The price of bitcoin soared in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to take advantage of the surge in interest. Still, Coinbase isn’t interested in taking its crypto gains for granted. To stay ahead in a much larger cryptocurrency market, the company is pouring money back into its master plan. As of 2017, the company’s revenue was $1 billion and more than $150 billion in assets were traded with 20 million customers.
Coinbase, a San Francisco-based company, is known as the leading cryptocurrency trading platform in the United States, and with its continued success, it was ranked #10 on the CNBC Disruptor list in 2018 after not- it was listed in the previous two years. .
On its road to success, Coinbase has left no stone unturned in poaching key executives from the New York Stock Exchange, Twitter, Facebook and LinkedIn. In the current year, the size of its full-time engineering team has nearly doubled.
Earn.com was bought by Coinbase this April for $100 million. This platform allows users to send and receive digital currency while answering mass market emails and performing micro tasks. The company currently plans to bring in a former venture capitalist from Andreessen Horowitz, founder and CEO of Earns as its first chief technology officer.
Based on the current valuation, Coinbase was valued at around $8 billion when it proposed to buy Earn.Com. This value is much higher than the $1.6 billion valuation that was estimated in the last round of venture capital funding in the summer of 2017.
Coinbase refuses to comment on its valuation despite having more than $225 million in funding from top VCs including Union Square Ventures, Andreessen Horowitz, and the New York Stock Exchange.
To meet the needs of institutional investors, the New York Stock Exchange plans to launch its own cryptocurrency exchange. Nasdaq, a rival of the NYSE, is also contemplating a similar move.
• Competition is approaching
As competing organizations look to take a bite out of Coinbase’s business, Coinbase is looking for other venture capital opportunities to try to build a moat around the company.
Dan Dolev, an instant analyst at Nomura, said Square, a company run by Twitter CEO Jack Dorsey, could eat into Coinbase’s exchange business because it started trading cryptocurrencies on its Square Cash app in January
According to Dolev’s estimates, Coinbase’s average trading fees were about 1.8 percent in 2017. Such high fees could drive users to other, cheaper exchanges.
Coinbase is looking to become a one-stop shop for institutional investors while covering its exchange business. To attract this class of white-glove investors, the company announced a fleet of new products. This class of investors has been particularly cautious about diving into the volatile cryptocurrency market.
Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.
Coinbase believes there are billions of dollars in institutional money that can be invested in the digital currency. It already has custody of $9 billion in client assets.
Institutional investors are concerned about security despite knowing that Coinbase has never been hacked like other global cryptocurrency exchanges. The president and COO of Coinbase said that the impetus for Coinbase’s custody launch last November was the lack of a trusted custodian to safeguard its crypto assets.
• Wall Street is currently going from Bashing Bit to Cryptocurrency Backer
According to the latest data available from Autonomous Next Wall Street, interest in cryptocurrency appears to be on the rise. Currently, there are 287 cryptocurrency hedge funds, while in 2016 there were only 20 cryptocurrency hedge funds. Goldman Sachs has even opened a cryptocurrency trading desk.
Coinbase has also introduced Coinbase Ventures, which is an incubation fund for early-stage startups working in the cryptocurrency and blockchain space. Coinbase Ventures has already raised $15 billion for further investments. Its first investment was announced in a startup called Compound, which allows you to borrow or lend cryptocurrency while earning an interest rate.
In early 2018, the company launched Coinbase Commerce, which allows merchants to accept major cryptocurrencies for payment. Another bitcoin startup was BitPlay, which recently raised $40 million in venture money. Last year, BitPlay processed over $1 billion in bitcoin payments.
Proponents of blockchain technology believe that in the future, cryptocurrency will be able to eliminate the need for central banking authorities. In the process, it will reduce costs and create a decentralized financial solution.
• Regulatory security continues to be intense
For keeping access limited to four cryptocurrencies, Coinbase has received a lot of criticism. But they must tread carefully as US regulators deliberate on how to control certain uses of the technology.
For cryptocurrency exchanges like Coinbase, the issue of concern is whether or not cryptocurrencies are securities that would be subject to the jurisdiction of the Securities and Exchange Commission. Coinbase is slow to add new coins because the SEC announced in March that it would apply security laws to all cryptocurrency exchanges.
The Wall Street Journal reported that Coinbase met with SEC officials to register as a licensed broker-dealer and electronic trading facility. In this scenario, it would be easier for Coinbase to support more coins and also comply with security regulations.