Behind Coinbase’s strategy to expand globally, leading with its wallet
- Coinbase is undertaking a two-pronged strategy to grow internationally by entering markets at scale through the Coinbase Wallet.
- The crypto exchange is learning from giants like WhatsApp to build a UX that performs well in diverse contexts.
With a total of 89 million verified users by the end of 2021, Coinbase expects to keep expanding globally to achieve its mission of “establishing an open financial system throughout the world”. However, going global with a digital product means being ready to localize your service and business strategy to new geographies.
Coinbase’s strategy for global expansion is two-pronged: first, while the company will continue to push its core brokerage and exchange businesses, promoting decentralized and easy-to-use products like Coinbase Wallet is its long-term goal. Coinbase Wallet allows the company to move into international markets at scale, opening doors to other products such as Coinbase NFT, and ultimately encouraging further participation in the crypto economy.
This strategy is already well underway. In February, Coinbase expanded into Mexico, enabling customers there to send and receive money as well as convert their cryptoassets into the 100+ cryptocurrencies that the platform supports, including the USDC stablecoin. This launch allows customers to avoid high sender fees and gives them a chance to grow their assets by saving them in Coinbase Wallet.
Coinbase’s expansion into Mexico comes after its entrance into Japan - one of the largest crypto trading markets by volume - in August 2021, which was enabled by a partnership with Mitsubishi UFJ Financial Group, a bank that serves 40 million Japanese customers.
The second dimension of the firm’s international strategy involves expanding upon institutional products such as Custody, a service that provides financial controls and storage solutions of cryptoassets for institutional investors. Custody went international in 2020, establishing a new base in Dublin, Ireland. According to Coinbase, the expansion was a response to customer demand in Europe, which is its fastest-growing market. The firm believes that cohabiting the same region as its clients would help it attain greater legal and regulatory clarity.
As Coinbase establishes itself in multiple regions, it is also rapidly changing the face of its workforce by pushing for a team that is drawn from diverse environments like the Middle East, North Africa, Latin America, East and Southeast Asia. In 2022, the company aims to hire 6000 more employees, primarily for its technology and development teams, which will focus on platform scaling and reliability, international expansion, and product innovation. With these “leaders”, the firm hopes to develop products that are regionally relevant and functional in local use cases.
The two-pronged strategy is positively impacting Coinbase’s bottom line: in 2021, it generated $3.6 billion in net income - up 11x compared to 2020 - and its trading volume grew more than 8.5x over the same period.
Adapting a company’s products to regional needs and demands is an uphill battle, one that Coinbase chose not to fight alone. The firm adapted its international and product development by learning from other industry giants like WhatsApp. The key takeaway practices range from building applications that ease onboarding, to providing reliable functionality in difficult environments, such as areas with low internet connectivity or old hardware.
An expansionist business strategy needs performance regardless of locality, quality of connection or hardware - something that requires businesses to focus on application localization. This means adapting digital services to different languages, markets and cultures. As Melissa Zhang, ex-senior software engineer at Coinbase details, the company’s high growth rate meant that its engineers had their work cut out for them. The solutions they came up with provide a case study on how digital products can be made to perform well locally.
While app localization favors products that run in native languages, translations can prove costly to implement and difficult to scale, especially when companies diversify their portfolio of products. Here, as many independently developed parts are forced to function as one, duplication starts taking a toll on workflow efficiency, and solutions that worked before can start to fragment and lose consistency. To counter this, Coinbase engineers designed their own translation service, which sits between their translation management system and their clients. It provides translations on the go based on the locality of the request, and has helped Coinbase to cut its webpage response time by 27%.
To ensure quality, Coinbase has adopted context-based translation, which allows translators to work in the larger context of the application. Moreover, it urges its employees to use the products in different languages to help identify pain points experienced by the users. Even though translation is a critical dimension of localization, applications must also feel local. This means that designers must brainstorm designs that can adapt to the richness and diversity of language and typography around the globe, paying attention to things such as different word lengths, characters sizes, and RTL (right-to-left) script.
With net revenue totaling $7.35 billion in 2021, Coinbase aims to keep utilizing its findings from the past year and build more Layer 2 blockchain products. These products comprise secondary protocols built on top of existing blockchain systems that render crypto transactions more accessible by making them faster and less costly.