21 ms·

Coinbase’s listing may break records

101 points by axiomdata316 6y ago

rawtxapp 6y ago
I believe this is going to be a big milestone in raising awareness of cryptocurrencies and making them more mainstream. I would expect a lot of the "but the gov will ban it" arguments to be significantly weaker as crypto exposure of traditional investors keeps getting larger and larger. That said, one thing that boggles my mind is the fact that it seems to be currently valued at 100B$ which is roughly the market cap of Goldman Sachs.
- the_local_host 6y ago
  > I would expect a lot of the "but the gov will ban it" arguments to be significantly weaker... Cryptocurrency supporters should be lobbying for government bans, not against them. The most direct way to demonstrate that cryptocurrencies are truly decentralized and resilient to censorship is to subject them to unrelenting attack, most naturally in the form of legal crackdowns.
  - londons_explore 6y ago
    The protocols and tech might be resistant to government crackdowns, but the user's being sent to prison for "illegal use of cryptocurrency" would certainly hamper use...
  - spottybanana 6y ago
    Not agreeing, but it is interesting viewpoint. Personally I have been involved a lot in the crypto space, and seen lots of bank account freezes and similar problems happening to crypto traders. Maybe sometimes there is something nefarious going on, maybe it was false positive, who knows. However, personally seeing this has affected me in a way where I don't really trust banks much. That has put me in a position where I have increasingly large position in cryptocurrencies.
  - deleted 6y ago
    [deleted]
  - beaner 6y ago
    That's dumb. The purpose of decentralization isn't to simply demonstrate the strength of the decentralization. It's an element that helps something achieve a purpose. In this case, the ability of a person to be their own bank. Not being banned also helps that purpose. Why would cryptocurrency supporters lobby for government bans?
  - paxys 6y ago
    There are cryptocurrency supporters who want to revolutionize the world's monetary systems, get governments out of currency manipulation, make international transfers easy and free, remove burden of entry for businesses, remove oppressive payment processors etc. Then there are cryptocurrency supporters who are holding large amounts of it and just want the value to keep going up. The latter category definitely does not want a government ban on trading/usage.
  - agumonkey 6y ago
    Isn't that typical of new 'things' ? Defining themselves against the norm only to reach for acceptance as proof of stability ?
  - TedDoesntTalk 6y ago
    > Cryptocurrency supporters should be lobbying for government bans, not against them. Just like a banned dr. Suess book, this would further inflate prices
    - paholg 6y ago
      No Dr. Seuss books are banned. The publisher decided to stop publishing a few of them.
      - simiones 6y ago
        There's more to it than that - eBay for example has banned trade in those books as well (Amazon too, and probably others), on the second hand market. Not sure if they reversed this absolutely crazy decision in the meantime, would be happy to hear that they did.
        TedDoesntTalk 6y ago
        They did not reverse it. And I can’t buy those books at Barnes & Noble, either. Even at their physical stores.
        knowaveragejoe 6y ago
        Oh no! Anyways.
  - bouncycastle 6y ago
    Obviously sarcasm, but there's a little bit of truth behind this. The real value of cryptocurrency is if the governments ban it. (They are more of a nightmare for totalitarian regimes, rather than free open societies.)
  - rtpg 6y ago
    Except there's a gov't ban and now you can't actually get dollars into your brokerage account to buy crypto (and neither can anyone else), and then the price starts dropping. There's only so much effort someone will go through until they'll just put the money in Robinhood or something and buy some random meme stock.
  - JumpCrisscross 6y ago
    > cryptocurrencies are truly decentralized and resilient to censorship If a major government wanted to break crypto, it would simply credibly threaten to launch a 51% attack. This is within the budget of most developed economies, and much simpler than enforcing a ban. Nobody does it because it would be stupid. Crypto is part of the economy. Destroying it would be akin to bombing a domestic factory because one doesn’t like its products.
    - throw4738 6y ago
      51% attack would be very expensive on electricity and new infrastructure. There is already working and profitable infrastructure to prevent money laundering.
    - mateuszf 6y ago
      > If a major government wanted to break crypto, it would simply credibly threaten to launch a 51% attack. Do you know how hard it's now to buy/produce graphic cards and asic-s good for mining crypto? The demand is very big yet producers can't scale up. I don't see governments to have possibility obtaining so much hardware in a short/medium time horizon.
      - simiones 6y ago
        Why do you think the government would have to produce new ASICs, when they could just buy or seize the existing ones?
        WanderPanda 6y ago
        That would take out the "most developed countries" part...
        mateuszf 6y ago
        > Why do you think the government would have to produce new ASICs, when they could just buy or seize the existing ones? There is not enough of them to buy on the market to make 51% attack. Of course seizing is possible but hard because I imagine it would be quite hard to locate them, apart form large mining operations they are quite distributed. In case of bitcoin network it would have to be a large multicountry operation. Because the miners are really distributed around the world.
  - throw4738 6y ago
    But most cryptos are not truly decentralised and robust enough. There is centralised dev team. And no crypto can truly handle brainsplit network issues.
- randomsearch 6y ago
  I think it increases the chance not of legitimisation but of a govt bailout when either (a) Bitcoin threatens to melt the planet or (b) bitcoin’s value collapses, because there isn’t a (c) I can see.
  - rocqua 6y ago
    Why can't bitcoins price "stabilize" by fluctuating inside the 1000 to 200000 range?
