ERC20 to Garner Support from Coinbase: Its Implications

Coinbase, which is one of the premier global crypto-exchanges have declared, that they will be offering support for ERC20 tokens. This means that ERC20 tokens will be added by Coinbase sometime in the future.

Understanding the term ERC20 token

The term ERC20 refers to the collection of tokens that were created through the feature of smart contracting feature that Ethereum’s blockchain is specifically equipped with. Hence ERC20 is technically referred to as “Ethereum standard for tokens”. It acts as an interface that must be abided by anybody who wants to write a smart contract or issue a token.In spite of the shrink in the share of Ethereum’s market, the ICO bull market of 2017 was singularly dominated by ERC20.

Importance of the listing

The importance of this event lies in the fact that Coinbase will now have the ability to add several more coins in the crypto-market. Tokens such as EOS, Binance Coin, VeChain, Waltonchain, Golem,0x, OmiSego and several others are now going to be qualified for being added to the Coinbase platform.

As of now, Coinbase has not made an official declaration regarding which ERC20 tokens they would be adding to their platform. However, in the initial press release, they already have declared the names of some of the coins that they have selected to integrate into their platform. The Coinbase network can be partitioned into the following: Coinbase (the app), Coinbase asset management (which enables users to make an investment in an index), Coinbase Custody and GDAX (their exchange).

What the support for ERC20 implies for the Coinbase services

1. Coinbase custody: The team of Coinbase custody is assessing a host of assets to support for the purpose of withdrawals and deposits. It should be noted that Coinbasecustody is likely to integrate more assets than those available for trading on GDAX or Coinbase for the near future.
2. Coinbase: In November 2017, the GDAX Digital Asset Framework was published by Coinbase.As per this guidance, assets are to be listed on Coinbase only after they have been listed on GDAX.It is basically a guide that states the factors that would be taken into consideration before making the decision regarding which new coins to list.Coinbase mentions the factors on the basis of which ERC20 tokens will be integrated into their platform. These factors are price steadiness, liquidity and other “health metrics of cryptomarket”. Still, there is no warranty that a coin which is added to GDAX will necessarily be added to Coinbase which is the main app.
3. GDAX: The GDAX team anticipates additional regulation-based clarity before finalizing on exactly which ERC20 token it should be supporting. Support for the addition of ERC20 assets will provide the exchange platform to facilitate the safe recuperation of ERC20 tokens which have been involuntarily sent to GDAXEthereum addresses.
4. Coinbase asset management: In accordance with the index methodology, Coinbase asset management list new coins automatically after they are initially added to GDAX.

The Coinbase team has made the following statement:

“This paves the way for supporting ERC20 assets across Coinbase products in the future, though we aren’t announcing support for any specific assets or features at this time. We are announcing this both internally and to the public as consistent with our process for adding new assets. Additionally, like GDAX, support for ERC20 will also give us a path to enabling the safe recovery customer ERC20 assets inadvertently sent to CoinbaseEthereum addresses.”

Effect on Cryptomarkets

The move has failed to boost confidence in the cryptomarkets as the total capitalization amount has dropped down to only 30 billion dollars. The move failed to boost Ethereum, the market cap of which has dropped by almost 10% on 26th March 2018.

The expectation for the future

This move was not unexpected as Brian Armstrong, the CEO of Coinbase has mentioned many a time in 2017 that the exchange was planning to integrate additional new coins on its platform. This seems to be a smart move for the exchange. The market share of Coinbase is exposed to several potential threats from rival companies like Robinhood, which is an investment app that deals with traditional currency.

If the new coins get listed, investors should expect a vast rise in the amount of trading volume to be received, given the popularity and wide reach among new budding investors entering the crypto market. There is also a high possibility for Coinbase to indirectly provide assistance to coins by adding them to its platform. That is because the general public will consider the additions of the coins on Coinbase as a proof of the legitimacy of the coins. Thus the popularity and transactions of the coins among crypto-traders are likely to increase to a significant extent.

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Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.

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