On April 14th, Coinbase debuted on the Nasdaq Stock Exchange at $381 per share, celebrated as the first major U.S. cryptocurrency platform to go public. The stock surged on its first trading day, briefly pushing the company’s valuation to $112 billion and boosting the net worth of its co-founder and CEO, Brian Armstrong, past $15 billion.
Media outlets were quick to note the significance: an eight-year-old crypto exchange was, at least momentarily, rivaling established financial giants like Morgan Stanley in market appeal.
The Meteoric Rise and Sudden Volatility of Coinbase
There’s an old story from the 19th-century California Gold Rush: the wealthiest figures weren’t the miners hunting for gold, but entrepreneurs like Levi Strauss, who sold denim pants, and Samuel Brannan, who sold supplies. The lesson still resonates: sometimes, the real opportunity lies in servicing the dreamers.
In today’s crypto gold rush, Bitcoin mines hidden near hydroelectric plants and in remote mountains symbolize the hopes of many seeking quick wealth. But the first to truly succeed have been those building the tools for traders—the cryptocurrency exchanges.
Brian Armstrong, then an Airbnb engineer, discovered Bitcoin through its whitepaper in 2010. Intrigued, he dove deeper, eventually concluding that cryptocurrencies needed a legitimate, exchange-like platform. He left his job and co-founded Coinbase.
By 2012, Coinbase had become the first licensed cryptocurrency exchange in the U.S. and eventually its largest. Armstrong famously compared the platform’s role to “iTunes for Bitcoin.”
2020 was a breakout year. With equities and cryptocurrencies booming, many individuals turned to trading during the pandemic. Coinbase’s verified user count grew by 11 million, reaching 43 million by year’s end. Trading volume surged to $193 billion, a 141.7% year-over-year increase.
The company reported $1.277 billion in annual revenue—a 128% increase—and net income of $322 million. About 85.8% of that revenue came from transaction fees.
The momentum continued into 2021. With Bitcoin’s price still climbing, trading activity intensified. In a preliminary Q1 report published on April 6, Coinbase announced estimated revenue of $1.8 billion, with net income between $730 million and $800 million—surpassing its entire 2020 revenue in just three months.
By the end of Q1, assets on the platform had reached $223 billion, accounting for 11.3% of all global crypto assets. Verified users grew to 56 million, a 30% increase quarter-over-quarter, while trading volume quadrupled to $335 billion.
This explosive growth signaled a shift: crypto was moving from a niche interest to a mainstream financial asset.
On April 14, Coinbase went public on Nasdaq via a direct listing—a first for the exchange—opening at $381 per share. The debut was widely seen as a symbolic milestone for the legitimacy of digital assets.
But the excitement was short-lived. As governments worldwide began tightening crypto regulations, Bitcoin’s price fluctuated wildly. On April 18, it crashed by $8,000 in just one hour.
Since Coinbase depends heavily on trading fees, its fortunes are tied to crypto market sentiment. By April 22, its market cap had fallen to around $59 billion—nearly halving in just over a week.
Was Coinbase Cashing Out at the Top?
The extreme volatility wasn’t solely due to market conditions. Some of it was self-inflicted.
Coinbase opted for a Direct Public Offering (DPO), which allows existing shareholders to sell immediately without a lock-up period. The company’s S-1 filing clearly warned that early sales could adversely affect the stock price.
But the speed of insider selling still surprised observers. On April 14, CEO Brian Armstrong sold nearly 750,000 shares, cashing out approximately $292 million. CFO Alesia Haas sold all of her shares, netting over $99 million, and board member Marc Andreessen sold shares worth about $112 million.
In total, insiders sold nearly 13 million shares in the days following the IPO, cashing out close to $4.6 billion.
While these transactions were legal, they raised eyebrows and led to accusations of opportunism.
Armstrong defended the moves, stating that the capital would help fund new business lines. Currently, about 85% of Coinbase’s revenue comes from transaction fees—a model some analysts see as vulnerable. Competitors like Kraken, Gemini, and BitSTAMP are pushing fees lower, and many believe commission-based revenue will eventually disappear.
