Coinbase will start trading bitcoin rival ethereum on its cryptocurrency exchange

Bitcoin has a new competitor that’s gaining steam.
Bitcoin has a new competitor that’s gaining steam.
Image: AP Photo/Rick Bowmer, File
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Ethereum is having a moment.

Coinbase, a bitcoin-only exchange, is planning to add support for ethereum, the company said today (May 19). Coinbase exchange users will be able to buy and sell ether, the virtual currency unit behind ethereum starting Tuesday, May 24. Ether is currently trading at about $14 USD (bitcoin is trading at around $448 USD). Sources say Coinbase had been considering adding ethereum for some time. Earlier today, a screenshot of a support page for ether was published by a cryptocurrency trader on Twitter, then appeared on social media site Reddit.

Ethereum is a digital currency similar to bitcoin. Such currencies, based on software, allow people to transact anonymously and freely without a middleman involved.

Created by 22-year-old software developer Vitalik Buterin, ethereum has a particular property that’s excited companies: smart contracts. Smart contracts are essentially agreements between two parties that can execute automatically, without human involvement. Unlike bitcoin, ethereum natively supports smart contracts. Proponents say smart contracts can cut costs and reduce human error. They have gained support from JPMorgan ChaseBarclays, and even the state of Delaware.

IBM has explored using Ethereum to help Internet of Things devices interact with each other. Microsoft added support for ethereum to Azure, its cloud computing platform for developers.  Marley Gray, director of business development for blockchain at Microsoft, said that the tech giant has added over 40 different partners for Azure platform, 40% of which are based on Ethereum. Earlier this month, the New York Department of Financial Services approved Gemini, a virtual currency exchange founded by the Winklevoss brothers, to start trading ether.

Coinbase hasn’t yet gotten regulatory approval in general in New York, so Coinbase users in New York won’t be able to trade ethereum. The company expects to make ethereum and new products available to New York users once its bitlicense is approved. New York State residents can use the Coinbase exchange and the virtual currency wallet.

Coinbase’s support is a vote of confidence for ethereum. The startup has raised $106 million in four funding rounds from investors such as Andressen Horowitz, BBVA Ventures, and the New York Stock Exchange. Adding ethereum will not only help the virtual currency, but could generate more trading on Coinbase’s exchange.