About Kraken: A Leading Cryptocurrency Exchange

Introduction

Founded in 2011 in San Francisco, California, Kraken has become the fourth-largest crypto exchange by trading volume, with nearly nine million clients globally. In this article, we will explore what makes Kraken cool, how it works, and why it has gained such popularity among cryptocurrency traders.

What is Kraken?

Kraken is a digital asset exchange that provides individuals and institutions with the ability to buy, sell, and trade a variety of cryptocurrencies. The exchange offers trading pairs between fiat currencies and cryptocurrencies, as well as cryptocurrency-to-cryptocurrency trading pairs. Kraken’s platform offers advanced trading tools, such as margin trading and stop-loss orders, to help traders manage their risk effectively.

How Does Kraken Work?

Kraken’s platform operates similarly to traditional stock exchanges, but with digital assets. The exchange matches buyers and sellers, allowing them to trade cryptocurrency assets for a fee. Kraken offers several different trading pairs, including popular cryptocurrencies like Bitcoin, Ethereum, and Dogecoin, and lesser-known cryptocurrencies like Zcash and Monero. Kraken is offering several fiat currencies, such as USD, EUR, and GBP, which can be used to purchase cryptocurrencies.

Why Are Cryptocurrencies Popular and Why Do People Choose to Trade on Kraken?

Cryptocurrencies have gained popularity in recent years due to their decentralized nature and the potential for high returns. Unlike traditional fiat currencies, cryptocurrencies are not controlled by a central authority or government, making them resistant to inflation and government interference. Many traders also see cryptocurrencies as a hedge against economic instability, and as a way to diversify their investment portfolios.

Kraken has become a popular choice for cryptocurrency traders due to its user-friendly platform, advanced trading tools, and high liquidity. The exchange’s low fees and fast transaction times have also contributed to its popularity. Additionally, Kraken has a reputation for being one of the most secure cryptocurrency exchanges, with no major hacks or security breaches to date.

Cryptocurrency User Base Growth and Potential Prospects

Kraken’s user base has grown significantly in recent years, with the number of new users jumping four times in the first quarter of 2021, compared to the second half of 2020. Spot trading volume in Q1 grew 1.5 times over spot trading volume recorded throughout 2020 to reach a record level of $160B. In comparison, trading volume on Coinbase was $335B in Q1 2021.

Kraken’s expansion into the Middle East, with the opening of its regional headquarters in Abu Dhabi, is expected to further increase its user base and trading volume. The exchange will become the first cryptocurrency exchange to offer direct funding and trading in UAE dirhams against Bitcoin, Ethereum, and other virtual assets. UAE launch marks a wider play into an increasingly lucrative Middle East region, which is considered as one of the fastest-growing cryptocurrency markets in the world, making up 7% of global trading volumes, according to Chainalysis.

In May 2022, Kraken announced the future launch of an NFT marketplace, which is expected to further expand its user base and revenue streams.

What Makes Kraken Cool?

Kraken has become known for its commitment to transparency and security. The company operates on a fully reserved system, which means that it holds 100% of its clients’ cryptocurrency assets in cold storage, offline and secure from cyber threats. Kraken also regularly publishes security audits and maintains a bug bounty program to encourage responsible disclosure of any security vulnerabilities.

Kraken’s platform is also designed with advanced traders in mind, offering various trading pairs, margin trading, and futures trading. The platform also integrates with various third-party tools and services to provide users with a comprehensive trading experience.

In May 2022, Kraken announced the future launch of an NFT marketplace, which will allow users to buy and sell non-fungible tokens on its platform. This move marks Kraken’s entry into the fast-growing NFT market, which has seen explosive growth in recent years.

Financials and Valuation

Kraken has raised a total of $137M from 28 investors, including Digital Currency Group (invested in Coinbase, Luno, Curv), Blockchain Capital (invested in Coinbase, Bitnet) and others.

The company is often compared to Coinbase, which debuted via direct listing on the Nasdaq stock exchange in April 2021. An initial market cap on the IPO comprised $85.8B and exceeded $100B after the listing. The IPO price per share was equal to $250 and on the first day of trading closed at $328.28. Its trading volume has amounted to $1580B in 2021. In comparison, the trading volume on Kraken in 2021 was $574B.

Future Outlook

Kraken’s CEO Jesse Powell said that the company is in talks with investors regarding a new funding round. Noting that Kraken has a strong balance sheet, Powell added that the company is not in a rush to raise capital. А new round of financing could value the company at $20B. In the interview to Bloomberg TV at the beginning of March 2021, Powell said he would reject a $10B valuation, and suggested the company could raise double that – which appears to confirm Kraken is seeking the higher valuation. In June 2021, Jesse Powell said that the firm is “doing all the prep work” to become a public company in 12 to 18 months.

Kraken’s growth has been nothing short of impressive. With a surge in new users and trading volume, Kraken has established itself as a major player in the crypto exchange space. The company’s expansion into the Middle East is a strategic move that could pay dividends, as the region has been identified as one of the fastest-growing crypto markets in the world. Additionally, the launch of an NFT marketplace could further cement Kraken’s position as a leading player in the crypto space.

Kraken’s financials and valuation are impressive, with a potential $20B valuation on the horizon. As the company continues to grow and expand into new markets, it will be interesting to see how Kraken competes with other major players in the crypto exchange space.