6 ms·

Coinbase plans to add $500M worth of crypto to its balance sheet

41 points by jstx1 5y ago

runawaybottle 5y ago
Is it possible they are privy to legislation coming down (in whatever country) that would require them to have a certain amount of actual crypto collateral at all times to back some of their transactions? Is it possible that they would lobby for such legislation to stifle upstarts that won’t have this kind of purchasing power?
pavlov 5y ago
Exciting news: Vegas casino adds $500M of other casinos' chips to its balance sheet. Visa will soon be out of business.
- bluecalm 5y ago
  The analogy isn't good. Casino chips corresponds 1-1 to dollars. It's not like you have to pay more for them if there is fewer around. That being said companies benefiting from rising crypto currencies prices buying said currencies just to hold them (and therefore manipulating the price due to limited supply) should at least raise some eyebrows.
  - sokoloff 5y ago
    If you take the logical view that BTC et al today function more like assets than currencies, then an enormous number of actors in the equity markets are in the situation of buying an equity asset and benefiting if its price goes up (and often talking their own book as well).
  - Cthulhu_ 5y ago
    Arcade tickets then. What are they worth? Who knows, see what you can buy with them.
- deleted 5y ago
  [deleted]
- scrollaway 5y ago
  You're trying to make a point but think it'd be pretty noteworthy if a casino added half a billion in chips from other casinos.
- mgamache 5y ago
  Do most money managers want to buy casino chips? Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips? Get you buy chips on all major exchanges? Visa should be worried.
  - arcticbull 5y ago
    So this one time the entire economy of Albania imploded requiring a bail-out from the IMF because everyone got into a massive Ponzi scheme. [1] Interestingly enough, it happened at a period of serious political instability - switching over from communism to capitalism. This lack of confidence in social institutions caused people to seek refuge in snake oil salesmen. There's an awful lot of parallels in this story. Cryptocurrencies are really, super stupid currencies. They fly in the face of everything we know about modern economics. They're slow, they're expensive, they're deflationary. People don't spend deflationary things, and an economy is built on the idea of money changing hands. They're stupid assets because they're backed by nothing. They're not productive, and the biggest are negative-sum investment vehicles with value constantly skimmed off by miners. Crypto advocates are basically the anti-vaxxers of finance. If I've learned one thing from history and "Extraordinary Popular Delusions and the Madness of Crowds" it's not to underestimate this kind of insanity. So, with that in mind, let me address your question head on: > Do most money managers want to buy casino chips? I mean, most money managers in 2008 wanted people to buy mortgage-backed securities did they not? > Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips? 85% of all trading volume is ersatz counterfeit dollars. [2] It really is an open question just how big this market actually is. If it wasn't there would be a Bitcoin ETF. This is in fact the reason there isn't one. Instead you've got Michael Saylor's next hell-ride, brought to you by the gentleman who lost more money in one day than anyone to date in 2000 when it came to light he was cooking the company books. The MicroStrategy company books. He settled for $11M. [3] [1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht... [2] https://coinlib.io/coin/BTC/Bitcoin https://coinlib.io/coin/BTC/Bitcoin [3] https://www.nytimes.com/2000/12/15/business/microstrategy-chairman-accused-of-fraud-by-sec.html https://www.nytimes.com/2000/12/15/business/microstrategy-ch...
- ravenstine 5y ago
  Are USD and company shares really so different from poker chips? (Not to say you don't have an excellent point)
  - jstx1 5y ago
    Poker chips have 1:1 correspondence to dollars. So they're very different from shares and from cryptocurrencies.
    - deleted 5y ago
      [deleted]
    - JohnJamesRambo 5y ago
      Poker chips are like a stablecoin based on USD, an inflationary currency- a very poor investment indeed. I’d be quite worried if a business invested in USD, but they all try to. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
  - BrissyCoder 5y ago
    Poker chips don't have earnings or pay dividends.
- spyder 5y ago
