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Coinbase prepares for 'crypto winter' by laying off employees

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Coinbase is a cryptocurrency trading platform, aimed at both individuals and institutional investors. It was founded in 2012 as a tool that would simplify the purchase of Bitcoin and grow into one of the most famous crypto exchanges. For retail investors, Coinbase is a ready and easy-to-use solution for trading cryptocurrencies.

In the last two weeks, they have laid off about 18% of employees, about 1000 people and this was confirmed by the CEO in his announcement. CEO Brian Armstrong assumes that we are entering a recession, which could lead to a new "crypto winter", a period of reduced trading volume and sunken cryptocurrency prices. It also states that their biggest source of income comes from trading fees and with redundancies they cut costs for the upcoming difficult period

The main source of income is trading fees

Coinbase's main sources of income are, as with most exchanges or brokers, trading fees and income that they collect through a spread in price. They also offer a Coinbase card, have a cryptocurrency payment solution intended for business users and their own stable coin USDC. Before going public on April 14, 2021, Coinbase was valued at $250 per share. On the first day of trading, the price reached up to $429 and closed at $328. According to CoinMarketCap, the daily trading volume on Coinbase is about $3 billion and weekly visits from about 2 million users.

When asked by shareholders what the future holds for Coinbase in relation to rising competition and falling trading fee prices, the CEO states that 54% of users do more of this than direct trading – e.g. they spend cryptocurrencies, borrow or deposit for interest. In terms of competition, he believes that trust and ease of use are what make Coinbase safe from the competition. Trust, because they have been on the market for a long time, because they are a public company and care about the safety of users. Ease of use, because they have brought the complicated world of cryptocurrencies closer to ordinary users in a simple way. It compares it to electric current – most don't know how it works, but they can still benefit from it. Also, they feel that the competition has concentrated on individual solutions and they offer great breadth within one platform.