What is Coinbase all About?
Coinbase is a US company which operates as a trading platform for cryptocurrencies. The primary purpose of this trading platform is to broker the exchange of cryptocurrencies with fiat currencies.
Specific cryptocurrencies which can be traded via Coinbase include Bitcoin, Ethereum and Litecoin. The platform’s origins date back to June 1, 2012, when the company was launched by Brian Armstrong and Fred Ehrsam.
Prior to founding Coinbase, Armstrong was employed as a developer at Airbnb. Meanwhile, Ehrsam was working as a Forex trader for Goldman Sachs. Their idea was developed in response to a startup competition.
This contest was sponsored by Y Combinator, an American startup accelerator responsible for innovative companies, such as Reddit and Airbnb. Once Coinbase started trading, its company headquarters then relocated to San Francisco, California.
A Cryptocurrency Trading Platform Created Via Financing Rounds
Coinbase received venture capital in May 2013 as part of a financing round which was urgently needed to fund further development. More venture capital was raised in the course of another round of financing in December 2013.
Then, due to the increasing popularity of cryptocurrencies, further venture capital funding was raised in January 2015. On this occasion, around $75 million was raised by several prominent banks.
This financing initiative had historical significance – this was the first time financial institutions had invested in a cryptocurrency business. To date, the platform has raised over $117 million through venture funding.
Coinbase as an Official Trading Platform for Bitcoin
Later, the US authorities granted the company approval to operate a Bitcoin trading platform in a number of states. This concession led to a rapid increase in the Bitcoin price.
At that time, the platform had 2.1 million active wallets. However, due to its status as an officially registered trading platform, Coinbase was asked to disclose user identities.
The US federal Internal Revenue Service (IRS) specifically demanded disclosure of accounts held by US citizens. This request came at a time when three US citizens were revealed as tax evaders using cryptocurrencies.
To counteract the potential for future tax evasion via cryptocurrencies, the disclosure of user identities became a permanent requirement. At that time, Coinbase already had more than 4.9 million active customers, most of them from the US.
In August 2017, the company announced that Bitcoin cash transactions would also be allowed, despite having made a previous statement saying this would not take place.
This rethink was necessary to accommodate customer requirements and avoid the migration of digital assets. At this juncture, the value of the Coinbase trading platform had reached $1.6 billion.
This market capitalization meant that Coinbase had become the first cryptocurrency company to achieve a market capitalization of over $1 billion.
What Products Does Coinbase Offer?
Coinbase products fall into two main categories:
1. The “Global Digital Asset Exchange”, also referred to as GDAX for short. This is a professional trading platform for cryptocurrencies. In addition, this product will be expanded to include an end-user trading platform with an integrated wallet.
2. A Coinbase application programming interface. This was created for developers and merchants so that external programs could be linked to the platform. In addition, its functionality also allows automated payment transactions to be executed via the platform.
On Coinbase, digital currencies can be exchanged with fiat currencies through the use of GDAX and the retail client platform. This facility supports cryptocurrencies such as Bitcoin, Bitcoin Cash, Litecoin and Ethereum.
In addition, all popular fiat currencies are accepted. Furthermore, to offer a comprehensive service, trading can be conducted using various cryptocurrencies. An integrated wallet also allows users to keep or deposit store tokens via Coinbase.
Coinbase User Requirements
To open an account, you must register using a browser-enabled device. PCs and laptops are particularly well-suited for this purpose because all data and trading conditions can be easily viewed.
In addition, a mobile phone is required. Logging in for the first time requires some data entry in response to screen prompts. After this stage, Coinbase sends an SMS containing a confirmation code which must be entered to complete the registration process.
Upon successful registration, a confirmation email is sent to the registered email address. It is useful to install Coinbase as a mobile app, which requires the same verification procedure.
Later, the operator of a user account will be asked to complete a document ID + photo verification process.
Coinbase Trading Conditions
The trading platform offers some special features. The exchange fee for trading is 1.5%, and users may only exchange a maximum of €9,000 per day. However, any amount can be transferred to a Coinbase account.
Any monies transferred to an account should be effected via a classic transfer, which is the most straightforward method. The Coinbase app offers simple functionality in such situations.
It can act as a wallet and as a place of exchange – an advantageous feature that is not available via comparable trading platforms. Operators use a vault system to provide extra protection for stored tokens.
It takes two days for these tokens to be paid out. In addition, multiple verification SMS protocols must be acknowledged, otherwise, the transaction will not be executed.
This ensures that tokens can be stored under absolutely secure conditions. However, for any tokens not subject to vault storage, users can request “instant transactions”, which are carried out in seconds.
Alexander Weipprecht is the managing partner of Provimedia GmbH. As a trained IT specialist for application development, he has been advising leading companies on the following topics for more than 10 years: online marketing, SEO and software. Cryptocurrency is becoming increasingly important to businesses and investors. Through Coin Report and Krypto Magazin Germany, Alexander wants to give all people easy access to the subject matter.