Tuesday, May 5, 2015

CoinBase.com Review



Coinbase Review: A+

In my mind, nothing comes close to Coinbase in terms of ease of use and security. You link a bank account to the San Francisco-based start-up, and then send them money to buy Bitcoin at the currently offered price. They wait up to a few days to ensure your transaction clears (Bitcoin is a murky financial area, and they don’t want to risk identity theft or other problems until they have banks on their side), and then give you access to your coins. 30 days after you have a successful transaction, you can add a credit card to your account to enable “instant buys” of up to $1,000 per week. Regular speed buys are allowed at up to $50,000 per week, from a linked bank account. Their platform is very popular, and justifiably so–it makes owning and managing your coins very simple. They also take excellent security precautions–two-factor authentication on log-in AND on send, keeping the VAST majority (97%!) of their coins in offline storage, and so on. They are an excellent way to enter the Bitcoin ecosystem, and an excellent way to integrate Bitcoin into your business, if you’re so inclined. They also offer the excellent Coinbase Vault program–a system that allows you to place your coins into a very high-security lock, requiring two-factor authentication along with a mandatory waiting period before the coins can be moved.

What aren’t they? They AREN’T an exchange. They aren’t a trading platform. If your goal is to be buying and selling Bitcoin on its swings, you don’t want to be using Coinbase for your day-to-day trading.
Details:

    Backed by Andreessen Horowitz
    Biggest US player, focused on merchant integration
    Easy platform for buying and selling
    Good way to get money into the ecosystem
    High fees and long waits make it unsuited for trading. It’s more like Western Union than like Scottrade.
    There appears to be a coordinated smear campaign against them on the internet.

Pros:

    Easy to use! No harder than PayPal
    Secure, trustworthy, American
    Good customer service
    They pay your transaction fees when you move your Bitcoin around

Cons:

    Fees of about 1%
    Long lag time for initial purchase, and later purchases over 1BTC makes it hard to profit from market movement over the short term
    Slightly higher than market price for purchase
    Really just not intended to be used for trading
    Will occasionally cancel orders for “high-risk behavior”

Arbitrary Coinbase Review Ratings:

Legitimacy: 10/10
Ease of Use: 8/10
Trading Utility: 3/10
Customer Service: 8/10
Would I recommend it to my mother? I did.


Bitcoin transactions per day more than doubled

Bitcoin-transactions-on-the-blockchain

Bitcoin-transactions-on-the-blockchain 

In December 2014, the Bitcoin network averaged 86,038 transactions per day. In December 2015, the Bitcoin network averaged 202,869 transactions per day (as of 12/23/15). This means that daily transactions on the bitcoin network more than doubled (136% growth year over year) in 2015.

Despite the strong growth in transactions, no single use case has broken out to the mainstream. This is something to keep an eye on in 2016 and beyond.


Bitcoin became more global

U.S.vs International Coinbase users




U.S.vs International Coinbase users 
The majority of Coinbase users now reside outside the U.S (international users grew from 44% to 51% of our total user base in 2015). Despite Coinbase being founded in the U.S. and gaining initial traction there, we’re now seeing exceptional international growth in countries like Brazil, the Philippines, and Indonesia.



Countries-most-rapidly-adopting-Coinbase-in-2015 
Bitcoin volatility decreased

BTC-USD Volatility vs.-RUB-USD and BRL-USD
Volatility has been on the decline since bitcoin’s inception. In 2015, bitcoin volatility fell by 21%. More specifically, the bitcoin vs U.S. dollar exchange volatility (trailing 30 day average) fell from 3.98% to 3.15% this year. You can see some of the more volatile government backed currencies this year in the graph above for comparison.

Will bitcoin eventually become less volatile than some government backed currencies? We’ve seen some interesting debate on the topic which could point to either answer (both short and long term).


The price of bitcoin went up

Price-of-bitcoin-vs-gold-in-2015
The price of bitcoin gets a bit more attention than it deserves (we prefer to look at transactions per day as a better measure of how real usage is changing). However, the price still has a big impact on mining profitability, purchasing power of bitcoin holders, and consumer confidence, so it is worth addressing.

The bitcoin price went up 40% in 2015 (as of 12/23/15), making it one of the largest gainers this year vs other asset classes. As one example amongst many, gold was down roughly 10% this year.


The Bitcoin developer ecosystem grew

Number of GitHub repositories mentioning payment methods



Github-repository-references
 

In 2015, the elusive “killer app” for the Bitcoin protocol did not emerge. But developer activity was strong, as suggested by the the fact that the number of Github repositories mentioning 'bitcoin’ increased by approximately 40% Y/Y. Bitcoin developer applications improve upon the core utility and utilization of bitcoin, creating value for the Bitcoin network.

Conclusion

While much of the industry shifted to focus on blockchain technology this year, we remained focused on bitcoin and saw the ecosystem grow nicely.

Here are a few major events to keep an eye on in 2016:
 

  • An emerging application layer for Bitcoin. In 2015 the infrastructure layer of bitcoin matured. With better developer APIs, the 21 Bitcoin Computer enabling a new group of bitcoin applications, and open source communities like Blockstack flourishing, we expect bitcoin applications to start to take off in 2016. 
  • The next bitcoin halving occurs in July. Currently, 25 bitcoin are created every 10 minutes (meaning that for the price to hold constant, there needs to be net buying activity of roughly 3,600 bitcoin per day). In July 2016, the mining reward will cut in half and only 12.5 bitcoin will be created every 10 minutes. This may cause the price of bitcoin to increase if buying activity remains the same or goes up.
Bitcoin’s future will be achieved by the collective work of thousands of people around the world, and we’re proud to be playing a small part in helping bitcoin grow.

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