There's a fair bit of money in WaAM - my wife used to do it for Wells and had a $6B book (as a fresh college graduate!). Consumers don't have money, that's what makes them consumers. If you're managing money, you ought to do it for rich people that have a lot of it.
Also there are two reasons why DEX's have high volume: - Long tail of assets are only on DEX's. Average retail isn't buying these - DEFI protocols utilize DEXs. I would argue most of the volume isn't people trading, rather automatic trading to support protocols like Yearn.finance
Although I suppose Coinbase could be the platform through which those general purpose companies work for clients that want crypto.
Of course this could also be where Coinbase's niche ends up: providing the backend infrastructure for traditional wealth management companies to handle the crypto plumbing for them. If I were Wells Fargo or similar and wanted to offer crypto services to my wealth management customers, I'd much prefer using Coinbase as a turn-key solution for it than try to roll my own setup. Or simply buy Coinbase itself and have a huge strategic advantage over competitors.
Of if I were in a position to make such decisions, I'd be too busy swimming through my piles of money, lighting cigars with $100 bills, and sipping single malts older than my great grandfather to bother posting here from my armchair where I have not a single horse in the game.
A brokerage might be the "custodian" of your shares, but you still have control over them, and there's a massive paper trail to prove that. Borderline impossible to steal.
Crypto is a different story.
And yes, the potential market for Coinbase Custody is companies like Wells, Goldman, family offices, etc. that manage money for the actual rich people. On the application form they ask you how many millions (or billions) you have under management. They're clearly marketing it to hedge funds, WaAM divisions, family offices, etc that are managing institutional money.
If this is actually the case, I'd much rather use Gemini than Coinbase. Gemini seems much more fiduciary-minded in their verbiage on their site, and the fact they don't throw a bunch of "shitcoins" at your face on every other click. Their fees are lower, too (but higher than Coinbase Pro, which is more for the trading-minded) and they have a daily auctioning system which to my knowledge coinbase has no equivalent.
Also, Coinbase is notorious for the servers crashing on every price spike. Gemini, on the other hand, stays out of the headlines regarding uptime, which is what a wealth management company should do.
Full disclaimer: I have accounts I use in both Gemini and Coinbase, I don't believe myself to be biased here, and I actively use both services.
But if you really want a "wealth and asset management" service, I would personally recommend Gemini as the platform. If you think you have a leg up on the market and would like to trade for profit, go with Coinbase.
If I have $100M to invest, why the hell would I go on Coinbase like a common day trader millenial looking to make $2500, rather than use Gemini Trust to store my millions, where I could save hundreds of thousands or millions of dollars using their auction system?
To loosely use an analogy if you will, Robinhood is to Coinbase as Vanguard is to Gemini.
[0] https://blog.coinbase.com/coinbase-is-helping-corporate-comp...
Futures and swaps just give you so many more contracts to arb and more leverage if you want it.
Citation needed. The fees are significantly lower than the brokerage (custody fees go down with larger amounts), which has been the bread & butter that's funded the development of all their other operations. Custody fees are probably not insignificant in absolute terms, but I'm highly doubtful they're greater than brokerage fees.
An amount like $5b would likely pay less than 10 bips (0.1%) per year in custody fees, or $5m/year. Coinbase Pro's volume has recently been doing up to a few million dollars in revenue per day - and that's not even counting the higher brokerage fees that apply on top of some of that volume.
Custody is certainly an important part of the business. But I think brokerage currently accounts for a much larger % of revenue. Custody will become bigger as the price of crypto grows.
[0] https://www.coindesk.com/crypto-exchange-coinbase-acquires-x...
I'm sure there's some vertical integration considerations here: the people that hold this amount of assets also trade, and probably trade at OTC with very special requirements that make them valuable.
As a casual observer, I believe you are dead wrong here. My guess is that the retail arm of Coinbase is the real profit center. Will be interesting to find out.
And notably, PayPal's market penetration is much greater than Coinbase's.
> You cannot withdraw to your own wallet/cold storage.
The prevailing mass interest in Bitcoin is for speculation, which doesn't require an offline wallet. Letting PayPal hold it is fine for most users.
You still need a centralized exchange to be an on-ramp to go from regular money to the blockchain. But that's way less lucrative. You convert your dollars to USDT/WBTC/Ethereum at Coinbase, transfer to your wallet, then do 99% of trading/gambling on Uniswap. That's not a future where Coinbase is very valuable.
institutions can invest in a decentralized software contracts (which by nature, don't KYC) like anyone else. it's just not common right now.
