As we kick off 2017, I think it’s important for Coinbase and GDAX to continue supporting more crypto currencies. We are no longer just a Bitcoin company. We are a digital currency company.
This past year, we started the process by adding support for Ethereum. This was a major step. In 2017, you’ll see us continue that trend.
To be clear, I love Bitcoin and it is not going anywhere. It appears to be the reserve currency of the digital currency space — a sort of digital gold if you will. It is an asset class that people flee to in times of trouble, most suitable for large, slow transfers, with a more conservative roadmap to evolve the protocol. What it has not become is a scalable payment network (with lower fees, faster confirmation times, and higher throughput). I’m skeptical that it will be able to make this leap (even with new developments in the pipeline). Federated protocols seem to evolve slowly. This initially saddened me because I think an open payment network is where the greatest potential lies for digital currency to improve the world (hence our mission at Coinbase: to create an open financial system for the world). But I’ve come to accept that Bitcoin may not fill this role, and that is ok. It is still a very valuable technology in the world as an asset class, and that is perfectly fine.
Bitcoin may surprise me and scale (I hope it does). As we wait to see, an opportunity has emerged for other protocols to fill the payment network gap. Ethereum seems the most likely candidate for this at the moment (although things change rapidly in digital currency space). It continues to attract a number of good engineers to work on the protocol and build applications (an important leading indicator) and if proof-of-stake is successful this year, it will be a major computer science breakthrough providing a sustainable advantage. ICOs (people raising money on the blockchain) show no signs of slowing down, and Ethereum makes it very easy to issue new tokens. I think new tokens built on top of Ethereum will find all sorts of use cases, from virtual worlds to prediction markets.
Bitcoin’s guaranteed scarcity is an attractive property from an investment point of view (another gold like characteristic). Ethereum has yet to determine its inflation policy, but it seems to be leaning toward some moderate inflation policy (2–3% a year). This is another indicator to me that you’ll see Bitcoin continue to flourish as an asset class (and hold its value) while Ethereum may emerge as the preferred option for payment networks and custom tokens.
It’s incredibly difficult to predict the future and the digital currency industry is no exception (take the above for what it is, pure speculation). Rapid change seems to be the only certainty. For this reason, you’ll see Coinbase and GDAX continue to support more crypto-currencies in 2017. As the most popular retail exchange (Coinbase) and institutional exchange in the U.S. (GDAX), we want to make it easy for people to use all types of digital currencies. Our goal going forward is to not play favorites, or support one digital currency more than any other, but simply to make it easy for customers to buy and sell whatever digital currencies they want. In this way, we can help support growth of the entire digital currency industry.Look for more digital currency options to be added in 2017.
I think the world is still largely unaware that digital currency has been growing ~2.5x every year. If this trend continues (and I see no reason to believe otherwise) the future is very bright indeed. I’m looking forward to an exciting and productive 2017.