    - jcpham2 6y ago
      a) it totally can b) proof work uses as much electricity as proof of work needs, the internet cry-for-help crowd likes to recite made up numbers
      - ac29 6y ago
        > b) proof work uses as much electricity as proof of work needs No, proof as work uses as much electricity as is profitable. The entire Bitcoin network could trivially be run on a single PC.
    - pta2002 6y ago
      I'd say 20000% fluctuations are hardly stable, no?
- logicchains 6y ago
  >That said, one thing that boggles my mind is the fact that it seems to be currently valued at 100B$ which is roughly the market cap of Goldman Sachs It makes more sense when you consider the insane fees they get away with charging due to lack of competition in the regulated US crypto space. In a mature exchange in the normal financial markets, one might expect to pay under 0.5bps (one bp is 1% of 1%). In overseas crypto exchanges, the fee will be around 5bps. In Coinbase, it's 20-50bps.
  - riffraff 6y ago
    but the business volume is _much_ lower, and GS deals with an inordinate amount of more lucrative things (SPACs, IPOs, etc).
  - I_am_tiberius 6y ago
    > lack of competition in the regulated US crypto space That's what I thought as well. People complain about monopolies but these over regulated spaces make it so difficult for startups to get going. It shouldn't be necessary for a non tangible asset company to need an angel investor that pays for tons of bureaucracy and license acquisition.
    - Guthur 6y ago
      I feel we collectively misinterpret what the problem with single trader situations are. There being a monopoly is not the problem, the problems are always anti trust behaviour i.e. not co-operating with the market for improvement, closing of competition by some behaviour that is not beneficial to the market. Highly regulated markets tend to do this due the difficulty in disrupting such a market, you need to play by the existing rules and that leaves little room for manoeuvre against the incumbents, the incumbents are free from anti trust because the rules are set by the authorities, often at the behest of the incumbents of course.
  - TacticalCoder 6y ago
    > It makes more sense when you consider the insane fees they get away with charging due to lack of competition in the regulated US crypto space. The fees, as you explain it, do indeed seem like highway robbery. But there's something very specific about Coinbase in the US: all customers funds from american fiscal residents in USD are FDIC insured (so up to 250 K are safe). AFAICT they're the only one to actually offer this? It's also a real company, with a real address, whose owners are real people, etc. It's not exactly the "we're convicted criminals operating from the Cayman using some shady bank" type of crypto exchange.
- rvz 6y ago
  > I believe this is going to be a big milestone in raising awareness of cryptocurrencies and making them more mainstream. 'Mainstream' as in a stronger argument for cryptocurrency regulations. We are only going to see more retail investors throwing in riskier investments with leverage and will end up bag-holding in another bust cycle.
  - bryanwb 6y ago
    Big hedge funds never do risky things and leave us holding the bag</sarcasm>
    - rvz 6y ago
      Translation: Sure thing. I'm going to buy Coinbase stock with leverage on the day of its direct listing and hope that I will HODL it all the way to the moon. When it goes back down, it doesn't matter if I'm wiped out or a bag holder, I can still get a way with it via asking for a bailout just because a big hedge fund can do it. /s
- vineyardmike 6y ago
  What’s even crazier is that GS has 30k plus employees while CB has 1500. The value per employee difference is insane. Then consider that CB might find side revenue sources (HS has many sources of revenue for example) and think about what multiple of current value CB can grow to and how comparatively “easy” it is for CB to double compared to GS.
- jillesvangurp 6y ago
  At this point the reason governments are not cracking down as much as they could is increasingly not just that that would do quite a bit of damage among e.g. VCs and institutional investors (think pensions). People come out with pitch forks if you start messing with their pensions; so that is a big reason to maybe talk tough but let it happen at the same time. But there's also the FOMO factor. Governments are afraid of missing out and getting run over by e.g. the Chinese doing this regardless of what they allow or won't allow. In the US particularly, this is a direct threat to the relevance of the dollar as a means to conduct international trade. For the same reason China is moving pretty aggressively against certain crypto currencies while openly backing and endorsing others and e.g. the Chines national bank openly flirting with moving their currency on a block chain. That's why a lot of this stuff is happening under the watchful eye of the SEC with companies head quartered in San Francisco.
- ur-whale 6y ago
  > which is roughly the market cap of Goldman Sachs. Nothing prevented GS to enter the crypto space and offer a product similar to Coinbase's. Instead, this is what they were spending their time on: https://www.theguardian.com/business/2017/nov/30/bitcoin-is-a-vehicle-for-fraudsters-warns-goldman-sachs-boss https://www.theguardian.com/business/2017/nov/30/bitcoin-is-...
  - rchaud 6y ago
    Goldman Sachs is large enough and ubiquitous enough that it should be assumed that they are, to some extent, on both sides of every trade they recommend (or discourage). Just because Goldman is telling their pension fund clients to avoid crypto doesn't mean that they don't have teams trading billions of it daily.
- drexlspivey 6y ago
  They were valued at 100B$ before their earnings last week showing an annualized growth of 500% (1.8B revenue for q1 vs 1.1B for the whole 2020), I expect it to settle at a higher number tomorrow.
- endymi0n 6y ago
  That‘s not a feature, it‘s a bug. An unregulated, emerging industry that comes with a baggage of enormous energy use, fraud and money laundering is one thing. Letting it get to a level of „Too big to fail“ where regulation or an outright ban might have repercussions on whole economies is a whole another thing that I‘m not exactly looking forward to.