But then Coinbase would just charge high fees for doing so and draw those down over time if/when competitors enter the market.
Most "regular people" are going to use trusted and established brands and companies. They don't want to see their money go poof.
Not necessarily. The regulatory landscape in traditional finance is somewhat fragmented as well, which simply means people/institutions/corporations shop around for the regulatory venue they prefer.
Or the US can impose its own de-facto global regulations, similar to what it already does on a global scale because a huge % of finance goes through US banks at some point. For example: Want to go against the Iran sanctions? Well, you can, legally, if your country hasn't signed on to them. You just won't ever be able to do business that touches anything US related. Which means you won't be able to do business with any other major western or global bank either under threat of the US cutting ties with them.
Without large institutions, and a few of the largest playing the part of "market makers" that provide liquidity, you won't get significant liquidity for large moves, not unlike the current crypto situation. And large institutions will always be subject to the sort of regulatory situations above.
It's a bit of a paradox: Part of crypto's appeal is its freedom from regulation. But in order for crypto to really go mainstream, global financial systems & their regulations. Nations have a strong interest in keeping monetary policy within their control. They will use every tool at their disposal to make sure crypto can't do an end-run around that control.
New projects will even tease "Binance listing coming!" to build up hype for their projects.
And Binance is still not as selective as Coinbase. A Coinbase listing is a marker of legitimacy for any crypto project.
This reputation alone makes Coinbase a very valuable buy.
There isn't a winner take all strategy in brokerage houses, its take enough to make a return, why would you apply a different higher fictional standard to crypto exchangers?
Also they provide various interest-like services and keep the difference between what they earn and what you earn.
that is objectively true, it's so regularly so that it's become a meme in the btc community.
By being the easiest cryptocurrency broker to use, by far. By being based in the US, and not in some SEA country (not saying that's inherently bad, but I'd rather keep my money in the US if at all possible). They even have an insurance policy for everything on their platform. Let's see the Binances of the world provide that.
Saying your keys are in the USA is kinda like saying your Swiss bank account’s login and password are in the USA. If that Swiss bank account is still reportable, why not your Bitcoin too?
What matters is where the asset is, not where you can control it from.
I work for a crypto company and this is our belief. Users hold their own keys and must sign their own transactions. Of course that means that things like limit orders can't be done (easily) and it means all trades have more latency and more costs (due to fees for sending transactions vs. db entry).
However, we've found it difficult to get market traction as a lot of people seem to prefer the ease of custodial wallets.
You do gain a higher degree of financial sovereignty by managing your own keys, and it's definitely an important option to have and fight for. Just be cognizant that you also gain a lot of responsibility, too. For some people, storing at a site like Coinbase will continue to be a safer option.
Nope, thank them for their contribution to the predictable frequency of lost digital assets and their scarcity. Praise be. Blessed be the fruit.
Even you yourself don't understand it, so you you should be a little less confident in what you promote. Equating investment ability with key management ability is stupid.
All that being said it still seems really pointless to me to have coins which you cannot send online. But prehaps if like my grandpa wanted to hold some bitcoin as an investment, I'd advise something like cash app robinhood because no matter what you do wrong nobody can get the actual coins, at best to a fraudster it's another classical bank account for which there are all manner of legal clawback methods and safeguards in place.
The vast majority of people involved in the space today are simply here for the money, and would prefer cryptocurrencies to work more like their existing bank accounts.
This is by design. The BTC GitHub repo was hijaked years ago by Blockstream and corporate interests that want to force users on to their "second layer" solutions.
Real Bitcoin users and anyone with a brain moved to competing projects like Bitcoin Cash, Ethereum and Monero long ago. Only newbies and shills stick around pushing the, biTcOiN is gOLd narrative.
Wild-ass guess: "most" is true of "number of humans that own cypto-currency", but probably not true of "percentage of crypto-currency by value held", if that makes sense. More succinctly, I'd expect more crypto to be held in exchanges than in individual wallets, if you're able to somehow account for coins/value stored in lost wallets.
Update: looks like figuring this with any real accuracy is probably near impossible
While what you said is true, CASH lets you send your BTC out of it. Unlike Paypal/RH et al.