The UK’s Coinfloor is the oldest cryptocurrency exchange in the nation. Unfortunately, the five-year-old Coinfloor is laying off the majority of its 40 person staff in the wake of declining trading volumes. So what does this mean for buying crypto in the the UK? Is this a sign of industry decline or a reflection of problems specific to Coinfloor?
Coinfloor and the Failure to Evolve
There are two competing concepts in the world of business: “First Mover Advantage” and “The Advantages of Backwardness”. The former refers to the inherent edge you can gain by coming to market before your competitors. Coinfloor was founded in 2013, before any other online Bitcoin exchanges in the UK (at least, any that remain open).
The latter concept refers to the advantage of waiting for a pioneer company to “work out the kinks” of a business model, before entering into a market having learned from their mistakes. All of the other crypto exchanges in the UK may not have Coinfloor’s seniority, but they have been able to incorporate modern best practices from the ground floor, rather than retrofitting their services as Coinfloor has been forced to do.
Coinfloor has always provided reliable service and an intuitive interface. They’ve even supplied over-the-counter services for London customers. However, this has not been enough to assure Coinfloor’s long-term relevance. After all, this is an exchange that basically only sells Bitcoin. Though Coinfloor also has a Bitcoin Cash trading pair, more than 99% of their <$1 million 24 hour trading volume is in BTC alone.
In 2013, there were few ways for people in the UK to buy Bitcoin. Now there are many. What’s more, British nationals are not limited to Bitcoin exchanges which operate from within their borders. International exchanges like Binance (see Binance review) and Bitmex offer dozens of altcoins in addition to Bitcoin. Domestic brokers like eToro (see eToro review) provide new investment models for Bitcoin and a hand-selected array of high-quality altcoins. Coinfloor simply lost its edge and failed to distinguish itself over the long haul.
While Coinfloor is not shuttering, it’s hard to imagine it pulling out of its declining trajectory. Many exchanges have suffered in the protracted bear market we’re still enduring. For a business like Coinfloor, though, daily volume less than $1 million is likely not enough to keep the lights on, at least with a staff of 40. Coinfloor is just one of many blockchain exchanges and businesses that are feeling the pinch of low trading volume.
In the end, this may not be a bad thing. We believe that crypto prices will return. The platforms that survive the long drought will have proved their mettle. When the bulls come back, the real innovators will be elevated while some of the lesser projects will have fallen away.