Coinbase - The Largest Cryptocurrency Exchange In US

Sarika Anand Sarika Anand
May 21, 2021 10 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.

Individual coin ownership records are stored in a ledger in the form of a computerized database that uses strong cryptography to protect transaction records, monitor coin formation, and verify ownership transfers, making a cryptocurrency, or crypto, a digital asset designed to work as a medium of exchange.

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 March 2021, it was the largest cryptocurrency exchange in the United States by trading volume.

Know more about the Coinbase success story below

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 - Name, logo and Tagline
Coinbase - Founder and History
Coinbase - Products and Services
Coinbase - Vision and Mission
Coinbase - Business Model
Coinbase - Revenue and Growth
Coinbase - Funding and Investors
Coinbase - Investments
Coinbase - Acquisitions
Coinbase - Competitors
Coinbase - Challenges Faced
Coinbase - Future Plans
Coinbase - FAQs

About Coinbase and How it Works?

The largest cryptocurrency exchange in the United States is Coinbase. The San Francisco-based business, which was established in 2012, 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 onramp for 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

According to Coinbase's strategy, they will first launch a retail exchange to make investing in digital currency easy for customers. Second, they will enable professional traders and organizations to exchange digital currencies. Not only will this support the investment outlined in step one, but it will also help scale it by increasing trading volumes.

They'll build an user interface for the general public so that they can begin using the payment network. They could see a surge in the number of technologies tested if the barrier to developing new digital currency applications is removed. They plan to invest in, collaborate with, or create a variety of new applications in this space, including substitutes for many of the services used in finance 1.0.

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 - Founder and History

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

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

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 - 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 and vision 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."

Coinbase - 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'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.


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Coinbase - Revenue and Growth

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 percent of that total. In 2020, Coinbase was responsible for roughly 0.57 percent of the $193 billion in cryptocurrency trading value.

Sales will rise by 139 percent 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 $847.3M in funding over 14 rounds.

Date Round Amount Lead Investor
Dec 21, 2018 Secomdary Market $22M -
Oct 30, 2018 Series E $300M Tiger Global Management
Oct 8, 2018 Series E $300M -
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 14 investments thus far as follows:

Date Organization Name Round Amount
May 18, 2021 Cortex $2.5M
April 28, 2021 Alchemy Insights $80M
April 14, 2021 Tribe Accelerator $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 15 organizations.

Aquiree Name Date Amount About Acquiree
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.

Coinbase - 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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