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.
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.
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.
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.
Just like a banned dr. Suess book, this would further inflate prices
Anyways.
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.
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.
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.
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.
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.