Meet Your Future Banker
Inc.|Winter 2021/2022
In 2021, Brian Armstrong proved the digital economy doesn’t need the U.S. Dollar. Here’s why that’s important—why it matters to you —and why it makes his juggernaut, coinbase, inc.’s company of the year.
By Bill Saporito. Photographs by Zachary Scott
Srian Armstrong once feared he'd been born too late. As a teenager growing up in the late 1990s, he could play video games and chat and surf on the burgeoning internet. But he was too young to take part in the dot-com startup boom happening all around him, transforming the economy along with how he spent his days and nights. “I didn't know if something so important would come along in my lifetime again,” he says today. • Something did. • And Coinbase is the company he co-founded to do something about it. For most of Coinbase's nearly 10-year history, Bitcoin and its cyber coin kin were not so many investable assets as they were the focus of a philosophical and economic argument. Old, fiat money asked: How can any store of value be based on an algorithm that solves a cryptologic problem tied to something called a blockchain ledger created by a pseudonymous code ninja named Satoshi Nakamoto? Could a hash function really replace cash?

Crypto's tech bro-libertarian-anarchist evangelists viewed things much differently. (So, too, did criminals and terrorists.) Removed from the clutches of governments, central banks, and big financial institutions, crypto, they proclaimed, was the perfect transaction medium, especially for digital nomads job surfing the global economy. By the mid-teens, crypto fanboys had formed the next wave of support, and a growing cadre of day traders gloated in subreddits and on Twitter as the Bitcoin they bought for $226 in April 2015 rocketed to $13,062 in December 2017. Then along came crypto winter” in 2017-18, which saw prices crashing more than 50 percent, and crypto's many doubters began enthusiastically writing its obituary. (Not for the first time, either.)

That debate is now done-and crypto has won. Bitcoin's price eclipsed $67,000 in early November, and even after cooling a bit, it is up nearly 300 percent from the year before. Trading volumes are soaring, and nonfungible tokens (NFTs)-unique digital assets tied to music, sports, the arts, and the stupid-generated around $4 billion in sales in August 2021 alone. The crypto market cap is now some $2.7 trillion.

Crypto is dominating the startup culture, too. There are blockchain mining startups; crypto trading platforms; crypto finance outfits. And decentralized finance-DeFi-is on the verge of reshaping the global economy. Large central banks may soon issue their own digital currencies, and everything from contracts to car titles to medical records could migrate to blockchain ledgers-digital repositories of data and value. Businesses of all sizes are integrating crypto into their payment systems, perhaps the greatest change to money since the development of credit cards in the 1950s. In the bigger picture, says Cornell University economist Eswar S. Prasad in his recent book, The Future of Money, cash is dead.

No U.S. crypto company has been a bigger winner in that debate than Coinbase-Inc.'s 2021 Company of the Year. It has served as both the industry's lighthouse and its powerhouse throughout the sector's stormy initial decade. You never know exactly, in crypto, what's going to happen,” Armstrong told Inc. during an interview from Los Angeles, where he lives (his company is based in San Francisco). “But in every major city I go to, a lot of the best entrepreneurs and young people are all excited about crypto. They want to go build products in this space.” And Coinbase would be the model for them all.

A GOOD STANDARD-BEARER leads by example. Through the first three quarters of 2021, Coinbase's revenue rose nearly eightfold, to $5.34 billion from $692 million the previous year, and generated a profit of $2.78 billion. That's a breathtaking net profit margin of 52 percent. With the second-largest trading platform (after Binance) for retail and institutional customers, Coinbase is already a colossus of the cryptoverse: Seventythree million users and more than $255 billion in customer assets are parked on that platform. To keep up with the growth, the company hired some 1,200 new employees this year, more than doubling its staff.

To top things off, Coinbase shifted from entrepreneurial startup to enterprise, going public in April through a direct listing, which means that it didn't sell any new shares because the company doesn't need your money. (Its market cap briefly topped $100 billion in mid-November.) Why go public, then? Because Armstrong says he wants to embrace regulators and the public markets to make Coinbase as transparenteven mundane-as possible.

That's the practical entrepreneur in him. Armstrong the idealist has a much loftier goal for crypto: to be the pathway to a more inclusive global financial system. DeFi purports to offer more economic freedom, less friction, and lower costs than traditional financial operators, and it avoids third parties such as big banks that get between you and your money.

Likewise, Armstrong sees Coinbase as one of the architects for Web 3.0, a blockchain-based version of the internet that isn't ruled by dominant tech companies like Facebook/Meta, one where developers are free to create and market apps without having to pay a toll to Apple. “One thing that's really exciting to me about the crypto economy and the crypto culture is that it has this sense of optimism about it,” he says. “We can build a better future. There's opportunity all around us. Anybody can participate in it.

Armstrong is doing what he can to channel this spirit of limitless possibilities. Most of Coinbase's income consists of fees earned from executing trades. It's lucrative but highly variable-spot trading volume dropped 29 percent in the third quarter compared with the previous one, sending the stock price skidding. That's why the company is diversifying. The initiatives include a hosting service for developers called Coinbase Cloud (think of it as AWS for crypto), a trading platform for institutions called Prime, and Coinbase NFT. There's also Coinbase Direct Debit and Coinbase Reimburse, which allows you to deposit your salary and expense payments. There's a Coinbase debit card, too. As Armstrong has made clear again and again, Coinbase wants to be the Amazon of assets.

