Table of Contents

#1. Step 1: Coinbase Business Model
#2. Step 2: Elements and functions of the site
#3. Step 3: crypto platform monetization
#4. Step 4: Marketing Strategy
#5. Step 5: Development Approach

Coinbase is an online platform for buying, selling, transferring and storing digital currency, which has become popular due to its ease of use and ever growing functionality. Next, we’ll look at the capabilities of this platform and tell how to create a website like Coinbase yourself.

Step 1: Coinbase Business Model

At the time of launch in 2012, the Coinbase website was an online wallet where you could store some of the most popular cryptocurrencies. However, by the end of this year, the service had the opportunity to safely buy digital currencies without the need to switch to third-party services. And this was only the beginning, in the next years the possibilities of the site were constantly expanding:

1. Deposit insurance. The stored in Coinbase online wallets cryptocurrency is insured. If users lose money due to a violation of the physical security of a web service, cyberattacks, or employee theft, the company will compensate for the damage. The amount of coverage depends on the country, for example, for residents of the United States it is 250 thousand dollars. Insurance does not cover cases of loss of money due to the user's fault.
2. Crypto-exchanges. In 2015, the centralized GDAX exchange (formerly Coinbase Exchange) and the decentralized Paradex exchange in 2018 were launched. The purchase and sale of coins is integrated as a normal trading interface.
3. Payment gateway. e-Commerce web services can connect to Coinbase in order to realize the possibility of purchasing goods and services on their site using bitcoins, ether, bitcoin cache and other popular coins.
4. Venture fund. Comprehensive support and investment in early stage of blockchain startups.

As you can see, Coinbase is a comprehensive platform that provides many cryptocurrency services. Creating such a site will require a lot of time and money, as well as talented developers who can implement everything at the same high level, since if the quality of the created product is lower, then users will not make sense to use your site.

Step 2: Elements and functions of the site

Trading engine. At Coinbase, it is implemented in a classic way and allows you to buy cryptocurrency at a market rate through integration with GDAX. The list of available coins, payment methods and fees depend on the region (city, country) and specific cryptocurrency. Some currencies are only available for sale with the Pro & Prime tools. In addition, the purchase of crypto is completely blocked for residents of certain countries, which is associated with the company's desire to act in the legal field.

Basic features of the trading engine:

1. Transaction execution and balance calculation.
2. Makes a call to access order books.
3. Matching buy and sell transactions on the exchange.

User interface. All elements of the site that interact with the user directly. When developing them, you need to focus on a pleasant appearance and an intuitive understanding by the user of the functions of each element. Without this, while developing sites like Coinbase, you can easily get bogged down by creating an interface that only experts can figure out.

Basic user interface functionality:

1. Registration / Login using email, phone or social networks.
2. Profile setup, including the ability to create a new crypto address.
3. Cryptocurrency rate charts, including showing the highest correlations.
4. Transfers and the possibility of creating orders for the purchase of crypto.
5. View balance and transaction history.
6. Training and background information.

User management. An online platform that provides the services of a cryptocurrency wallet and / or exchanger, needs tools that are responsible for automatically tracking, managing and deleting profiles at the request of users. In practice, these tools are responsible for the following actions:

1. Receiving and processing requests for registration and login. Including checking and confirming the email and phone number, tracking the IP address and creating a cryptocurrency account (wallet).
2. Verification of the user's identity according to the KYC procedure, which is important for determining the user's jurisdiction and increasing the limits on input / output. Some things can be confirmed automatically (country, phone, last name and first name using Internet banking), while the rest will require the creation of an application for verification by the administrator (availability of a document, matching of a person on a document and user selfie).
3. Blocking users or freezing accounts in case of incorrect / atypical behavior, for example, if the user usually operated with small amounts, and then suddenly created a request to transfer all funds to an unfamiliar counterparty. These actions are now tracked using deep neural networks.

Admin panel. A set of functions and tools with which administrators monitor the status of a site, manage users and monitor trade. Based on access levels, they should be given the opportunity to view the user ID, email address, phone number, first name with last name, etc., as well as information about transactions: identifier, time stamps, amounts, description, etc.

The panel should allow administrators to:

1. Manage cryptocurrency listing.
2. Set trading and other fees.
3. Freeze and / or cancel transactions.
4. Chat with users via chat or email.
5. Add and edit content (text, pictures, video).
6. Add and configure payment methods.

Cryptocurrency wallet. A program that allows users to receive, store and send virtual coins. The more cryptocurrencies a wallet can operate, the better. When implementing a wallet to launch a site like Coinbase, you need to consider the following things:

1. There are several types of wallets: hot and cold, desktop and mobile, single or multi-currency. Each type of wallet is designed for various purposes and is popular in a specific target group.
2. Each user should have the opportunity to buy and sell cryptocurrency in real time, which requires integration with exchanges or exchangers. In addition, integration with PayPal, Stripe, 2Checkout and other payment gateways, banks, payment systems are needed.
3. Wallets can be implemented in the form of a common pool, where all user funds are stored, both on cryptocurrencies that need liquidity, and in the form of separate wallets for each user, which is more reliable.
4. To increase the reach of the audience, you need to integrate your wallet with e-Commerce services (shops, crypto-exchanges, banks, exchangers, ATMs).

