5 ms·

More like 7%, and yes, YC will typically "sit" and not do anything. In fact, given that Coinbase has raised recently, YC's share is probably higher than 7% thro

More like 7%, and yes, YC will typically "sit" and not do anything. In fact, given that Coinbase has raised recently, YC's share is probably higher than 7% through the YC Continuity fund. Who knows what will happen once an IPO happens, but no YC company has reached that point yet. We'll find out soon with Dropbox.

kristianp 9y ago
What do you mean 'who knows what will happen'? YC will have a big payday.
- dmitrygr 9y ago
  you forgot "if and only if the public finds this valuation believable"
  - make3 9y ago
    included in this is, if bitcoin doesn't fall to zero (as people wouldn't use coinbase if bitcoin was worthless). in a way I guess, it's kind of like owning some bitcoins, because if bitcoin tanks, coinbase will be worthless
- ActsJuvenile 9y ago
  I wouldn't bet on it. Coinbase valuation will drop drastically when Tether bubble pops and bear market sets in.
  - SwellJoe 9y ago
    One can be short-term bearish, long-term bullish, on cryptocurrency. I am. Tether is a disaster looming on the horizon for every cryptocurrency investor and business, but it, too, will pass. Mt. Gox was very bad for crypto for a while...and, then it didn't matter anymore. If I were a betting man, I'd wager we'll see Tether play out similarly: Big spike in price (which we've already seen), massive drop to something reasonable based on actual demand and participation by real people with real money (currently ongoing, though surprisingly drawn out...the Tether trick seems to be working better than I would have believed, if it were pitched as a film plot), and then long slow climb back to a new all-time high (two years, perhaps). Then again, at some point, something that works better is going to replace Bitcoin. Maybe the terrifying Tether crash will be the straw that breaks BTCs back. But, Coinbase/GDAX will be well-placed to profit from whatever that next thing is, as long as they're vigilant for new opportunities and careful as hell about security. Coinbase can only lose by making mistakes at this point. They profit whether BTC is going up or down, as they take (very high) fees regardless.
    - AlexCoventry 9y ago
      What's the most worrying news you've heard of, regarding Tether? It seems sketchy as hell, but I haven't seen anything which would cause me to call it a looming systemic disaster, yet.
      - tehlike 9y ago
        2+ billion dollar in imaginary money, with more coming every week, with no real audit? I don't know, with wash trading and bots, it could be accounting for > 80-90% of current marketcap.
        tzakrajs 9y ago
        The market cap of tokens can be deceiving. But is it inherently broken to suggest that there is fiat to backup each USDT?
        tehlike 9y ago
        It is inherently broken to claim that there is usd for eqch usdt when there isnt.
      - SwellJoe 9y ago
        There's an incredible amount of smoke for a situation where there is no fire. They have no banks, as far as anyone can tell. Every bank that they publicly had a relationship with has cut ties months ago. They haven't accepted new accounts from individuals since then, but the USDT market cap has exploded since then; they've been printing $100 million every day or so for the past few days even as BTC has been dropping. If the money is coming from anywhere, it would have to be institutional investors...so, what institutional investor sends $100 million a day to a sketchy as heck looking little company with no audits, no accountants, no banks, and to buy an instrument that, according to the terms of service, cannot be redeemed for dollars. That really doesn't add up. For me to believe $100 million a day is pouring into Tethers while BTC is overall either stagnating or on a downward trend (much more than when it was doing well and on its way to an ATH of 19+k), I'd need to see some evidence. They've promised audits, right on the front page of the website, for years...never delivered one. I'd believe they're laundering money on this scale (which is mostly bad for them, when they get caught, though the market will be hit hard when their wash trades stop). And, I'd believe they're printing money on a fractional reserve model. This one would be even worse for the BTC market, because Tether has been buying roughly half of miner output for months now...that would mean half of the upward pressure has potentially been fictitious. How can that not be disastrous? But, I simply can't believe they have 1:1 backing for over $2 billion. It just looks completely outlandish, given all the shady stuff surrounding the company and its founders. Extraordinary claims require extraordinary evidence, and so far, they've failed to provide any evidence, much less extraordinary evidence. Someone sitting on a $2+ billion dollar fund that's growing $100 million every day can afford to hire a reputable accounting firm to look at the books and talk to the institutions holding the money.
  - throwaway1748 9y ago
    Why would it drop below 1.6B? Coinbase makes money in both bull and bear markets via fees. If they booked 1B+ in fees last year their cash on hand alone should justify their current valuation, if not conservatively justify a higher one
- HorizonXP 9y ago
  "Who knows what will happen" = Only YC knows whether or not they'll sell their shares post-IPO.
spullara 9y ago
They have almost certainly been diluted. They don't do their pro-rata generally on each funding round and my bet is that the YC Continuity Fund was only allowed to do their pro-rata. When the Dropbox S-1 drops we will see what kind of ownership they end up with over time.

