Coinbase CEO Brian Armstrong predicted that cryptocurrency-related services will one day become commodities. He spoke about his organization’s ambitions to rely on subscription-based business models to generate revenue. In fact, Armstrong also suggested that the subscription model could contribute significantly to the company’s revenue. The strategy, however, has a long-term perspective and a 20-year view.
The cryptocurrency exchange recently revealed a loss of $1 billion for the last quarter. Faced with the collapse of the cryptocurrency market, the company’s revenue fell nearly 64% in the second quarter, compared to the same period last year.
Armstrong discussed the future ambitions of the exchange in a interview with CNBC.
A lot is planned in advance
Regarding the company’s sales, Armstrong told CNBC that margins will eventually exist. The Coinbase CEO predicted that a significant portion of the company’s revenue would come from its subscription-based business model. “I would like to see the platform generate more subscription fees in the future,” he continued. He added,
“Whatever we build, others will eventually build and it will become more commoditized. We realize that trading fees will not be what it takes. This is always going to be an important part of our business. In ten years, even in 20 years, I would like to arrive at a place where there will be more subscriptions and services.
Armstrong wants to stop using trading fees as a primary source of income because, although they provide income during bull markets, they stop when gloomy sentiment sets in.
Currently, 18% of Coinbase’s revenue comes from subscription services.
He went on to say that the company tries to turn as many fixed costs into variable costs as possible. Now, while Armstrong has suggested that there will always be a “variety of Coinbase ads,” the Coinbase Super Bowl ads may no longer exist.
In a move that could greatly improve its outlook, Coinbase has just partnered with Blackrock, the world’s largest asset manager. The Blackrock collaboration aims to open a new entry point for institutional investors into the cryptocurrency ecosystem.
Finally, Armstrong believes that Coinbase needs to abandon the US-centric strategy as it moves away from reliance on fees.
“Looking back, maybe we applied the American lens a bit too much to the global landscape, and I would actually say that may have been a mistake that we made over the last couple of years. We’re changing that. .
Challenges around Coinbase
Coinbase, which was created in 2012, has now seen four bear market cycles, according to Armstrong. While pretending to be indifferent, Coinbase has already cut costs and laid off 18% of its workforce.
Coinbase also has other issues to consider when trying to maintain a lean operation. Due to suspected securities violations and the fact that Coinbase services allegedly crashed during times of economic unpredictability, a customer filed a $5 million lawsuit against the exchange.
Warning for investors
According to Brian Armstrong, the current “crypto winter” — the term used to describe periodic industry downturns — could continue for another 12-18 months.
“We all hope it will be, you know, 12 to 18 months and a nice recovery, but obviously you have to plan for it to be longer than that. And that’s how we think about it. And we’re not trying to be too cute to predict the future.