While Coinbase – one of the largest names in blockchain – is surely benefiting from 2020’s resurgence of cryptocurrencies, the company has suffered a series of unexpected challenges over past months. From public perception, to system outages, the following are a few hiccups experienced by the industry leader.
The first issue at hand is also the most recent. In an article published by the New York Times, 23 former employees of Coinbase each shared their experience at the popular exchange – unfortunately for Coinbase, these experiences were highlighted by alleged recurring instances of discrimination against the company’s black employees.
In this exposé, past employees share stories which saw them put on display to the public, in an attempt at cultivating a positive public image, but routinely treated with a lack of respect behind closed doors.
It is no secret that such allegations can destroy a young company. As such, Coinbase took the initiative to get ahead of this bad press, by releasing a statement of its own, prior to the New York Times publication.
It is important to remember that these claims are just that – claims. While they very well may be true, Coinbase remains steadfast in its stance that no wrong-doing occurred. Regardless of where the truth lay, there will no doubt be increased scrutiny on operations at Coinbase moving forward by both those outside and within the company.
Prior to the exposé on discrimination at Coinbase by the New York Times, the company had made a bold move with regards to politics.
In September of 2020, Coinbase CEO, Brian Armstrong, announced that the company was taking an apolitical stance, and would offer employees uncomfortable with the decision the opportunity to quit while receiving a ‘generous exit package’.
This decision took place as companies throughout North America were voicing their support of the Black Lives Matter (BLM) movement.
Opinions are and will continue to be, divided on the responsibility of companies to take part in social activism. Yes, Coinbase is in the position to use a voice that will reach masses of people. At the end of the day, however, it is still just a company involved in FinTech – its mission was never to tackle issues as large as the one at hand.
Brian Armstrong, CEO of Coinbase, recently commented on why it didn’t follow the lead of other companies that decided to speak on BLM.
“The reason is that while I think these efforts are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.”
Despite its mission, the decision to remain apolitical may not be one that is appropriate in 2020. By Coinbase’s own account, social activism has become commonplace within Silicon Valley. The company states that its stance was taken as a means to protect company value – a definite risk in a society placing increased importance on social activism.
Moving beyond political and workplace issues, Coinbase has also endured its fair share of technological problems along the way – they are a growing FinTech company after all.
What is surprising, is that recent tech problems brought to light are not new at all. Dating back to the 2017 bull market, the Coinbase exchange has a reputation for crashing at inopportune times. It simply can’t handle the workload at a moment in time, and three years later this is still an issue.
A recent example of this occurred on November 24, 2020. At this time, thousands of users began reporting issues with the platform, in the midst of a flurry of market activity.
Coinbase is one of the biggest names in blockchain. Unfortunately, what this means is that when it cannot tout and maintain high levels of reliability, it paints a poor reflection of the entire industry. It comes across as though cryptocurrencies really are still the ‘wild west’ – an association many are working to distance themselves from.
For blockchain to continue moving forward, the industry needs for its biggest and best to be just that.
While the previous examples have already taken place, there is another potential hiccup yet to occur. In the near future, holders of the popular cryptocurrency Ripple or ‘XRP’, will be awarded an airdrop – courtesy of a company named ‘Float’.
Smart-contracts are a promising implementation of blockchain technology, which are supported by various projects such as Ethereum. While XRP does not currently tout the capability to host smart-contracts, Float and its ‘Spark Tokens’ look to change that.
With XRP remaining one of the most popular cryptocurrencies in the world, anticipation for Spark Tokens is unsurprisingly high. Unfortunately, is expected that XRP holders which keep their assets within Coinbase will not benefit from this process. Although Coinbase does indeed have time left to announce support for the move, it does not have much of it.
If support is not announced, it would not be surprising to see a large amount of XRP withdrawn from Coinbase wallets, and stored elsewhere, in a wallet which will ensure holders receive their airdrop.
While airdrops can place an undue burden on exchanges, clients expect them to be supported. Regardless, if Coinbase remains one of the few to shy away from taking this burden on, it will be seen as the latest hiccup in a string of many.
No company is perfect. Each will be presented with unique battles and must find the best way forward. Despite the troubles experienced by Coinbase over the past year, the company remains at the forefront of the blockchain industry. Moving forward it still represents one of the brightest spots in the sector, as a reliable, reputable, and promising platform.
Thankfully, the issues surrounding Coinbase do not appear to have hindered product development. While dealing with each of the aforementioned issues, Coinbase has continued to march forward, with a recent example being the launch of its ‘Coinbase Card’ in the United States.