Coinbase: A bitcoin startup is spreading to capture more of the market

In 2017, the price of Bitcoin skyrocketed to Coinbase, one of the largest cryptocurrency exchanges in the world, was in the right place at the right time to capitalize on the spike of interest. Nevertheless, Coinbase is not interested in granting its crypto profits. In order to stay ahead in a much larger cryptocurrency market, companies are returning money to their master plan. As of 2017, the company’s revenue of $ 1 billion and $ 150 billion of assets have been reported to have been transacted between 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 on the CNBC Disruptor list in 2018 after failing to make the list two years ago.

On the road to their success, Coinbase has made no effort to hunt down key executives from the New York Stock Exchange, Twitter, Facebook, and LinkedIn. This year, the size of its full-time engineering team has almost doubled.

Earn.com was bought by Coinbase this April for 100 million. The platform allows users to send and receive digital currency while replying to emails from a wide range of markets and completing micro tasks. Currently, the company plans to bring in Andresen Horowitz, a former venture capitalist, founder and CEO of Arns, as its first chief technology officer.

At current estimates, Coinbase is worth about $ 8 billion to buy Earn.Com. This value is much higher than the $ 1.6 billion valuation estimated in the last round of venture capital financing in the summer of 2017.

Coinbase declined to comment on its valuation, despite receiving more than 225 million in funding from Union Square Ventures, Andresen Horowitz and the top VC 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. NYSE rival Nasdaq is considering a similar move.

The competition is coming

Since competing firms want to get out of the Coinbase business somewhat, Coinbase is looking to capitalize on other ventures in an effort to build a moat around the company.

Dan Dolev, a Nomura Instant analyst, said Square, a company run by Twitter CEO Jack Dorsey, could take part in the Coinbase exchange business since it launched its cryptocurrency business on its Square Cash app in January.

According to Dolev estimates, Coinbase’s average trading fee in 2017 was about 1.8 percent. These high fees can lead users to other cheaper exchanges.

Coinbase wants to be a one-stop shop for institutional investors while hedging its exchange business. To entice that white glove investor class, the company has announced a fleet of new products. This category of investors has been particularly wary of plunging into volatile cryptocurrency markets.

Products produced by Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets Company.

Coinbase thinks there are billions of dollars of institutional money that can be invested in digital currency. It has already saved $ 9 billion in consumer assets.

Institutional investors are concerned about security, although Coinbase has not been hacked like some other global cryptocurrency exchanges. The president and COO of Coinbase said the motivation for launching Coinbase Custody last November was the lack of trusted guardians to protect their crypto assets.

• Currently moved from Wall Street bashing bit to cryptocurrency backer

According to the latest data from Autonomous Next Wall Street, interest in cryptocurrencies seems to be on the rise. Currently, there are 287 crypto hedge funds, whereas in 2016, only 20 cryptocurrency hedge funds existed. Goldman Sachs has even opened a cryptocurrency trading desk.

Coinbase has also launched Coinbase Ventures, an incubator fund for early-stage startups operating in the cryptocurrency and blockchain space. Coinbase Ventures has already raised 15 billion for further investment. Its first investment was announced in a startup called Compound, which allows one to lend or lend cryptocurrency while earning interest rates.

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 more than $ 1 billion in Bitcoin payments.

Proponents of blockchain technology believe that in the future, cryptocurrency will be able to meet the requirements of the central banking authority. In the process, it will reduce costs and create a decentralized financial solution.

Regulatory security remains tight

Coinbase has been widely criticized for restricting access to four cryptocurrencies. But U.S. regulators must be careful when it comes to policing certain uses of technology.

For cryptocurrency exchanges like Coinbase, the concern is whether the cryptocurrencies are securities that are under the jurisdiction of the Securities and Exchange Commission. Coinbase is known to be 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 reports that Coinbase has met with SEC officials to register itself as a licensed brokerage and electronic trading venue. In such a situation, it would be easier for Coinbase to support more coins and comply with security regulations.