Several crypto projects and companies have launched over the years. While most of them have managed to tread through the waters, a bunch of them have failed the time-test. Brian Armstrong’s brainchild, Coinbase, is one such company that started of nowhere but, with time, managed to gain a say in the market.
Outlining how Coinbase climbed the ladder of richness
Coinbase, as such, was founded in 2012 by Armstrong, a former Airbnb engineer. The exec had enrolled in the Y Combinator startup incubator program, and he had received $150,000 from the same and launched the company using that amount as the initial funding. The same year, a former Goldman Sachs trader, Fred Ehrsam, clubbed with Armstrong and became a co-founder. During the initial days, the company merely focussed on facilitating Bitcoin buying and selling via bank transfers.
Soon after the launch, Coinbase secured its first series of investments worth $5 million. The second round of investment worth $25 million followed right after. Some others boarded onto the core team, but not everyone stuck around.
Nevertheless, by 2014, the company surpassed the one million user mark. The same year, it announced its first set of acquisitions. Post that, the partnership spree continued, and Coinbase kept building on its solid foundational base.
Then, in 2015, Coinbase Exchange was launched to cater to professional traders, and the same was rebranded to GDAX first and Coinbase Pro later in 2018. The company’s international expansion began when it launched services in Canada and Singapore. Then, the very next year, Coinbase Prime was established to cater to institutional appetite.
By 2020, the Coinbase will become a remote company with no formal headquarters. In 2021, in a landmark event, the exchange was listed on Nasdaq, making it the first-ever crypto company to go public.
It is a known fact that one of the primary revenue sources of revenue for Coinbase comes from the transactional fee it earns from its retail users. The crypto market rallied until November last year, with Bitcoin climbing to new highs. Trader and investor interest had notably inclined during the said period, and Coinbase directly benefitted from the same.
Here, it is interesting to note that the Coinbase CEO purchased a lavish estate in Bel Air in Los Angeles for $133 million. Per The WSJ, the sale was closed in December last year and marked one of the most expensive sales for a single-family house in Los Angeles. Right after the said news started doing the rounds on social media, people began speculating that Armstrong made the luxury purchase because Coinbase was prospering.
By May this year, Coinbase again scripted history by entering the Fortune 500 list. However, not all was good for long.
Disaster struck. Is Coinbase back to square one?
Despite being able to fare well and keep clenching records over the years, Coinbase couldn’t shield itself from winter. To make up for the dwindling revenue, the company recently laid off around 18% of its staff.
A few community members on social media have openly questioned Armstrong’s decision to purchase that Los Angeles property last year. Per them, the exec should have saved up the same for situations like this to bail out the company.
However, Armstrong had predicted that the bull cycle would end last year and was prepared for such an outcome already. He’d said that Coinbase would continue building come what may.
He also added,
“We need to develop resilience, ignore the noise, and continually make forward progress on our mission.”
Well, this is not the first bear market that Coinbase has witnessed, and its boat has sailed through other adverse conditions already in the past. So, unlike the community labeling the latest set of events as the ‘riches to rags’ twist to Coinbase’s tale, it looks like the company is merely scripting the ‘re-trial and testing’ phase of its tale.