Category Archives: Coinbase

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The Coinbase Effect: 0x Jumps Nearly 50% After Being Listed On Coinbase

0x (ZRX) has become the 6th cryptocurrency to be listed on Coinbase, the biggest exchange headquartered in the United States. Since ZRX went live for trading on Coinbase its price has surged from USD 0.70 to USD 0.95 as of this writing on 17 October 2018, and briefly as high as USD 1.04, a nearly 50% price increase. ZRX has climbed up the ranks on CoinMarketCap to #22 with a USD 511 million market cap. This can be called the Coinbase Effect, and was observed in the past when Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic were added to Coinbase.

Other examples of the Coinbase Effect include Ethereum Classic, which jumped 25% on 11 June 2018, generating a USD 300 million increase of Ethereum Classic’s market cap. In the 2 months following its listing on Coinbase, Ethereum Classic’s market cap surged a total of USD 800 million. The ultimate example of the Coinbase Effect, so far, is when Bitcoin Cash was listed on 19 December 2017 and rallied 140% within a day, generating an increase in market cap of USD 42 billion. When Ethereum was added to Coinbase on 21 July 2016 it surged 30%, and when Litecoin was added to Coinbase on 3 May 2017 it rallied 130% in about a week, and 220% total during the first 1.5 months after being listed.

Buying and selling of ZRX officially started on Coinbase on 16 October 2018, 5 days after ZRX launched on Coinbase Pro. Now ZRX is available on Coinbase’s website, as well as its Android and iPhone apps, making it easy to buy across the United States. This has led to a direct increase in demand for ZRX, with daily trading volume spiking from USD 10 million on 16 October just prior to the Coinbase listing, to USD 143 million currently.

While some of the ZRX price increase can be attributed to speculation that ZRX’s price would rise due to being listed on Coinbase, users on Coinbase have a true thirst for diversifying their portfolios beyond the 5 major cryptos previously listed on Coinbase, including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic. ZRX is the first ERC-20 token to be listed on Coinbase, so its users can finally add an ERC-20 token to their portfolio.

Several other top cryptos are ERC-20 tokens, and these will likely be added to Coinbase in the coming months. It will be easy for Coinbase to add other ERC-20 tokens since they use the same backbone technology as ZRX. Further, Coinbase announced in September 2018 that they will be adding all possible cryptos that are popular and legal, setting the precedent for adding numerous other cryptos, to compete with exchanges like Huobi and Binance which have hundreds of cryptos.

As seen with the ZRX listing, the Coinbase Effect can cause a drastic increase in a crypto’s price and market cap. As Coinbase progressively adds more cryptos, the Coinbase effect could lead to an overall increase in the crypto market cap. The ZRX listing alone has so far led to a USD 100+ million market cap increase.

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Coinbase Secures Ireland Office as Brexit Safety Net

On Monday, major cryptocurrency exchange Coinbase announced the opening of a new office in Ireland’s capital of Dublin. The move is said to prevent any risks to the company associated with the UK leaving the European Union (EU).

With the UK scheduled to break off from the EU and possibly its entire regulatory framework, Coinbase has been forced to relocate its European hub from its London offices, although the London branches will remain in place to service the UK. According to Coinbase, the EU was its fasted growing market in 2017 and Ireland was most well equipped to provide the expertise needed to take this on.

Ireland’s Minister for Financial Services and Insurance, Michael D’Arcy T.D, praised the cryptocurrency exchange’s decision, saying it is a reflection of the country’s growing competitiveness in the financial services industry.

Speaking to UK-based news outlet the Guardian, Coinbase’s UK CEO Zeeshan Feroz said that in the case of a so-called hard Brexit that sees the UK leaving the European Customs Union, the exchange cannot risk not being able to provide the same level of service to customers located in Europe.

Feroz added that in addition to providing a Brexit contingency plan, the Dublin office will be well-placed to benefit the burgeoning Irish cryptocurrency economy and provide a number of skilled tech jobs, alongside growing the national technology sector.

