The last few months and weeks in the crypto world have been intense to say the least. Words like “bubble” and “mania” are used all the time. Over the U.S. Thanksgiving holiday, Coinbase — the leading exchange among newcomers to the crypto-world — reportedly opened over 100,000 accounts. Recent reports suggest that Coinbase now has more accounts than traditional brokerage Schwab.

The company is, however, going through some growth challenges. It has faced governance issues around supposed insider trading of Bitcoin Cash and has suffered from frequent outages, making trading unavailable for long periods of time and frustrating customers. In short, Coinbase is going through its “fail whale” period.

However, the company is quietly and rapidly executing a classic Trojan Horse strategy, which, if successful, could end up putting traditional brokerages out of business.

That may sound like hyperbole, but I mean it. Let me explain why.

Step 1: Coinbase becomes the de-facto location for natively crypto assets

Coinbase has almost reached this milestone already — at least among mainstream U.S. consumers. The company added Bitcoin Cash support a few weeks ago and is headed down the path of supporting ever more crypto assets. While the company stated in a blog post yesterday that it has made no decisions about adding new currencies, it also referenced the Digital Asset Framework it announced in November, whose sole purpose is to vet new crypto assets and add them to Coinbase’s GDAX exchange. (GDAX is a version of Coinbase intended for professional traders.)

Chatter on a cryptocurrency forum last month, coupled with a screenshot of Coinbase’s supposed coin pipeline, gave rise to rumors that Dash, Ripple, and Monero would be coming soon. It’s common knowledge that Coinbase initially missed the boat when it came to supporting Ethereum trading, and I think the company realizes now that it could be missing the alt coin boat. I’ve spoken to enough coins that have had conversations with Coinbase to believe more coins are coming.

As the excitement continues around crypto, more and more people will start using Coinbase as a known and trusted exchange to “put their toe in the water” with crypto assets.

In marketing terms, Coinbase has “awareness” among its target customers.

Step 2: Coinbase becomes a trusted brand in the mind of the consumer

As mainstream usage grows and cryptoassets continue to come out of the shadows, Coinbase (assuming it addresses its reliability and governance issues) becomes synonymous with crypto. It’s like PayPal for digital money.

They aren’t there yet. As mentioned, the site goes down regularly, the sign up and KYC/AML process is still time-consuming and cumbersome, and the whole tax reporting issue is still up in the air, which makes the company vulnerable to regulators.

But, none of that is insurmountable.

Step 3: Leverage crypto custody expertise to push into traditional assets

Once Coinbase gets to a solid point of reliability, millions of customers will rely on the exchange for its crypto-asset custody expertise. This is where things will get interesting, because this trend will intersect perfectly with another macro-trend: the “blockchain-ification” of traditional assets.

While Coinbase is building up its customer base, the world of traditional assets (stocks, bonds, etc.) will be going through their own “blockchain revolution.” The centralized clearing houses that currently manage all of the information about shares in AAPL, GOOG, AMZN, FB, etc. are going to be replaced by distributed ledgers. Most people in financial services can see this. It’s precisely why stock exchanges, DTCC, and everyone else is going so hard, so fast into blockchain.

For more evidence of this trend, just look at the evolution of the Australian Stock Exchange towards blockchain, the efforts that Nasdaq has put towards it, and the DTCC announcement of last year.

In this blockchain world of the future, every asset is represented by a digital token on a blockchain. That token has a corresponding private key which signifies ownership. The brokerages of the future are the ones that will have expertise in private key custodianship and all of the technological and security infrastructure that goes along with it.

So, take a wild guess now — which company has a five-year head start on the learning, know-how, and practice of managing private keys? Yep, Coinbase.

When the stocks of AAPL and FB become tokens, the brokerage of the future will need to prove they can effectively manage the private keys on behalf of their clients. This is when Coinbase will begin to eat away at the business of traditional brokerages. Its back-end and security will be more blockchain-ready and battle tested, so it will be able to provide all the services traditional brokerages do but more cheaply and with greater reliability.

Essentially, Coinbase will say “you already trust us to hold your Bitcoin, Ether, Litecoin, etc. Now you can use some of those gains to move seamlessly in and out of traditional companies and other investment vehicles right within Coinbase. After all, it’s all about managing cryptoassets on your behalf, and we’ve been doing that better and longer than anyone else on the planet. So, do a BTC-AAPL trade right within our platform.”

As if that’s not enough, Coinbase will also push down into mobile payments, using its Toshi wallet app (or some future version of it) to integrate with the brokerage account. So customers will eventually have a replacement for TD Ameritrade, Fidelity, E*Trade on one side and a replacement for PayPal, Venmo on the other side.

The challenge for traditional brokerages

Ironically, we may even see traditional brokerages hasten their own demise by partnering with the company that is going to compete with them, in the well-intentioned spirit of customer service.

Much like Borders and others allowed Amazon to run their back-end infrastructure at the beginning of the Internet era, Fidelity, for example, now allows customers to see their Coinbase holdings via a Fidelity dashboard. It feels customer-centric (and it is), but it actually raises the profile of Coinbase among Fidelity customers, increasing the likelihood they will start moving more assets into Coinbase, building the brand perception and hastening the arrival of the day when Coinbase can effectively compete with traditional brokerages.

The brokerages are in a race against time. They need to acquire the innovation and knowledge associated with managing crypto-assets before Coinbase becomes a top-tier financial services brand.

There are a few cards they could play, including partnering with some high-potential coins that are not yet listed on Coinbase and/or being the outlet for direct investment into regulated initial coin offerings (ICOs). The investment bankers who did IPOs will get cut out by the retail brokers doing ICOs.

There’s a saying that six months in crypto is like five years in the “normal” world. Some brokerages are faster and more innovative than others, but we all know that even the most agile enterprises often can’t move as quickly as fast-moving startups.

The comparative advantages that a traditional brokerage has over Coinbase (security experience, scale, regulatory relationships, customers, brand recognition, and balance sheet) are not going to be there forever, and the size of the advantage will shrink at crypto speed.

Jeremy Epstein is CEO of Never Stop Marketing and author of The CMO Primer for the Blockchain World. He currently works with startups in the blockchain and decentralization space, including OpenBazaar, IOTA, and Zcash.