Coinbase, the world’s largest crypto brokerage is allegedly close to finalizing a funding round of around $500 million at a valuation of $8 billion. Moreover, Binance has begun to become more active in the investment domain, funding blockchain startups internationally.
While the business of major cryptocurrency exchanges like Coinbase, Binance, and BitMEX is burgeoning with attractive business models and considerable profitability, minor exchanges are struggling in the bear market.
Coinfloor, the UK’s oldest exchange has slashed the number of its employees this week. This move is taken after recording a decline in its revenues as a consequence of the drop in the daily trading volume of major cryptocurrencies. One major reason for the decline is the burgeoning of many cryptocurrency exchanges in the local market.
Zeeshan Feroz, Coinbase UK CEO told CCN in an interview that they have been working to introduce prompt payments for as long as they’ve been operating in the UK. Customers not only benefit from increased speed but decreased cost as well. There will be no more exchange rates as the customers are no longer required to convert funds from Pound
Sterling to Euros and vice versa to add and remove funds. This will, in turn, make cryptocurrencies easily accessible to most people in the UK.
Obi Nwosu, the chief executive at Coinfloor, announced that it is decreasing its employee count in the weeks to come, possibly due to the increase in competition in the UK market fueled by the entrance of Coinbase and Bithumb.
Venture capital firm Passion Capital, TransferWise founder Taavet Hinrikus, and Adam Knight, a former managing director at Goldman Sachs and Credit Suisse, invested in and supported the exchange since its launch.
Coinfloor has not been able to face stiff competition and is undergoing restructuring, despite the involvement of high profile investors and venture capital firms. The dominance of the sector by bigger exchanges may actually prove out to be a good signal for the whole ecosystem.
For instance, in South Korea, the virtual currency exchange backed by the country’s biggest commercial banks, technology corporations, and internet conglomerates including Korbit, Upbit, and Gopax have imposed dominance over the local market throughout the past two years.
It is evident that for startups to compete in the market, they need strong infrastructure and backing from major investors and conglomerates. This has been demonstrated by Coinfloor that even an exchange of its magnitude cannot sustain high-cost operations due to the rapid onslaught of bigger exchanges.