In 2017, bitcoin’s price soared. Coinbase, the largest cryptocurrency exchange in the world, saw the opportunity to profit from the rise in interest. Coinbase doesn’t want to take its crypto gains as a given. The company is investing money into its master plan to stay ahead in the larger cryptocurrency market. The company reported a revenue of $1 billion in 2017 and more than $150 billion in assets were traded between 20 million customers.
Coinbase, a San Francisco-based company, is the most popular cryptocurrency trading platform in America. Its continued success has landed it at No. After failing to appear on the CNBC Disruptor List in the past two years, Coinbase landed at the No. 10 spot in 2018.
Coinbase, on their way to success, has not stopped poaching top executives from the New York Stock Exchange and Twitter, Facebook, LinkedIn. The company’s full-time engineering staff has nearly doubled in the past year.
Coinbase purchased Earn.com in April for $100 million. The platform allows users to send and get digital currency, while also replying to mass-market emails and completing microtasks. The company plans to hire Earns, a former Andreessen Hoowitz Venture Capitalist and CEO, as its first chief technology officer.
Coinbase was valued at $8 billion according to the current valuation when it bought Earn.Com. This valuation is significantly higher than the $1.6 billion that was calculated at the last round in venture capital financing in summer 2017.
Despite having received funding from Union Square Ventures and Andreessen Horowitz, Coinbase declined to comment on its valuation.
The New York Stock Exchange plans to create its own cryptocurrency exchange in order to meet institutional investor needs. A similar move is being considered by Nasdaq (a rival to NYSE).
Competition Coming
Coinbase is exploring venture capital opportunities to help build a strong foundation around its business as competitors look to get a piece of Coinbase’s operations.
Dan Dolev, an instant analyst at Nomura, stated that Square, a company owned by Jack Dorsey, Twitter CEO, could potentially eat into Coinbase’s exchange business. Square Cash started trading cryptocurrency in January.
Dolev estimates that Coinbase’s average trading fee was 1.8 percent in 2017. This high fee could cause users to switch to cheaper exchanges.
Coinbase plans to be a one-stop platform for institutional investors, as well as hedging its exchange business. The company has announced a range of new products to attract this white-glove investor class. This group of investors is especially cautious about entering the volatile cryptocurrency market.
The company launched Coinbase Prime and The Coinbase Institutional Coverage Group as well as Coinbase Custody, Coinbase Markets, Coinbase Markets, Coinbase Prime and Coinbase Prime.
Coinbase believes that billions of dollars worth of institutional money can be invested into digital currency. It has already secured $9 billion worth of customer assets.
Institutional investors worry about security, despite the fact that Coinbase has not been hacked like other global cryptocurrency exchanges. Coinbase’s president and COO stated that Coinbase was launched because they didn’t have a trusted custodian to protect their crypto assets.
* At the moment Wall Street shifts from bashing Bit to Cryptocurrency Supporter
According to the latest data from Autonomous Next Wall Street, cryptocurrency interest seems to be growing. There are currently 287 cryptocurrency hedge funds. In 2016, only 20 existed. Goldman Sachs even has a cryptocurrency trading desk.
Coinbase also launched Coinbase Ventures, an incubator fund for startups in the crypto and blockchain space. Coinbase Ventures already has $15 billion in capital for future investments. The company’s first investment was made in Compound, a startup that allows you to lend or borrow cryptocurrency and earn interest.
Coinbase Commerce was launched at the start of 2018 by the company. This allows merchants to accept all major cryptocurrencies as payment. BitPlay was another bitcoin startup that recently raised $40 million in venture capital. BitPlay received more than $1 Billion in bitcoin payments last year.
Blockchain technology supporters believe that cryptocurrency will eliminate central banks. It will also lower costs and provide a decentralized financial solution.
* Regulatory Security Remains Intense
Coinbase, which allows access to only four cryptocurrencies at a time, has been criticized a lot. They must be careful as U.S. regulators consider how to police certain use of the technology.
Coinbase and other cryptocurrency exchanges are concerned about whether cryptocurrencies could be considered securities and fall under the jurisdiction of the Securities and Exchange Commission. Coinbase admits that it is slow to add new coins, as the SEC announced March that all cryptocurrency exchanges would be subject to security laws.
Wall Street Journal reported that Coinbase had met with the SEC officials in order to register as an electronic trading platform and licensed brokerage. It would be easier for Coinbase, in such a scenario to support more coins as well as to comply with security regulations.