  > Visa will soon be out of business. Visa is also buying the casino chips and spending it in the even more riskier casinos (NFTs): https://www.forbes.com/sites/ninabambysheva/2021/08/23/visa-enters-metaverse-with-first-nft-purchase/ https://www.forbes.com/sites/ninabambysheva/2021/08/23/visa-... "We think that NFTs are going to play a really important role in the future of retail and social media, entertainment and commerce,'' says Cuy Sheffield, head of crypto at Visa" Also: “We envision there could be a future where your crypto address becomes as important as your mailing address,” Sheffield says. “In the same way Visa’s been here through shifts of commerce before, we're really excited to help drive this new shift of commerce in the future.”
SuoDuanDao 5y ago
Can't help but feel like this is part of the same trend that saw Palantir buy a bunch of gold... not sure I see the pattern though.
- moondistance 5y ago
  Lack of confidence in national governance. Also, in this case, TINA (there is no alternative) and "talking your book" (to build interest).
  - cinquemb 5y ago
    Negative yielding sovereign trash with CB's as the marginal bid (or majority of the bid in some "markets") or at worst, the latest shit coins that your customers (institutions and individuals alike) are giving you fiat for and at best…
- Pungsnigel 5y ago
  I'm guessing it's simply that more and more people are fearing that the current inflation is not transitory.
nextstep 5y ago
I wonder if this loophole for institutional investors to buy crypto on the stock market will be enough to turn around Coinbase’s slipping share price.
- mgamache 5y ago
  Maybe, but MicroStrategy is probably a more pure play of that.
shp0ngle 5y ago
The price can go up forever!
Ekaros 5y ago
I wonder if they have too much crypto laying around and they fear that converting it to fiat would affect the markets... In which case this might make more sense...
- nly 5y ago
  Coinbase being an exchange take a % of whatever volume is exchanged. The unit price doesn't matter beyond driving speculative volume. If CB were buying crypto assets to driv speculative volum I think they'd be breaking a lot of regulations?
prestigious 5y ago
Shocking to see how out of touch hacker news is with crypto. I guess not much has changed since coinbase was launched on HN and faced a bunch of naysayers then also.
- thiscatis 5y ago
  Exactly. I think the average person would rather have the nay of hacker news but the yay of Wall Street.
  - deleted 5y ago
    [deleted]
  - notafraudster 5y ago
    I mean, Long Island Iced Tea -> Long Blockchain Company got the "yay" [sic] of Wall Street but the "nay" of "people who recognized that an Iced Tea company claiming they could magically reinvent their business around blockchain with no specifics as to how"; and subsequently it turns out that, actually, there was no business plan and it was an insider trading pump and dump move. I'm sure before the insider trading charges that the executives of the company were absolutely happy to have market approval and leases on yachts, as anyone would be. I should say, I think Coinbase is relatively well situated to capitalize on crypto, and it's a real business. I also think it's pretty well situated to shrink and deleverage if there's a decline in the crypto market. I don't think they're a scam. I just mean that using market approval as evidence that the market is real, not a scam, not a trend, or does something useful is foolish. The point-in-time correlation of market success and fundamental success is nearly 0, even if the long-term correlation is very high. Recently see also: NFT mania. Surely you'd rather be the artist that gets paid $50 million for selling some bits even as the process is widely derided, since you the artist aren't the bag-holder later on when it turns out the bits aren't worth $50 million.
  - orwin 5y ago
    I know a dev (used to work from Leeds UK, i don't know where he is actually) who created a crypto with 2 friends for someone who had the "yay" of Wall street. Long story short, he collected 200k for a 3-month job as actual payment, and another 600k when he sold his shitcoins (that's what he shared in our alumni group at least), i think the shitcoin creator escaped with 3M and a lot of people actually lost money. I thought it was funny and an actual tax on stupidity, but now i understand that it was targeted at poor and/or young people who did not really had to money to loose in these schemes.
throwaway4good 5y ago
Given that Coinbase has a market cap of about 70B, it is not that much.
- jtbayly 5y ago
  There market cap has little to do with how much cash they have sitting around. How much of their free money are they converting?
devops000 5y ago
Less supply, higher price, higher buyer commission in real USD.
deleted 5y ago
[deleted]

