It’s Only Been a Year, But Coinbase Has Closed Down its Chicago Office

Remember when we were writing about cryptocurrency weekly, even daily? It was interesting to see the value climb and climb and climb, and in some cases bottom out. Or at least lose enough value that people were getting worried. I mean, you can’t blame them, it’s a similar thrill to playing the stock market. The whole idea that you might not get out of what you put into that investment can be terrifying. And while cryptocurrency still remains one of those big unknowns for people, I’d say that its popularity is declining. While I just said that buying crypto would be similar to playing the stock market, I meant only from an emotional perspective. The two systems are wildly different, and crypto is getting a bad rap from regulators.

Which makes you wonder if crypto is a viable type of currency? In fact, the prominent cryptocurrency exchange Coinbase is set to chose their Chicago office, just one year after it was opened. In addition, it will let go around 30 software engineers during the closure. The group had been tasked with building a special “matching engine” product for high frequency trading. But that product, according to a Coinbase spokesperson, is no longer a priority. Instead, the firm is set to focus on other products like over-the-counter trading and custody services.

This is bad news for Coinbase, who had an incredible 2018. In fact, they tripled their employee headcount to about 800 people, even though, the prices of cryptocurrency were falling and trading volumes declined dramatically. Is this indicative of the future for Coinbase, or just a setback? According to the company, it’s the latter, although I don’t see how. The layoffs were effective immediately, meaning, they needed to get rid of people in order to stay afloat. 2018 might have been good for Coinbase, but it was a long-running slump for the rest of the industry.

In 2017, we saw Bitcoin make its way up to $20,000, but in 2018 that bubble started to deflate. It was around that time that the value of cryptocurrencies fell 90% in value, which cut deeply into the revenue of companies like Coinbase, as they make most of their money from trading commissions. Even as the industry shows signs of recovery, with Bitcoin approaching $6,000 in recent weeks, Coinbase and others have been searching for fresh strategies and new sources of revenue.

Coinbase is reporting that they will locate a “small number” of their Chicago-based matching engine developers to their main office in San Francisco, as well as maintain a remote sales force in the city. Last September, Coinbase opened a New York office, which catered to institutional clients. At that time, it reportedly hired 100 staff and taking them from powerhouses like the New York Stock Exchange, Barclays and Citigroup. But since then, they have done some kind of “restructuring” as have many other blockchain startups.

What does all this mean for cryptocurrency? I think cryptocurrency had a good run back in 2017, but as I said then, I feel that the currency itself isn’t sustainable. No one was really “buying” into it in a large scale kind of way. Meaning, it was living as this underground type currency, that your average consumer didn’t quite understand. It wasn’t tangible, and people were getting kidnapped as a result. All in all, I’m not surprised that we’ve landed where we have when it comes to cryptocurrency. Whether or not it will make a resurgence is something I can’t answer.