Coinbase is a leading cryptocurrency exchange and wallet platform that allows users to buy, sell, and store digital assets such as Bitcoin, Ethereum, and Litecoin. Founded in 2012, Coinbase has grown to become one of the most popular and widely-used platforms for buying and selling cryptocurrencies, with over 43 million verified users worldwide.
Currently, Coinbase sees over 73 million users trade over $300 billion in cryptocurrencies every quarter. Among all exchanges, it has the second-highest transaction volume, according to cryptocurrency data provider CoinMarketCap. It is considered a major on-ramp off-ramp platform for cryptocurrency trading.
Coinbase is so popular because of its user-friendly interface. Its simple layout makes it easy to understand how to purchase, sell, send, and receive cryptocurrency. There is a tonne of educational material on the Coinbase website as well.
Statistics say that 98 million people use Coinbase globally, and 8.8 million of them actively trade each month.
A Sneak-Peak into Coinbase
Coinbase is a U.S based cryptocurrency exchange that was founded in 2012 but it went public on April 14, 2021, through the direct listing process. It has over 170 coins to trade and is backed by banks like J.P. Morgan. Coinbase is extremely user-friendly, is well-known, and is trusted by U.S. regulators. Coinbase is extremely easy to use for beginners but has limited options for expert traders. It has numerous options for U.S. traders but limits its facilities to international traders.
One major thing to keep in mind while trading on the Coinbase platform is the fee they charge for even a small amount of transaction. The exact amount of charged fee is not listed on the website and is calculated according to your transaction amount and this is one of the biggest reasons that Coinbase is useful “only” for beginners.
A Comparison between the top 2 Cryptocurrency Exchanges
Binance, the number one platform for cryptocurrency trading is followed by Coinbase. These two platforms have their own ways of functioning like Binance has a narrow learning curve and is more inclined towards advanced users with multiple trading options. Coinbase, on the other hand, is beginner-friendly with comparatively fewer transaction types with API and SDK-based widgets.
Although Binance supports over 600 cryptocurrencies to use and is one of the cheapest exchanges out there, it is not as easy to use as Coinbase is and sometimes becomes very overwhelming for the experts too.
When we talk about which one is safer, Binance became prey to hackers in 2019 and Coinbase informed The New York Times that only 0.004% of its users faced account drainage overnight and it has never been attacked by hackers. Experts at that time said that the possible reason for this account drainage was SIM swapping. Both platforms are considered secure, but Coinbase has a good reputation as Binance is currently under U.S. investigation.
SWOT Analysis of Coinbase's Product
Here is a detailed SWOT analysis of Coinbase on the basis of its current product:-
User-friendly interface: One of Coinbase's key strengths is its user-friendly interface. The platform has a clean and intuitive design that makes it easy for users to navigate and perform various actions, such as buying and selling cryptocurrencies with a fiat-to-cryptocurrency gateway.
Multi-device accessibility: Coinbase is available on both web and mobile devices, which allows users to access their accounts and perform transactions on the go. This feature makes Coinbase a convenient and accessible option for users who want to buy or sell cryptocurrency.
Additional services: In addition to buying and selling cryptocurrencies, Coinbase offers services such as staking and borrowing, which adds to its functionality and utility. For example, users can earn rewards by staking their cryptocurrency on the platform, which is an attractive feature for investors.
Security and compliance: Coinbase has implemented several security measures, such as 2-factor authentication and biometric login, to protect users' assets and personal information. Additionally, the platform is compliant with regulations in various jurisdictions, which adds to its credibility.
High fees: Users have reported that Coinbase's fees are higher than other cryptocurrency exchanges, which can be a deterrent for some users. According to the data from the website, the "Coinbase Pro" trading fee starts at 0.5% for takers and is reduced to 0% for makers, while the "Coinbase.com" fee is around 1.49% for buying and selling cryptocurrencies.
Lack of privacy: Coinbase collects and stores a significant amount of personal information from its users, which can be a concern for privacy-conscious individuals.
Slow customer support: Some users have reported that it takes a long time to get a response from Coinbase's customer support team.
Account verification: Some users have reported issues with account verification, which can be frustrating and time-consuming.
Fiat on-ramp: Coinbase provides a fiat on-ramp that allows users to buy cryptocurrency using traditional currencies such as USD, EUR, and GBP. This feature makes it easy for users to enter the cryptocurrency market, which can increase demand for Coinbase's services.
Expansion into new markets: Coinbase has expanded into new markets such as the United Kingdom, Singapore, and Canada, but there is still room for growth in other regions.
