Coinbase to support ERC20 tokens – what it means
On March 26, Coinbase, the world’s largest crypto currency (CC) exchange, announced that they intend to support ERC20 based tokens. This announcement generated some excitement, both for technical aspects and investment prospects. Here is what COINBASE said:
“We’re excited to announce our intention to support the Ethereum ERC20 technical standard for Coinbase in the coming months. 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.”
Briefly, ERC20 is a technical standard used for Ethereum smart contracts, and ERC20 tokens have become a popular way for development teams to quickly build interoperable contracts/assets. An ERC20 token is one that is built to operate on top of the Ethereum blockchain, and there are hundreds of these tokens in existence. Which ones will ultimately succeed and make it on to the COINBASE exchange is a matter of speculation, however, by examining known parameters we can sharpen up the speculation quite a bit. Here are some of the known indicators:
- Coinbase has about 13 million users, making it the largest in the world, and it is clear that Coinbase believes in the Ethereum network
- Future tokens coming on to Coinbase will likely be ERC20, based on Ethereum, and this would increase market liquidity, creating a more stable environment for investors.
- Digital tokens historically increase in value when they get listed on Coinbase
- Coinbase has developed a framework for the kinds of tokens it will allow on its exchange, and the requirements include – decentralized network – open source code – be innovative and solve a problem – a working alpha or beta product – a good reputation and problem response rate – a clear road map – high market capitalization – quickly convertible to another asset.
Given all that, are there any current tokens that meet all the requirements? There are only a few that come close, loosely fitting these requirements, and there are none that meet 100% of these requirements. By carefully analyzing ERC20 tokens and owning the best of them before they hit Coinbase could easily lead to a tidy profit.
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