Coinbase Adds Support for Ethereum-based ERC20 Tokens
Investors in the cryptocurrency space who don’t have a background in the technical aspects of this new technology are often unaware of the broad similarities between different digital currencies. Aside from those digital currencies designed as spinoffs or modifications of popular tokens like bitcoin, there are more complicated sets of standards which govern whole groups of cryptocurrencies. Among these, the ERC20 standard, short for “Ethereum Request for Comment,” is perhaps the most popular and widely-adopted. It is a set of protocols and functions adopted by a large portion of the cryptocurrency community and taken as a standard by which many new cryptocurrencies are designed. Now, ERC20 is slated to get a major boost, as the popular cryptocurrency exchange Coinbase announced plans to support ERC20 tokens in the coming months.
Coinbase Expands Into ERC20 Space
Coinbase announced plans to support ERC20 tokens in a blog post published on March 26th and reported by Coin Telegraph. The decision marks a reversal from statements made earlier in the year. In the post, Coinbase declared that the decision “paves the way for supporting ERC20 assets across Coinbase products in the future.” However, it is not the first move in this direction for the U.S.-based exchange; weeks prior, Coinbase added ERC20 token support to its dApp browser Toshi and its ethereum wallet.
Coinbase Maintains Strict Controls for New Assets
As with many other digital currency exchanges, Coinbase maintains a very particular and stringent set of guidelines which govern all new asset additions. As such, the exchange has not yet revealed any potential altcoin candidates which may be added to the platform. Coinbase has been particularly cautious about these decisions since December’s addition of Bitcoin Cash, which resulted in accusations that Coinbase leadership was engaged in insider trading.
The ERC20 announcement was accompanied by a statement indicating that “Coinbase will only list assets after they are listed on GDAX” and “after evaluating factors such as liquidity, price stability, and other market health metrics.” Nonetheless, the exchange left the door open to the addition of ERC20-compliant tokens in the future, saying that Coinbase leaders “may choose to add any ERC20 asset added to GDAX to the Coinbase platform” as well.
Investing in cryptocurrencies and Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns bitcoin and ripple.
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