Application programming interface (API). A set of tools and functions that allows external services to access the data and functions of your platform. It is through the API that external services will connect to your site, accept payment with cryptocurrency, check wallet balance, etc.

There are three things to consider when implementing the API:

1. Private and public API. Depending on the goals, some API solutions must be private (internal), which is necessary, for example, to create a trading bot. While the public API solutions will be used by third-party services to connect to your site.
2. The protocol, which is the standard for the exchange of data between participants in exchange trading in real time.
3. A protocol designed for real-time data exchange between a browser and a web server. It is used to send information related to market movements, changes in trade, etc.

Coinbase Commerce. An open source payment gateway with which online stores and other commercial online services can easily and quickly connect the possibility of accepting payments in the form of BTC, ETH, LTC and BCH coins, as well as USDC stablecoins (the course is tied to the dollar 1: 1) This solution is already used by default in Shopify and WooCommerce.

Coinbase Commerce benefits:

1. Lower transaction fees.
2. Fast payments and no crypto acceptance fees.
3. Money from the buyer's wallet goes directly to the seller’s wallet without third parties.

Statistics and analytics. Typically, these are logs, charts and various indicators, which in the simplest implementation are needed to track the history of transactions, in a more complex one - technical analysis. When implementing a cryptocurrency wallet, you can get by with the history of transactions and a simple chart of the course, while launching an exchange will require the creation of a full-fledged trading chart with a lot of information and indicators. In addition, trading pairs panels will be needed.

Depending on the type of exchange and the target group, analytics is created for:

1. We need training tips, sales assistants, guides and a relatively simple design. On Coinbase, this is a regular trading interface.
2. Professional traders. More complex charts with a large number of indicators, as well as the ability to customize some elements. On Coinbase, these are the Pro & Prime trading interfaces.

At Binance, these are the basic and advanced trading interfaces.

Database. Usually, two types of databases are used when implementing crypto exchanges: REDIS and SQL. REDIS uses RAM, which provides high speed, but creates security risks. Whereas SQL uses read-only memory, which is more reliable, but slightly slower.

Mobile app. The Coinbase platform would not have become so popular if it did not have a smartphone application, so when you start the Coinbase analogue, you also need to create your own application. This will require additional time and money, but the investment will pay off many times - more than 80% of owners of smartphones and tablets prefer to access the service through the application rather than a web browser.

Step 3: crypto platform monetization

Coinbase's main sources of income are fees:

1. Buying and selling crypto in a wallet. The amount of commission depends on the currency, amount, method and specific country. Usually it is 1-5%. Sometimes more if it's an unpopular cryptocurrency and / or payment method.
2. Conversion of cryptocurrencies. The service charges a spread margin of up to 2% depending on market fluctuations in the exchange rate on Coinbase Pro.
3. Trading transactions on Coinbase Pro. The value depends on the volume - from 0 to 0.5% for buy and sell orders. A commission reduction begins when volumes exceed $ 10 thousand and reach a minimum value of 0% for sellers if volumes exceed $ 50 thousand and 0.04% for buyers if volumes exceed $ 1 trillion.

It is unknown how much the company earns with a payment gateway.

Step 4: Marketing Strategy

Coinbase positions itself as a service for everyone: beginners and professionals, inverters and raiders, individuals and companies, sellers and buyers of goods and services on the network. The platform is trying to cover the entire available range of services in the field of cryptocurrencies, while the market is relatively free, and not without success. For this, Coinbase marketers are actively using:

1. Promotion on social networks. Before the ban on crypto ads on Facebook, Google and YouTube, there were a lot of such ads, now these are mainly announcements about payment gateway services and hidden advertising.
2. Affiliate traffic. The service offers 50% of the commissions for three months and BTC for $ 10 if the borrowed person buys or sells BTC for $ 100 within 180 days.
3. Advertising on search networks. Advertisements over search results, the creation of SEO-content to improve positions in the natural search results and advertising on Google Ads.

In addition, Coinbase participates in various specialized events and initiatives that create informational occasions for mentioning in the media, which also contributes to the promotion of the platform.

Step 5: Development Approach

Clone script. A free or relatively inexpensive solution that “clones” the functionality and largely the design of the Coinbase website. The quality and security of such software is determined by the developer, but usually it’s the work of novice programmers or small companies that offer a faster and cheaper way to create cryptocurrency wallets and exchanges.

White Label solutions. A more expensive and usually better solution, which also largely clones the design and functionality of the original. Unlike clone scripts, White Label software is usually updated periodically and has technical support.

Website development from scratch. A great option if you need quality and implementation of new functional and design solutions. In addition, self-development gives you full control over the process and copyright. Of the minuses - the high cost and development time.