Opinion: How FTX Is Leaving Coinbase in the Dust

Key Takeaways

  • FTX has develop into one of many world’s largest cryptocurrency exchanges in below three years.
  • On the identical time, Coinbase has regularly listed doubtful initiatives and confronted inside points and product failures.
  • FTX CEO Sam Bankman-Fried is among the key causes for the change’s success.

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Whereas FTX clearly has its sights set on growth, Coinbase is lagging in lots of areas.

FTX and Coinbase In contrast

No matter once you got here into crypto, you in all probability bear in mind the primary time you got some. Once I first examine Ethereum, I signed as much as Coinbase to purchase ETH virtually instantly after. It grew to become my platform of alternative for stacking ETH thereafterat the very least till DeFi and stablecoins arrived. The expertise of shopping for crypto on Coinbase has all the time been easy for me and I’ve by no means had any complaints (having stated that, I did use Coinbase over Coinbase Professional for an embarrassingly very long time, that means I obtained burned paying by the nostril on avoidable charges). 

I’m grateful that Coinbase supplied an onramp for me into one thing that will change my lifeand worldviewperpetually. Nonetheless the most important crypto change within the U.S., Coinbase is an astonishingly profitable firm; its $86 billion valuation on Nasdaq final yr proved this. However whereas Coinbase has accomplished properly out of the latest crypto growth, it’s beginning to lose its stronghold among the many crypto change titans. Whereas Binance stays prime canine and Coinbase isn’t far behind, the quickest rising cryptocurrency change in 2021 was an organization that launched barely three years in the past. Nowadays, you’ll find its title on Miami Warmth’s house court docket. It’s referred to as FTX. 

I spend plenty of time studying about FTX’s Herculean advertising and marketing efforts, and for good cause: the fast-rising change has blown all of its opponents out of the water in the case of spreading model consciousness. Moreover the $135 million Miami Warmth deal, FTX has additionally enlisted individuals like Tom Brady and Gisele Bündchen as companions in a transparent bid to draw mainstream curiosity. It’s additionally scored a variety of successful targets past the sports activities world. 

Most lately, FTX added assist for Ethereum’s prime Layer 2 resolution, Arbitrum. For some unknown cause, Coinbase is but to make a Layer 2 transfer and appears extra centered on itemizing full trash aimed toward individuals who don’t know any higher; solely a day earlier than FTX added Arbitrum, it added assist for a doubtful challenge referred to as Pawtocol. Earlier than that, FTX purchased Liquid in what is going to in all probability be considered one of a number of huge acquisitions it makes this yr. And when meme shares have been all the fad and Wall Avenue Bets was dominating headlines, FTX’s agile crew responded by itemizing GameStop shares and silver futures. It additionally provided lumber futures because the wooden market entered a mania section final yr. It was ready to do that partly due to unfastened regulatory restrictions: in contrast to Coinbase, FTX’s primary arm isn’t primarily based within the U.S. (the agency is presently headquartered within the Bahamas). 

FTX additionally has a much smaller crew than Coinbase. On the helm of it’s Sam Bankman-Fried, the man who traded his solution to changing into the richest below 30-year-old on the planet and helped Solana develop into a prime 5 coin final yr. Bankman-Fried is a cult-like determine in crypto, and his fame is such that there are memes about his shoelaces and workplace beanbag (he usually sleeps on the FTX ground slightly than going house in order that he stays in a piece headspace). Bankman-Fried memorably made a $5 million donation to Joe Biden’s presidential marketing campaign, and I believe he’s an enormous cause for the absurd quantity of capital the change has raised over the previous few months. FTX is presently valued at $32 billion. 

Coinbase, in the meantime, hasn’t had fairly the identical success of late. Sure, it went public final yr in what was described as a watershed second for the business, however that was the excessive level. Inner politics over the Black Lives Matter motion in 2020 resulted in a widely-shared hit piece in The New York Occasions, and Brian Armstrong responded by publishing a divisive weblog put up about how politics may cause distractions. He introduced that the corporate would stay laser-focused on its mission as “#OneCoinbase.” A bunch of workers left over the debacle and Coinbase was left paying out beneficiant severance packages. In contrast to FTX, Coinbase employs over 1,000 individuals, so perhaps these sorts of clashes have been inevitable. 

It’s confronted different points, too. Whereas the world’s largest change, Binance, has all the time accomplished its greatest to evade regulators, Coinbase has proudly taken the other strategy. However that backfired final yr when the SEC screwed the corporate over on its Lend product, warning that its fastened 4% rate of interest on digital property may represent a safety. Coinbase canned Lend shortly after. When it caught onto the NFT growth later than most of its opponents, it promised an NFT market geared towards social engagement by the top of 2021, nevertheless it’s nonetheless nowhere to be seen. Coinbase NFT has since been spotlighting numerous NFT initiatives by its Twitter web page, at occasions selecting out odd (and dare I say, out of contact) selections like MekaVerse, which was simply one of many worst NFT initiatives of 2021. 

There’s yet another apparent level I’ve barely touched on. FTX has the cleanest consumer expertise of all the key crypto exchanges, and it doesn’t rinse you on charges like Coinbase does. That reality alone has satisfied many merchants to maneuver over (admittedly, Coinbase continues to be the go-to change for a lot of huge gamers, which is a direct results of the corporate focusing on whales by its Coinbase Institutional merchandise). It’s significantly good for derivatives, which explains why it does about $12 billion in each day quantity.

What extra must be stated? Nothing is fixed in life, not least in crypto. Simply as Ethereum might at some point flip Bitcoin, and Solana or another Layer 1 might at some point flip Ethereum, don’t be shocked to see FTX overtake Coinbase—and even perhaps Binance—sooner or later. Hell, on virtually each metric in addition to spot buying and selling quantity, it already has. 

Disclosure: On the time of writing, the creator of this function owned ETH and a number of other different cryptocurrencies. 

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