Can the early success of major crypto exchanges propel them to winning the broader consumer finance market?submitted by mickhagen to genesisblockhq [link] [comments]
This is the first part of Crypto Banking Wars — a new series that examines what crypto-native company is most likely to become the bank of the future. Who is best positioned to reach mainstream adoption in consumer finance?
While crypto allows the world to get rid of banks, a bank will still very much be necessary for this powerful technology to reach the masses. We believe a crypto-native company, like Genesis Block, will become the bank of the future.
In an earlier series, Crypto-Powered, we laid out arguments for why crypto-native companies have a huge edge in the market. When you consider both the broad spectrum of financial use-cases and the enormous value unlocked through these DeFi protocols, you can see just how big of an unfair advantage blockchain tech becomes for companies who truly understand and leverage it. Traditional banks and fintech unicorns simply won’t be able to keep up.
The power players of consumer finance in the 21st century will be crypto-native companies who build with blockchain technology at their core.The crypto landscape is still nascent. We’re still very much in the fragmented, unbundled phase of the industry lifecycle. Beyond what Genesis Block is doing, there are signs of other companies slowly starting to bundle financial services into what could be an all-in-one bank replacement.
So the key question that this series hopes to answer:
Which crypto-native company will successfully become the bank of the future?We obviously think Genesis Block is well-positioned to win. But we certainly aren’t the only game in town. In this series, we’ll be doing an analysis of who is most capable of thwarting our efforts. We’ll look at categories like crypto exchanges, crypto wallets, centralized lending & borrowing services, and crypto debit card companies. Each category will have its own dedicated post.
Today we’re analyzing big crypto exchanges. The two companies we’ll focus on today are Coinbase (biggest American exchange) and Binance (biggest global exchange). They are the top two exchanges in terms of Bitcoin trading volume. They are in pole position to winning this market — they have a huge existing userbase and strong financial resources.
Will Coinbase or Binance become the bank of the future? Can their early success propel them to winning the broader consumer finance market? Is their growth too far ahead for anyone else to catch up? Let’s dive in.
BinanceThe most formidable exchange on the global stage is Binance (Crunchbase). All signs suggest they have significantly more users and a stronger balance sheet than Coinbase. No other exchange is executing as aggressively and relentlessly as Binance is. The cadence at which they are shipping and launching new products is nothing short of impressive. As Tushar Jain from Multicoin argues, Binance is Blitzscaling.
Here are some of the products that they’ve launched in the last 18 months. Only a few are announced but still pre-launch.
Can they create a cohesive & united product experience?
Binance WeaknessesBinance is strong, but they do have a few major weaknesses that could slow them down.
Binance Wrap UpI don’t believe Binance is likely to succeed with a homegrown product aimed at the consumer finance market. Their current product — which is focused heavily on professional traders and speculators — is unlikely to become the bank of the future. If they wanted to enter the broader consumer market, I believe it’s much more likely that they will acquire a company that is getting early traction. They are not afraid to make acquisitions (Trust, JEX, WazirX, DappReview, BxB, CoinMarketCap, Swipe).
However, never count CZ out. He is a hustler. Binance is executing so aggressively and relentlessly that they will always be on the shortlist of major contenders.
CoinbaseThe crypto-native company that I believe is more likely to become the bank of the future is Coinbase (crunchbase). Their dominance in America could serve as a springboard to winning the West (Binance has a stronger foothold in Asia). Coinbase has more than 30M users. Their exchange business is a money-printing machine. They have a solid reputation as it relates to compliance and working with regulators. Their CEO is a longtime member of the crypto community. They are rumored to be going public soon.
Coinbase StrengthsLet’s look at what makes them strong and a likely contender for winning the broader consumer finance market.
Coinbase WeaknessesLet’s now look at some things that could hold them back.
Coinbase Wrap UpAt Genesis Block, we‘re proud to be working with Coinbase. They are a fantastic company. However, I don’t believe that they’ll succeed in building their own product for the broader consumer finance market. While they have incredible design, there are no signs that they are focused on or capable of internally building this type of product.
Similar to Binance, I think it’s far more likely that Coinbase acquires a promising young startup with strong growth.