Third-quarter hitch aside, the company is on its way to reaching that goal. “A lot of things went well that I had hoped for this year,” Armstrong says, “which is that we would be a public company, that we would have multiple revenue streams, and that we'd be seeing more uses of crypto. Not just people trading it as speculation, but actually using it for NFTs and games and DeFi and now even identity and the metaverse.”

This ambition dovetails with the evolution of the market. In 2021, crypto bridged the gap to the financial institutions, regulators, and general public who viewed it skeptically. In addition to Bita coin, Ethereum, Tether, Dogecoin, and other well-known coins, more than 7,000 cryptos are now trading on more than 300 exchanges globally. With the launch of two crypto futures-based exchange-traded funds in the U.S. in October, institutional asset managers gave their blessing to 401(k) investors. More than 1,000 hedge funds, VCs, and pension funds are trading on the Coinbase Pro platform, and blockchain companies-those involved in creating crypto, NFTs, websites, and the plumbing that connects all of them raised $7 billion in venture capital in the first half of the year alone, according to CB Insights.

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM INC.View All

Out the Other Side

The burden of leading can be heavy even in the best of times. Coupled with the depression that afflicts so many founders, it can overwhelm their soul ... or forge it into something stronger.

10+ mins read
Inc.
Winter 2021/2022

The Future of...Fixing Pharmaceuticals

Eric Edwards is cofounder and chief executive officer of Phlow, a public benefit pharmaceutical corporation. He previously co-founded pharmaceutical company Kaléo, where, among other roles, he was responsible for overall scientific strategy and pharmaceutical development programs. Following an unprecedented year for the pharmaceutical industry, including leaps in vaccine technology and supply chain shortages, Inc. asked Edwards to share his vision for the future of pharmaceuticals.

1 min read
Inc.
Winter 2021/2022

She Broke the Bank

Luvleen Sidhu was just 28 when she founded BankMobile with a lofty mission: to reinvent banking for millions of Americans through the power of tech. The 2015 launch presciently anticipated the coming rise in mobile banking, and six years later the Radnor, Pennsylvania based business merged with a special purpose acquisition company (SPAC) in a transaction worth $150 million. That made Sidhu the youngest female founder and CEO ever to take a company public, and led her to even grander goals: Still at the helm of the company—now called BM Technologies—she says she wants to “create ripple effects and inspire other women.” Here’s why you should put your money on her to do just that.

2 mins read
Inc.
Winter 2021/2022

Meet Your Future Banker

In 2021, Brian Armstrong proved the digital economy doesn’t need the U.S. Dollar. Here’s why that’s important—why it matters to you —and why it makes his juggernaut, coinbase, inc.’s company of the year.

10+ mins read
Inc.
Winter 2021/2022

Fake It Till You Make... A Mess

When the media company Ozy unraveled last fall, its CEO, Carlos Watson-the would-be wizard of Ozy-stood accused of inflating performance, inventing partners, and looking the other way when his co-founder impersonated a YouTube exec to potential investors. It wasn't, however, the first time a finding hungry, win-at-any-cost entrepreneur would take preposterously desperate measures: Cook the books? Check. Conspire to traffic cocaine? Hey, it's financing! Dress like Steve Jobs? Sadly, yes. Take a look at some who crossed the line from unbridled hype to “Let me explain, Your Honor.” – BILL SHAPIRO

4 mins read
Inc.
Winter 2021/2022

Force of Habit

THE CALORIE COUNTING CARDIO TRAINING STATIONARY BIKE GAMIFICATION STRESS REDUCING PSYCHO OPTIMIZING PEOPLE CENTERING WEIGHT LOSS SUBSCRIPTIONATING WHATEVER BEHAVIOR NEXT NEEDS CHANGING COMPANY | Noom’s founders built an overnight-success weight-loss app after years of failure. Now they’re working to parlay their big hit into a string of them.

10+ mins read
Inc.
Winter 2021/2022

IS YOUR HIRING IN NEED OF HELP?

TIP SHEET

2 mins read
Inc.
Winter 2021/2022

Chris and Shivani VS. the World

Venture investor Chris Sacca talks with Shivani Siroya, founder of fintech company Tala, about scaling up your business without locking it down.

6 mins read
Inc.
Winter 2021/2022

Flipping The Scrip

In 2011, tech industry veteran Doug Hirsch launched digital health care marketplace GoodRx with Scott Marlette and Trevor Bezdek. With 20 million people now using it every month to find affordable prescription medications, GoodRx has saved them $30 billion. Hirsch has continued to serve as co-CEO since taking the company public last year. We asked him how he’s kept it healthy through all the changes.

2 mins read
Inc.
October 2021

Kara Goldin – Making a Bigger Splash

Hint founder and CEO Kara Goldin talks to Park Place Payments founder and CEO Samantha Ettus about breaking into a new industry with an unconventional strategy.

6 mins read
Inc.
October 2021