Coinbase reigns as the largest US-based cryptocurrency exchange. It’s one of the most-favoured platforms, offering a gateway for buying, selling, and exchanging digital currencies. The platform offers a diverse portfolio of cryptocurrencies with approximately 240 tradable assets.
With its intuitive and easy-to-navigate interface, it appeals to a broad spectrum of users, encompassing both novice and seasoned traders. This user-centric design ensures that individuals at any level of trading experience can engage comfortably with the platform. While the standard Coinbase platform is tailored for novice users, Advanced Trade, which replaced the premium service Coinbase Pro in 2022, targets seasoned traders seeking advanced trading options.
The exchange boasts $76 billion in quarterly volume traded and $114 billion in safeguarded assets. The platform is accessible in over 100 countries and has over 3,400 employees. A notable feature that was launched in September 2021 is the direct deposit option. This enables users to have their pay checks deposited directly into Coinbase, with the option to convert their pay into Bitcoin or other cryptocurrencies. Additionally, Coinbase also introduced a Visa debit card, allowing users to earn rewards by spending their crypto assets.
Genesis and growth
Coinbase’s journey began in 2012, when Brian Armstrong, an engineer with a background at Airbnb, saw the potential in the burgeoning field of cryptocurrency. His vision was to create a platform that simplified the process of buying, selling, and using Bitcoin ($BTC), which at the time was a relatively new and complex digital currency. Armstrong’s idea was to make Bitcoin accessible to the average person, not just the tech-savvy or financial experts.
With this vision, Armstrong applied to the Y Combinator startup incubator program, a well-known launchpad for tech startups. His proposal and potential of the project earned him a seed fund of $150,000, a crucial investment that helped kickstart Coinbase.
As Coinbase began to take shape, Armstrong sought a partner who could complement his technical expertise with a strong background in finance. This search led him to Fred Ehrsam, a former Goldman Sachs trader. Ehrsam’s experience in the traditional finance world brought a valuable perspective to Coinbase. His Goldman Sachs background also lent much credibility to Coinbase. This blend of Armstrong’s innovative tech approach and Ehrsam’s financial expertise proved to be a powerful combination for Coinbase.
After its inception, Coinbase quickly attracted significant investments, including a $5 million round led by Union Square Ventures in 2013. The company expanded rapidly, hitting one million users by 2014. It launched Coinbase Exchange for professional traders in 2015, later rebranded to GDAX and then Coinbase Pro. International expansion began in 2015, and in 2018, Coinbase Ventures was launched to invest in blockchain and cryptocurrency companies.
Diverse product portfolio
Coinbase is more than just a crypto exchange; it’s an investment vehicle, a decentralised financial system, and a platform for crypto app development.
Its products cater to individuals, businesses, and developers.
- Coinbase Custody: Launched in 2017, this platform serves institutional investors, offering storage and financial control solutions for crypto assets.
- Coinbase Wallet: A popular mobile app launched in 2017, allowing users to buy, store, trade, and lend crypto assets.
- Coinbase Prime: Introduced in 2021, this platform is designed for institutional investors, offering advanced trading and market assessment features.
- Coinbase Commerce: This platform enables businesses to integrate crypto payments into their checkout processes, supporting major eCommerce platforms.
- Developer Products: Coinbase offers a range of products for developers, including APIs and cloud infrastructure systems, to build and integrate crypto businesses.
Coinbase Prime
In 2019, Coinbase launched Coinbase Prime, a platform specifically designed to cater to the needs of institutional clients. This move was a strategic expansion, acknowledging the growing interest of institutional investors in the cryptocurrency market. Coinbase Prime offered advanced trading tools, dedicated account management, and enhanced security features, all tailored to meet the sophisticated requirements of institutions such as hedge funds, asset managers, and corporate treasuries.
Venturing into stablecoins
Around the same time, Coinbase also ventured into the world of stablecoins with the launch of USDCoin ($USDC). Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as the US dollar. The introduction of USDCoin represented Coinbase’s commitment to providing a more stable and versatile digital currency option for its users, suitable for both trading and everyday transactions.
Going public with the COIN token
A landmark moment in Coinbase’s history came in 2021 when the company went public on the Nasdaq stock exchange. This event was significant for several reasons. Firstly, it marked Coinbase as the first major cryptocurrency exchange to be publicly listed. It stood out as a testament to the growing legitimacy and acceptance of cryptocurrencies in the mainstream financial world. The public listing was done through a direct listing of its shares under the ticker symbol “COIN”.
High transaction fees
Coinbase, while renowned for its user-friendly interface and robust security measures, is often critiqued for its transaction fees, which tend to be higher than the industry average. This aspect of their service model has been a point of contention for many users. The platform charges a premium for the convenience and reliability it offers, particularly for smaller transactions. These fees can vary depending on the payment method, the size of the transaction, and the volatility of the market at the time of the transaction. While these higher fees might be justified by the seamless experience and the range of services offered by Coinbase, they can be a deterrent for users who are more cost-conscious or who engage in frequent trading.
