Coinbase’s listing may break records
economist.com
economist.com
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.
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.
Looks like there is some details here https://www.coinbase.com/legal/insurance
So, should you have the desire to keep cash at Coinbase for some reason, it will actually be held at a real bank and FDIC insured.
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.
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.
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-...
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.
'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.
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
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.
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.
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.
Anyone who makes this argument likely stopped staying in touch with blockchain tech after 2016.
It's like people stopped paying attention after the last crash and assume the crypto space has stood still since.
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.
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.
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.
Just like a banned dr. Suess book, this would further inflate prices
Anyways.
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.
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.
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.
No, proof as work uses as much electricity as is profitable. The entire Bitcoin network could trivially be run on a single PC.
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.
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.
Coinbase's market cap is going to be higher than both exchanges combined - while doing a fifth of the revenue.
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.
As another person has already mentioned, decentralization is regarding the re-routing possible when a node fails. Whether the node is a validator, miner, or enterprise.
The point about decentralization is that there are other nodes to build on when one part is removed, even if that node is the biggest one.
People keep using a measuring stick that shrinks every day.
Measurement results are guaranteed to impress.
(Ok I'm just random internet guy with conspiracy theories I suppose..)
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.
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.
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?
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.)
Especially when BTC is at record highs.
What are some competitors from IPO to (near) bankruptcy in n months?
preemptive edit: cool(aid) down, it MAY be a scenario
In any case, when the (current) crypto bubble burst, Coinbase valuation will take a deep dive.
“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”
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.
I agree with the other poster. If you can’t afford one share of a [speculative] stock, you likely shouldn’t be buying it.
Your life would have to be insanely privileged beyond belief for a reasonable question/response to be on the high end of privileged stuff.
Again, being able to afford stocks is privileged in the first place. If you can’t afford to pay for a single stock for 99% of stocks, you likely can’t afford to lose 50% of that stocks value. Which is possible with Coinbase.
Being on and only on eTrade is pretty privileged. Why are you on there? The fact that you didn’t need to sign up to the newer stock startups for the $5 new customer stock they give you is highly privileged.
The majority of the US doesn’t have a college degree yet I’m assuming you do. But please, don’t let me get in your way when talking tuition.
Same with being privileged enough to want Facebook shut down if it was your choice. It’s an incredible privilege to have Facebook be so unimportant to your life that you can have it be shut down and be happy about it without any loss of QoL.
I don’t understand why you have to attack people personally in the first place. No one is a saint on HN any way.
You have a point regarding the Apple devices I’ve got. They were purchased over time with cash that I saved. So homepods bought on sale, iPhones that we use for years (basically until they fall apart) and my MacBooks all last for years and years so we prefer quality and pay the Apple Premium.
That you or anyone might work at Facebook is not a personal attack. You’re not Zuckerberg. You’ve a job and bills and financial goals: so be it. It’s government that could shut them down or investors that could sour to their business model or parents that could shield their kids from interacting with it and Instagram 24/7.
All I was mentioning is that I don’t make the high six figures (after bonuses and RSUs) to have substantial disposable income to pay for a stock that is likely to come in at 500 or more per share.
It was funny to see me being described as saying extremely privileged things regarding money.
Good luck to you as well
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.
So, what's left? Oh, the climate. Where to even begin here? Call me when hash function workers create smog in a small city. Until then, our industry seems quite capable of killing the planet by itself.
It's better for the world long term if people that care about it are not poor. So, do make money and improve the world in other ways. Clearly you can offset with good deeds whatever energy will be wasted.
Our current bankjng system isn’t perfect and criticism is OK.
But that doesn’t absolve Bitcoin frim their damaging impact.
And remember that Existing financial systems do a lot of good, they are a core part of our societies.
Bitcoin and other crypto doesn’t provide any legitimate benefit to our societies, it damages and undermines them.
This is what I call extreme whataboutism.
Trying to paint the other in a very bad light so you don’t have to account for your own ‘misdeeds’.
No need for some kind of political discussion.
If Coinbase went and handed out a trillion $ worth of BTC to the wealthiest corporations in America over the past year, I would have my wealth in a different asset. Coinbase didn't do that with BTC though, the Fed did it with USD. I worked hard to earn this cash, why should I let someone else devalue my work without consulting me first?
https://louwrentius.com/cryptocurrencies-are-detrimental-to-...
> I can trust crypto because I can predict what it will do in terms of affordances and supply.
That sounds like a delusion. BTC is very volatile. When the music stops, there won't be enough chairs...
The Fed did hand out USD but that is for a very, very good reason: to keep society up and running, to keep it from total collapse.
I understand that keeping society operational is not very profitable for you, but I think it's rather nifty.
Seems like you misread this part of my statement and replaced it with "price."
