The price of bitcoins jumped sharply in 2017. Coinbase, one of the largest cryptocurrency exchanges in the world, was in the right place at the right time to take advantage of the jump in interest rates. However, Coinbase is not interested in taking its cryptocurrencies for granted. To stay ahead in a much larger cryptocurrency market, the company is putting money back into its master plan. By 2017, the company’s revenue is reported at $ 1 billion, and assets of more than $ 150 billion are 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 landed 10th on CNBC Disruptor’s list in 2018 after failing to make the list. in the previous two years.
On its way to success, Coinbase leaves no stone unturned in the poaching of key executives on the New York Stock Exchange, Twitter, Facebook and LinkedIn. This year, the size of his full-time engineering team has almost doubled.
Earn.com was acquired by Coinbase in April for $ 100 million. This platform allows users to send and receive digital currency while responding to mass market emails and performing microtasks. The company is currently planning to bring in former venture capitalist Andreessen Horowitz, founder and CEO of Earns, as its first chief technology officer.
According to current estimates, Coinbase was valued at about $ 8 billion when it set out to buy Earn.Com. This value is much higher than the estimate of $ 1.6 billion, which was estimated in the last round of venture capital funding in the summer of 2017.
Coinbase declined to comment on its valuation, despite having more than $ 225 million in funding from top VCs, including Union Square Ventures, Andreessen Horowitz and also from the New York Stock Exchange.
To meet the needs of institutional investors, the New York Stock Exchange plans to launch its own cryptocurrency exchange. The NYSE rival Nasdaq is also considering a similar move.
• The competition is coming up
While competing organizations try to bite off Coinbase’s business, Coinbase is looking for other venture capital opportunities in an attempt to build a trench around the company.
Dan Dolev, an immediate Nomura analyst, said Square, a company run by Twitter CEO Jack Dorsey, could feed into Coinbase’s stock business since it began trading cryptocurrency in its Square Cash app in January. .
According to Dolev’s estimates, Coinbase’s average trading fees were approximately 1.8% in 2017. Such high fees could direct consumers to other cheaper exchanges.
Coinbase seeks to become a one-stop shop for institutional investors while hedging its stock business. To attract the investor in this class with white gloves, the company announced a fleet of new products. This class of investors are especially wary of immersing themselves in the volatile cryptocurrency market.
Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.
Coinbase estimates that there are billions of dollars of institutional money that can be invested in digital currency. It already has a $ 9 billion deposit of client assets.
Institutional investors are concerned about security, even though they know that Coinbase has never suffered a hack like some other global cryptocurrency exchanges. Coinbase’s president and chief operating officer said the impetus for launching Coinbase’s trusteeship last November was the lack of a trusted trustee to protect their crypto assets.
• Wall Street is currently moving from Bashing Bit to Cryptocurrency Backer
According to the latest data from Autonomous Next Wall Street, interest in cryptocurrency seems to be increasing. There are currently 287 cryptocurrency hedge funds, while in 2016 there were only 20 cryptocurrency hedge funds. Goldman Sachs even opened a cryptocurrency trading office.
Coinbase also introduced Coinbase Ventures, which is an incubation fund for early-stage startups operating in cryptocurrency and blockchain. Coinbase Ventures has already raised $ 15 billion for further investment. His first investment was announced in a startup called Compound, which allows a person 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 launch is BitPlay, which recently raised $ 40 million in risky 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, this will reduce costs and create a decentralized financial solution.
• Regulatory security remains intensive
To limit access to four cryptocurrencies, Coinbase has drawn a lot of criticism. But they need to step carefully as US regulators consider how to control certain uses of the technology.
For cryptocurrency exchanges such as Coinbase, the question is whether cryptocurrencies are securities that would be subject to the jurisdiction of the Securities and Exchange Commission. Coinbase has been slow to slow down the addition of new coins since 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 and e-commerce venue. In such a scenario, it will be easier for Coinbase to maintain more coins and also to comply with security regulations.