Coinbase is both centralized and decentralized and will be in the future as well

Coinbase is a platform where merchants and consumers can transact with new digital currencies like Bitcoin, Ethereum, and Litecoin. It also provides a digital currency wallet and was founded in June of 2012. They are based in San Francisco, California. Brian Armstrong is the Co-Founder and CEO of Coinbase. He recently was seen explaining to his company’s users and employees, the nature of Coinbase, whether it is centralized or decentralized.

He put the working of Coinbase in very simple words, when people gain access to cryptocurrency through Coinbase, it tends to be a more centralized structure of getting there whereas using cryptocurrency tends to be more decentralized. Coinbase has products in both of these areas, and the first one helps the second one happen. According to him, people need to be able to do both of the above functions.

The adoption of cryptocurrency happens in several phases, namely the investment phase in which people speculate and try to make money on crypto. This is where 90% of activity is happening today, primarily via centralized exchanges.

Then the utility phase, where people begin using cryptocurrency as a payment network, transacting for real goods and services, interacting with dapps, etc. This is where about 10% of activity is happening today, primarily via decentralized, user-controlled wallets.

In other words, the investment phase draws enough people, and among that, a critical mass of people is reached to spark the utility phase, or come for the tool and stay for the network.


Fiat-to-crypto exchanges tend to be more centralized because they integrate with the traditional financial system. For example, Coinbase and GDAX make it easy to connect the user’s bank account and buy cryptocurrencies. This means Coinbase and other platforms like them closely work with banks and regulators to build the most compliant systems. There is a lot of interaction with the ‘real world’ in each country to make this work.

Crypto-to-crypto wallets, by contrast, are more decentralized. The customer controls their own funds. For example, Toshi and Coinbase Commerce use a user-controlled wallet.

Brian Armstrong’s recent analysis | Source: Medium

Each of the above has exceptions. For example, decentralized exchanges, and centralized wallets both offer compelling advantages, even if they are less popular today.

The overall point is that there will be both centralized and decentralized products which help create an open financial systemjust like ISPs which are centralized and browsers which are decentralized both play a key role in the internet ecosystem. It’s a false dichotomy to pit one against the other because both are a part of the solution.

CEO of Coinbase, Brian Armstrong says:

“Coinbase will continue creating both centralized and decentralized products that help accelerate the adoption of an open financial system.”

A Twitter user says:

“With all due respect: @Coinbase’s “decentralized” products will always work in support of its centralized business. You can’t separate the 2 unless you create 2 separate companies. Decentralization isn’t just code – it’s a mindset that I have not yet seen from Coinbase.”

Another Twitter user comments:

“Amazing work your whole team is putting in. This is a very competitive market. I think the core is trading Cryptos, but you have to add more decentralized. $Trx would be ideal.”

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