The price of Bitcoin skyrocketed in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to capitalize on the surge in interest. Even then, Coinbase has no interest in keeping its crypto-profits acceptable. To stay ahead of the larger cryptocurrency market, the company is pouring money back into its master plan. By 2017, the company’s revenue was $1 billion, with more than $150 billion in assets sold among 20 million customers.
San Francisco-based Coinbase is known as the leading cryptocurrency trading platform in the United States, and its continued success earned it the 10th spot on the CNBC Disruptor list in 2018, after failing the previous two years. .
On their way to success, Coinbase has left no stone unturned in poaching key executives from the New York Stock Exchange, Twitter, Facebook and LinkedIn. It has nearly doubled the size of its full-time engineering team this year.
Earn.com was purchased by Coinbase this April for $100 million. This platform allows users to send and receive digital currency by responding to mass market emails and completing micro-tasks. The company currently plans to bring in a former Andreessen Horowitz venture capitalist, founder and CEO of Earns, as its first chief technology officer.
According to the current valuation, Coinbase valued itself at around $8 billion when it was set to buy Earn.Com. This value is much higher than the $1.6 billion valuation that was estimated in the last round of venture capital funding in the summer of 2017.
Coinbase declines to comment on its valuation, despite having more than $225 million in funding from top VCs, 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. NYSE rival Nasdaq is also considering a similar move.
• The competition is approaching
As competing entities seek to chip away at Coinbase’s business, Coinbase is looking to other venture capital opportunities in an attempt to build a moat around the company.
Nomura Momentum analyst Dan Dolev said Square, which is run by Twitter CEO Jack Dorsey, could be involved in Coinbase’s exchange business since it started trading the cryptocurrency with its Square Cash app in January.
According to Dolev’s estimates, Coinbase’s average trading fees in 2017 were roughly 1.8 percent. These high fees can drive users to other cheaper exchanges.
Coinbase is looking to become a one-stop shop for institutional investors while hedging its exchange business. To appeal to that white-glove investor class, the company announced a fleet of new products. This class of investors has been particularly cautious about diving into the volatile cryptocurrency market.
Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the company’s products.
Coinbase believes there are billions of dollars of institutional money that can be invested in the digital currency. It already has $9 billion in client assets under custody.
Institutional investors are concerned about security, despite knowing that Coinbase has never been hacked like some other global cryptocurrency exchanges. Coinbase’s president and COO said that the impetus behind Coinbase’s launch of custody last November was the lack of a trusted custodian to protect their crypto assets.
• Currently, Wall Street is Shifting from Bashing Bit to Cryptocurrency Backer
According to the latest data available from Autonomous Next Wall Street’s, interest in cryptocurrency appears to be on the rise. There are currently 287 crypto hedge funds, compared to only 20 cryptocurrency hedge funds in 2016. 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 accumulated $15 billion for further investments. His first investment was announced in a startup called Compound, which allows you to borrow or lend cryptocurrency while earning interest.
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 capital. BitPlay processed more than $1 billion in bitcoin payments last year.
Proponents of blockchain technology believe that in the future, cryptocurrency will be able to eliminate the need for central banking authorities. In the process, this will reduce costs and create a decentralized financial solution.
• Regulatory security remains intense
Coinbase has received a lot of criticism for limiting access to four cryptocurrencies. But they must tread carefully as US regulators consider how to oversee certain uses of the technology.
A concern for cryptocurrency exchanges like Coinbase is whether cryptocurrencies are securities subject to the jurisdiction of the Securities and Exchange Commission. Coinbase has admittedly been slow to add new coins since the SEC announced in March that it would enforce security laws on all cryptocurrency exchanges.
The Wall Street Journal reports that Coinbase has met with SEC officials to register as a licensed brokerage and electronic trading venue. In such a scenario, it would be easier for Coinbase to support more coins as well as comply with security regulations.