Coinbase, unlike most exchanges, features solely four coins. Their app and website are simple to use for those inexperienced in the trading/investing field which makes them a favorite among the population. If you can predict the next coin to land on Coinbase, you are likely to see an exponential jump in asset value upon announcement of that specific coin’s addition.
The Coins Currently on Coinbase (BTC, ETH, LTC, BCH)
Coinbase currently has four coins listed; Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). BCH was the most recently added and increased over 100 percent upon the announcement it was going to be added. Ripple (XRP) was predicted to be added in early January and Coinbase announced there were no commitments made to any new additions yet. This sent XRP which was approaching $4 back to the $1.30 range it currently resides at. A coin once it makes it to Coinbase has reached the “Big Leagues.” BTC was the original. ETH has provided ICOs to the masses. LTC has an incredible team. BCH was the first fork supported by Coinbase, although it took almost seven months. Each one of these coins is impressive in their own rights. Predicting which coin will come next will bring your portfolio to the “Big Leagues.”
It is obvious the best traders are not active on Coinbase as the technique is much more elementary. There is no ability to place sell or buy orders at specific price points, description or display of market caps, but it is very easy to use. This is why it has become so popular with those unfamiliar with trading and financial markets. A coin will experience an exponential climb if it manages to be approved for trading on Coinbase/GDAX. If there were four items in the grocery store, which four would you purchase? If a fifth was added, would that now become a likely candidate?
Clearly, the answer to these questions is obvious. If only four options are available, an individual is forced to purchase one of the four, and generally speaking, most will seek the cheapest if they are novice investors. BTC is priced at approximately $8,000 per coin, and even in breaking it into smaller pieces there is nothing that feels pleasant about spending $120 and receiving 0.01 of an asset. The logic is very rudimentary, very basic. Coinbase is used because it is the easiest to use, there are minimal assets on it, and predicting the next addition can easily lead to 100 percent returns the day of the announcement. With BTC, ETH, LTC, and BCH being the only coins listed an addition will dramatically increase that new coin’s value in the short term.
GDAX and Coinbase Factors for a New Coin
1 Mission and Values
3 Legal and Compliance
4 Market Supply
5 Market Demand
6 Crypto Economics
Factor 1: Mission and Values
Coinbase is very specific in what they are looking for when analyzing a new coin to be added to their Coinbase/GDAX trading platform. The first factor, ‘Mission and Values’ speak to what the coin stands for. Coinbase is looking for open financial markets, technologies that solve problems or create value, economic freedom, equality of opportunity and decentralization. The most unique of this list is decentralization. This is because one of the favorite picks to land on Coinbase happens to be a fairly centralized coin, but for reasons stated later should get around this decentralization issue.
Factor 2: Technology
Technology is an exceptionally important aspect when judging which coins should be added to the Big Leagues. Coinbase has made it very clear they are solely considering projects that have demonstrated their ability in both coding and security capabilities. The specific composure of the team will be analyzed at great length. Issues with scalability that may be faced in the future along with orderly governance (how project consensus is achieved) are considered heavily. Most coins meet these stringent technological standards if they are unique enough to make the Coinbase short list
Factor 3: Legal and Compliance
This factor seems like a CYA (cover your a**) for Coinbase and GDAX. They are adamant about any coin following domestic and international regulations. This seems like a fairly obvious requirement. The second aspect of Factor 3 is the coin does not violate GDAX’s user agreement (how would a coin violate this agreement?). Factor 3, Legal and Compliance should not be presumed to be an issue except for privacy coins to be discussed later.
Factor 4: Market Supply
Coinbase understands that by adding a coin to their exchanges, it will dramatically increase the volume traded of that coin. To ensure this amount of trading can take place they want to ensure adequate liquidity, and coin supply exist. They have determined Factor 4 will be broken into high trade velocity, high circulation, being multi-regional (accessible all over the world), and having current fiat-to-crypto trading pairs. This factor greatly narrows down the list of potential coins, but almost all on the shortlist have a large number of coins in circulation, high trade velocity, are multi regional, and have fiat-to-crypto trading pairs. This is a factor used for weeding out but what you are left with is still a list of hundreds of coins.