While the Dublin branch assuming the role as EU leader may come as a blow to the UK, Feroz believes that there is a way the government can make Brexit work in its favor for the cryptocurrency industry.

”I am of the view today that there is an opportunity for Britain post-Brexit to perhaps take the lead in offering “balanced regulation” for the sector,” he told the Guardian, adding “In general, and outside of Brexit, I think crypto should be regulated as a service. There are businesses out there like ours that handle billions of dollars or pounds every day.”

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Coinbase Lists Its First Ethereum ERC20 Token, 0x

Coinbase, the biggest cryptocurrency exchange headquartered in the United States, has listed its first Ethereum ERC20 token. The lucky ERC20 token is 0x, the #25 crypto on CoinMarketCap with a market cap of USD 414 million as of this writing on 12 October 2018. This opens up the door for many more Ethereum ERC20 tokens to be listed on Coinbase.

Getting listed on Coinbase is major news for any crypto since it makes them easily available throughout the United States as Coinbase is the go-to place to buy crypto in the country. This increases demand and price for any crypto that gets listed on Coinbase. It has been announced a while ago that 0x would likely be added to Coinbase, and 0x began to rally in the middle of September from USD 0.51 to USD 0.77 today, a 50% rally. The rally became more aggressive in the past couple of days due to Coinbase finally listing 0x. 0x is available for fiat to crypto trading on Coinbase Pro, and will soon be rolled out across all Coinbase platforms.

0x is the 6th crypto to be listed on Coinbase, the others being Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic. Coinbase announced near the beginning of October that it was opening a new application process, and was planning on adding every possible crypto to its exchange, eventually becoming like Binance which has hundreds of cryptos available for trading. 0x is just the first of many cryptos that will likely be added to Coinbase, and as seen with 0x, getting added to Coinbase has a very positive impact on a crypto’s market price. Therefore, if Coinbase truly ends up listing all major cryptos, it could have a significant impact on the overall crypto market.

ERC20 is a protocol to make a token using the Ethereum blockchain, which is essentially a cryptocurrency that uses the Ethereum blockchain to secure itself. Numerous major cryptos are Ethereum ERC20 tokens, like Binance Coin, Maker DAO, OmiseGO, Aeternity, Basic Attention Token, Golem, Holo, Augur, Status, Populous, Waltonchain, and Chainlink. These are just the ERC20 tokens that have market caps in excess of USD 100 million, there are many more besides this with lower market caps that are still quite popular.

Now that Coinbase has added 0x, it would be quite easy to add any other ERC20 token since they use the same backbone technology, and considering Coinbase’s new policy to add every worthy crypto, it is likely that many more ERC20 tokens will be added to Coinbase in the coming months.

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Coinbase Index Failure Reveals Crypto Index Fund Shortcomings

The Coinbase Index, Coinbase’s version of a crypto index fund, is being pulled from the market. Apparently, there wasn’t enough interest in it and it didn’t make enough money to make it worthwhile, so the exchange is redirecting  resources. The Coinbase Index only launched in March 2018 and this failure reveals how crypto index funds may not yet represent an optimal investment.

The ideology behind the Coinbase Index is that institutional investors want a product where they don’t have to actually touch crypto but can invest in it in a safe and regulated way. The Coinbase Index included the five cryptocurrencies on Coinbase: Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ethereum Classic, weighted by market cap. The index would automatically re-adjust the weight every month as the relative market cap of these currencies changed, so investors could essentially invest in the Coinbase Index and track the overall crypto market, much like investors invest in stock indices like the S&P 500 and NASDAQ to track the stock market.

The first downside was probably the requirement that investors be accredited and that they invest at least USD 250,000. This excluded all average investors and many wealthy ones that are not accredited. Accredited investors would be forced to invest a large sum of money to reach the minimum, instead of investing a little to get a taste for the crypto market.

Another problem with the Coinbase Index was that it wasn’t possible for investors to make their own decisions to optimize their portfolio, besides investing more in the index or divesting. Investors with large sums of investment would probably want more control over their portfolio.