fergie 6y ago
non-paywalled version -> https://outline.com/naVB6H https://outline.com/naVB6H
- 867-5309 6y ago
  also the non-hug-of-death cache
- forgotmypw17 6y ago
  non-jswalled version: https://archive.is/LnKBC https://archive.is/LnKBC
- photon-torpedo 6y ago
  Adding a dot to the domain name also seems to get around the paywall.
SideburnsOfDoom 6y ago
All values given in USD I see. Well, someone is going to extract real money from this.
- ur-whale 6y ago
  My thoughts exactly. People keep using a measuring stick that shrinks every day. Measurement results are guaranteed to impress.
louwrentius 6y ago
I think this is awful. I think what we see is that investing has become very hard. So people are desperate for anything that may show growth. But I believe this is a kind of short-term bet against our future. Because we know the detrimental effects of cryptocurrencies. I think this is all very cynical. Undermining our climate, evading taxes, money laundering. Coin base doesn’t do these things I hope but by supporting cryptocurrencies, it does indirectly. I’m happy staying poor if that is better for the world long-term but that is probably very dumb of me.
- sprash 6y ago
  Don't blame "the people". The vast amount of money printing by central banks are the cause that holding onto cash and saving has become a high risk operation. The solution is going back to the gold standard. The economist is owned by the same people that own your central bank. If they write about the "detrimental effects" of crypto, crypto must be really good.
  - padraic7a 6y ago
    The Economist is owned by 'The Economist Group', which seems to be controlled by the Agnelli family a wealthy Italian business dynasty. What conspiracy do you subscribe to about Central Banks? https://en.wikipedia.org/wiki/The_Economist_Group https://en.wikipedia.org/wiki/The_Economist_Group
    - deleted 6y ago
      [deleted]
  - chii 6y ago
    > The solution is going back to the gold standard. and that situation was what happened in the 1929 great depression. And being on the gold standard, there wasn't any way to print, and took a world-war to break out of the depression.
    - gher-shyu3i 6y ago
devops000 6y ago
Coinbase could buyback Bitcoin to inflate their commissions and increase the retail rush
JacKTrocinskI 6y ago
Awesome, I hope they expand their crypto listing to include Dogecoin sometime in the near future.
apples_oranges 6y ago
I think I have figured crypto currencies out, I mean I have a theory. The old school people, bankers and what not, cannot wrap their heads around exponential growth. That's why valuations of tech companies are confusing to them. And they are using their old thinking to cope with what they consider a huge inflation risk. It's not real (imho) but that's what they see and they think Bitcoin maybe a safe haven. (The whole idea of Bitcoin has to do with slowing things down. The whole thing is a huge brake on what computers do. Whoa, slow down, calculate these n^x hashes first.) (Ok I'm just random internet guy with conspiracy theories I suppose..)
- runawaybottle 6y ago
  That’s true for a handful of companies. It’s not true for the broader industry where things trade at 30x earnings. Tech gets a pass to trade at those multiples. If any insurance or financial company add ‘tech’ at the end (fintech, insurancetech), they get this pass for some reason. If Hershey came up with candytech, it too would be allowed to trade like that. This is a serious bubble if we keep playing games like this. We know how ridiculous this can be from GameStop, where it has no business trading above $100, but somehow is doing it. Game tech.
- pjc50 6y ago
  If there's one thing the traditional banking industry can understand, it's compound interest. Which is exponential growth. What they have trouble with is exponential growth at very high rates, which nearly always implies very high risk.
  - SideburnsOfDoom 6y ago
    > What they have trouble with is exponential growth at very high rates, which nearly always implies very high risk. Correct, traditional banking "has trouble" with exponential growth at very high rates. Which means that actually, they do understand something fundamental about it.
muhammedbash 6y ago
This valuation is insane. $100 billion for a company that is doing approx $2 billion in annual revenues. I know that investors are pricing in future earnings potential - but this valuation seems like drinking too much Kool Aid to me. Competition will change Coinbase's future profitability. Coinbase cannot get away with charging such high commissions/fees for much longer. The entry barriers to setting up crypto exchanges aren't that high. There are plenty of opportunities for people to step with the single USP of lower fees/commissions than Coinbase.
- ur-whale 6y ago
  True, but it's not like tech. stocks valuation are in any way rational in the last year and a half, so why should CB be any different?
- Tenoke 6y ago
  There's already an exchange (Binance) with 9x the volume of Coinbase and a fraction of the fees, however, the USA has been quite hostile to them compared to CB, so it's not exactly easy to 'step up' at least there.
- throwyrboat 6y ago
  Institutional business is a more lucrative market than the consumer space, and nobody can service this space at the moment, despite demand. What the market is lacking is trustworthy operators who have execution technology and balance sheet. Coinbase have done better than other players at getting their trust brand right with consumers and regulators. A conventional public listing will further enhance that. Through the Tagomi acquisition, Coinbase picked up a team who know execution technology. Through the float, they will get balance sheet. There are strong network effects between these business units. For example, once you have your smart-order-router and algos for institutions, you can also offer it to consumers. By having your own liquidity pool and active market-makers, you can internalise flow that you would otherwise have dispatched to other venues, and save on execution costs. It may be a winner-takes-all market. I am not saying they will succeed, but the sky is the limit.
  - 6y ago
thendrill 6y ago
