The AOL of Bitcoin Has Arrived: Coinbase Launches First True Global Bank

The internet was a vague idea for most people, before AOL arrived and gave the world a usable, daily internet access tool. The recent launch of Coinbase Exchange will change Bitcoin no less spectacularly. If you need further evidence, compare the early user growth rates of AOL with those of Coinbase. Coinbase adoption rates are significantly outpacing those that AOL made history with back in the early 1990s.

Here’s how and why.

Since Bitcoin growth rates seem to be stagnating compared to their 2013-2014 highs, most of us are accustomed now to leadership and innovation in the industry coming from the heavily venture-backed companies. From the standpoint of a VC, the space has matured over the past year from a field of slim pickings to one filled with heavyweights such as Coinbase, BitPay, Circle, BitGo, ChangeTip, BitFury, Chain, BitNet, OkCoin, Blockchain and many more. Amazing teams, amazing businesses, incredible growth trajectory and promise. If you haven’t been watching closely, you may have missed this transformation.

The recent news of Coinbase’s $75 million series C and the fruit of their labor, the Coinbase Exchange, was well publicized. However, few took note of the company’s rollout of fiat-backed accounts. On a pragmatic level, this means you can now sell your bitcoin and hold local currency with Coinbase. Individually these announcements are exciting, but in unison they represent a game changer. Bitcoin, beyond its philosophical or technological promise, has finally gained legal utility.

Let me lay this out for you in more detail.

Coinbase just used its Bitcoin foundation to become the world’s first global bank. Let that sink in. Sure, there are international banks, but operationally these banks function more as group of allied national banks who share a brand. That is not the same thing as a global bank. A customer in Greece, for example, who opens an account with Coinbase, is now doing business directly with a U.S.-based “bank.”

Thanks to Coinbase’s $75 million funding round provided by the NYSE, large U.S. banks, a multinational telecom company and a roster of finance VIPs, you can now open an account in a country such as Poland or Greece, fund your account via bitcoin or wire, and hold your money in U.S. dollars in the comparatively stable U.S.A. Your money is now completely insulated from your local currency issues, but spends the same as euros in your local bank account. This is the best of both worlds: all the functionality of your existing bank (and more), without the associated risks and fees. In addition to the banking services, Coinbase has just created the easiest, cheapest, least corrupt and most secure way to buy dollars. I imagine we’ll see an increasing number of local currencies you can hold in your account, too.

This week has seen an additional series of important announcements from Coinbase. On February 10, the company announced that it has expanded its bitcoin buy-and-sell functionality to five additional countries: the Czech Republic, Hungary, Bulgaria, Norway and Croatia. This brings the total number of countries where Coinbase’s buy-and-sell features are available to 24, with its wallet functionality available in 166 others.

All Coinbase needs now is a debit card and they could complete the circle. What if Coinbase gets shut down locally? If they were smart, they’d shut down operations in that country and refund everyone their deposits in bitcoin. Let the customer unload it locally at a small discount. The result: risk-free dollars. Funded by the NYSE. And INSURED.

If you are an exchange, it is imperative that you start taking notes and start moving fast. Coinbase has created the world’s first truly global bank, with features and low fees that a legacy bank is technically incapable of offering, unless they use Bitcoin.

Congratulations are in order for Coinbase. This was no easy feat. But surely now, other financial institutions have taken note of BBVA and USAA involvement, and will be looking for their own play in the space. As soon as Coinbase turns on the marketing engine that brands it as a gateway for USD, Coinbase use will surge internationally and, by its nature, introduce those users to the world of Bitcoin. Consumers have a use case, businesses have a use case, and the best-performing venture investors are salivating. Now it’s just a race to the first 10 million users.