Armstrong has bigger plans. He predicts that within five to ten years, 50% of the company’s revenue will come from non-trading activities. Some investors even see Coinbase becoming the "Amazon of crypto."
Back in 2016, Armstrong laid out a four-phase vision for Coinbase. Phase 1 was building the exchange. Phase 2 involved creating a blockchain payment network. In Phase 3, the company would develop user-friendly applications to make blockchain accessible to ordinary consumers. The final phase envisions rebuilding the traditional financial system into an open network offering services like lending, credit, and global payments—serving over one billion users.
Can Cryptocurrency Shed Its ‘Speculative’ Image?
In a 2020 blog post, Armstrong looked ahead to crypto’s next decade. He argued the focus would shift from speculation to real-world utility—more scalable chains, better privacy, and ultimately, greater economic freedom.
It’s a compelling vision, but the road ahead is uncertain. Regulatory bodies are wary of letting private companies主导 the financial system. For cryptocurrencies to be seen as more than speculative toys, they’ll need to achieve broader acceptance and demonstrate tangible value.
The recent frenzy around Dogecoin—a joke cryptocurrency launched to mock the hype—illustrates the problem. boosted by tweets from Elon Musk and retail enthusiasm, Dogecoin’s price rose nearly 100 times in early 2021. From its March 2020 low, it surged over 400x.
At its peak, Dogecoin’s market cap exceeded $60 billion—eclipsing major companies like Ford and Marriott. Its rise also fueled a wave of animal-themed meme coins, some of which gained over 1000% in a single day.
Even Musk struggled to explain what gave Dogecoin inherent value. Originally created as infinite-supply parody with no use case or technical innovation, Dogecoin’s run exemplifies the speculative mania still dominating the crypto space. If such bubbles burst, many inexperienced investors could face significant losses.
In this environment, Coinbase’s valuation remains tied to highly volatile crypto assets. Becoming the next Amazon is still a distant dream.
That said, Armstrong has always emphasized compliance. Coinbase holds numerous licenses, including the BitLicense from New York’s Department of Financial Services (NYDFS)—one of the most difficult regulatory approvals to obtain. Unlike many other exchanges, Coinbase has avoided launching its own exchange token, staying focused on regulatory alignment.
As a leader, Coinbase could help steer the industry toward greater legitimacy. If more companies collaborate with regulators to develop clear frameworks, digital assets might eventually stabilize and integrate into the global financial system.
Only when markets are driven less by speculation and more by real utility can cryptocurrency become a positive force for economic innovation.
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Frequently Asked Questions
What is Coinbase?
Coinbase is a U.S.-based cryptocurrency exchange platform that allows users to buy, sell, and store digital assets. It went public on Nasdaq in April 2021 and is known for its emphasis on regulatory compliance.
How does Coinbase make money?
The majority of Coinbase’s revenue comes from transaction fees charged on trades. A smaller portion comes from subscription services, asset storage, and other emerging business lines.
What was unique about Coinbase’s IPO?
Coinbase opted for a Direct Public Offering (DPO), which allowed existing shareholders to sell shares immediately without a lock-up period. This differs from traditional IPOs where new shares are issued and early investors are typically barred from selling for months.
Is cryptocurrency more than just a speculative asset?
While much of the current trading is speculative, advocates believe blockchain technology will eventually support practical applications like decentralized finance (DeFi), smart contracts, and low-cost international payments.
What are the risks of investing in cryptocurrency?
Cryptocurrencies are highly volatile, regulatory changes can impact value, and the technological complexity may pose risks for inexperienced users. It’s important to research thoroughly and consider professional advice.
How does Coinbase ensure security and compliance?
Coinbase uses industry-standard security measures, including cold storage for assets and two-factor authentication. It also holds multiple regulatory licenses and works closely with financial authorities in various jurisdictions.