But wait... That is an entire company, valued for over 1bn usd. That can "potentialy" ( but yet not realistically, yet for now) be compeletley wiped out to 0 if someone managed to "guess" their cold wallet priv key.... Interesting...... Edit: my bad, binance has a single cold wallet (165k btc) , coinbase I think keeps their btc in 8k btc wallets each. Still that is 500k mil for each key guess
- anonporridge 6y ago
  You need to check out the math, https://bitcoin.stackexchange.com/a/12740 https://bitcoin.stackexchange.com/a/12740 This is simply not worth worrying about.
gigatexal 6y ago
I hope they float enough shares that each share isn't 1000 USD.
- gigatexal 6y ago
  lol @ the downvotes. I just want in and don't have a FAANG salary to buy shares. Sheesh.
  - skinnymuch 6y ago
    Why does the stock price matter? It’s all the same in the end. Stock splitting doesn’t change anything except perception.
    - gigatexal 6y ago
      Because eTrade doesn’t do partial shares. “Why does the stock price matter/it’s all the same in the end” is one of the more privileged things I’ve heard here. By that logic any of the following are statements to take without question: “why does the price of housing matter?” “Why does the price of food matter?” “Why does the price of tuition matter”
      - seattle_spring 6y ago
        Why can't you make a free account with the dozens of free stock brokers that allow fractional shares? As an aside, if you can't afford a single full share then it might not be wise to gamble your remaining few dollars on a crypto play.
        gigatexal 6y ago
        Prefer all my accounts to be in one place but it’s worth looking into for the fractional share purchasing alone. I wonder if I could transfer those shares if I wanted to.
      - skinnymuch 6y ago
patd 6y ago
With Binance starting to have Tesla stock tokens, it would be funny if they started doing the same for Coinbase shares.
ckastner 6y ago
You have to love the irony of the centralization effects we are seeing with cryptocurrencies that pride themselves on being decentralized and beyond regulatory control of individual nations. Coinbase's success not only reflects on the substantial amount of control that they exert. It also reflects on that of the U.S., which regulates Coinbase.
- seibelj 6y ago
  It’s also ironic that the internet has been re-centralized by a handful of tech giants. But the fact that massive centralization exists, does not mean that individuals cannot choose to use decentralized tools. Crypto enthusiasts can be maximally decentralized, if they choose.
  - ckastner 6y ago
    Indeed. I did not mean to claim that decentralization is categorically dead -- only practically, in the sense that the masses (the original supposed beneficiaries) probably won't benefit from it.
- Geee 6y ago
  Uh no. Coinbase is not and will not be a monopoly. It's impossible for them to get into a monopoly as long as government allows competition. There's hundreds of exchanges worldwide and there's very little moat in the business. If governments monopolized exchanges, it would still be possible to exchange from person to person.
  - ckastner 6y ago
    I didn't say anything about a monopoly though.
    - Geee 6y ago
      Centralization means single point of failure, which would happen in a monopoly situation. There's no single points of failure in Bitcoin. Private companies offering services on free markets don't diminish bitcoin's decentralization.
templain 6y ago
Just buy cryptocurrencies no need to buy $COIN. It's totally against the idea.
fergie 6y ago
Will people keep on using crypto when they are forced to use centralized, democratically unaccountable gatekeepers such as Coinbase? What happens if we give random, yet massively wealthy corporations unfettered power to print money? (yes, yes, we do this to some extent already with banks, but they are _fairly_ tightly regulated, at least in theory). Can we even _have_ currencies that dont have nation states backing them up? Cryptocurrencies are a great idea when they remain decentralized and relatively small- but what happens when they become centralized and powerful? Surely this can't go on forever?
- argvargc 6y ago
  Why do you say "will people keep using crypto when they are forced to use centralized..."? They are not forced to use centralized services to issue, custody or trade cryptocurrencies. They never have been since the space was born in 2009, and - accordant with the its fundamental structure and purpose - can't be. That's... kind of the whole point? Surely, if centralised exchanges were to turn out to be a net-negative place for users to store and exchange crypto, users on those platforms would simply pivot back to join the much larger userbase using decentralised and private alternatives from which they left? The main reasons they left were because in early development they were difficult to use, easy to make a mistake, and volumes were low. That's certainly not still the case after 11+ years of development. (And I wouldn't necessarily describe as "small", a market cap roughly matching that of Apple's stock.)
andy_ppp 6y ago
How do I buy Coinbase shares in Britain tomorrow?
singularity2001 6y ago
It may break records of the quickest IPO devaluation so far. What are some competitors from IPO to (near) bankruptcy in n months? preemptive edit: cool(aid) down, it MAY be a scenario
- rawtxapp 6y ago
  Are you implying they'll go bankrupt? Did you look at their financials at all? They blow any other "unicorn" out of the water on their IPO day (well technically direct listing).
  - thehappypm 6y ago
    The US government can very well ban, or start heavily taxing, or auditing, crypto. That's a huge risk.
  - singularity2001 6y ago
    Yes, when the tether house of card collapses, it might take down much of the infrastructure, including Coinbase. In any case, when the (current) crypto bubble burst, Coinbase valuation will take a deep dive.
nojito 6y ago
The future of crypto is pretty obvious when a company is set to do a raise for USD and not BTC. Especially when BTC is at record highs.
seattle_spring 6y ago
Wow their employees are going to be crazy rich. Weren't they granting stock at a $8b valuation only a month or two ago? At $100b even an L4 might walk away with $5m.
neonate 6y ago
https://archive.is/EfERH https://archive.is/EfERH

