Coinbase is one of the most popular Bitcoin exchanges in the world. The San Francisco-based company has become a household name for its quick and easy platform for buying and selling bitcoins. But what caught everyone’s attention was the fact that Coinbase is owned by the American Express Company. American Express is one of the most recognizable brands in the world and is now also a part of crypto. So, what is this all about? Let’s take a look at how the story of Coinbase begins.
Who Owns Coinbase?
As mentioned above, American Express is a part of the Coinbase company. This company was founded in San Francisco in 2004 by Fred Ehrsam, Roger Ver and a few others. The company’s name wasn’t changed to Coinbase until 2011. The name Coinbase comes from the trading desks of Coinbase and American Express in the same building. So, technically, everyone who works at Coinbase is part of the American Express Company.
How did Coinbase get its start?
In order to understand how Coinbase got to where it is today, it is essential to look back at the company’s beginning. In early 2011, Fred Ehrsam and his business partner, Jay H. Tan, started a Bitcoin company called MtGox. The company was formed to deal exclusively in Bitcoins and listed itself on the over-the-counter (OTC) market. During this time, the Bitcoin price was relatively low and trading was challenging due to high demand and a lack of supply. The price of a single Bitcoin fluctuated between $0.30 and $0.50 during this time. After the initial public offering (IPO) was announced in April 2011, the value of a single Bitcoin skyrocketed. By the end of that year, the value of a single Bitcoin had increased by over 100 times. As the value of a single Bitcoin skyrocketed, demand for the currency increased and trading volumes spiked.
The Coinbase Company
In the beginning, MtGox was the only exchange where people could buy and sell Bitcoins. However, as the popularity of Bitcoin grew and more exchanges started tape, MtGox’s competitors found a way to get a jump on it. In May of that year, Tokyo- based Bit Trade Japan and London-based Bitfinex announced they were joining forces to create the largest Bitcoin exchange in the world, BitStamp. Bit Trade Japan became the European exchange and Bitfinex became the American one. In early 2014, after the Silk Road bust, the Financial Crimes Enforcement Network, otherwise known as FinCEN, issued guidance interpreting how businesses must operate to avoid violating U.S. law by buying and selling drugs and other goods using virtual currencies. Regulators believe that virtual currencies pose risks as well, and in February of that year, FinCEN issued guidance outlining what these risks are and how financial institutions should respond if they are involved in the purchase of goods and services using virtual currencies. Some of the other companies that are a part of Coinbase include World Financial Trading Association, New York Stock Exchange, Nasdaq, The Clearing House, and more.
American Express Becomes a Part of Coinbase
In the beginning, Coinbase was just an idea between a couple of friends. But over the years, it has evolved into one of the largest Bitcoin companies in the world. In May 2014, Ehrsam, one of the co-founders of Coinbase, resigned as the company’s CEO due to differences with the company’s management. Ehrsam was replaced as CEO by Asiff Hirani, who started his career at Google while Ehrsam was there as the Director of Engineering. After the change in leadership, Ehrsam and Hirani set out to make one of the most impactful pivots in the company’s history. They led Coinbase to become a fully-fledged bank-like company. To achieve this, Ehrsam brought on a team of financial advisors to guide the company’s strategy going forward. The advisors helped Ehrsam and Hirani to examine the company’s architecture and operations and provided expert advice on how to make the pivot successful.
Where Can I Buy and Sell with Coinbase?
Now that we’ve gone over the who, what, and when, it’s time to take a look at the how and why of Coinbase. First and foremost, users will need to sign up for an account at Coinbase. Once they’ve done that, they’ll be able to create a virtual wallet to store their virtual currency. From there, they can use it to buy and sell different types of cryptocurrencies, stock indexes, and other financial assets. Users will also be able to create an account with a financial advisor if they want help managing their investments. When signing up for an account, users will be given a choice of between an online or mobile app. The online platform can be used to buy and sell cryptocurrencies, and the mobile app lets users buy, sell, and monitor their investments from the convenience of their own devices.
What is the Current State of Coinbase?
As mentioned above, Coinbase is a leading digital currency exchange that has become a household name for its quick and easy platform for buying and selling bitcoins. However, that’s not to say that the company is without its issues. In February of this year, the Securities and Exchange Commission (SEC) issued a Statement of Data Practices that outlined some of Coinbase’s past practices and its current approach to data and privacy. Among other things, the SEC stated that: “The SEC is concerned that the manner in which Coinbase’s data management practices may have encroached upon a business’s core activities of collecting and managing data necessary to enable a user to buy and sell securities.” The SEC also noted that: “The lack of any controls or procedures in place to ensure that the data is properly collected and managed may have led to the opportunity for a data breach or otherwise violated the participants’ rights.”
Everyone’s Talking About Coinbase and How It’s Impacting Bitcoin
Now that we’ve gone over what Coinbase is and what it does, it’s time to take a look at how the company is impacting the digital currency world. First and foremost, Coinbase is a well-known digital currency exchange. As such, it has a large and engaged user base that is eager to use its platform to buy and sell cryptocurrencies. Additionally, Coinbase is the largest broker-dealer with a fully-fledged exchange. This means that it is able to offer the most diverse selection of financial products and services to its customers. By providing a reliable platform for both retail and institutional investors to trade financial markets, Coinbase makes it easier for people to buy and sell financial assets.
Overall, Coinbase is a very successful company. It is well-known for its ease of use and the wide range of financial products and services that it offers. However, the company does have some issues. In particular, the SEC’s recent data practices have raised some concerns and limited the breadth of products and services that the company could offer moving forward. To address these issues, the company has begun to implement data and privacy controls that will better protect user data. This should allow the company to continue to offer its wide range of products and services while maintaining an appropriate level of data security. If you are interested in purchasing or trading cryptocurrencies, it is strongly recommended that you get in touch with a financial advisor before doing so. You can find a list of certified financial advisors on FINRA’s BrokerCheck platform.