The price of bitcoin soared 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 interest spike. However, Coinbase is not interested in taking its crypto winnings for granted. To stay ahead of a larger cryptocurrency market, the company is plowing money back into their master plan. As of 2017, the company’s revenue was reported at $ 1 billion and more than $ 150 billion of assets were sold to 20 million customers.
Coinbase, a San Francisco -based company, known as the leading cryptocurrency trading platform in the United States and with its continued success, landed at No. 10 places on the CNBC Disruptor list in 2018 after failing to make the list the past two years.
On their path to success, Coinbase has left no stone unturned in extracting executive keys from the New York Stock Exchange, Twitter, Facebook, and LinkedIn. In the current year, the size of his 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 money while responding to mass market emails and completing micro tasks. Currently, the company plans to bring in a former Andreessen Horowitz venture capitalist, Earns founder and CEO as its first chief technology officer.
According to current valuations, Coinbase valued itself at about $ 8 billion when it started buying Earn.Com. This amount is higher than the $ 1.6 billion estimated in the final round of venture capital financing in the summer of 2017.
Coinbase declined to comment on its valuation despite the fact that it has 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 start its own cryptocurrency exchange. Nasdaq, a rival to the NYSE is also considering a similar move.
• The competition is imminent
While competing organizations are looking to take a stake in 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 may be eating into Coinbase’s exchange business since it started trading cryptocurrency on the Square Cash app back in the day. January.
According to Dolev estimates, Coinbase’s average trading fee was nearly 1.8 percent in 2017. High fees could lead users to other cheaper exchanges.
Coinbase is looking to become a one-stop shop for institutional investors while hedging the business in its exchange. To attract the white glove investor class, the company has announced a host of new products. This class of investors is especially wary of diving into the fast-paced cryptocurrency market.
Coinbase Prime, Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.
Coinbase feels there are billions of dollars in institutional money that can be invested in digital currency. It already has in custody $ 9 billion in customer assets.
Institutional investors are concerned about security despite knowing that Coinbase has never suffered a hack like other global cryptocurrency exchanges. The president and COO of Coinbase said the impetus for Coinbase’s launch of custody in November was the lack of reliable custodians to protect their crypto assets.
• Currently Wall Street is Moving from Bashing Bit to Cryptocurrency Backer
According to the latest data available from Wall Street’s Autonomous Next, interest in cryptocurrency seems to be growing. Currently, there are 287 crypto hedge funds, while in 2016, only 20 cryptocurrency hedge funds existed. Goldman Sachs has even opened a cryptocurrency trading desk.
Coinbase also introduced Coinbase Ventures, an incubator fund for early -stage startups working in the cryptocurrency and blockchain space. Coinbase Ventures has already raised $ 15 billion for additional investment. The first investment is announced in a startup called Compound that allows a borrower or lender in 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 is BitPlay, which recently raised $ 40 million in venture money. Last year BitPlay processed more than $ 1 billion in bitcoin payments.
Proponents of blockchain technology believe that in the future, cryptocurrency will be able to eliminate the need for central bank authorities. In the process, it will lower costs and create a decentralized financial solution.
• Regulatory Security Remains Strong
To keep access limited to four cryptocurrencies, Coinbase has received a lot of criticism. But they need to be careful as U.S. regulators plan how to policy some use of the technology.
For cryptocurrency exchanges such as Coinbase, the thing of concern is whether cryptocurrencies are securities to be under the jurisdiction of the Securities and Exchange Commission. Coinbase has admitted to being slow in adding 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 itself as a licensed brokerage and electronic trading venue. In such a situation, it may be easier for Coinbase to support multiple coins and also to comply with security regulations.