41 points by jstx1 5y ago

Is it possible they are privy to legislation coming down (in whatever country) that would require them to have a certain amount of actual crypto collateral at all times to back some of their transactions? Is it possible that they would lobby for such legislation to stifle upstarts that won’t have this kind of purchasing power?

pavlov 5y ago

Exciting news: Vegas casino adds $500M of other casinos' chips to its balance sheet. Visa will soon be out of business.

bluecalm 5y ago
The analogy isn't good. Casino chips corresponds 1-1 to dollars. It's not like you have to pay more for them if there is fewer around. That being said companies benefiting from rising crypto currencies prices buying said currencies just to hold them (and therefore manipulating the price due to limited supply) should at least raise some eyebrows.
- sokoloff 5y ago
  If you take the logical view that BTC et al today function more like assets than currencies, then an enormous number of actors in the equity markets are in the situation of buying an equity asset and benefiting if its price goes up (and often talking their own book as well).
- Cthulhu_ 5y ago
  Arcade tickets then. What are they worth? Who knows, see what you can buy with them.
deleted 5y ago
[deleted]
scrollaway 5y ago
You're trying to make a point but think it'd be pretty noteworthy if a casino added half a billion in chips from other casinos.
mgamache 5y ago
Do most money managers want to buy casino chips? Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips? Get you buy chips on all major exchanges? Visa should be worried.
- arcticbull 5y ago
  So this one time the entire economy of Albania imploded requiring a bail-out from the IMF because everyone got into a massive Ponzi scheme. [1] Interestingly enough, it happened at a period of serious political instability - switching over from communism to capitalism. This lack of confidence in social institutions caused people to seek refuge in snake oil salesmen. There's an awful lot of parallels in this story. Cryptocurrencies are really, super stupid currencies. They fly in the face of everything we know about modern economics. They're slow, they're expensive, they're deflationary. People don't spend deflationary things, and an economy is built on the idea of money changing hands. They're stupid assets because they're backed by nothing. They're not productive, and the biggest are negative-sum investment vehicles with value constantly skimmed off by miners. Crypto advocates are basically the anti-vaxxers of finance. If I've learned one thing from history and "Extraordinary Popular Delusions and the Madness of Crowds" it's not to underestimate this kind of insanity. So, with that in mind, let me address your question head on: > Do most money managers want to buy casino chips? I mean, most money managers in 2008 wanted people to buy mortgage-backed securities did they not? > Is the market in chips large enough to cause the government to copy the chip market and tax the exchange of chips? 85% of all trading volume is ersatz counterfeit dollars. [2] It really is an open question just how big this market actually is. If it wasn't there would be a Bitcoin ETF. This is in fact the reason there isn't one. Instead you've got Michael Saylor's next hell-ride, brought to you by the gentleman who lost more money in one day than anyone to date in 2000 when it came to light he was cooking the company books. The MicroStrategy company books. He settled for $11M. [3] [1] https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm https://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.ht... [2] https://coinlib.io/coin/BTC/Bitcoin https://coinlib.io/coin/BTC/Bitcoin [3] https://www.nytimes.com/2000/12/15/business/microstrategy-chairman-accused-of-fraud-by-sec.html https://www.nytimes.com/2000/12/15/business/microstrategy-ch...
ravenstine 5y ago
Are USD and company shares really so different from poker chips? (Not to say you don't have an excellent point)
- jstx1 5y ago
  Poker chips have 1:1 correspondence to dollars. So they're very different from shares and from cryptocurrencies.
  - deleted 5y ago
    [deleted]
  - JohnJamesRambo 5y ago
    Poker chips are like a stablecoin based on USD, an inflationary currency- a very poor investment indeed. I’d be quite worried if a business invested in USD, but they all try to. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- BrissyCoder 5y ago
  Poker chips don't have earnings or pay dividends.
spyder 5y ago
> Visa will soon be out of business. Visa is also buying the casino chips and spending it in the even more riskier casinos (NFTs): https://www.forbes.com/sites/ninabambysheva/2021/08/23/visa-enters-metaverse-with-first-nft-purchase/ https://www.forbes.com/sites/ninabambysheva/2021/08/23/visa-... "We think that NFTs are going to play a really important role in the future of retail and social media, entertainment and commerce,'' says Cuy Sheffield, head of crypto at Visa" Also: “We envision there could be a future where your crypto address becomes as important as your mailing address,” Sheffield says. “In the same way Visa’s been here through shifts of commerce before, we're really excited to help drive this new shift of commerce in the future.”

