Coinbase will be discontinuing its Coinbase Pro trading platform. The talks about this have been around for a few months now, and it is finally happening. The end of Coinbase Pro will be happening this month. If you are irresponsible with your crypto assets, procrastinate in moving the off exchanges, and may have some left on Coinbase Pro like me, this might be a time to revisit your exchange wallets and make sure this transition is not a surprise. I have know that this transition was coming, but never got a chance to move my coins. Coinbase was kind enough to inform me that they will move my assets to Coinbase on my behalf on November 21, 2022. They do that!
I remember when Coinbase acquired BRD wallet, I did nothing although I had some coins on BRD. Coinbase decided to get rid of BRD and promote their own self-custody Coinbase Wallet. It was an acquisition to eliminate a competition. When time came to discontinue BRD, they simply made it dysfunctional, with only option to transition to Coinbase Wallet. There were super kind to move my funds to their new product. I was expecting they would do the same when it was time to shut down Coinbase Pro. In theory, all funds are safe, they are just moved to Coinbase account. However, I have seen and heard stories when people had difficulty withdrawing their coins from Coinbase in the past. I have not experienced that myself, and hopefully won't. But it wouldn't hurt to take actions to make sure everything is in order.
These changes were expected. Coinbase became successful when it didn't have much of a competition. It enjoyed making a lot of money on a concept of simplicity in crypto. My opinion about their business practice is that it was driven by extreme greed and short term vision of accumulating as much money as possible from trading fees. However, they did have a great platform to offer, they had a great solution at the time. They could have been stronger company today, if their business vision wasn't clouded with extreme greed. In fact, the realization of the weakness of their original vision is the reason for the changes they are making now.
Two years ago, I was ready to sell some bitcoins. I had some on Coinbase and decided to sell bitcoins before the end of the year. A friend of mine who uses Coinbase Pro suggested not to sell on Coinbase main platform and instead to sell them on Coinbase Pro. I knew fees were differed on both, but I didn't know how big the difference was. It turns out Coinbase fees were much higher than Coinbase Pro. That's what I did. Moved bitcoins to Coinbase Pro, which didn't cost any fees. At the same time others were saying not to sell or at least wait until the last days of December. I did wait. Then bitcoin bull run happened. Distracted with the price action and all the new born excitement around crypto, I abandoned the idea to sell. After few month, I had no need to sell anymore. So, the coins ended up staying on Coinbase Pro indefinitely. I doubt I will be selling them anytime soon. But it is time to find them new home.
Back to the Coinbase business model. Coinbase created a great company - cool brand name (taken from bitcoin code), easy to use App, a bridge to and from fiat. In my understanding, they is business model was to sell the easy access to crypto and charge high fees. Fees for convenience make sense. But taking advantage of the situation and lack of competition, and charging higher than reasonable fees doesn't make sense. That's what they did. I bought my first bitcoins on Coinbase, and it was very clear how high the fees were. That's why I never used Coinbase for trading. But they also wanted to attract crypto traders, and for them they had a separate platform - GDAX, which later became Coinbase Pro. Coinbase app seemed to be a lot easier to user compared to GDAX or Coinbase Pro. That's how they justified charging higher fees.
Their strategy kinda worked. They did make a lot of money. They became a publicly traded company. They are globally recognized brand. But things are different now. There are more players in crypto space, and some platforms like Robinhood and Webull are offering zero fee trading. High trading fees are things of the past, and competition will continue. So now, Coinbase needs to reevaluate their business model to stay relevant in the space. By getting rid of Coinbase Pro, they are trying to unite to platforms into one and charge same fees. They are taking steps even further by offering a new advance trading platform - Coinbase One. I haven't used it, and highly unlikely I ever will. At the first glance it seems to be a zero trading fees platform with monthly subscription fee of $30.
Coinbase One does seem interesting and $30 seem to be very low monthly subscription fee, especially for those who trade on daily basis. It good to see free market working and competition forcing companies like Coinbase changing their strategy of how they make money and moving towards zero fee trading. I don't mind to see fees for trading. Companies need to make money to operate, innovate, and deliver quality products. If the fees are reasonable and product is great, it is win win for both the companies and its customers. The issue I have with companies like Coinbase is how they utilize or used to utilize deception in achieving their profit goals.
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