Honorable MentionsOther US-based exchanges worth mentioning are Kraken, Gemini, and Bittrex. So far we’ve seen very few signs that any of them will aggressively attack broader consumer finance. Most are going in the way of Binance — listing more assets and adding more pro tools like margin and futures trading. And many, like Coinbase, are trying to attract more institutional customers. For example, Gemini with their custody product.
Wrap UpCoinbase and Binance have huge war chests and massive reach. For that alone, they should always be considered threats to Genesis Block. However, their products are very, very different than the product we’re building. And their approach is very different as well. They are trying to educate and onboard people into crypto. At Genesis Block, we believe the masses shouldn’t need to know or care about it. We did an entire series about this, Spreading Crypto.
Most everyone needs banking — whether it be to borrow, spend, invest, earn interest, etc. Not everyone needs a crypto exchange. For non-crypto consumers (the mass market), the differences between a bank and a crypto exchange are immense. Companies like Binance and Coinbase make a lot of money on their crypto exchange business. It would be really difficult, gutsy, and risky for any of them to completely change their narrative, messaging, and product to focus on the broader consumer market. I don’t believe they would ever risk biting the hand that feeds them.
In summary, as it relates to a digital bank aimed at the mass market, I believe both Coinbase and Binance are much more likely to acquire a startup in this space than they are to build it themselves. And I think they would want to keep the brand/product distinct and separate from their core crypto exchange business.
So back to the original question, is Coinbase and Binance a threat to Genesis Block? Not really. Not today. But they could be, and for that, we want to stay close to them.
Other Ways to Consume Today's Episode:
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With Bitcoin’s second halving in July 2016, Coinbase decided to flex its influence by intervening in a dispute over Bitcoin’s block size—an issue that still garners controversy today. As the Guardian wrote in August 2015, Bitcoin was undergoing a ‘civil war’ with proponents of higher block sizes supporting a hard fork called ‘Bitcoin XT.’ Analysis Bitcoin Price. It's unfortunate that with such large volatility in the stock markets, Bitcoin was not stable enough to benefit from a positive PR spin showing it is an alternative to ... It goes without saying the whole debacle regarding the Bitcoin scalability issue, and Bitcoin XT client has been going for far too long already. Anyone who dared to express their opinion on the matter was greeted with skepticism, derogatory remarks, and deleted comments on Reddit. For some companies openly supporting Bitcoin XT, their services ended up being removed from Bitcoin.org for the ... The Bitcoin XT update puts into effect BIP 101, which would raise the block size to 8 MB on January 11, 2016. The block size would continue to double every two years until finally hitting a cap at 8,912 MB (almost 9 GB!).This was considered a significant enough increase to help alleviate scaling issues for now, while minimizing any possible disadvantages that come from it. With Bitcoin’s second halving in July 2016, Coinbase decided to flex its influence by intervening in a dispute over Bitcoin’s block size—an issue that still garners controversy today. As the Guardian wrote in August 2015, Bitcoin was undergoing a ‘civil war’ with proponents of higher block sizes supporting a hard fork called ‘Bitcoin XT.’ It really got heated in 2015 with the censorship and XT controversy. Heck, you could say that the discussion about scaling began in 2009 with Satoshi’s second email to the world, where he described how Bitcoin could grow to worldwide usage using on-chain scaling. This debate climaxed in August 2017 with the Bitcoin Cash split. Two of bitcoin’s best-known developers have ‘forked’ the software in a controversial attempt to resolve its scalability crisis. The client, Bitcoin XT, was dreamt up earlier this year as a ... buy bitcoin cash on binance - A new report from unnamed researchers points at Bitcoin as one of the contributors to increased hacking by popular ransomware, Ryuk – launched in 2018. According to Interpol, BTC is rising as a - Cryptocurrency investment activities, including actions done to buy Bitcoin Cash on Binance, are subject to market risk. Long-term, banning XT from r/Bitcoin will hurt XT's chances to hijack Bitcoin. There's still a chance, but it's smaller. (This is improved by the simultaneous action on bitcointalk.org, bitcoin.it, and bitcoin.org) <theymos> The big controversy in the start caused some "Streisand Effect", which I expected, but that was only a temporary boost for XT, and that was probably inevitable at some ... The Bitcoin XT controversy has been a useful illustration of this point. As Todd noted during the recent panel discussion, the knowledge that the overall community also has a say in development matters has prevented Bitcoin Core developers from making controversial protocol changes in the past:
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