SuoDuanDao 5y ago

Can't help but feel like this is part of the same trend that saw Palantir buy a bunch of gold... not sure I see the pattern though.

moondistance 5y ago
Lack of confidence in national governance. Also, in this case, TINA (there is no alternative) and "talking your book" (to build interest).
- cinquemb 5y ago
  Negative yielding sovereign trash with CB's as the marginal bid (or majority of the bid in some "markets") or at worst, the latest shit coins that your customers (institutions and individuals alike) are giving you fiat for and at best…
Pungsnigel 5y ago
I'm guessing it's simply that more and more people are fearing that the current inflation is not transitory.

nextstep 5y ago

I wonder if this loophole for institutional investors to buy crypto on the stock market will be enough to turn around Coinbase’s slipping share price.

mgamache 5y ago
Maybe, but MicroStrategy is probably a more pure play of that.

shp0ngle 5y ago

The price can go up forever!

Ekaros 5y ago

I wonder if they have too much crypto laying around and they fear that converting it to fiat would affect the markets... In which case this might make more sense...

nly 5y ago
Coinbase being an exchange take a % of whatever volume is exchanged. The unit price doesn't matter beyond driving speculative volume. If CB were buying crypto assets to driv speculative volum I think they'd be breaking a lot of regulations?

prestigious 5y ago

Shocking to see how out of touch hacker news is with crypto. I guess not much has changed since coinbase was launched on HN and faced a bunch of naysayers then also.

thiscatis 5y ago
Exactly. I think the average person would rather have the nay of hacker news but the yay of Wall Street.
- deleted 5y ago
  [deleted]
- notafraudster 5y ago
  I mean, Long Island Iced Tea -> Long Blockchain Company got the "yay" [sic] of Wall Street but the "nay" of "people who recognized that an Iced Tea company claiming they could magically reinvent their business around blockchain with no specifics as to how"; and subsequently it turns out that, actually, there was no business plan and it was an insider trading pump and dump move. I'm sure before the insider trading charges that the executives of the company were absolutely happy to have market approval and leases on yachts, as anyone would be. I should say, I think Coinbase is relatively well situated to capitalize on crypto, and it's a real business. I also think it's pretty well situated to shrink and deleverage if there's a decline in the crypto market. I don't think they're a scam. I just mean that using market approval as evidence that the market is real, not a scam, not a trend, or does something useful is foolish. The point-in-time correlation of market success and fundamental success is nearly 0, even if the long-term correlation is very high. Recently see also: NFT mania. Surely you'd rather be the artist that gets paid $50 million for selling some bits even as the process is widely derided, since you the artist aren't the bag-holder later on when it turns out the bits aren't worth $50 million.
- orwin 5y ago
  I know a dev (used to work from Leeds UK, i don't know where he is actually) who created a crypto with 2 friends for someone who had the "yay" of Wall street. Long story short, he collected 200k for a 3-month job as actual payment, and another 600k when he sold his shitcoins (that's what he shared in our alumni group at least), i think the shitcoin creator escaped with 3M and a lot of people actually lost money. I thought it was funny and an actual tax on stupidity, but now i understand that it was targeted at poor and/or young people who did not really had to money to loose in these schemes.

throwaway4good 5y ago

Given that Coinbase has a market cap of about 70B, it is not that much.

jtbayly 5y ago
There market cap has little to do with how much cash they have sitting around. How much of their free money are they converting?

devops000 5y ago

Less supply, higher price, higher buyer commission in real USD.

deleted 5y ago

[deleted]