101 points by axiomdata316 6y ago

I believe this is going to be a big milestone in raising awareness of cryptocurrencies and making them more mainstream. I would expect a lot of the "but the gov will ban it" arguments to be significantly weaker as crypto exposure of traditional investors keeps getting larger and larger. That said, one thing that boggles my mind is the fact that it seems to be currently valued at 100B$ which is roughly the market cap of Goldman Sachs.

the_local_host 6y ago
> I would expect a lot of the "but the gov will ban it" arguments to be significantly weaker... Cryptocurrency supporters should be lobbying for government bans, not against them. The most direct way to demonstrate that cryptocurrencies are truly decentralized and resilient to censorship is to subject them to unrelenting attack, most naturally in the form of legal crackdowns.
- londons_explore 6y ago
  The protocols and tech might be resistant to government crackdowns, but the user's being sent to prison for "illegal use of cryptocurrency" would certainly hamper use...
- spottybanana 6y ago
  Not agreeing, but it is interesting viewpoint. Personally I have been involved a lot in the crypto space, and seen lots of bank account freezes and similar problems happening to crypto traders. Maybe sometimes there is something nefarious going on, maybe it was false positive, who knows. However, personally seeing this has affected me in a way where I don't really trust banks much. That has put me in a position where I have increasingly large position in cryptocurrencies.
- deleted 6y ago
  [deleted]
- beaner 6y ago
  That's dumb. The purpose of decentralization isn't to simply demonstrate the strength of the decentralization. It's an element that helps something achieve a purpose. In this case, the ability of a person to be their own bank. Not being banned also helps that purpose. Why would cryptocurrency supporters lobby for government bans?
- paxys 6y ago
  There are cryptocurrency supporters who want to revolutionize the world's monetary systems, get governments out of currency manipulation, make international transfers easy and free, remove burden of entry for businesses, remove oppressive payment processors etc. Then there are cryptocurrency supporters who are holding large amounts of it and just want the value to keep going up. The latter category definitely does not want a government ban on trading/usage.
- agumonkey 6y ago
  Isn't that typical of new 'things' ? Defining themselves against the norm only to reach for acceptance as proof of stability ?
- TedDoesntTalk 6y ago
  > Cryptocurrency supporters should be lobbying for government bans, not against them. Just like a banned dr. Suess book, this would further inflate prices
  - paholg 6y ago
    No Dr. Seuss books are banned. The publisher decided to stop publishing a few of them.
    - simiones 6y ago
      There's more to it than that - eBay for example has banned trade in those books as well (Amazon too, and probably others), on the second hand market. Not sure if they reversed this absolutely crazy decision in the meantime, would be happy to hear that they did.
      - TedDoesntTalk 6y ago
        They did not reverse it. And I can’t buy those books at Barnes & Noble, either. Even at their physical stores.
        knowaveragejoe 6y ago
        Oh no! Anyways.
- bouncycastle 6y ago
  Obviously sarcasm, but there's a little bit of truth behind this. The real value of cryptocurrency is if the governments ban it. (They are more of a nightmare for totalitarian regimes, rather than free open societies.)
- rtpg 6y ago
  Except there's a gov't ban and now you can't actually get dollars into your brokerage account to buy crypto (and neither can anyone else), and then the price starts dropping. There's only so much effort someone will go through until they'll just put the money in Robinhood or something and buy some random meme stock.
- JumpCrisscross 6y ago
  > cryptocurrencies are truly decentralized and resilient to censorship If a major government wanted to break crypto, it would simply credibly threaten to launch a 51% attack. This is within the budget of most developed economies, and much simpler than enforcing a ban. Nobody does it because it would be stupid. Crypto is part of the economy. Destroying it would be akin to bombing a domestic factory because one doesn’t like its products.
  - throw4738 6y ago
    51% attack would be very expensive on electricity and new infrastructure. There is already working and profitable infrastructure to prevent money laundering.
  - mateuszf 6y ago
    > If a major government wanted to break crypto, it would simply credibly threaten to launch a 51% attack. Do you know how hard it's now to buy/produce graphic cards and asic-s good for mining crypto? The demand is very big yet producers can't scale up. I don't see governments to have possibility obtaining so much hardware in a short/medium time horizon.
    - simiones 6y ago
      Why do you think the government would have to produce new ASICs, when they could just buy or seize the existing ones?
      - WanderPanda 6y ago
        That would take out the "most developed countries" part...
      - mateuszf 6y ago
        > Why do you think the government would have to produce new ASICs, when they could just buy or seize the existing ones? There is not enough of them to buy on the market to make 51% attack. Of course seizing is possible but hard because I imagine it would be quite hard to locate them, apart form large mining operations they are quite distributed. In case of bitcoin network it would have to be a large multicountry operation. Because the miners are really distributed around the world.
- throw4738 6y ago
  But most cryptos are not truly decentralised and robust enough. There is centralised dev team. And no crypto can truly handle brainsplit network issues.
randomsearch 6y ago
I think it increases the chance not of legitimisation but of a govt bailout when either (a) Bitcoin threatens to melt the planet or (b) bitcoin’s value collapses, because there isn’t a (c) I can see.
- rocqua 6y ago
  Why can't bitcoins price "stabilize" by fluctuating inside the 1000 to 200000 range?
  - jcpham2 6y ago
