Coinbase is a United States based digital currency exchange company that has made buying and managing cryptocurrency easier and more accessible to the general public. Founded in July 2011 by Brian Armstrong and Fred Ehrsam, the company’s services were launched in October 2012. The services of the company are focused around cryptocurrency storage and transactions. By using Coinbase, one can securely purchase, store, and use their cryptocurrency with ease. At first, Coinbase only supported Bitcoin, though it has now developed its sphere to support other digital currencies, including Ethereum and Litecoin. Today, Coinbase has expanded thoroughly on the international level, providing buying and selling services for digital currency in 32 countries and a cryptocurrency wallet, which is used to store cryptocurrency, in 190 countries.
Coinbase’s business is built on the simplicity of buying cryptocurrency on its exchange. On its exchange users can buy cryptocurrency similar to buying everyday products from Amazon. All users have to do is select a cryptocurrency and the funding method for the purchase before exchanging fiat money for cryptocurrency. The easy process to purchase cryptocurrency using fiat gives Coinbase their competitive edge, enticing new cryptocurrency investors to use the exchange.
Coinbase competes with every cryptocurrency exchange, but in terms of similar business models and target markets, Coinbase competes directly with Kraken, Gemini and Robinhood Crypto. Unlike Coinbase that has continuously focused on expanding their user base, doing this by making their platform available in 32 different countries; Kraken has focused on building a secure exchange for its users. Bloomberg New reported that Jesse Powell said, “It was clear after that hack at Mt. Gox, when they were down for like a week, that the exchange is really the most critical piece of the ecosystem...I wanted there to be another one to take its place, if Mt. Gox failed.” Kraken has worked towards building an exchange that users can use knowing that their cryptocurrency is safe. Gemini, is another US-based Coinbase competitor who is focused on attracting users and institutional accounts to their exchange. Gemini is currently the exchange that the Cboe Global Markets uses to determine the daily settlement price for Bitcoin futures. Robinhood Crypto is a relative newcomer to the cryptocurrency exchange game, they focus are currently building out their platform with the focus of no added fees for users transacting on their platform. Coinbase, Kraken, and Gemini have all recently suffered scaling issues during the December 2017 Bitcoin bull run. All of these exchanges with the exception of Robinhood Crypto, were adding excess of 50,000 users a day, a promising number since these businesses are a key factor for growth in the cryptocurrency market.
Coinbase has positioned itself to become a great business in the future. They currently are are one of the biggest exchanges with average trade volume of $350,000,000 a day. Coinbase has a long road ahead of itself if it wants to become the leading cryptocurrency exchange. To reach this they have to continue to add stellar cryptocurrency offerings to their platform so users have a wide variety of cryptocurrencies to trade. Other than attracting new users through the introduction of other cryptocurrencies Coinbase’s introduction of cryptocurrency payments for online transactions will give the exchange a competitive advantage over other exchanges as more people begin trading cryptocurrency. For Coinbase to continue to grow they will need to introduce more tradeable cryptocurrencies or add new features to attract users.