Further, more discerning investors would prefer holding their own private keys. Even though the Coinbase Index is backed by crypto, investors cannot use the crypto in the index at will, as they do not truly own any of it.

Indeed, Coinbase has shifted its attention to offering the Coinbase Bundle, where investors can buy a bundle of crypto that they actually hold themselves. A major fix with the Coinbase Bundle is investors don’t have to be accredited and the minimum investment is USD 25. The Coinbase Bundle gives investors the freedom to buy, sell, and send the crypto as they wish. Circle is using a similar strategy, offering a bundle of 11 cryptocurrencies with a minimum investment of USD 10.

The Coinbase Index story shows that investors want to buy actual crypto instead of crypto indexes. Coinbase will be targeting institutional investors with a sales and support team, making custom strategies for each institutional investor, instead of the broad brush of a crypto index fund.


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Bithumb Acquired for $354 Million by Singapore Medical Group

South Korean cryptocurrency exchange Bithumb has sold majority control for USD 354 million to a Singapore-based medical group, according to the latest Reuters update.

Bk Global Consortium has acquired the 51 per cent share in the exchange necessary to give it overall control. The deal was signed by BK International Consortium, a blockchain investment company formed by BK International, a plastic surgical procedures clinical team in Singapore.

The deal means that Bithumb, South Korea’s largest crypto exchange by volume, passes over its controlling stake from BTC Holdings, who had previously held 76% of the company’s equity, to the new stakeholders.

Bithumb, with daily trading volume near USD 400 million, is the sixth-largest in the world behind Binance, OKEx, Huobi, Bitfinex, and Upbit. A total of 37 different cryptocurrencies are traded on the exchange.

The new premier stakeholder in Bithumb is plastic surgeon Kim Byung Gun, a South Korean cryptocurrency investor who had already launched his own ICO consulting firm and platform last August. The deal with BK global priced the major South Korean exchange at over KRW 1 trillion won (USD 880 million). News Asia observed:

“Kim, who demonstrated his multinational management ability in the field of medical care, has invested in fintech [and] blockchain… companies in Singapore.”

Although beset by a major hacking in June of this year resulting in the loss of KRW 35 billion (USD 40 million), the exchange has still made significant gains through the first half of 2018 estimated to be around USD 35 million. The suspension of withdrawals and the opening of new accounts, however, led to a significant drop in volume at the time.

The new major stakeholder is setting his targets high, with plans to create a new platform similar that that of Binance and San Francisco exchange giant Coinbase. Kim also wants to create a blockchain e-commerce system in partnership with Singapore’s e-marketplace Q2 along with talk of a fiat-backed stablecoin being developed in the future.


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Coinbase Lauds Japanese Crypto License Hurdles

The chief policy officer of cryptocurrency exchange Coinbase has praised Japan’s tightened regulatory stance on the cryptocurrency industry, saying that the exchange’s longer-than-expected waiting period to receive its operating license is a good thing.

Mike Lempres spoke with local financial news outlet Nikkei Asian Review where he supported Japan’s increased security measures on the industry, saying that “[It] is good for us”.

The increased regulations that he references include Japan’s Financial Services Authority (FSA) intensification of security requirements from cryptocurrency exchanges since January’s largest reported hack that hit Japanese platform Coincheck. USD 532 million in the NEM cryptocurrency was stolen in the incident.

New cryptocurrency exchanges are now required to go through a more enhanced clearing process before they can legally operate, with 160 apparently waiting to receive their licenses.

According to Lempres, talks with Japan’s leading financial watchdog are ”going well” and Coinbase is committed to its target of launching in Japan by 2019. The exchange has been actively looking to enter the Japanese market since June, giving the timeframe of one year for this to materialize.

Terms of the agreement are being decided

One key area of the licensing agreement still being negotiated is whether Coinbase will be required to operate internally in Japan. According to Lempres, if the FSA requires it, it will certainly be problematic for the exchange’s security measures as they currently operate from the US.

”It would be hard for us to duplicate what we do in the US today in Japan and other countries,” he explained, noting that Coinbase has dozens of security-focused employees working from its California headquarters.

