Jul 27, 2017 · 2 min read
Totally get the logic on why you don’t want to support BCC, but understand that you guys are probably going to lose customers and trading volume by not allowing customers to keep BCC that is generated from BTC holdings:
- Exchange customers are sticky — regardless of whether we are talking stocks or crypto — once assets are “on exchange” there is activation energy required to move them. By forcing rational customers off-exchange, you guys are essentially un-sticking your customers and partially neutralizing that normally favorable aspect of your business model
- You are going to be unnecessarily taking lots of dry powder off the exchange. Many customers opt to keep their crypto sitting on Coinbase/GDAX— a meaningful % probably don’t even know how to set up a wallet off-exchange. In addition to forcing customers off-exchange, you are allowing them to get educated on alternate storage mechanisms (i.e. wallets). A big chunk of those BTC holdings aren’t going to come back, because Coinbase will now be on the other side of the required activation energy.
- You are giving competitors an opportunity to take share. Once there is a flight of BTC off your exchanges and into a wallets, customers will ask themselves whether they want to keep it off-exchange, send it back to Coinbase/GDAX, or send it to another exchange. Surely some % will choose the 1st or 3rd option (which could have been prevented). Also, some of your competitors are supporting BCC and properly crediting customers, giving them an opportunity to differentiate themselves from you.
I’m a (fairly happy) Coinbase / GDAX customer, but I’m scratching my head on your strategy. I, like thousands of other customers you have, will be transferring off-exchange and will have the opportunity to re-evaluate how much I bring back to your ecosystem — a situation created solely by your policy here.
Some actual predictions:
- Your existing customer (controlling for new customer acquisition) BTC holdings on exchange are going to be down 10–15% 1 month from now. It might be as high as 20–30% for active, educated users. This will be from BTC flight that doesn’t return because it’s sitting in an off-exchange wallet or went to a competitor
- Your trading volume for those same existing customers is going to be down a material amount as well for the same reasons
