Why Coinbase is exploring Cardano, BAT, Stellar, Zcash, 0x listings
Why those five? What does Coinbase see in them? Quite a lot, it says.
Is your name on the list? Coinbase has announced that it's exploring the addition of five new tokens.
The reason for not just adding them, it says, is because their inclusion requires additional exploratory work, and they might only be listed to buy and sell rather than allowing customers to send or receive with a local wallet. They also might arrive in different jurisdictions at different times.
At the same time, Coinbase now announces new coin listings and explorations simultaneously internally and externally. This is probably because of all the trouble and insider trading allegations that came from its Bitcoin Cash listing, which means there's typically a large lead-up.
"These assets will require additional exploratory work and we cannot guarantee they will be listed for trading. Furthermore, our listing process may result in some of these assets being listed solely for customers to buy and sell, without the ability to send or receive using a local wallet. We may also only enable certain ways to interact with these assets through our site, such as supporting only deposits and withdrawals from transparent Zcash addresses. Finally, some of these assets may be offered in other jurisdictions prior to being listed in the US," the announcement reads.
It says it expects that BAT and 0x will be the first ERC20 tokens it adds.
Why these coins?
Coinbase also gave a quick rundown of what it liked about each coin, specifically how each hits the requirements of the Coinbase Digital Asset Framework (PDF) which outlines its criteria for listing new assets, including:
- High quality coding, scalability and technical ingenuity.
- Decentralised financial systems that contribute to "creating on-ramps to finance 2.0." One might cynically interpret this as Coinbase wanting to list assets that can make it more money and give it more customers, rather than advancing potential competition.
- A solid team, especially in its foundation and leadership.
- Genuine customer demand, in the form of a thriving community or already serving a genuine purpose.
If you're interested in what exactly Coinbase looks at when listing assets, it's worth looking at their feedback on these coins.
Coinbase notes the technical uniqueness of Cardano, backed up by a team that might be able to fulfil its ambitious goals. It acknowledges that the Cardano main event isn't live yet, but points to the roadmap targets the project has already achieved and its community interest.
"The Cardano protocol was created by Charles Hoskinson, one of the co-founders of Ethereum. Cardano's Bitcoin-like Settlement Layer (CSL) mainnet is live and it has a functional wallet for its built-in ADA cryptocurrency," Coinbase says.
"It has also taken a different technical direction from other blockchains on several axes, like its Ouroboros proof-of-stake algorithm, its use of Haskell, and its focus on formal verification. While Cardano's Computation Layer (CCL) is not yet live, the project has published long-term roadmaps, has shipped working software, and appears to have a growing community."
Basic Attention Token
Coinbase comments on the genuine usefulness, its founder's credentials and the broad live userbase of the BAT project.
"The Basic Attention Token (BAT) is the internal token of the Brave browser... Brave announced that they have recently passed 3 million monthly users and are in the top 10 list in the Google Play store in more than 20 countries."
Coinbase comments on the technical features of Stellar, its diverse backers and how its anchor system balances the need for speed with a kind of functional decentralisation equivalent that might appeal to institutions.
"Stellar is an open-source protocol for value exchange developed by Stanford CS professor David Mazieres, Rust language author Graydon Hoare, and Jed McCaleb. Lumens (XLM) are the native asset of the Stellar network. Stellar's consensus protocol is different from proof-of-work in that it allows and requires individual nodes to choose the set of other nodes they trust as a group (a "quorum slice") to give them accurate information about the state of the Stellar network."
"Stellar allows for the creation of anchors that can issue assets, use bridge servers to interface with existing banks, and follow Stellar's compliance protocol. Initially funded by Stripe, Stellar's board members include Khosla Ventures partner Keith Rabois, Stripe cofounder Patrick Collison, WordPress founder Matt Mullenweg, YCombinator President Sam Altman, MIT DCI head Joi Ito, and AngelList founder Naval Ravikant."
Coinbase remarks on Zcash's technical achievements, specifically the importance of being able to allow for both transparent and private transactions as needed. The always-private coins like Monero might risk running into regulatory troubles in some places, while always-transparent coins like bitcoin generally won't be suitable for sensitive institutional transactions. The future of cash-type cryptocurrencies might be with those which can switch privacy on and off as needed.
It's worth noting privacy in cryptocurrency is an exceptionally challenging area spanning diverse fields, so any coin that managed to convincingly pull it off tends to have a very capable and diverse team behind it.
"Zcash is a cryptocurrency which uses recent advances in cryptography to allow users to protect the privacy of transactions at their discretion. The distinction between Zcash’s "transparent” and “shielded” transactions is analogous to the distinction between unencrypted HTTP and encrypted HTTPS," Coinbase explains.
"In both cases, the unencrypted/transparent version of the protocol allows third parties to see metadata associated with the communication or transaction, while the encrypted/shielded version protects this information. The Zcash protocol has been live since 2016 and the development team has published technical improvements that may reduce the memory consumption associated with transaction privacy by 98%."
Coinbase points at the real world use and independent projects that have been built on top of the 0x Protocol, and how it has already proven itself across many transactions. It's safe to assume Coinbase's own developers are eyeing some of the development tools it offers, and that the future Coinbase decentralised exchange might be able to use the protocol as intended.
As a practical token that Coinbase might use itself, it makes a lot of sense that it would list it.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, NANO