While 99% of funds are stored offline, he says, 1% is held in a so-called ”hot wallet” online which is fully insured.


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Coinbase Valuation to Potentially Hit $8 Billion

Coinbase, the largest cryptocurrency exchange headquartered in the United States, is about to close a USD 500 million investment deal with Tiger Global that would spike its valuation up to USD 8 billion. In the summer of 2017, prior to the major crypto rally which saw Bitcoin hit USD 20,000 in December 2017, Coinbase was valued at USD 1.5 billion. Therefore, if the deal with Tiger Global is closed, it would confirm the exchange’s valuation has more than quadrupled in a year. Coinbase already set its valuation at USD 8 billion earlier in 2018 when it tried to acquire in exchange for shares.

It is expected that USD 250 million of this investment from Tiger Global would be used to buy out other shareholders, and USD 250 million will go into Coinbase’s bank. Apparently, investors have been aggressively trying to buy shares even though they are no longer on sale, through the backdoor mechanism of privately negotiating with shareholders. Some shareholders want to sell, since the stock has certainly gone up due to the high demand for it, but Coinbase has warned shareholders not to trade stock. If this investment from Tiger Global goes through, plenty of shareholders will have a chance to cash out.

It appears conditions are optimal for a rapid expansion if this USD 500 million investment is finalized. Coinbase has recently announced that it is going to expand from listing only five major cryptocurrencies to all of the possible cryptocurrencies, and now they will have hundreds of millions of dollars to throw into the expansion effort. Coinbase still lags far behind the global crypto exchange powerhouses Huobi, OKEx, and Binance who occasionally each have trading volume in excess of USD 1 billion per day.

It appears Coinbase is gearing up for an initial public offering (IPO), where its stocks would go public and be tradeable by investors worldwide. If this IPO eventually happens, it would be a milestone for the crypto space, providing a direct way for investors to invest in the crypto exchange industry.


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CPFP Deployed by Coinbase to Rescue Stuck Bitcoin Transactions

Coinbase announced on 2 October 2018 that it is using Child Pays for Parent (CPFP) to push through Bitcoin transactions that get “stuck” due to fee volatility. Bitcoin transactions sent right before fees suddenly rise often get pushed down the queue in favor of transactions with higher fees; CPFP solves this issue, drastically improving the user experience.

Bitcoin transaction fees are not fixed, rather, the highest bidder gets their transaction confirmed the quickest. Therefore, if someone sends a Bitcoin transaction and the fee rapidly rises by the time the next block is found, the Bitcoin transaction can wait for confirmation for many hours. Essentially, a stuck Bitcoin transaction has to wait for transaction fees to go down before it goes through, since any Bitcoin transaction with higher fees is prioritized.

CPFP solves this problem by broadcasting another transaction connected to the original one. Most Bitcoin transactions have a change output, which is the total amount of Bitcoins from the inputs minus the amount being sent. This is similar to how in a grocery store someone gives USD 20 for USD 5 of milk and receives USD 15 of change.

Bitcoin change is sent back to the original wallet. With CPFP, another transaction is conducted with the change from the original transaction, with a much higher fee added. The second transaction is known as the child, while the original is the parent. Child transactions cannot be confirmed before a parent transaction, but they can be confirmed at the same time as miners will recognize the CPFP association. Bitcoin mining software usually groups pending child and parent transactions together, since they are dependent on one another, and combine their fees.

Thus, if the child transaction has a high enough fee, then the parent transaction will be confirmed. Coinbase uses CPFP after four blocks of a Bitcoin transaction being pending, an average of 40 minutes. Other crypto exchanges will likely adopt CPFP since it drastically improves user experience.

Coinbase reports that over the past few months they have rescued thousands of stuck Bitcoin transactions, and often batch together CPFP transactions to make them more efficient.

Bitcoin users using wallets that puts them in control of their own private keys, such as Electrum or Bitcoin Core, typically can perform their own CPFP transactions easily.