    a) it totally can b) proof work uses as much electricity as proof of work needs, the internet cry-for-help crowd likes to recite made up numbers
    - ac29 6y ago
      > b) proof work uses as much electricity as proof of work needs No, proof as work uses as much electricity as is profitable. The entire Bitcoin network could trivially be run on a single PC.
  - pta2002 6y ago
    I'd say 20000% fluctuations are hardly stable, no?
logicchains 6y ago
>That said, one thing that boggles my mind is the fact that it seems to be currently valued at 100B$ which is roughly the market cap of Goldman Sachs It makes more sense when you consider the insane fees they get away with charging due to lack of competition in the regulated US crypto space. In a mature exchange in the normal financial markets, one might expect to pay under 0.5bps (one bp is 1% of 1%). In overseas crypto exchanges, the fee will be around 5bps. In Coinbase, it's 20-50bps.
- riffraff 6y ago
  but the business volume is _much_ lower, and GS deals with an inordinate amount of more lucrative things (SPACs, IPOs, etc).
- I_am_tiberius 6y ago
  > lack of competition in the regulated US crypto space That's what I thought as well. People complain about monopolies but these over regulated spaces make it so difficult for startups to get going. It shouldn't be necessary for a non tangible asset company to need an angel investor that pays for tons of bureaucracy and license acquisition.
  - Guthur 6y ago
    I feel we collectively misinterpret what the problem with single trader situations are. There being a monopoly is not the problem, the problems are always anti trust behaviour i.e. not co-operating with the market for improvement, closing of competition by some behaviour that is not beneficial to the market. Highly regulated markets tend to do this due the difficulty in disrupting such a market, you need to play by the existing rules and that leaves little room for manoeuvre against the incumbents, the incumbents are free from anti trust because the rules are set by the authorities, often at the behest of the incumbents of course.
- TacticalCoder 6y ago
  > It makes more sense when you consider the insane fees they get away with charging due to lack of competition in the regulated US crypto space. The fees, as you explain it, do indeed seem like highway robbery. But there's something very specific about Coinbase in the US: all customers funds from american fiscal residents in USD are FDIC insured (so up to 250 K are safe). AFAICT they're the only one to actually offer this? It's also a real company, with a real address, whose owners are real people, etc. It's not exactly the "we're convicted criminals operating from the Cayman using some shady bank" type of crypto exchange.
rvz 6y ago
> I believe this is going to be a big milestone in raising awareness of cryptocurrencies and making them more mainstream. 'Mainstream' as in a stronger argument for cryptocurrency regulations. We are only going to see more retail investors throwing in riskier investments with leverage and will end up bag-holding in another bust cycle.
- bryanwb 6y ago
  Big hedge funds never do risky things and leave us holding the bag</sarcasm>
  - rvz 6y ago
    Translation: Sure thing. I'm going to buy Coinbase stock with leverage on the day of its direct listing and hope that I will HODL it all the way to the moon. When it goes back down, it doesn't matter if I'm wiped out or a bag holder, I can still get a way with it via asking for a bailout just because a big hedge fund can do it. /s
vineyardmike 6y ago
What’s even crazier is that GS has 30k plus employees while CB has 1500. The value per employee difference is insane. Then consider that CB might find side revenue sources (HS has many sources of revenue for example) and think about what multiple of current value CB can grow to and how comparatively “easy” it is for CB to double compared to GS.
jillesvangurp 6y ago
At this point the reason governments are not cracking down as much as they could is increasingly not just that that would do quite a bit of damage among e.g. VCs and institutional investors (think pensions). People come out with pitch forks if you start messing with their pensions; so that is a big reason to maybe talk tough but let it happen at the same time. But there's also the FOMO factor. Governments are afraid of missing out and getting run over by e.g. the Chinese doing this regardless of what they allow or won't allow. In the US particularly, this is a direct threat to the relevance of the dollar as a means to conduct international trade. For the same reason China is moving pretty aggressively against certain crypto currencies while openly backing and endorsing others and e.g. the Chines national bank openly flirting with moving their currency on a block chain. That's why a lot of this stuff is happening under the watchful eye of the SEC with companies head quartered in San Francisco.
ur-whale 6y ago
> which is roughly the market cap of Goldman Sachs. Nothing prevented GS to enter the crypto space and offer a product similar to Coinbase's. Instead, this is what they were spending their time on: https://www.theguardian.com/business/2017/nov/30/bitcoin-is-a-vehicle-for-fraudsters-warns-goldman-sachs-boss https://www.theguardian.com/business/2017/nov/30/bitcoin-is-...
- rchaud 6y ago
  Goldman Sachs is large enough and ubiquitous enough that it should be assumed that they are, to some extent, on both sides of every trade they recommend (or discourage). Just because Goldman is telling their pension fund clients to avoid crypto doesn't mean that they don't have teams trading billions of it daily.
drexlspivey 6y ago
They were valued at 100B$ before their earnings last week showing an annualized growth of 500% (1.8B revenue for q1 vs 1.1B for the whole 2020), I expect it to settle at a higher number tomorrow.
endymi0n 6y ago
That‘s not a feature, it‘s a bug. An unregulated, emerging industry that comes with a baggage of enormous energy use, fraud and money laundering is one thing. Letting it get to a level of „Too big to fail“ where regulation or an outright ban might have repercussions on whole economies is a whole another thing that I‘m not exactly looking forward to.

