Already estimated for a valuation of $100 billion, the company plans to list on the Nasdaq under the ticker COIN…
Coinbase presents itself as a success story of the crypto economy, which it says has developed over and above the transfer of bitcoin, an early use case for block chain technology.
The company reported revenue earning worth $1.3 billion in 2020, more than double the $533.7 million that it posted in 2019. Coinbase recorded net income of $322.3 million in 2020, versus a loss of $30.4 million for 2019.
Coinbase admits that it had 2.8 million monthly transacting users and 43 million verified users as of the end of 2020. The company’s median quarterly trading volume increased to $38 billion in 2020 from $21 billion in 2019 and $17 billion in 2018.
The company compares itself to Alphabet Inc.’s Google search engine, saying that while Google made it easy for people to access information its “democratizing access to the crypto economy by enabling anyone with an internet connection to easily and securely invest in and use crypto assets.'
The company's filing documents contain a letter from founder and CEO Brian Armstrong. Unlike a hellish, boring, pompous or deceiving you might expect it to be, its actually quite revealing of Coinbase’s vision and future for the cryptocurrency ecosystem.
Here is the full text of the letter:
Coinbase is a company with an ambitious vision: to create more economic freedom for every person and business. Everyone deserves access to financial services that can help empower them to create a better life for themselves and their families, but today we are a long way from this vision.
The current financial system is rife with high fees, delays, unequal access, and barriers to innovation. In many countries, citizens don't have access to sound money, a functioning credit system, or even basic property rights. If the world economy ran on a common set of standards that could not be manipulated by any company or country, the world would be a more fair and free place, and human progress would accelerate.
When I first read the Bitcoin whitepaper back in 2010, I realized this computer science breakthrough might be the key to unlock this vision of the future. Every payment could be as fast, cheap, and global as sending an email. Cryptocurrency could provide the core tenets of economic freedom to anyone: property rights, sound money, free trade, and the ability to work how and where they want. Economic freedom is a necessary, if not sufficient, condition for human progress. Societies with greater economic freedom have higher life expectancy and GDP growth, less war and corruption, better treatment of the environment, and higher income of the poorest 10% of people in society. Higher economic freedom correlates with the kind of societies that we all aspire to create. Our job at Coinbase is to help make this future a reality.
What started with Bitcoin has spawned an entire industry with countless different blockchains and tokens. We now have stablecoins, privacy coins, security tokens, reward tokens, governance tokens, and smart contracts. We're seeing the digitization of all types of value in a new economy that we call the crypto economy.
Trading and speculation were the first major use cases to take off in cryptocurrency, just like people rushed to buy domain names in the early days of the internet. But we're now seeing cryptocurrency evolve into something much more important. People are using cryptocurrency to earn, spend, save, stake, borrow, lend, vote, and perform many other types of economic activity. Companies are being funded, getting early customers, and will eventually go public, all on the block chain. The crypto economy is just getting started. It is not intended to replace the traditional economy, but instead be a complement to it, much like email was to paper mail. The crypto economy offers a more global, free, and fair alternative to traditional economies that is native to the internet.
Coinbase is building the infrastructure to power the crypto economy, helping bring the benefits of this new technology to the world. Today, you could think of our products as a safe and easy-to-use platform to buy, sell, store, save, spend, and use cryptocurrency. But for many of our customers, they simply think of us as their primary financial account in the crypto economy. Coinbase is building a portfolio of different products and services that connect to this primary financial account, and we're enabling third party products and services to be connected as well. We seek to make all of our products and services the most trusted and easiest to use in the industry.
Trust is critical when it comes to storing money. From the early days, we decided to focus on compliance, reaching out to regulators proactively to be an educational resource, and pursuing Licenses even before they were needed. We invested heavily in cybersecurity, built novel key storage mechanisms, and obtained a cybercrime insurance policy. We even developed ways for customers to custody their own cryptocurrency safely, so they didn't need to trust us at all. Most importantly, we built a culture that doesn't take shortcuts or try to make a quick buck.
Ease of use is our other major area of focus. Cryptocurrency is still much too difficult to use for the average person. In the same way that people can access the internet without understanding how TCP/IP works, or turn on a Light switch without understanding how electricity works, they need to be able to use cryptocurrency without understanding the underlying complexity. We accomplish this by continually finding ways to simplify our products and pushing for new standards in the industry that improve usability.
Trust and ease of use will be as relevant in ten years as they are today, and our work here will never be done. We may not always move the fastest, or offer the lowest prices, but if we accomplish our goal of being the most trusted and easiest to use, customers will continue to choose our products and services now and in the future.
It is the very early days of this industry, and Coinbase has always taken a Long-term view. We are squarely focused on delivering the best crypto experience to our customers. Today, we are investing in growth because we believe that scale is critical to achieving the potential of our business model.
You can expect volatility in our financials, given the price cycles of the cryptocurrency industry. This doesn't faze us, because we've always taken a long-term perspective on crypto adoption. We may earn a profit when revenues are high, and we may Lose money when revenues are Low, but our goal is to roughly operate the company at break even, smoothed out over time, for the time being. We are looking for Long-term investors who believe in our mission and will hold through price cycles.
Our goal is to build a portfolio of products and services with efficient capital allocation and to demonstrate repeatable innovation. We have done this before, taking the profits from our early products and services and reinvesting them into new products and services that we believe help accelerate our vision of the future. We will continue to make investments in new products and services when we see a sufficient probability of gaining market Leadership. Some of these investments will pay off, others will not. We will measure our products and services and the effectiveness of our investments analytically, and shut down products and services that do not provide expected returns. We will Learn from our successes and mistakes, and use those learnings to inform our decision making in the future. We hope this perspective will make us more profitable in the Long run as we see the full scale of this industry unfold.
Thank you, Brian Armstrong CEO, Coinbase
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