Once Popular Coinbase Application Falling from Grace

Coinbase has seen its application download ranking drop to its lowest since April 2017, according to Quartz.

It fell to number 40 on the list of most-downloaded applications finance application in the US in June of this year; in January it was in first place.

Time to buy the dip?

Background

Coinbase, founded in 2012, is a Bitcoin broker, exchange and wallet provider which has its headquarters in San Francisco. It was founded in 2012 and raised millions in funding, including $100 million in August 2017.

By November 2017 it had surpassed 12 million registered users and in December of that year TechCrunch reported that the Coinbase application was the financial application most downloaded by Americans from the Apple App Store. The download rate was so high (on one day reaching 30,000) that the service wasn’t actually functional for a lot of the time.

Technology publication Recode estimated that the company had made $1 billion in profit over 2017 and in April 2018 Coinbase valued itself at $8 billion. It claims to store more than $20 billion in cryptocurrency and in May of this year announced a suite of ‘institutional products’ called Coinbase Markets, opening an office in Chicago.

Problems

Coinbase has since suffered problems which have affected its success. both internal and external.

One issue was the loss of its tax lawsuit in February 2018. It was forced to agree to release the data of approximately 13,000 customers to the Internal Revenue Service. The requirement only applies to customers with more than $20,000 worth of cryptocurrency, and because the IRS wanted all of its customers’ data, Coinbase considered this a partial victory.

Another was the hundreds of customer complaints revealed by the US Securities and Exchange Commission in June 2018 – these concerned topics ranging from unusual transactions in their accounts to non-existent customer support. According to The Economist, its headquarters are in an unmarked office on a high floor in an office tower at a different location to what is displayed on its website – entrance is by invitation only. According to the article, this is a safety measure: “…a diversion tactic to keep away disgruntled crypto-currency investors, thieves who are trying to get access to crypto-assets, and other malefactors.”

In addition to these issues, Bitcoin has dropped in value significantly over this year. In December 2017 one bitcoin was worth around $20,000, but at moment it would set you back only $6,417, according to coinmarketcap.com. Last month CNBC reported that Google searches for the word ‘bitcoin’ had dropped by 75 percent since January.

The effects have been fairly drastic. Coinbase’s cryptocurrency exchange, Coinbase Pro, which was renamed only last month from GDAX, handles $107.6 million in daily trading volumes as compared to $376 million in May. In addition to this, its website traffic has dropped from 126.5 million visitors in January 2018 to 28.4 million in June according to SimilarWeb.

7/ I want to encourage you all to ignore the price of crypto and the headlines which will inevitably start to come up. Our job is to rise above that, finding our own intrinsic source of motivation, to come in and do our best work, regardless of what other people think.

— Brian Armstrong (@brian_armstrong) June 19, 2018