Best Fintech Biz Models: Coinbase
Coinbase is one of the most exciting Fintechs. They are one of the biggest players in Crypto running an intriguing platform business model and a great example of an exchange-based Fintech company.
At a high level, they are running a similar business model as disgraced FTX whose wrongdoings caused significant reputational damages to crypto and its ecosystem. This was further compounded by bankruptcies of other large crypto companies (Celsius Networks, 3 Arrow Capital, etc).
Coinbase is one of the most popular crypto platforms used by consumers, institutions and developers to trade crypto and provide related services.
Get an annotated version of this graphic for free below.
Their platform business model intermediates transactions between:
crypto / blockchain networks (markets) on the one side and
end customers (=investors) or
banks / financial institutions on the other side.
The wider ecosystems also includes developers, integrations, an ecosystem of products and more.
Key participant types & interactions
Platform business models thrive from intermediating, managing and stimulating interactions between the key participant types. Let’s take a look at the value propositions and offerings to the key participant types.
(1) Consumers
Consumers are individual customers, typically small investors, individuals or semi-professional investors. Consumers buy cryptocurrencies for different reasons. Investing is a key reason based on the belief that valuations will increase with different people having different time frames in mind. But various other reasons exist including crypto being decentralised and not controlled by any singular or a range of institutions, such as central banks, the “financial system”, etc. Privacy, global reach and other frequently-cited reasons exist for individuals to trade crypto.
Some of Coinbase’s offerings to end customers include:
Trading (buying, selling)
Custody of coins with Coinbase offering different types of custody and infrastructure behind it
Financing of trades
Wallet - again with various forms of it
(2) Financial institutions & businesses
Financial institutions & businesses can include:
Banks
Asset managers
Hedge funds
Wealth managers
Market makers
Payment platforms and more
These can be private or public institutions and typically use Coinbase’s services to serve their own customers.
Coinbase’s offerings to institutions can differ quite a bit from those to individuals and include:
Execution of trades
Custody - various solutions
Financing options for institutional investors
Regulatory compliance and risk management
A fascinating aspect of the offerings for institutional vs individual customers is related to the trading volumes vs revenue vs cost structure (thus net profits) which turn out to be quite counterintuitive.
(3) “Developers”
The most diverse set of key participants are “Developers”. We are not talking about the programmer behind a screen but rather a group organisation or company developing offerings for their targeted customers. This can and does include startups and scaled firms.
The participant type “Developers” can include:
Actual groups of (core) developers building new currencies, networks, decentralised protocols, infrastructure and more
Crypto issuers
Financial institutions developing crypto-related offerings and products
Startups, firms building ecosystem products and offerings including applications / dapps, crypto-utilising products, NFT or related products and more
Coinbase has some fascinating ideas on how these can translate to significant growth of their business.
Coinbase business model highlights
Why we love Coinbase are the different biz model highlights:
The largest crypto-trading platform & app
One of the slickest WealthTech apps
Many direct B2B and B2C offerings centred around crypto: staking(=”interest”), wallet solutions, financing and a lot more
A Stablecoin pioneer generating substantial revenues from it
Extensive range of crypto offerings and still broadening
Wide customer segments and still evolving
Owning 3 crypto exchanges (!)
An amazing path of ecosystem opportunities
This is also why we have selected them in our Fintech book as one of 6 amazing examples providing insights into these biz model highlights.
The Best Fintech Biz Models Today
Coinbase’s Business Model has more fascinating aspects than covered in the article.
Learn more about Coinbase and some of The Best Fintech Biz Models Today:
Robinhood ~ Coinbase ~ PayPal ~ Fiserv ~ CoreLogic ~ Xero
We have carefully selected the best examples from different sub-verticals of Fintech that elaborate on a broad range of creative business model approaches.
~50 pages (pdf) presented in a wonderful format that is easy to read & understand.
You will love reading this book!