fergie 6y ago

non-paywalled version -> https://outline.com/naVB6H https://outline.com/naVB6H

867-5309 6y ago
also the non-hug-of-death cache
forgotmypw17 6y ago
non-jswalled version: https://archive.is/LnKBC https://archive.is/LnKBC
photon-torpedo 6y ago
Adding a dot to the domain name also seems to get around the paywall.

SideburnsOfDoom 6y ago

All values given in USD I see. Well, someone is going to extract real money from this.

ur-whale 6y ago
My thoughts exactly. People keep using a measuring stick that shrinks every day. Measurement results are guaranteed to impress.

louwrentius 6y ago

I think this is awful. I think what we see is that investing has become very hard. So people are desperate for anything that may show growth. But I believe this is a kind of short-term bet against our future. Because we know the detrimental effects of cryptocurrencies. I think this is all very cynical. Undermining our climate, evading taxes, money laundering. Coin base doesn’t do these things I hope but by supporting cryptocurrencies, it does indirectly. I’m happy staying poor if that is better for the world long-term but that is probably very dumb of me.

sprash 6y ago
Don't blame "the people". The vast amount of money printing by central banks are the cause that holding onto cash and saving has become a high risk operation. The solution is going back to the gold standard. The economist is owned by the same people that own your central bank. If they write about the "detrimental effects" of crypto, crypto must be really good.
- padraic7a 6y ago
  The Economist is owned by 'The Economist Group', which seems to be controlled by the Agnelli family a wealthy Italian business dynasty. What conspiracy do you subscribe to about Central Banks? https://en.wikipedia.org/wiki/The_Economist_Group https://en.wikipedia.org/wiki/The_Economist_Group
  - deleted 6y ago
    [deleted]
- chii 6y ago
  > The solution is going back to the gold standard. and that situation was what happened in the 1929 great depression. And being on the gold standard, there wasn't any way to print, and took a world-war to break out of the depression.
  - gher-shyu3i 6y ago

devops000 6y ago

Coinbase could buyback Bitcoin to inflate their commissions and increase the retail rush

JacKTrocinskI 6y ago

Awesome, I hope they expand their crypto listing to include Dogecoin sometime in the near future.

apples_oranges 6y ago

I think I have figured crypto currencies out, I mean I have a theory. The old school people, bankers and what not, cannot wrap their heads around exponential growth. That's why valuations of tech companies are confusing to them. And they are using their old thinking to cope with what they consider a huge inflation risk. It's not real (imho) but that's what they see and they think Bitcoin maybe a safe haven. (The whole idea of Bitcoin has to do with slowing things down. The whole thing is a huge brake on what computers do. Whoa, slow down, calculate these n^x hashes first.) (Ok I'm just random internet guy with conspiracy theories I suppose..)

runawaybottle 6y ago
That’s true for a handful of companies. It’s not true for the broader industry where things trade at 30x earnings. Tech gets a pass to trade at those multiples. If any insurance or financial company add ‘tech’ at the end (fintech, insurancetech), they get this pass for some reason. If Hershey came up with candytech, it too would be allowed to trade like that. This is a serious bubble if we keep playing games like this. We know how ridiculous this can be from GameStop, where it has no business trading above $100, but somehow is doing it. Game tech.
pjc50 6y ago
If there's one thing the traditional banking industry can understand, it's compound interest. Which is exponential growth. What they have trouble with is exponential growth at very high rates, which nearly always implies very high risk.
- SideburnsOfDoom 6y ago
  > What they have trouble with is exponential growth at very high rates, which nearly always implies very high risk. Correct, traditional banking "has trouble" with exponential growth at very high rates. Which means that actually, they do understand something fundamental about it.

muhammedbash 6y ago

This valuation is insane. $100 billion for a company that is doing approx $2 billion in annual revenues. I know that investors are pricing in future earnings potential - but this valuation seems like drinking too much Kool Aid to me. Competition will change Coinbase's future profitability. Coinbase cannot get away with charging such high commissions/fees for much longer. The entry barriers to setting up crypto exchanges aren't that high. There are plenty of opportunities for people to step with the single USP of lower fees/commissions than Coinbase.

ur-whale 6y ago
True, but it's not like tech. stocks valuation are in any way rational in the last year and a half, so why should CB be any different?
Tenoke 6y ago
There's already an exchange (Binance) with 9x the volume of Coinbase and a fraction of the fees, however, the USA has been quite hostile to them compared to CB, so it's not exactly easy to 'step up' at least there.
throwyrboat 6y ago
Institutional business is a more lucrative market than the consumer space, and nobody can service this space at the moment, despite demand. What the market is lacking is trustworthy operators who have execution technology and balance sheet. Coinbase have done better than other players at getting their trust brand right with consumers and regulators. A conventional public listing will further enhance that. Through the Tagomi acquisition, Coinbase picked up a team who know execution technology. Through the float, they will get balance sheet. There are strong network effects between these business units. For example, once you have your smart-order-router and algos for institutions, you can also offer it to consumers. By having your own liquidity pool and active market-makers, you can internalise flow that you would otherwise have dispatched to other venues, and save on execution costs. It may be a winner-takes-all market. I am not saying they will succeed, but the sky is the limit.
- 6y ago

thendrill 6y ago

But wait... That is an entire company, valued for over 1bn usd. That can "potentialy" ( but yet not realistically, yet for now) be compeletley wiped out to 0 if someone managed to "guess" their cold wallet priv key.... Interesting...... Edit: my bad, binance has a single cold wallet (165k btc) , coinbase I think keeps their btc in 8k btc wallets each. Still that is 500k mil for each key guess

anonporridge 6y ago
You need to check out the math, https://bitcoin.stackexchange.com/a/12740 https://bitcoin.stackexchange.com/a/12740 This is simply not worth worrying about.

