Coinbase Evolution: From Bitcoin Payment App to $86 Billion Public Company
Coinbase celebrated the fourth anniversary of its public debut yesterday. The company went public on April 13, 2021, reaching an $86 billion valuation that briefly touched $100 billion, rivaling Facebook's 2012 market entry.
CEO Brian Armstrong noted at the time that the listing created a thousand new millionaires overnight. The debut also added $16 billion to Armstrong's personal wealth through his 40 million Coinbase shares, while allowing early investors and employees to cash out billions on the first day.
The journey to this milestone wasn't smooth. Armstrong guided the company through regulatory challenges and market volatility during the nine years leading to its Nasdaq debut. Coinbase emerged into a strong bull market that helped fuel its growth.
Coinbase began with humble origins. In March 2012, Armstrong posted on Hacker News seeking a co-founder for "Bitbank," a PayPal-like application for sending bitcoin via email. By June, the company was renamed Coinbase and had secured $165,000 in startup funding.
The business model focused on exchanging bitcoin for US dollars. By February 2013, Coinbase users had traded $1 million worth of bitcoin in a single month. The company's revenues have shown strong correlation with bitcoin prices ever since.
Recent reports show Coinbase is pursuing further market expansion through acquisition. The company is in advanced talks to purchase Deribit, the largest cryptocurrency options trading platform globally, potentially valued between $4-5 billion. This would complement Coinbase's existing futures-focused derivatives business.
While Coinbase has diversified its revenue streams beyond bitcoin trading fees, the cryptocurrency remains significant to its business model. Bitcoin drove approximately 30% of all transaction revenue last year, though critics note the company has been slow to adopt Bitcoin upgrades like Lightning and Taproot.
Coinbase currently trades at about half its April 2021 valuation. Meanwhile, other crypto firms like stablecoin issuer Circle and trading platform eToro are preparing for potential public listings in the coming years.
