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. Despite this, Coinbase is not interested in taking its crypto winnings for granted. To stay ahead in the much larger cryptocurrency market, the company is pulling money back into its master plan. By 2017, the company’s revenue was $ 1 billion, and over $ 20 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 landed at number 10 on the CNBC Disruptor List in 2018, after failing to make that list the previous two years.
On its way to success, Coinbase has left no stone unturned in the poaching of 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.
Earn.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 Andreessen Horowitz, a venture capitalist, founder and CEO of Earns, as its first technology director.
According to current estimates, Coinbase was estimated at about $ 8 billion when it set out to buy Earn.Com. That value is much higher than the $ 1.6 billion estimate estimated in the last round of venture capital funding in the summer of 2017.
Coinbase declined to comment on its estimate 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 launch its own cryptocurrency exchange. Nasdaq, an NYSE rival, is also considering a similar move.
• Competition is coming
While competing organizations are struggling to bite Coinbase’s business, Coinbase is looking for other venture capital opportunities in an attempt to build a moat around the company.
Dan Dolev, a current Nomura analyst, said Square, a company run by Twitter CEO Jack Dorsey, could eat on the Coinbase stock exchange because it began trading cryptocurrency in its Square Cash app in January.
According to Dolev’s estimates, average trading fees for Coinbase were approximately 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 stock market business. To lure the investor class into white gloves, the company announced a fleet of new products. This class of investors is particularly cautious about diving into an unstable 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. It already has custody of $ 9 billion in customer assets.
Institutional investors are concerned about security, despite knowing that Coinbase has never suffered hacking like some other global cryptocurrency exchanges. The Coinbase president and CEO said the impetus for launching custody of Coinbase in November last year was a lack of a trusted custodian to protect 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 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 raised $ 15 billion for further investment. The first investment was announced in a startup called Compound, which allows you to borrow or borrow 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 in the future, cryptocurrencies 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 safety remains intensive
To limit access to four cryptocurrencies, Coinbase has come up with a lot of criticism. But they must step carefully as U.S. regulators think about how the police manage certain uses of technology.
For cryptocurrency exchanges like Coinbase, the question is of concern whether cryptocurrencies are securities that would be subject to the jurisdiction of the Securities 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.