As the fall in the stock market played into the hands of Coinbase

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As the fall in the stock market played into the hands of Coinbase

The atmosphere of the Wild West on the cryptocurrency market, which is supported by the almost weekly reports of a new theft, fraud, manipulation, bankruptcies and the requirements of regulators, cooled the enthusiasm of investors.

However, all this chaos had a positive effect on Coinbase cryptocurrency exchange from San Francisco, founded six years ago. Perhaps, at this point it can be called the most successful company in the industry. In 2017, on the background of General interest to the market on the stock exchange daily recorded 50 million new users. Last year the company’s turnover, which not only supports the work of the trading platform, but also offers services for storage of the five largest cryptocurrency, has exceeded $ 150 billion.

“In fact, in 2017 and to be honest, in the first half of 2018 we could not keep up with market demand. Now we’re starting to catch up, introducing new products and services. We had to spend a lot of time optimizing the core functions, given the rapid growth in the past year.”

In November it will be 10 years from the moment when Satoshi Nakamoto published his work entitled “Bitcoin: a peer-to-peer electronic money”. Soon after, the enthusiasts started talking about the era of open standards and decentralized networks. The domination of Google and Facebook on the Internet was to be completed, and in its place would come open technologies (like email and web browsers of the early 2000s).

In February, financier Chris Dixon published an essay about the potential of the blockchain and the Internet 3.0. Dixon is a partner in a hedge Fund Andreessen Horowitz and serves on the Board of Directors of Coinbase. In the essay explains why venture capitalists invested heavily in the blockchain, and why so much talent moving from Silicon valley in companies like Coinbase.

Connie Yang spent four years at Facebook. She currently works as the Director of design at Coinbase. In the company she was attracted by the opportunity to improve usability that suffers most cryptocurrency exchanges. She says:

“Everyone with whom I spoke think the main problem is low usability. In the industry a lot of experts on technologies/protocols, developers and investors, but almost no attention to the education of the rest of the population. Almost nobody talks about that kind of technology, what are their advantages and what benefits they can bring.”

According to her, the next step will be the emergence of a financial system that can benefit all people, not just the early enthusiasts and investors. She says:

“We want to make sure that people understand and participate in its work, and that we represent the interests of all segments of the population, not just those of the elect who are advanced enough to independently understand what the blockchain”.

In his work, Dixon argues that the era of dominance of companies like Facebook can be a historical anomaly, and one day the Network will return to its liberal principles:

“The Internet is still at an early stage of its development: in the coming decades, the key online services will certainly be rethought. Help this crypto-economic network and generalization of the ideas underlying bitcoin and elaborated in the air. Kryptonite combine the best features of two previous eras: decentralized, community-managed network with capabilities that will eventually exceed the capacity of the most advanced centralized projects.”

Even Facebook itself puts on the idea. Earlier this year, the social network has created a blockchain-unit. It was headed by former CEO of PayPal David Marcus, in parallel, responsible for the development of the Facebook messenger. The unit was staffed with dozens of experienced engineers and talented developers, but the results of his work are not yet known.

Given the promise of the sector for decentralization, it seems surprising that the biggest company in the cryptocurrency market is a centralized trading platform. Enthusiasts argue that the development and promotion of decentralized applications just takes time, and Coinbase is irrelevant to this process. Romero says:

“Should I expect that tomorrow on Facebook or Twitter go to the Ethereum blockchain? No. Uber will not disappear anywhere. Gradually, however, developers and entrepreneurs there are the tools.”

Meanwhile, Coinbase is focused on building a profitable business. Fee per trade is $1-3, plus 50 basis points for the sale. While the cryptocurrency is dropping, profits Coinbase grew. A huge flow of money has allowed the company to acquire two things. The first is the talented developers that switched to Coinbase from Facebook, Amazon, Lyft, LinkedIn and other big companies.The second is time. Slowing growth has helped to solve long-existing problems associated with the influx of thousands of new users. Jesse Pollak, head of Department of development of consumer products, says:

“When the company grows in a year 40 times, breaks everything. The market decline has given us a respite and helped to focus on what our clients need. I think it has allowed us to dramatically change the appearance of a consumer product and to try something new and interesting.”

No response yet an important question remains: to what extent does the success of Coinbase will contribute to the approximation of the predicted Internet 3.0? If the majority of people will own cryptocurrency, whether it will accelerate development of decentralized apps? You put the failure of the exchange questioned the existence of the entire industry? Or is it two separate issues?

Chris Dixon emphasizes that it is often impossible to predict who will benefit from the new technology. In 2007 it was thought that the most popular functions of the iPhone will be a taxi and sending disappearing messages. With bloccano, according to him, involves the same uncertainty. In any case, the idea of creating blockchain applications appeared soon after the launch of Ethereum in 2016. Dixon says:

“There are many points that need to be worked out. The good news is that it’s just software. We do not need to build cell towers or create a special robots. Upgrade is easy and cheap.”

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