The value of Bitcoin skyrocketed 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 surge in interest. Despite this, Coinbase has no interest in taking its crypto profits for granted. To stay ahead of the much larger cryptocurrency market, the company is pouring money back into its master plan. By 2017, the company had $1 billion in revenue and sold more than $150 billion in assets to 20 million customers.
Coinbase, based in San Francisco, is known as the leading cryptocurrency trading platform in the United States and thanks to its continued success, it was ranked 10th on CNBC’s 2018 Disruptor list after not making the list the previous two years. .
On its way to success, Coinbase left no stone unturned in poaching key executives from the New York Stock Exchange, Twitter, Facebook and LinkedIn. This year, the number of full-time engineers has almost doubled.
Earn.com was acquired by Coinbase in April of this year for $100 million. This platform allows users to send and receive digital currency by responding to mass market emails and completing microtasks. The company is currently planning to bring in former venture capitalist Andreessen Horowitz, founder and CEO of Earns, as its first-ever chief technology officer.
At its current valuation, Coinbase valued itself at around $8 billion when it set out to buy Earn.Com. This value is significantly higher than the $1.6 billion valuation that was estimated during the last round of venture capital funding in the summer of 2017.
Coinbase declined to comment on its valuation despite having more than $225 million in funding from leading venture capital firms including Union Square Ventures, Andreessen Horowitz, and 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, the NYSE’s rival, is also considering a similar move.
• Competition is coming
As rival entities look to take a bite out of Coinbase’s business, Coinbase is looking to other venture capital opportunities in an attempt to build a moat around the company.
Dan Dolev, an instant analyst at Nomura, said Square, the company run by Twitter CEO Jack Dorsey, could eat up Coinbase’s exchange business because it began trading the cryptocurrency on its Square Cash app in January.
Coinbase’s average trading fees were roughly 1.8 percent in 2017, Dolev estimates. Such high fees may drive users to other cheaper exchanges.
Coinbase aims to be a one-stop shop for institutional investors while hedging its exchange business. To attract this class of white-glove investors, 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, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are products launched by the company.
Coinbase suggests that billions of dollars of institutional money could be invested in the digital currency. It already holds $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 impetus behind Coinbase’s custodial system launch last November was the lack of a trusted custodian to protect their crypto assets.
• Wall Street is currently moving from Bashing Bit to Cryptocurrency Backer
Interest in cryptocurrency appears to be on the rise, according to the latest data from Autonomous Next Wall Street’s. There are currently 287 crypto hedge funds, while in 2016 there were only 20 crypto hedge funds. Goldman Sachs even opened a cryptocurrency exchange.
Coinbase also introduced Coinbase Ventures, which is an incubator fund for early-stage cryptocurrency and blockchain startups. Coinbase Ventures has already raised $15 billion for further investment. His first investment was announced in a startup called Compound, which allows you to borrow or borrow 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 capital. Last year, BitPlay processed more than $1 billion in bitcoins.
Proponents of blockchain technology believe that in the future, cryptocurrency will be able to eliminate the need for central banks. In the process, this will reduce costs and create a decentralized financial solution.
• Regulatory security remains intense
To maintain access to four cryptocurrencies, Coinbase has drawn a lot of criticism. But they should tread carefully while US regulators decide how to control certain uses of the technology.
For cryptocurrency exchanges like Coinbase, the question of whether cryptocurrencies are securities subject to the jurisdiction of the Securities and Exchange Commission is a concern. Coinbase has admittedly been 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 this case, it will be easier for Coinbase to support more coins as well as comply with security regulations.