We need to talk about Coinbase

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In the past decade, few companies have experienced the same meteoric rise as Coinbase (NASDAQ: COIN). With a market cap of $75 billion, it’s the market leader in North America, and in every bull run, it transforms into a fee-generating machine.

Yet, despite massive revenues and profits in recent years, Coinbase is still experiencing inconvenient outages and is struggling to deal with surges in demand. The latest example of this manifested during the launch of the Trump meme coins when U.S. President Donald Trump and First Lady Melania Trump launched back-to-back tokens on the Solana blockchain.

Coinbase users keen to get in on the action experienced waits of up to 48 hours, and transactions stalled for 20+ hours in many cases. After the frenzy had died down, CEO Brian Armstrong took to X (formerly Twitter) to explain what happened. He said his company wasn’t prepared for the sudden surge in users and would be working to up its game on Solana.

We have the Solana backlog triaged, and transactions should generate quickly again. If your transaction got canceled you can retry it now – apologies for the trouble.

It’s clear we need to step up our game on Solana, scale our infrastructure, and provide native support for…

— Brian Armstrong (@brian_armstrong) January 22, 2025

Coinbase has a problematic history in bull runs

The recent Solana debacle isn’t the first time Coinbase has dropped the ball at a critical moment. During the 2020/2021 trading season, it buckled under pressure more than a few times. Here are some of the memorable instances:

April 29, 2020 – Coinbase went offline as BTC surged past $6,000, frustrating traders who wanted to capitalize on the price movement.
May 9, 2020 – Another outage occurred just days before the BTC halving, a time of heightened market interest.
June 1, 2020 – Coinbase went down again as BTC spiked to $10,000, preventing users from buying or selling during a key rally.
January 29, 2021 – A massive outage occurred as Dogecoin (DOGE) spiked 300% due to the retail frenzy fueled by WallStreetBets.
May 19, 2021 – One of the biggest crashes in digital currency history (BTC dropped from $43K to $30K in a day), and Coinbase struggled with downtime, frustrating traders who couldn’t react quickly.
October 27, 2021 – Shiba Inu (SHIB) skyrocketed, and Coinbase had delays, showing its recurring issues with handling surges in memecoin interest.

These outages and freeze-ups almost always occur during significant market events and heightened volatility. Whether a popular coin is surging or crashing, Coinbase struggles, leaving users frustrated they’ve missed out on the action.

Yet, outages during important moments aren’t the only thing plaguing Coinbase. There’s an equally concerning trend unfolding.

Can Coinbase honor cashouts?

Social media is awash with claims about Coinbase account freezes. Seemingly, many users have experienced account freezes when trying to cash out large amounts, leading some to question if Coinbase can honor cashouts or whether it’s stalling for time.

Fun Fact: There’s no legitimate reason for Coinbase to suddenly restrict and freeze your account, and then later magically unfreeze it for compliance purposes.

Sending in additional documentation is a stalling tactic.

If there was truly a problem with your account, it would…

— Bitfinex'ed 🔥🐧 Κασσάνδρα 🏺 (@Bitfinexed) December 13, 2024

Those who have been involved in the digital currency and blockchain industries for a decade or more have to ask: is this economic freedom? What is the point of blockchain tech if corporate third parties like Coinbase can freeze accounts, withhold funds, and hold up transactions by failing to scale?

Is it perhaps the case that Coinbase backed small block BTC, crippling the effectiveness of the original Bitcoin protocol, because it saw an opportunity for itself to act as a layer-two gatekeeper, making vast profits in the process? And isn’t this just old wine in new bottles if so?

How can this keep happening every cycle?

It’s time to face the truth: there’s no practical reason why Coinbase should continue to face these issues. It’s certainly not a resource shortage because its last reported revenue of $1.13 billion and net profit margin of 6.69% leaves plenty of money to invest in infrastructure.

So, what is it then? Perhaps Coinbase’s priorities are wrong. Instead of listing endless garbage tokens to generate more trading fees, maybe it should focus on scaling its tech stack and preparing for the next surge.

We’re still far from mass adoption of digital currencies, but we’re getting closer with every cycle. The more new users encounter problems like Coinbase repeatedly creates, the longer that will take.

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