kristianp 9y ago

What do you mean 'who knows what will happen'? YC will have a big payday.

dmitrygr 9y ago
you forgot "if and only if the public finds this valuation believable"
- make3 9y ago
  included in this is, if bitcoin doesn't fall to zero (as people wouldn't use coinbase if bitcoin was worthless). in a way I guess, it's kind of like owning some bitcoins, because if bitcoin tanks, coinbase will be worthless
ActsJuvenile 9y ago
I wouldn't bet on it. Coinbase valuation will drop drastically when Tether bubble pops and bear market sets in.
- SwellJoe 9y ago
  One can be short-term bearish, long-term bullish, on cryptocurrency. I am. Tether is a disaster looming on the horizon for every cryptocurrency investor and business, but it, too, will pass. Mt. Gox was very bad for crypto for a while...and, then it didn't matter anymore. If I were a betting man, I'd wager we'll see Tether play out similarly: Big spike in price (which we've already seen), massive drop to something reasonable based on actual demand and participation by real people with real money (currently ongoing, though surprisingly drawn out...the Tether trick seems to be working better than I would have believed, if it were pitched as a film plot), and then long slow climb back to a new all-time high (two years, perhaps). Then again, at some point, something that works better is going to replace Bitcoin. Maybe the terrifying Tether crash will be the straw that breaks BTCs back. But, Coinbase/GDAX will be well-placed to profit from whatever that next thing is, as long as they're vigilant for new opportunities and careful as hell about security. Coinbase can only lose by making mistakes at this point. They profit whether BTC is going up or down, as they take (very high) fees regardless.
  - AlexCoventry 9y ago
    What's the most worrying news you've heard of, regarding Tether? It seems sketchy as hell, but I haven't seen anything which would cause me to call it a looming systemic disaster, yet.
    - tehlike 9y ago
      2+ billion dollar in imaginary money, with more coming every week, with no real audit? I don't know, with wash trading and bots, it could be accounting for > 80-90% of current marketcap.
      - tzakrajs 9y ago
        The market cap of tokens can be deceiving. But is it inherently broken to suggest that there is fiat to backup each USDT?
        tehlike 9y ago
        It is inherently broken to claim that there is usd for eqch usdt when there isnt.
    - SwellJoe 9y ago
      There's an incredible amount of smoke for a situation where there is no fire. They have no banks, as far as anyone can tell. Every bank that they publicly had a relationship with has cut ties months ago. They haven't accepted new accounts from individuals since then, but the USDT market cap has exploded since then; they've been printing $100 million every day or so for the past few days even as BTC has been dropping. If the money is coming from anywhere, it would have to be institutional investors...so, what institutional investor sends $100 million a day to a sketchy as heck looking little company with no audits, no accountants, no banks, and to buy an instrument that, according to the terms of service, cannot be redeemed for dollars. That really doesn't add up. For me to believe $100 million a day is pouring into Tethers while BTC is overall either stagnating or on a downward trend (much more than when it was doing well and on its way to an ATH of 19+k), I'd need to see some evidence. They've promised audits, right on the front page of the website, for years...never delivered one. I'd believe they're laundering money on this scale (which is mostly bad for them, when they get caught, though the market will be hit hard when their wash trades stop). And, I'd believe they're printing money on a fractional reserve model. This one would be even worse for the BTC market, because Tether has been buying roughly half of miner output for months now...that would mean half of the upward pressure has potentially been fictitious. How can that not be disastrous? But, I simply can't believe they have 1:1 backing for over $2 billion. It just looks completely outlandish, given all the shady stuff surrounding the company and its founders. Extraordinary claims require extraordinary evidence, and so far, they've failed to provide any evidence, much less extraordinary evidence. Someone sitting on a $2+ billion dollar fund that's growing $100 million every day can afford to hire a reputable accounting firm to look at the books and talk to the institutions holding the money.
- throwaway1748 9y ago
  Why would it drop below 1.6B? Coinbase makes money in both bull and bear markets via fees. If they booked 1B+ in fees last year their cash on hand alone should justify their current valuation, if not conservatively justify a higher one
HorizonXP 9y ago
"Who knows what will happen" = Only YC knows whether or not they'll sell their shares post-IPO.

spullara 9y ago

They have almost certainly been diluted. They don't do their pro-rata generally on each funding round and my bet is that the YC Continuity Fund was only allowed to do their pro-rata. When the Dropbox S-1 drops we will see what kind of ownership they end up with over time.