gigatexal 6y ago

I hope they float enough shares that each share isn't 1000 USD.

gigatexal 6y ago
lol @ the downvotes. I just want in and don't have a FAANG salary to buy shares. Sheesh.
- skinnymuch 6y ago
  Why does the stock price matter? It’s all the same in the end. Stock splitting doesn’t change anything except perception.
  - gigatexal 6y ago
    Because eTrade doesn’t do partial shares. “Why does the stock price matter/it’s all the same in the end” is one of the more privileged things I’ve heard here. By that logic any of the following are statements to take without question: “why does the price of housing matter?” “Why does the price of food matter?” “Why does the price of tuition matter”
    - seattle_spring 6y ago
      Why can't you make a free account with the dozens of free stock brokers that allow fractional shares? As an aside, if you can't afford a single full share then it might not be wise to gamble your remaining few dollars on a crypto play.
      - gigatexal 6y ago
        Prefer all my accounts to be in one place but it’s worth looking into for the fractional share purchasing alone. I wonder if I could transfer those shares if I wanted to.
    - skinnymuch 6y ago

patd 6y ago

With Binance starting to have Tesla stock tokens, it would be funny if they started doing the same for Coinbase shares.

ckastner 6y ago

You have to love the irony of the centralization effects we are seeing with cryptocurrencies that pride themselves on being decentralized and beyond regulatory control of individual nations. Coinbase's success not only reflects on the substantial amount of control that they exert. It also reflects on that of the U.S., which regulates Coinbase.

seibelj 6y ago
It’s also ironic that the internet has been re-centralized by a handful of tech giants. But the fact that massive centralization exists, does not mean that individuals cannot choose to use decentralized tools. Crypto enthusiasts can be maximally decentralized, if they choose.
- ckastner 6y ago
  Indeed. I did not mean to claim that decentralization is categorically dead -- only practically, in the sense that the masses (the original supposed beneficiaries) probably won't benefit from it.
Geee 6y ago
Uh no. Coinbase is not and will not be a monopoly. It's impossible for them to get into a monopoly as long as government allows competition. There's hundreds of exchanges worldwide and there's very little moat in the business. If governments monopolized exchanges, it would still be possible to exchange from person to person.
- ckastner 6y ago
  I didn't say anything about a monopoly though.
  - Geee 6y ago
    Centralization means single point of failure, which would happen in a monopoly situation. There's no single points of failure in Bitcoin. Private companies offering services on free markets don't diminish bitcoin's decentralization.

templain 6y ago

Just buy cryptocurrencies no need to buy $COIN. It's totally against the idea.

fergie 6y ago

Will people keep on using crypto when they are forced to use centralized, democratically unaccountable gatekeepers such as Coinbase? What happens if we give random, yet massively wealthy corporations unfettered power to print money? (yes, yes, we do this to some extent already with banks, but they are _fairly_ tightly regulated, at least in theory). Can we even _have_ currencies that dont have nation states backing them up? Cryptocurrencies are a great idea when they remain decentralized and relatively small- but what happens when they become centralized and powerful? Surely this can't go on forever?

argvargc 6y ago
Why do you say "will people keep using crypto when they are forced to use centralized..."? They are not forced to use centralized services to issue, custody or trade cryptocurrencies. They never have been since the space was born in 2009, and - accordant with the its fundamental structure and purpose - can't be. That's... kind of the whole point? Surely, if centralised exchanges were to turn out to be a net-negative place for users to store and exchange crypto, users on those platforms would simply pivot back to join the much larger userbase using decentralised and private alternatives from which they left? The main reasons they left were because in early development they were difficult to use, easy to make a mistake, and volumes were low. That's certainly not still the case after 11+ years of development. (And I wouldn't necessarily describe as "small", a market cap roughly matching that of Apple's stock.)

andy_ppp 6y ago

How do I buy Coinbase shares in Britain tomorrow?

singularity2001 6y ago

It may break records of the quickest IPO devaluation so far. What are some competitors from IPO to (near) bankruptcy in n months? preemptive edit: cool(aid) down, it MAY be a scenario

rawtxapp 6y ago
Are you implying they'll go bankrupt? Did you look at their financials at all? They blow any other "unicorn" out of the water on their IPO day (well technically direct listing).
- thehappypm 6y ago
  The US government can very well ban, or start heavily taxing, or auditing, crypto. That's a huge risk.
- singularity2001 6y ago
  Yes, when the tether house of card collapses, it might take down much of the infrastructure, including Coinbase. In any case, when the (current) crypto bubble burst, Coinbase valuation will take a deep dive.

nojito 6y ago

The future of crypto is pretty obvious when a company is set to do a raise for USD and not BTC. Especially when BTC is at record highs.

seattle_spring 6y ago

Wow their employees are going to be crazy rich. Weren't they granting stock at a $8b valuation only a month or two ago? At $100b even an L4 might walk away with $5m.

neonate 6y ago

https://archive.is/EfERH https://archive.is/EfERH