The price of bitcoin rose sharply in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to cash in on the jump in interest. Nonetheless, Coinbase is not interested in taking its crypto winnings for granted. In order to continue to lead in a much larger cryptocurrency market, the company is returning money to its master plan. By 2017, the company’s revenue was $ 1 billion, and over $ 20 billion in assets were traded with 20 million buyers.
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Coinbase, a San Francisco-based company, is known as the leading cryptocurrency trading platform in the United States and with its continued success came in 10th place on the CNBC Disruptor List in 2018, after failing to make a list for the previous two years.
On their path to success, Coinbase left no stone unturned in the way of poaching key executives from the New York Stock Exchange, Twitter, Facebook and LinkedIn. In the current year, the size of his full-time engineering team has almost doubled.
Earin.com bought Coinbase this April for $ 100 million. This platform allows users to send and receive digital currency while responding to mass market emails and completing micro tasks. Currently, the company plans to bring in former investor Andreessen Horowitz, founder and CEO of Earns, as its first technology director.
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According to current estimates, Coinbase was estimated at about $ 8 billion when it set out to buy Earn.Com. This value is much higher than the estimate of $ 1.6 billion estimated in the last round of venture capital financing in the summer of 2017.
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Coinbase declined to comment on its estimate, despite having more than $ 225 million in funding from leading WCs, 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. Nasdaq, a rival of the NYSE, is also considering a similar move.
• Competition is coming
While competing organizations are trying to bite into Coinbase’s business, Coinbase is looking for other venture capital opportunities in an attempt to build a trench around the company.
Dan Dolev, a current Nomura analyst, said Square, a company run by Twitter CEO Jack Dorsey, could get into Coinbase’s exchange business because it started trading cryptocurrency in its Square Cash app in January.
According to Dolev estimates, average trading fees for Coinbase were about 1.8 percent in 2017. Such high fees could take users to other cheaper exchanges.
Coinbase wants to become an all-in-one place for institutional investors, while protecting its exchanges. To lure the investor class into white gloves, the company announced a fleet of new products. This class of investors has been particularly cautious in diving into the volatile cryptocurrency market.
Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Market are products launched by the company.
Coinbase believes there are billions of dollars of institutional money that can be invested in digital currency. He already has custody of over $ 9 billion in customer assets.
Institutional investors are concerned about security, although they know that Coinbase has never suffered hacking like some other global cryptocurrency exchanges. The president of Coinbase and the chief executive said the impetus for launching custody of Coinbase last November was a lack of a trusted custodian to guard their crypto assets.
• Wall Street is currently switching from Bashing Bit to Cryptocurrency Backer
According to the latest data available from Autonomous Next Wall Street, interest in the cryptocurrency seems to be increasing. There are currently 287 crypto-hedge funds, while in 2016 there were only 20 cryptocurrency hedge funds. Goldman Sachs has even opened a counter for cryptocurrency trading.
Coinbase also introduced Coinbase Ventures, which is an incubation fund for early-stage beginners working in the cryptocurrency and blockchain space. Coinbase Ventures has already accumulated $ 15 billion for further investments. His first investment was announced in a startup called Compound, which allows lending or lending cryptocurrencies with interest.
In early 2018, the company launched Coinbase Commerce, which allows merchants to accept major cryptocurrencies for payment. Another bitcoin launch was BitPlay, which recently raised $ 40 million in risky money. Last year, BitPlay processed more than $ 1 billion in bitcoin payments.
Proponents of blockchain technology believe that cryptocurrency will be able to eliminate the need for central banking authorities in the future. In the process, it will reduce costs and create a decentralized financial solution.
• Regulatory safety remains intensive
In order to limit access to four cryptocurrencies, Coinbase has drawn a lot of criticism. But they must step carefully as U.S. regulators consider how the police manage certain uses of the technology.
For cryptocurrency exchanges like Coinbase, the question is worrying whether cryptocurrencies are securities that would be subject to the jurisdiction of the Securities and Exchange Commission. Coinbase, however, is slowly adding new coins as 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 brokerage and e-commerce site. In such a scenario, it would become easier for Coinbase to support more coins, and also to comply with security regulations.