> to keep society up and running, to keep it from total collapse
Inflating the global reserver currency won't have this effect, it will only prolong the inevitable outcome. The reason we're in this situation in the first place is because of the US govt's mismanagement of the USD over the past five decades. I want out and crypto is my ticket, who are you to tell me I shouldn't be allowed to make this decision? I'm not telling you to stop using USD. I just want you to stop arguing for a crypto ban.
As for a benefit, if you consider crypto as a mode of protest alone it has value.
People are allowed to smoke and destroy their health (and of those nearby), people are allowed to gamble, people are allowed to buy to biggest truck that pollutes to no end. How is that legitimate and how does that benefit more to society?
It's a weak system one that works only when it has no competition.
I'll list a few:
1. Owning your own money
2. Hedging against hyperinflation and endless money printing
3. Earning more than 0.1% given by your savings account
4. Instant value transfer across borders instead of filling out 5 forms and waiting 3 days for wires
5. Fractionalizing, decentralizing and democratizing ownership of assets
6. Disrupting legacy institutions such as banks
7. Offering citizens of autocratic nations a hedge against censorship and crackdowns
Awful, I know
This is also misleading.
Only one question is relevant:
Where do the Bitcoin profits come from?
Anwer: other people. It’s a Ponzi and we all know it.
You were meant to slay dinosaurs, not become one
Banks used your money and bought risky assets that crashed the entire market in 2008. Did you benefit from it? Did most people?
Banks deploying risky tactics to maximize profits and crash economies every 10-15 is somehow fine. Heck, you jump fences to hand them your money.
But if you own your own money and decide to take on the risks, it's...a ponzi?
No thanks for the misplaced whataboutism.
And yes, all cryptocurrencies are ponzis. Because they don't create value. They just extract it from other people.
The fact that you believe that ALL crypto has no value created talks of lack of knowledge of many projects out there. Although I do agree that Bitcoin shouldn't be used as it is rn.
The people I know working (not trading, coding) in the space are some of the most committed and passionate and politically motivated people trying to develop new tools for coordination, to help people unionise, to create funding for public goods without coercive taxation, to represent peoples votes as a worldwide body rather than dividing along lines in the ground. It is a game of "can we organise ourselves better than those we compete with", the answer seems to be leaning towards yes. It is like the rochdale co-op movement spreading across mills in the industrial revolution, developing into workers unions, and left wing political parties challenging the aristocracy. It is a co-op, community ownership movement for internet workers.
I grew up going to protests, making my voice heard, voting for parties that never got voted in (cough in voting systems designed to never allow the thing that created them be replaced cough). For once i have found a way to collaborate and coordinate with others in an effective manner. Maybe it is a niche thing, maybe it cant scale, maybe it's just a video game, but maybe it is incredibly revolutionary, inclusive, and an actual force to bring around a change of power. Maybe it is only just getting started.
I look at the money in my wallet on my desk, pieces of paper with pictures of an old lady on them with a printed signature of the head officer of the bank. It looks medieval, it doffs the cap to inherited wealth, it is secured by violence, it says authority is legitimacy and everything else is false.
How anyone thinks crypto is a scam and the future is in the old ways seems as delusional to me as they think i am...
Ignorants will start yapping about "money printing" not realizing they're regurgitating talking points from a tiny group of people who are using their lack of intelligence to become obscenely wealthy.
A few people being bamboozled into poor investment decisions or getting scammed by people under the name of "crypto" doesn't take away for that imo.
There have been 0 real world applications for this tech in 8 years outside financial crime, fraud, and speculation. A lot of the same conversations in 2013 ended with "yes but it's so early give it 5 years" and here we are still waiting for a decentralized app that's more useful to anyone than a plain old db.
Also disagree that fiat had any effect on mugging frequency. People with gold/silver coins likely got mugged at the same rate.
Geez, I mean that's simply not true so I don't know what to say to you.
Granted, applications are not as wide-ranging as the moon-lambo squad might have you believe, but there are plenty of people using blockchain in production, and plenty more using related tech/concepts (like the ones I detailed).
>Also disagree that fiat had any effect on mugging frequency. People with gold/silver coins likely got mugged at the same rate.
well your implication then is that the gold/silver coin robbers kept focusing on those carrying gold/silver, and a whole new set of honest folk started stealing only fiat from people, which is likely untrue.
I'd suggest crypto is similar - present-criminals are probably still being criminal and perhaps a small number of people saw some opportunity to become a criminal, but I'd suggest that it doesn't `enable [...] the worst actors and the worst humans around.` any more than fiat currency, electricity, the internet, etc etc etc etc do
Over eastern i run out of money because i forgot that the whole banking is literally shut down for 5 days. I mean what the fuck is this in 2021?
Whatever you argue the tech is worthless. It was about time to we have an international, kinda unregulated but transparent way to own and move money.
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.
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.
What conspiracy do you subscribe to about Central Banks?
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
This is simply not worth worrying about.