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Innovation Act. 18 Aug 2017

This is Coinbase, the company determined to domesticate Bitcoin

bitcoin

Coinbase is the company that has set out to domesticate Bitcoin, guided by the need for rapid, secure and flexible exchange between current currencies and cryptocurrencies. Over time it has grown in scale and become one of the leading references in the sector.

Coinbase is an American company that has come up with a real-time currency exchange gateway between our bank accounts and bitcoins. This company acts as a virtual bitcoin wallet, and simultaneously offers the adequate payment gateways to allow the different markets to sell their products in bitcoin. Last week, BBVA invested in the company via BBVA Ventures.

The basic idea is to intermediate in currency exchange and online payment services; however the innovative contribution of Coinbase is its capacity to operate within the bitcoin market in both directions:

  • It offers versatility and flexibility when acquiring bitcoins from any user.
  • For the e-commerce segment it offers a payment gateway whereby they can access payment in bitcoins, and also allows these sellers to easily change their bitcoins into other currencies.

Past, present and future of cryptocurrencies

Bitcoin, as the most representative cryptocurrency in existence today, has two main limitations. Until today, acquiring or producing bitcoins was not a process within reach of any user, but required an advanced knowledge of the currency. The other is the lack of institutions to allow this currency to circulate.

Beyond the actual financial uses of money, it must meet the basic needs of commerce. It is therefore essential that there should be circulation and speed of movement in the currency flow so its price remains stable, and for its use to be widely accepted.

If we have a system that enables any user to have bitcoins in a couple of clicks and within just a few minutes, we exponentially increase the number of potential users of this currency, and thus the circulation of the exchanges will accelerate fairly rapidly.

coinbase-critpomoneda-bitcoin-bbva

Continuing with this hypothesis, if we can meet and expand the commercial application of this currency so it becomes a socially accepted payment channel, we can then put the currency in circulation, providing the institutions that accept these payment channels have a large volume of sales.

Coinbase has highlighted this gap, and this is why it has achieved the largest ever round of fundraising for an innovative financial service company.

The regulation of cryptocurrencies, the gap to be closed to ensure total security

Currently the central banks have the monopoly for issuing currency, and they alsocontrol the money supply in circulation.

What's more, the currency issued by the central banks is backed by the issuer itself and the governments that accept it. Cryptocurrencies are transverse issues that are not specifically controlled and regulated and so before their use becomes widely accepted, this current legal vacuum must be filled.

If it is not, we will be heading towards the rupture of the monopoly over the issue and control of the money supply of the currencies in circulation; this is a fairly "Austrian" view of the economy, which has its staunch defenders and detractors.

Finally whenever we talk of money, it is always worth highlighting that the bitcoin, as it stands today, is a risky financial asset. We only need to look at its price evolution compared to any other currency to see how the exchange curves have followed a veritable rollercoaster ride.

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