The Coinbase Cryptocurrency Exchange. The Review

a year ago

Cryptocurrency exchanges are the key component of a modern crypto industry. Today, we intend to discuss a major marketplace which is considered to be the most established and trusted one.

We are talking about Coinbase here.

About the company

Coinbase was founded in summer of 2012 when only a few people knew about cryptocurrencies and when the Bitcoin price was only $10. Brian Armstrong is the co-founder and the CEO of the exchange. The American entrepreneur even made it to the 2017 top 10 rating of the most influential businessmen younger than 40 years old, according to the Fortune magazine.  

These days, Coinbase rightfully belongs in the list of the leading cryptocurrency exchanges. The userbase itself exceeds 20M people, while the cryptocurrency trade is available for 33 countries. The official website reveals their agenda directly - “The mission is to create an open financial system for the world.”

Structure

Coinbase has got a complicated business structure which features various affiliated companies besides the stock exchange, including investment and charity foundations.

There are three primary departments within Coinbase:

  1. A cryptocurrency marketplace where deals go hand in hand with cryptocurrency and fiat money;
  2. A cryptowallet which can be used by any registered person without country-based restrictions. The only thing that’s required is an email;
  3. A separate stock exchange for professional traders only called Coinbase Pro, it was earlier branded as GDAX.

Terms of use

Coinbase is the most conservative and regulated cryptocurrency exchange. The company has made their bet on working exclusively in the legal area. That is why you may only see there trades of Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. According to the official information, the fifth Coinbase cryptocurrency may soon become Ethereum Classic. On the fiat money specter, American dollar, Euro, and British pound are available.

The trading operations are only available to verified customers, while the fees depend on the identification transparency, meaning the personal data provided to the stock exchange.

In exchange of these strict trading rules, Coinbase offers a deposit insurance, while 98% of the user funds are stored in the offline devices.

Scandals

But Coinbase has another side of the coin too. Many users regularly complain about the extremely slow and incompetent support service. The US Securities and Exchange Commission reports 134 pages of complaints addressed to Coinbase.

It was not without lawsuits either. Coinbase is accused of insider trading during the Bitcoin Cash listing when in just a few hours, its price rate jumped to the all-new record of $4300. On the other lawsuit front, bankrupted customers of Cryptsy stock exchange possess evidence that their stolen $8.3M were being money laundered through Coinbase.

There are also many users who are unhappy of the close cooperation between Coinbase and the authorities. As such, the exchange has transferred personal data of 13 000 users who accumulated $20 000 in total transactions — all this to the US Tax agency. Later on, Coinbase reminded the users of the necessity to pay out taxes and even incorporated their own online tax calculator.

The future of Coinbase

One can clearly see of Coinbase intentions to become the number one cryptocurrency exchange. Firstly, the company actively buys out different blockchain services in order to integrate them to their structure, the latest example of this activity is the purchase of the decentralized stock exchange called Paradex.

Second of all, there is an ongoing plan to enter the Asian market. Among the list of supported countries, Singapore has been already added. There is also a newly opened branch in Japan which specializes in registering licences for trading cryptocurrencies.

Now, thirdly, Coinbase plans to obtain banking and brokerage licenses in the US which will allow the exchange to be independent from other financial institutions. Speaking of which, Coinbase actively pursues to invite large institutional investors.