Facebook lifts cryptocurrency ban amid rumours of Coinbase takeover

If I were a Coinbase investor, such as Andreessen Horowitz, I'd take a long hard look at a potential acquisition. It could increase the value of their cryptocurrency holdings and speed up market adoption.

The main reason they remain one of the largest players in the marketspace is because they are one of the only "fiat bridges" -- a place where you can actually buy and sell crypto for government-backed dollars.

There's a reason why there are a dozen crypto exchanges but not many more (any more?) fiat bridges -- it requires setting up banking relationships, complying with KYC regulations, etc.

With that in mind why does an acquisition make sense for Facebook?

It seems like a similar price war was unleashed among brokerage houses (driven mainly hy Schwab, but also Robinhood), but brokerages are not buying one another. Instead the competition has shifted into fee-based products (like ETFs and mutual funds) as well as portfolio management.

If (a big If) the crypto market gets very huge, that strategy alone could easily make a few million dollars per day, or billions of dollars per year.

So yeah, they're terrible at that too - or they don't care, your choice.

Roll your own crypto is playing the game.

Running an exchange is being the house.

The house always wins.

Because in the times of gold-rush, you don't look for a gold. You setup your online store to sell axes :)

As investors, everything is for sale. They aren't going to stick to the 10 year plan half way through if billions are put on the table.

The same thing that's stopping them from building a rocket ship or a Facebook-branded pocket knife. Why would they do it?

Either this theoretical coin gives Facebook some advantage -- i.e. the ability to mint new coins at a whim, or an ICO that gives them a bunch of capital -- in which case that will make it unappealing to large swathes of users compared to fiat or existing cryptocurrencies, or exposes them to possible regulatory risk in exchange for capital, which they can easily raise through normal capital markets. Or it gives them no advantage, so ... why do it?

Purchasing a company like Coinbase doesn't seem to make sense to me in terms of aligned business goals, but my experience with M&A people is that it doesn't really matter -- they get rewarded based on perceived dollar value and execution, rather than whether their actions benefit the company. In the end nothing would surprise me here, but a priori acquiring a growing company at a perceived discount to its discounted future value is a good use of cash, even if only seen as an investment.

Come to think of it that describes a lot of the woes of big media and why the next big genre comes from small scenes in addition to inherit creativity or lack of it. Introducing say punk or gangster rap to music producer big names too early on would see you thrown out quickly and not just on their prejudices but rational "would get them pilloried even if it was the next big thing eventually".

Youtube has had several adpocalypses over it and tension between content producers and what advertisers want to be seen on and of course what viewers want. "If I wanted stale advertiser friendly content I would turn om tv." reactions.

But ban ICOs, half of which are scam coins, and everyone loses their minds, there's moral outrage, etc.

FB has a history of expensive acquisitions.