Coinbase: Extends a Bitcoin startup to capture more of the market

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The price of bitcoin soared in 2017. Coinbase, one of the world’s largest cryptocurrency exchanges, was in the right place at the right time to capitalize on rising interest rates. However, Coinbase is not interested in assuming its profits in cryptography. To stay ahead in a much larger cryptocurrency market, the company is reintroducing money into its master plan. By 2017, the company’s revenue was reported at $ 1 billion and more than $ 150 billion in assets were traded to 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 comply. list the previous two years. .

On its path to success, Coinbase has left no stone unturned in the poaching of key New York Stock Exchange executives, Twitter, Facebook and LinkedIn. In the current year, the size of your full-time engineering team has nearly doubled.

Coinbase bought Earn.com this April for $ 100 million. This platform allows users to send and receive digital currency while responding to mass market emails and performing micro tasks. The company is currently planning to incorporate former venture capitalist Andreessen Horowitz, founder and CEO of Earns, as chief technology officer.

According to the current valuation, Coinbase was valued at about $ 8 billion when it was proposed to buy Earn.Com. This value is well above the $ 1.6 billion valuation estimated in the last round of venture capital financing in the summer of 2017.

Coinbase is reluctant to comment on its valuation, although it has more than $ 225 million in funding from major share capital companies, including Union Square Ventures, Andreessen Horowitz and also the New York Stock Exchange.

To meet the needs of institutional investors, the New York Stock Exchange plans to start its own cryptocurrency exchange. Nasdaq, a NYSE rival, is also considering a similar move.

• The competition arrives

While competing organizations are looking to get their head around the Coinbase business, Coinbase is looking for other venture capital opportunities in an attempt to build a pit around the company.

Dan Dolev, an instant analyst at Nomura, said Square, a company led by Twitter CEO Jack Dorsey, could be involved in Coinbase’s trading business because it began trading cryptocurrencies on its Square Cash app in January.

According to Dolev’s estimates, Coinbase’s average trading rates were approximately 1.8% in 2017. Such high rates could lead users to other cheaper exchanges.

Coinbase wants to become a one-stop shop for institutional investors while covering their foreign exchange business. To attract this kind of white glove investors, the company announced a fleet of new products. This class of investors has been especially cautious about immersing themselves in the volatile cryptocurrency market.

Coinbase Prime, The Coinbase Institutional Coverage Group, Coinbase Custody and Coinbase Markets are the products launched by the company.

Coinbase believes there are billions of dollars in 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 any hacking like some other global cryptocurrency exchanges. The president and COO of Coinbase said the impetus for the launch of Coinbase custody last November was the lack of trusted custody to safeguard its cryptographic 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 cryptocurrency seems to be rising. There are currently 287 cryptocurrency hedge funds, while in 2016 there were only 20 cryptocurrency hedge funds. Goldman Sachs has even opened a cryptocurrency trading desk.

Coinbase has also introduced Coinbase Ventures, which is an incubator fund for start-up startups working in cryptocurrency and the blockchain space. Coinbase Ventures has already amassed $ 15 billion for new investments. His first investment was announced in a startup called Compound, which allows him to lend or lend 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 was BitPlay, which recently raised $ 40 million in risk 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 security remains intense

To maintain limited access to four cryptocurrencies, Coinbase has drawn a lot of criticism. But they must remain vigilant as U.S. regulators deliberate on how to control certain uses of the technology.

For cryptocurrency exchanges such as Coinbase, the issue of concern is whether or not cryptocurrencies are securities subject to the jurisdiction of the Securities and Exchange Commission. It is true that Coinbase is adding new currencies because 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 trading and brokerage site. In this scenario, it would be easier for Coinbase to support more currencies and also comply with security regulations.

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