Factor 5: Market Demand
Many would argue by adding a coin to Coinbase demand is generated automatically. However, Coinbase wants to ensure there is already a high customer demand. They want to ensure the community activity is very high and that the developers have teeming repositories. They also are concerned and want to ensure external stakeholders exist and finally that enough nodes are operating to satisfy a secure blockchain. Demand is an important factor for any market, and Coinbase wants to ensure they only add coins that already have sufficient demand and functioning communities prior to the Coinbase announcement. Nodes are very important as the blockchain runs on the community that is supporting it (quite literally on the computing power of it). While having external stakeholders is also important as it means there is institutional money invested in the product (the coin). These factors all play into Coinbase’s decision-making process.
Factor 6: Cryptoeconomics
The final factor Coinbase/GDAX considers is Cryptoeconomics. This can be broken into analyzing how the coin/token is specifically used. What is its utility? They take into consideration inflationary practices when considering all new coins. An important analysis also takes place regarding team ownership ensuring they only have a minority stake in the project. A very specific requirement is a hard-set total supply of coins and a code of ethics. Most coins have a hard-set total number of coins, but there are some with fluctuating totals. If a coin can “print” new tokens as they please it devalues the current coins in circulation extravagantly.
Coins That Meet These Factors: XRP, XMR and DASH
Almost each of the coins listed above has an issue or two with the list of factors Coinbase/GDAX has supplied. However, the rumors have been swirling regarding which coins will be added to Coinbase next. The list the King has compiled include three that the rumor mongering is greatest for, with substantiated reasons and analysis for if it’s likely to occur or not.
Ripple was one of the ones that had the most hype in the beginning of January as a Coinbase addition. Many people thought this may preempt BCH in making it to Coinbase. However, BCH was added and XRP took a slight hit. Coinbase said after BCH no new coins would be added for a short while (even though they confirmed additions in Q1 2018). The price of XRP tanked from a high of approximately $4.00 to the current $1.30 range. XRP has the most market adoption from major banks and the financial sector with the ability to move money across the globe in seconds for a few dollars on a secure blockchain. The current market cap of XRP is just under $50 billion making it one of the top three cryptocurrencies by market cap. Even with such a high market cap it will easily trend from $1.30 to $2.60 or $3.90 on the news of being added to Coinbase as the speculation alone did it this month. With the January market correction behind us and conferences every few days on the horizon, XRP should be a strong play without being added to Coinbase. However, if it does get added it should easily approach if not surpass $5.00 per coin. When being analyzed using the multiple factors GDAX uses it becomes clear that like most coins XRP has one major flaw.
The biggest problem with XRP is that the founders and the company Ripple, control over 50% of the total coins. This “centralization” of shares is the reason most skeptics doubt XRP’s addition to Coinbase. The King believes this will be overlooked as the current centralization results in the market not being flooded with shares, as XRP’s whitepaper outlines specifically how many shares may be sold monthly by the Company. This centralization provides so the market isn’t flooded with XRP’s every time there is a spike in the value of XRP by the company dumping their position. XRP’s acceptance across financial markets and partners from big banks to credit card processing firms give it solid footing for being the next addition to Coinbase. XRP has recently announced partnerships with Moneygram, AMEX, and BancoSantander making it a major player in both the crypto space and financial space. Not only does XRP have great partnerships but they were just added to an exchange very similar to Coinbase.
XRP was just added to BitOasis (Dubai Based) which similarly to Coinbase only listed two coins prior to XRP (BTC and ETH). BitOasis is most popular in the Middle East and North Africa and ranks well because of its simplicity. Coinbase could be most similarly compared to BitOasis which gives the impression Coinbase could be next. The author would rank XRP as one of the most likely to be added (as it already is on the short list of three most likely to be added), even with the issues facing it regarding decentralization. The market adoption by real financial institutions should give XRP enough of a boost to overlook the one aspect it is struggling with (decentralization).