Increasing adoption of cryptocurrency: As the adoption of cryptocurrency continues to grow, the demand for platforms like Coinbase is likely to increase.
Competition from other cryptocurrency exchanges: There are several other established cryptocurrency exchanges such as Binance, Kraken, Bitstamp, and many more, which can make it difficult for Coinbase to maintain its market share.
Volatility in cryptocurrency prices: The prices of cryptocurrencies can be highly volatile, making it difficult for Coinbase to predict demand for its services.
Regulatory risks: The regulatory environment for cryptocurrency is constantly changing, which can increase the risk for Coinbase.
What do Porter’s Five Forces say about Coinbase?
Porter's Five Forces is a framework for analyzing the competitive environment of a business. Here is an analysis of Coinbase using the five forces framework:
The threat of new entrants: The barriers to entry in the cryptocurrency exchange industry are relatively high. Coinbase has a large user base, a well-established brand, and a network effect that makes it difficult for new entrants to compete. Additionally, regulatory compliance is a significant barrier to entry, as it can be costly and time-consuming for new entrants to obtain the necessary licenses and approvals.
The threat of substitute products or services: The threat of substitute products or services is relatively low for Coinbase. While there are other cryptocurrency exchanges and wallet services, Coinbase has established itself as a reputable and widely-used platform, which makes it difficult for substitutes to gain market share.
Bargaining power of suppliers: The bargaining power of suppliers is relatively low for Coinbase. As a cryptocurrency exchange, Coinbase does not have any suppliers in the traditional sense.
Bargaining power of buyers: The bargaining power of buyers is relatively high for Coinbase. As a cryptocurrency exchange, Coinbase has a large number of buyers and sellers, which gives them some bargaining power. Additionally, users have the option to use other cryptocurrency exchanges, which can put pressure on Coinbase to offer competitive fees and services.
Competitive Rivalry: The competitive rivalry in the cryptocurrency exchange industry is intense. Coinbase competes with several other established cryptocurrency exchanges such as Binance, Kraken, Bitstamp, and many more. Additionally, new cryptocurrency exchanges are constantly entering the market, which increases the level of competition.
Is Coinbase Threat-Prone?
The FTX case said a lot about Coinbase. When FTX filed for bankruptcy, Coinbase shivered and fell almost 8% but it recovered its losses and then went up almost 10%. The founder of Coinbase claimed that the exchange was not directly exposed to FTX in any way and had no exposure to the FTT token. FTX falling down was a good sign for Coinbase as they both were competitors.
Coinbase could fail too but one bull run for the exchange is that the company can act as the beacon of stability. The possible reason for this is that Coinbase is not doing anything shady with its customer deposits.
Coinbase is at no “immediate” risk of falling. Still, the area that can pose a problem in the future is that the entire business model depends on retail investors who are willing to pay a fee to trade cryptocurrencies. Coinbase has been supporting institutional investors but generates very little revenue from these transactions.
Coinbase has also reported a distant but real threat, which is Decentralized Exchanges(DEX). These exchanges were not a problem before but over the course of time, they have evolved into something which is scrapping away an entire customer population. The main area of concern for Coinbase is not the production of equal volumes or contacts with the Celsius Network. It is the retail investors, on which the entire Coinbase is dependent.
Uniswap, a decentralized exchange has two different products which don’t mimic Coinbase at all. However, if retail chooses to wait out the cryptocurrency recovery and joins the market cautiously, Coinbase won't see an increase in volume or revenue. If Degens doubles down once more, Uniswap will be increasing the volume.
Therefore, it appears that the two don't truly compete.
The exchange stated that it competes with an increasing number of decentralized and noncustodial platforms and that doing so could negatively harm its company. As new market entrants frequently operate with low operating and regulatory costs, such platforms have cheap starting and entry costs.
An expert says that Bitcoin will be the only one surviving but not as “digital gold” and this will not be the environment where Coinbase could stick around.
There are now more locations than ever to acquire cryptocurrency thanks to its meteoric rise in popularity. Despite the fierce competition, Coinbase has maintained its dominance as the largest cryptocurrency exchange and allows users to buy cryptocurrency without leaving the platform. However, due to the stringent regulatory restrictions, its network effect, and the minimal threat of competing goods or services, it confronts a high barrier to entry. The rivalry is nevertheless fierce due to a large number of competitors and the strong purchasing power of consumers.
However, Coinbase has supporters who can assist it in identifying the threats and its experience navigating changing regulatory frameworks is an advantage for the company to outcast its competitors.
If you want to improve your sales experience which will let your users buy cryptocurrency without leaving the platform, allow us to serve you. Book a call with Onmeta now!