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Can Cryptocurrency Companies Compete With Wall Street Conglomerates?

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The cryptocurrency industry has produced many multibillion dollar companies over the past nine years. More specifically, Coinbase, Binance, Bitmain, Bitfinex, UPbit, Bithumb and Canaan evolved into billionaires, rivaling major conglomerates in regions such as the United States, South Korea and Japan.

Coinbase, based in San Francisco, today has more than 20 million users, almost as much as the asset management giant Fidelity Investments and twice as much as Charles Schwab. Coinbase is valuing itself as an $ 8 billion company and is even studying the possibility of applying for a more traditional banking license.

The evolution is a real problem

For many years, especially since 2017, extensibility has been the main problem for developers and blockchain users. When the price and volume of bitcoin transactions peaked in late 2017, users could not send bitcoin transactions without adding a $ 10 fee. Decentralized application developers struggled to deploy applications due to the high cost of gas required to process information on the Ethereum blockchain network.

But scalability is also a problem for centralized platforms and businesses. Although companies like Coinbase and Bithumb in South Korea have infinite flexibility in the processing of information and transactions, they have trouble adapting their customer support activities, offline activities, and other processes.

For example, in May, Coinbase revealed that she had established an office in New York to target institutional investors and Wall Street clients in order to operate as a brokerage firm for large-scale retailers. UPbit and Bithumb of South Korea have similar operations in Seoul, as they operate off-line offices to process person-to-person transactions in the over-the-counter market.

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Coinbase targets institutional investors

Olaf Carlson-Wee, the first Coinbase employee to create a cryptocurrency hedge fund Polychain Capital in 2017, said the success of Coinbase could be mainly attributed to its track record. During its six years of existence, Coinbase has never experienced a single security breach or hacking attack, unlike Bitfinex, Bithumb and other cryptocurrency exchanges that have suffered hacking attacks of several million dollars

"Not being compromised is one of the big reasons why Coinbase is what it is today," Olaf Carlson-Wee said.

In December 2017, Bithumb posted more than $ 6 billion for clients in its portfolios and vaults. Coinbase stores a lot more funds than Bithumb, as its operations, grow internationally. Earlier this month, Coinbase CEO Adam White revealed that the company manages more than $ 20 billion.

"We have optimized our experience by storing more than 20 billion cryptocurrencies to create Coinbase Custody, the most secure encryption storage solution available," White said, adding: "Coinbase offers already the largest liquidity, number of participants in the cryptocurrency space. "

A significant portion of the cryptocurrency exchange budget, such as Bitfinex, Coinbase and Bithumb, is devoted to improving security measures and maintaining an infrastructure that does not need to be used. is not vulnerable to security vulnerabilities. In addition, companies must aggressively develop their customer support team to manage support tickets and errors that may occur when depositing or withdrawing funds.

Dan Romero, an executive at Coinbase, said that the Coinbase customer support team has grown by more than 150% since February.

Cryptocurrency problem solving

Yet, despite the infrastructure and talents of Coinbase and other stock exchanges, unexpected mistakes occur and, due to the volatility of the cryptocurrency market, investors often become anxious and impatient with unforeseen situations. According to the WSJ, more than 1,530 complaints were filed by Coinbase investors with the Consumer Financial Protection Bureau (CFPB), far surpassing the number of complaints filed by users of American Express and PayPal combined.

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To compete with traditional financial institutions, cryptocurrency companies must evolve at an unprecedented rate and continually improve their infrastructure to cope with emerging technologies.

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