Coinbase, a popular cryptocurrency exchange in the United States, has announced the acquisition of Paradex, a U.S.-based business that provides an exceptional, peer-to-peer trading platform focused on speed, reliability, and non-custodianship. Paradex is a firm with roughly 10 workers in New York, Chicago, and San Francisco that facilitates the trading of ERC20 tokens based on the Ethereum network. (See also: What Is Coinbase and How Do You Use It?)
How Is Paradex a Fit for Coinbase?
Paradex offers a unique product in that it does not keep its clients’ cryptocoins. For transactions performed using the Paradex platform, trading participants may simply transfer crypto tokens from their digital wallet to the counterparty’s wallet. Coinbase, on the other hand, functions as a trusted custodian for all digital assets transacted by market participants on its trading platform.
Coinbase will be able to provide peer-to-peer trading to its consumers thanks to the integration of Paradex. It will benefit from the elimination of any third-party custodianship obligations, security management concerns, and related expenditures. At the moment, institutions that retain bitcoin on behalf of their customers are vulnerable to hacking efforts. Coinbase is said to have more than $20 billion in digital assets. With Paradex, the onus of cryptocoin security and storage falls on the end user, who keeps their digital assets in their own wallets.
Coinbase intends to include the Paradex platform into Coinbase Pro, a professional trading platform for people. Coinbase also introduced Coinbase Pro, which will develop from the current platform GDAX and be particularly geared for individual cryptocurrency traders. GDAX and Coinbase Pro will coexist until June 30, at which point all users will be transferred to the newer Coinbase Pro.
Coinbase Targeting Institutional Clients
Coinbase is seeking to enhance its portfolio of services to fulfill the demands of institutional customers, in order to gain a competitive advantage in that area. Last week, it introduced four new solutions geared exclusively at institutional traders: Coinbase Custody, Coinbase Markets, The Coinbase Institutional Coverage Group, and Coinbase Prime. The purchase of Paradex is another another move in that direction. (Also see: Goldman Adds Crypto Trading Operation.)
The connection will assist Coinbase in serving consumers, who will be able to trade a number of ethereum-based cryptocoins that typically adhere to the ERC20 specifications. Ethereum, as a platform, enables the production of a wide range of cryptocoins. Coinbase now trades bitcoin, bitcoin cash, ether, and litecoin, and this collaboration will allow it to grow beyond those few currencies. (For more information, see What Is ERC-20 and What Does It Mean for Ethereum?)
Initially, only non-US consumers will have access to Paradex, however Coinbase is “actively working toward” regulatory approval for the product in the US, according to CNBC.
“This (purchase) will greatly improve our clients’ proposition in terms of what they want to trade and how they want to trade it,” said Asiff Hirji, Coinbase’s president and chief operating officer.
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