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Coinbase Opens Public Listing Application, Promises Rapid Addition of New Crypto

Coinbase has announced on 25 September 2018 that it will be rapidly listing all possible cryptocurrencies via an application form that is open to the public. Currently, Coinbase only offers Bitcoin, Litecoin, Ethereum, Bitcoin Cash, and Ethereum Classic, which is a limited selection for a global-class crypto exchange.

In the past, new cryptocurrency additions to Coinbase, such as in the case of Bitcoin Cash and Ethereum Classic, had caused massive rallies for the listed coins. This is likely because it is probably the most mainstream crypto exchange in the United States and easy to use, so when a token is listed on Coinbase, it becomes widely available in the United States. This is well-known among traders, and just the fact that Coinbase will add any particular crypto is expected to cause a speculative rally for that crypto, especially since the exchange announces listings ahead of time.

Coinbase says that each cryptocurrency added via this public application process will have its own listing announcement, which would probably be the moment a rally starts for that crypto. As the exchange adds currencies, it could cause a widespread rally across the crypto space. There are nearly 2,000 cryptocurrencies on CoinMarketCap, and based on Coinbase’s announcement, it plans on listing every single one that is legal.

This will allow it to better compete with exchanges like Huobi, OKEx, Binance, and Bittrex which already have dozens to hundreds of cryptos. It can be expected that its trading volume will drastically rise since it will be much more versatile, giving customers the trading diversity they need, versus now where customers often take their Bitcoin off Coinbase to trade on exchanges like Binance where there are far more currencies listed.

At first, it will be free to fill out the application to add a listing, and perhaps this will continue during the time that all well-known cryptos are added to Coinbase. After that, the exchange intends on turning this into a business, with an application fee and an additional fee to get a crypto listed. Exchanges like Binance and Huobi make tremendous profits from adding new currencies via listing fees.

Another important aspect of Coinbase’s listing process is that it will list as many cryptos as possible according to local government regulations. This means in the United States new initial coin offering (ICO) crypto won’t be tradeable, but in other countries with no ICO laws, those cryptos will be tradeable. This allows Coinbase to achieve optimal crypto listings worldwide while respecting government regulations in particular countries, instead of deciding not to list a crypto in the rest of the world due to the laws of a single country.

Coinbase is the largest crypto exchange headquartered in the United States, with daily crypto trading volume in excess of USD 100 million per day.


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New York Report Points to Improvement Areas for Crypto Exchanges

The New York Attorney General’s office published a report this week that investigates the practices of cryptocurrency exchanges in the state.

It was undertaken on the basis of protecting and informing residents, with evidence conclusively pointing to areas that exchanges need to improve in order to ”ensure the fairness, integrity, and security of their exchanges”.

The ten exchanges that chose to participate in the Attorney General’s report include Bitfinex, bitFlyer USA, Bitstamp, Bittrex, Coinbase, Gemini, itBit, Poloniex, HBUS and Tidex. Of these platforms, just Bitfinex, Tidex and HBUS are not regulated by the New York State Department of Financial Services.

The report claims that some exchanges have failed to implement standard investor and consumer protections; this including adequate security measures as well as market surveillance protocols.

One aspect of this pointed to is an apparent lack of measures to impede ”abusive trading activity”. While the report acknowledges some exchanges have steps to implement safeguards and ”police the fairness of their platforms”, this cannot be said for all of those that participated in the study. The lack of market surveillance capabilities such as those found in traditional trading venues is said to restrict their capabilities of identifying and putting a stop to suspicious trading patterns.

Despite these criticisms, the Attorney General’s office is not looking to shut down or restrict any of their operations. Rather, the report has been conducted to help educate New York-based customers, and encourage the cryptocurrency marketplace to review its own flaws in order to preserve the integrity of transactions.

Should exchanges choose to ignore the advice and not adjust policies of their own accord, in the future the Attorney General’s office may well take legal action against the exchanges.

”As the sector matures, the OAG expects responsible trading platforms – in coordination with consumer advocates, regulators, and law enforcement – to expand the transparency, security, fairness, and accountability of their businesses,” it reads.


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