The legal compliance section is where XMR will have its issue if it suffers any hang-ups. XMR isn’t illegal, nor is it directly breaking laws. However, as it is a privacy coin, it is facilitating illicit activity on the Dark Web. It also has one of the best utility features as it is used all the time for its specific purpose, to send money privately. The problem is, many people who wish to send money anonymously are doing it for illegal reasons. This means XMR helps facilitate transferring of money illegally obtained even if it’s concept in itself is not illegal. XMR has also become a favorite among Dark Web marketplaces. From a utility perspective this is great, from a legal perspective, some red flags are raised.
BTC years ago was a favorite among the Dark Web and has only since begun to clean up its image. Monero should be able to recover from being the privacy coin used on the Dark Web, similarly to how BTC repaired its reputation. Being added to Coinbase would only legitimize their recovery from being viewed as the Dark Web coin. Privacy has its purpose, even on the blockchain. XMR has just under a $5 billion market cap with its biggest hindrance being it’s “bad boy” image. It may have to shake this image before being approved by Coinbase, but a similar predicament could be exclaimed for XRP’s centralization problem. Both, the author reckons, will make it to Coinbase in Q1 2018 as the CEO has hinted multiple times at the addition of coins.
DASH has multiple features that will make it a top contender for Coinbase while running into similar problems as its competitors. The core features of DASH include; InstantX, Private Send/Dark Send, and masternodes or proof of service miners (created by freezing 1,000 DASH). DASH is unique in InstantX lets you send funds anywhere in the world instantly on the public blockchain. While Dark Send gives you the option to send DASH, converting it to a privacy coin. This keeps the amount hidden from nosey onlookers searching transactions. DASH has a very strong marketing campaign as they are regularly sponsoring events (the Miami BTC Conference for example). Like the coins currently on Coinbase DASH can be stored on most of the main hardware wallets, is recognizable worldwide, and meets almost all the requirements set forth by GDAX.
However, the fact that a user can send funds using Dark Send sounds almost ominous in itself. “Dark Send,” what could someone be purchasing if they are trying to conceal what they are sending? The author understands what the critics are saying, but there is also no reason the transaction amount needs to be completely public and transparent either. Venmo and other money transfer services allow you to conceal the value of what is being sent, why should the blockchain force absolute transparency to be considered for Coinbase. This is not an absolute requirement but is heavily considered. DASH similarly to XMR is used regularly on the Dark Web to facilitate transactions involving illicit goods. Once again Coinbase/GDAX has an issue with using the coin for illegal purposes. However, BTC was once mainly used for illegal purposes, and although it has been rebranded along the way, it’s history should not be forgotten. Nor should other great coins like XMR or DASH be precluded from exchanges like Coinbase solely because they have a privacy standard or function. The author sees DASH as a very likely candidate for addition to Coinbase right behind XMR.
Conclusion: Coinbase is Likely to Add New Coins!
Many great coins exist among the 100s of scams. Based on mass-market adoption, financial institution adoption, the factors set forth by the GDAX/Coinbase team, and current news, the King has compiled a list of what he expects to be added to Coinbase. These are expectations, not guarantees. The crypto market is very volatile, and each investor needs to make their own choices. Educated choices with due diligence is always better than guessing blindly. Each of the three coins listed above have significant market traction and are genuiney spectacular candidates for Coinbase to add.
There is no way Coinbase ends 2018 with four coins listed as they profit based off volumes traded. The author expects them to fulfill their comment regarding multiple additions in Q1 and that beginning with XRP, XMR or DASH as the top candidates. February with the Dallas Super Conference and the Token Summit in March provide the perfect opportunities for a massive press release. All eyes will be on the crypto space for the next few months, and the King expects big news from Coinbase before the closure of Q1. Most likely one of the three coins, if not two, being listed in the short term.