Everything we just learned about Coinbase from the S-1 application

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

Economic freedom

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

The current financial system has high fees, delays, unequal access and barriers to innovation. In many countries, citizens do not have access to sound money, a functioning credit system or even fundamental property rights. If the world economy ran according to a set of common standards that could not be manipulated by any company or country, the world would be fairer and freer and human progress would accelerate.

When I first read the Bitcoin whitepaper in 2010, I realized that this breakthrough in computing could be the key to unlocking this vision of the future. Any payment can be just as fast, cheap and worldwide as sending an email. Cryptocurrency can provide everyone with the basics of economic freedom: 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 a higher life expectancy and higher GDP growth, less war and corruption, better environmental management and higher incomes for the poorest 10% of the people in society. Greater economic freedom depends on the kind of societies we all want to create. Our job at Coinbase is to help realize this future.

The crypto economy

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 are seeing the digitization of all types of value in a new economy we call the crypto economy.

Trade and speculation were the first major use cases to take flight in cryptocurrency, just as people rushed to buy domain names in the early days of the Internet. But we are now seeing cryptocurrency evolving into something much more important. People use cryptocurrency to earn, spend, store, deploy, borrow, lend, vote, and perform many other types of economic activities. Businesses get funded, get early clients, and will eventually go public, all on the blockchain. The crypto economy has just begun. It is not intended to replace the traditional economy, but instead to complement it, just as email was to paper mail. The crypto economy offers a more global, free and fair alternative to traditional economies inherent to the Internet.

A safe, trusted and user-friendly platform

Coinbase is building the infrastructure to power the crypto economy and helping bring the benefits of this new technology to the world. Today, you can consider 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 simply consider us 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 ensure that third-party products and services can also be connected. We strive to make all of our products and services the most trusted and easiest to use in the industry.

Trust is crucial when it comes to storing money. From the beginning, we decided to focus on compliance, proactively contacting regulators to be an educational resource, and pursue licensing even before they were needed. We have invested heavily in cybersecurity, built new key storage mechanisms and purchased cybercrime insurance. We’ve even developed ways for customers to keep their own cryptocurrency safe so they don’t have to trust us at all. Most importantly, we’ve built a culture that doesn’t require shortcuts or try to make money quickly.

Ease of use is our other major focus area. 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 turn on a light switch without understanding how electricity works, they should be able to use cryptocurrency without understanding the underlying complexity. We achieve this by constantly finding ways to simplify our products and by striving for new industry standards that improve usability.

Trust and ease of use will be just as relevant in ten years’ time as they are now, and our work here will never be finished. We may not always go the fastest or offer the lowest prices, but as we reach 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.

Build for the long term

It’s the very early days of this industry, and Coinbase has always taken a long-term view. We are fully focused on delivering the best crypto experience to our customers. Today, we invest in growth because we believe that scale is critical to realizing the potential of our business model.

You can expect volatility in our financial data given the price cycles of the cryptocurrency industry. This does not surprise us, as we have always had a long-term perspective on crypto adoption. We can make a profit when the revenues are high, and we can lose money when the revenues are low, but our goal is to keep the business about to break even for now, smoothed out with time. We are looking for long-term investors who believe in our mission and endure price cycles.

Our goal is to build a portfolio of products and services with an efficient capital allocation and to demonstrate repeatable innovation. We’ve done this before by taking the profit from our early products and services and reinvesting them in new products and services that we believe will help accelerate our vision of the future. We will continue to invest in new products and services if we see sufficient opportunity to achieve market leadership. Some of these investments will pay off, others will not. We will analytically measure our products and services and the effectiveness of our investments and discontinue products and services that do not deliver the expected returns. We will learn from our successes and mistakes and use those lessons to support 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