Round $2.5M
April 28, 2021 Alchemy Insights Series B $80M
April 28, 2021 Risk Harbor Seed Round $3.5M
April 14, 2021 Tribe Accelerator Venture Round $70M
Dec 14, 2020 Rain Series A $9.4M
Jul 12, 2020 Securitize Series A $12.8M
Dec 17, 2019 Alchemy Insights Series A $15M
Nov 19, 2019 Bison Trails Series A $25.5M
Oct 6, 2019 Coinbase-CBT Series B $80M
Sep 2, 2019 Coinbase-CBT Series A $20M
Aug 12, 2019 BLADE Seed Round $4.3M
Jul 17, 2019 Horizon Blockchain Seed Round $3.8M
Apr 22, 2019 ZestMoney Series B $20M
Dec 17, 2018 Abacus Seed Round $2M

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Coinbase - Acquisitions

Coinbase has acquired 22 organizations, as of May 5, 2022. BtcTurk was the last company acquired by Coinbase, which came in on April 21, 2022. Β Here's a list of the prominent Coinbase acquisitions to date:

Aquiree Name Date Amount About Acquiree
BtcTurk Apr 12, 2022 - A bitcoin and cryptocurrency exchange based from Turkey that utilises BTC trader's white label platform
FairX Jan 12, 2022 - A futures products manufacturing company that caters to the demands of the active retail investors
Unbound Security Nov 30, 2021 - A security company that extends protection for cryptographic keys and credentials, based in New York
BRD Nov 25, 2021 - Zurich-based company that designs, develops and markets financial software
Agara Nov 2, 2021 - Based in Bengaluru, India, Agara helps to automate end-to-end customer support operations.
Zabo Aug 4, 2021 - Zabo helps in connecting a crypto wallet with an application via codes.
Skew April 30, 2021 - skew is a platform that builds cutting-edge financial infrastructure for the digital assets space.
Bison Trails Jan 19, 2021 - Bison Trails allows the user to run secure infrastructure on multiple blockchains.
Tagomi May 27, 2020 - Tagomi is a cryptocurrency trading platform to provide clients with trade better execution so they can keep more of their returns.
Routefire Jan 7, 2020 - Routefire is a provider of trade execution infrastructure in the digital asset space.
Neutrino Feb 19, 2019 - Neutrino is focused on developing a comprehensive platform for analyzing, tracking & investigating blockchain and other virtual currencies.
Blockspring Jan 17, 2019 - Blockspring is a place to create, share, and run functions.
Distributed Systems Aug 15, 2018 - Distributed Systems is a digital identity startup and a full-stack machine intelligence.
Keystone Capital Corp. Jun 6, 2018 - Keystone Capital Corp. operates as a financial-services firm.
Venovate Jun 6, 2018 - Venovate facilitates the discovery, evaluation, and purchase of private company stock and other alternative assets.
Digital Wealth Jun 6, 2018 - Digital Wealth is a fee-only financial planning and investment management firm.
Paradex May 23, 2018 - Paradex operates as a crypto trading relay platform.

Coinbase - Competitors

Coinbase's top competitors include

  • River Financial
  • GNEISS
  • OST.com
  • Blockchain
  • Binance
  • Bittrex
  • Bitfinex
  • Kraken
  • Paxos
  • Xapo
  • Bithumb
  • Bibox.

Coinbase - Challenges Faced

Coinbase was up against existing players as well as new decentralised exchanges. The company has struggled to scale up, with its support staff handling a backlog of queries about, among other items, exchange outages and money transfer delays. Finally, since crypto asset prices directly affect Coinbase, it must exercise caution if the market continues to decline.

Coinbase has experienced internal issues as a result of poor execution. Despite a substantial increase in its user base, Coinbase has struggled to scale, as shown by recent events concerning the listing of bitcoin cash.


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Coinbase - Future Plans

Faced with the aforementioned obstacles, Coinbase intends to expand its core businesses while still exploring new opportunities.

According to Coinbase's "Digital Asset Framework," the company plans to add more assets to its network in order to diversify its trading. This would benefit the company's bottom line while also encouraging a huge consumer base to try out new blockchain applications. As a result, adding assets is both a hedge and a bet on the sector's long-term viability.

The goal of Coinbase is to assist all assets that meet their technical specifications and adhere to all applicable laws. According to Coinbase, customers around the world will eventually have access to at least 90% of the overall market cap of all digital assets in circulation through its platforms.

FAQs

What does Coinbase do?

Coinbase is an American company that runs a cryptocurrency trading network that is based entirely online.

Who founded Coinbase?

Brian Armstrong and Fred Ehrsam are the founders of Coinbase.

How does Coinbase make money?

Trading transaction fees and services such as storage and analytics accounted for about 90% of the company's revenue. Customers are paid transaction fees (roughly 0.5%) based on the size of their trades, with smaller trades incurring lower fees.

What companies do Coinbase compete with?

Coinbase's top competitors include River Financial, OST.com, Blockchain, Binance, Bittrex, Bitfinex, Kraken, Paxos, Xapo, Bithumb and Bibox.

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