Bitcoin rose dramatically in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to take advantage of the interest hike. However, Coinbase is not interested in taking its cryptocurrency earnings for granted. To stay ahead in a much larger cryptocurrency market, the company is returning money to its master plan. As of 2017, the company’s revenue was reported at $ 1 billion and more than $ 150 billion in assets were traded across 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, it ranked 10th on the CNBC Disruptor list in 2018 after failing to make the list in the past two years. .
On their road to success, Coinbase spared no effort in poaching key CEOs from the New York Stock Exchange, Twitter, Facebook, and LinkedIn. In the current year, the size of its full-time engineering team has nearly doubled.
Coinbase bought Earn.com in April for $ 100 million. This platform allows users to send and receive digital currencies while responding to mass market emails and completing small tasks. Currently, the company plans to bring in Andreasen Horowitz, a former venture capitalist, founder and CEO of Earns, to be its first-ever technical director.
According to the current valuation, Coinbase itself estimated at $ 8 billion when it started buying Earn.Com. This value is much higher than the $ 1.6 billion valuation that was estimated in the last round of venture capital financing in the summer of 2017.
Coinbase declines to comment on its valuation despite the fact that it has more than $ 225 million in financing from major investors 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 digital currency exchange. The New York Stock Exchange rival Nasdaq is also considering taking a similar step.
• Competition is coming
As rival organizations look to capitalize on the Coinbase business, Coinbase is looking for other opportunities for venture capital in an effort to build a moat around the company.
Dan Dolph, a spot analyst at Nomura, said Square Inc., a company run by Twitter CEO Jack Dorsey, could be thriving on Coinbase’s exchange business because it began trading cryptocurrency on the Square Cash app in January.
According to Dolev’s estimates, the average Coinbase trading fee was around 1.8 percent in 2017. These higher fees could drive users to other cheaper exchanges.
Coinbase is looking to become a one-stop shop for institutional investors while hedging their stock exchange business. To attract the white glove investor category, the company announced a fleet of new products. This class of investors has been particularly wary of plunging into the volatile 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 could be invested in digital currency. It already has custody of $ 9 billion in client assets.
Institutional investors are concerned about security despite knowing that Coinbase has never been hacked like some other global cryptocurrency exchanges. Coinbase’s president and chief operating officer said the drive behind the Coinbase service launch last November was the lack of a trusted trustee to protect their crypto assets.
• Wall Street is currently switching from Bashing Bit to Cryptocurrency Backer
According to the latest available data from Autonomous Next Wall Street, interest in cryptocurrencies appears to be growing. At present, there are 287 cryptocurrency hedge funds, while in 2016, there were only 20 cryptocurrency hedge funds. 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 industries. Coinbase Ventures has already raised $ 15 billion for more investments. Its first investment was announced in a startup called Compound that allows a person to borrow or lend a cryptocurrency while earning an interest rate.
At the beginning of 2018, the company launched Coinbase Commerce, which allows merchants to accept major cryptocurrencies for payment. Another Bitcoin company is BitPlay, which recently raised $ 40 million in project 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 banking authorities. In this process, you will cut costs and create a decentralized financial solution.
• Organizational security remains intense
To keep access limited by four cryptocurrencies, Coinbase drew a lot of criticism. But they have to tread carefully as US regulators debate how to monitor specific uses of the technology.
For cryptocurrency exchanges like Coinbase, the concern is whether the cryptocurrencies are securities that come under the jurisdiction of the SEC. Admittedly, Coinbase is slow to add new currencies because the Securities and Exchange Commission 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 place. In such a scenario, it would be easier for Coinbase to support more coins and also comply with security regulations.