The price of Bitcoin skyrocketed in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, took advantage of the surge in interest in the right place at the right time. Even so, Coinbase is not interested in taking its crypto gains for granted. In order to maintain a leading position in the larger cryptocurrency market, the company invested funds in its master plan. As of 2017, the company’s revenue was reported to be $1 billion, and more than $150 billion in assets were traded among 20 million customers.
Coinbase is a San Francisco-based company known as the leading cryptocurrency trading platform in the United States. With its continuous success, it was listed on the CNBC Disruptor list in 2018 after failing to be included in the list in the previous two years. The tenth place. .
On the road to success, Coinbase unswervingly poached 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.
In April this year, Coinbase acquired Earn.com for $100 million. The platform allows users to send and receive digital currency while replying to mass market emails and completing micro-tasks. Currently, the company is planning to hire the former Andreessen Horowitz venture capitalist, the founder and CEO of Earns as its first chief technology officer.
According to current valuation, Coinbase intends to acquire Earn.Com at a valuation of approximately US$8 billion. This value is much higher than the estimated value of $1.6 billion in the last round of venture capital financing in the summer of 2017.
Coinbase declined to comment on its valuation, although it has received more than $225 million in funding from top venture capital firms including Union Square Ventures, Anderson 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, a competitor of the New York Stock Exchange, is also considering similar measures.
• Competition is approaching
As competing organizations want to stand out from Coinbase’s business, Coinbase is looking for other venture capital opportunities to build a moat around the company.
Dan Dolev, an instant analyst at Nomura Securities, said that Square, run by Twitter CEO Jack Dorsey (Jack Dorsey), may swallow Coinbase’s exchange business because the company started trading on its Square Cash app in January Cryptocurrency.
According to Dolev’s estimates, Coinbase’s average transaction fee in 2017 was about 1.8%. Such high fees may take users to other cheaper exchanges.
Coinbase hopes to be a one-stop shop for hedging institutional investors and at the same time hedging its exchange business. In order to attract white glove investors, the company announced a series of new products. Such investors are especially cautious when entering the volatile cryptocurrency market.
Coinbase Prime, Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.
Coinbase believes that billions of dollars in institutional funds can be invested in digital currencies. It has managed $9 billion in client assets.
Although knowing that Coinbase has never been hacked like other global cryptocurrency exchanges, institutional investors still worry about security. Coinbase president and chief operating officer stated that the motivation for launching Coinbase custody in November last year was the lack of trusted custodians to protect its encrypted assets.
• At present, Wall Street has shifted from heavy positions to cryptocurrency supporters
According to the latest data from Autonomous Next Wall Street, interest in cryptocurrencies appears to be increasing. Currently, there are 287 crypto hedge funds, and in 2016, there were only 20 cryptocurrency hedge funds. Goldman Sachs even opened a cryptocurrency trading desk.
Coinbase also launched Coinbase Ventures, an incubator fund for early-stage startups working in the cryptocurrency and blockchain fields. Coinbase Ventures has accumulated $15 billion for further investment. Its first investment was announced in a startup called Compound, which allowed people to borrow or lend cryptocurrencies while earning interest rates.
In early 2018, the company launched Coinbase Commerce, an agreement that 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 bitcoin payments.
Proponents of blockchain technology believe that in the future, cryptocurrency will be able to eliminate the need for central bank authorities. In the process, it will reduce costs and create decentralized financial solutions.
•Regulatory safety is still important
In order to restrict access to the four cryptocurrencies, Coinbase has attracted a lot of criticism. However, when US regulators consider how to regulate certain uses of the technology, they must proceed with caution.
For cryptocurrency exchanges like Coinbase, the concern is whether cryptocurrencies are securities under the jurisdiction of the Securities and Exchange Commission. Coinbase’s rate of adding new coins is considered slow because the SEC announced in March that it will apply security laws to all cryptocurrency exchanges.
The Wall Street Journal reported that Coinbase met with SEC officials and registered itself as a licensed broker and electronic trading venue. In this case, it will become easier for Coinbase to support more tokens and comply with security regulations.