Everything we just learned about Coinbase thanks to its S-1 deposit

5. Here is the letter from founder and CEO Brian Armstrong:

Steven Ferdman / Getty Images

Economic freedom

Coinbase is a company with an ambitious vision: to create more economic freedom for every person and business. Everyone deserves to have access to financial services that can help them create a better life for themselves and their families, but today we are far from that vision.

The current financial system is rife with high fees, delays, uneven access and barriers to innovation. In many countries, citizens do not have access to sound currency, a functioning credit system, or even basic property rights. If the world economy operated on a common set of standards, which could not be manipulated by any company or country, the world would be a fairer and freer place, and human progress would accelerate.

When I first read the Bitcoin whitepaper in 2010, I realized that this IT breakthrough could be the key to unlocking this vision for the future. Every payment can be as quick, cheap, and comprehensive as sending an email. Cryptocurrency could provide anyone with the fundamentals of economic freedom: property rights, healthy 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 expectancies and GDP growth, less war and corruption, better treatment of the environment and higher incomes for the poorest 10% of the world. the society. Greater economic freedom correlates with the kind of societies we all aspire to create. Our job at Coinbase is to help make that future a reality.

Cryptoeconomics

What started with Bitcoin spawned an entire industry with countless different blockchains and tokens. We now have Stable Coins, Privacy Coins, Security Tokens, Reward Tokens, Governance Tokens, and Smart Contracts. We are seeing the digitization of all types of value in a new economy that we call the cryptoeconomy.

Trading and speculation were the first major use cases to take off in cryptocurrency, just as people rushed to buy domain names in the early days of the internet. But now we are seeing cryptocurrency evolve into something much bigger. People use cryptocurrency to earn, spend, save, wager, borrow, lend, vote, and perform many other types of economic activity. Businesses get funded, get early clients, and eventually go public, all on the blockchain. The cryptoeconomy is only just beginning. It is not intended to replace the traditional economy, but rather to complement it, just as email was to paper mail. The cryptoeconomy offers a more global, free and fair alternative to the traditional native Internet economies.

A safe, reliable and easy to use platform

Coinbase is building the infrastructure necessary to power the cryptoeconomy, helping to bring the benefits of this new technology to the world. Today, you can 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 clients, they just see us as their primary financial account in the cryptoeconomy. Coinbase builds a portfolio of different products and services that connect to this main financial account, and we also allow third-party products and services to be connected. We strive to make all of our products and services the most reliable and easy to use in the industry.

Trust is essential when it comes to storing money. From the early days, we decided to focus on compliance, proactively reaching out to regulators to be an educational resource and researching licenses before they were even needed. We have invested heavily in cybersecurity, built new key storage mechanisms and obtained a cybercrime insurance policy. We’ve even developed ways for customers to keep their own cryptocurrency safe, so they don’t need to trust us at all. Most importantly, we’ve 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 far too difficult for the average person to use. In the same way that people can access the Internet without understanding how TCP / IP works, or activate a light switch without understanding how electricity works, they should 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 industry standards that improve usability.

Confidence and ease of use will be as relevant ten years from now as it is today, and our work here will never be finished. We can’t always go the fastest or offer the lowest prices, but if we achieve our goal of being the most reliable and easy to use, customers will continue to choose our products and services now and to come up.

Building for the long term

These are the very early days of this industry, and Coinbase has always taken a long-term view. We strive to provide the best crypto experience for our customers. Today we invest in growth because we believe scale is essential to realize the potential of our business model.

You can expect volatility from our financial services, given the price cycles in the cryptocurrency industry. We don’t mind that, as we’ve always taken a long-term perspective on adopting crypto. We can make a profit when incomes are high, and we can lose money when incomes are low, but our goal is to run the company at roughly break-even point, smoothed over time, for the moment. We are looking for long term investors who believe in our mission and who will hold up through price cycles.

Our goal is to build a portfolio of products and services with efficient capital allocation and to demonstrate reproducible innovation. We have already done this, taking the profits from our early products and services and reinvesting them in new products and services that we believe help accelerate our vision for the future. We will continue to invest in new products and services when we see a sufficient likelihood of gaining market leadership. Some of these investments will pay off, some won’t. We will measure our products and services and the effectiveness of our investments analytically, and close products and services that do not provide the expected returns. We will learn from our successes and mistakes, and we will use these learnings to inform our decision-making in the future. We hope that this prospect 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