Coinbase startup at heart of bitcoin frenzy
Virtual currency market leader has more than 13 million customers
SAN FRANCISCO — The booming stock market of the 1920s had the New York Stock Exchange. The tech bubble of the 1990s had Nasdaq and E-Trade. And the virtual currency market of the last year has had Coinbase.
Coinbase has been at the centre of the speculative frenzy driving up the value of bitcoin — which topped $16,000 Thursday — and similar currencies. While there are many bitcoin exchanges around the world, Coinbase has been the dominant place that ordinary Americans go to buy and sell virtual currency. No company had made it simpler to sign up, link a bank account or debit card, and begin buying bitcoin.
The number of people with Coinbase accounts has gone from 5.5 million in January to 13.3 million at the end of November, according to data from the Altana Digital Currency Fund. In late November, Coinbase was sometimes getting 100,000 new customers a day — leaving the company with more customers than Charles Schwab and E-Trade.
The company faces challenges that are a reminder of the early days of now-mainstream online brokerages, which suffered through untimely outages and harsh criticism from traditional finance companies and government regulators.
And Coinbase’s missteps make it clear that the virtual currency industry is still young, with little of the battle testing that other financial markets have faced.
Coinbase’s offices in downtown San Francisco show a startup straining to keep up with growth.
Every last inch of space has been pressed into action. The day after bitcoin hit $10,000 in late November, a training session for Coinbase managers was moved to the game room because the engineering team needed to set up an emergency war room in the regular conference room.
The engineering team was trying to get Coinbase back up after the company’s site was knocked off-line, overwhelmed by a wave of incoming traffic. The number of visitors was double what it had been during the previous peak — two days earlier — and eight times what it had been in June, the peak until recently.
All the big bitcoin exchanges went down for at least part of the day, and Coinbase got back online faster than most. Most Friday afternoons, CEO Brian Armstrong holds a session in the cafeteria where employees can ask him anything. On the Friday of the record-hitting week, Armstrong discussed how the company was planning to grow and introduced Asiff Hirji, the new president and chief operating officer who will help him oversee it all.
The addition of Hirji, who had the same role at TD Ameritrade, was an implicit recognition that this new industry needs more seasoned hands to help young executives like Armstrong, 34. Hirji will manage Coinbase’s trading operations while Armstrong focuses on new projects. Armstrong has been running Coinbase since he cofounded it in 2012.