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> But virtually all money is being made on being a broker for people speculating on Bitcoin as if they're buying gold, with no significant intent to use bitcoin.

And there is a ton of other exchanges that are both user-friendly for regular people who are looking to buy Bitcoin (Cash App) and trader-friendly for people looking to trade bitcoin (Kraken/Binance).

Most serious Bitcoin enthusiasts don't prefer Coinbase over the alternatives, so I'm not sure what Coinbase's real moat is? How is it able to charge higher fees than most other crypto exchanges?

Great point. Hard to have a moat when your commodity is open by design/nature.

GitHub managed it, so. Centralisation has benefits.

I think it mostly boils down to a trusted brand and good UX. alternatives are pretty crap atm.

Fiat onramps.

Americans cannot access most of the other crypto venues because they are rampant money laundering machines. Coinbase is one that at least plays by some of the US KYC/AML.

There is no compelling evidence they are 'rampant money laundering machines'. Even to prove money laundering happened, you have to prove a crime happened that generated illicit revenue that was then laundered, in which case prosecuting for the AML violation would be redundant, as the offender could be successfully prosecuted on the root crime.

This is why AML laws make much more than money laundering illegal, why in the vast majority of cases of AML law violation, no money laundering was proven to have taken place, and why none of the analyses on the volume of money laundering use this burden of proof when formulating their estimates on the scale of the phenomenon.

What you could say is that other venues are less compliant with warrantless surveillance requirements of US financial crime regulators. That is the phenomenon that is actually provably rampant in non-US-regulated crypto exchanges.

> There is no compelling evidence they are 'rampant money laundering machines'.

Reggie Fowler and Crypto Capital were convicted of money laundering for crypto companies just a couple years ago. This was Bitfinex’s bank, which caused big balance sheet problems for iFinex and likely spawned the current era of the Tetheral Reserve.

Compelling evidence? The biggest exchanges’ banks are being thrown in jail for laundering. I’m not sure how much clearer it could be.

Being convicted of violating anti-money laundering laws is not proof that they engaged in money laundering. Like I explained, to prove money laundering occurred, you have to prove that money was generated in a criminal enterprise, which would require the party who provided the funds to be convicted in a court of law of some crime that generated the income.

In the vast majority of cases where a financial intermediary is convicted of violating an anti-money laundering law, this doesn't happen.

It would make discussions more constructive if you read the comment in full before responding to it.

Binance UI feels like a labyrinth if you're a begginer. Coinbase is much simpler.

Security. While many other exchanges have been hacked or simply walked away with users' money, coinbase is one of the oldest that is still around, and has remained professional and secure throughout.

They refused to support various blockchains until they were sure they could do it securely and reliably.

In a way it's somewhat poetic, as they sell trust for a trustless ecosystem.

We are in a speculative mania right now across all markets and I’ve believed for several months that the renewed popularity of Bitcoin is just an offshoot of that speculation. The appetite to buy any old thing is extreme.

I've been wondering about that a lot. The last big crisis was 2007 / 2008[0]. Bitcoin had an initial release in 2009 according to Wikipedia, and has performed well in a bull market. I'm almost morbidly curious to see what will happen when the next crisis hits.

It seems like markets are always cyclical. After the dot com crash nobody would touch a stock that didn’t have profits. Now 20 years later people shit on those who only buy “value” stocks as old and out of touch and insist that we’re in a new world where valuations don’t matter.

The hard part isn’t predicting a crash it’s trying time when it will happen.

This. If you look at the financials of all companies listing their stock almost all of them have really bad financials.

Curious what you mean by bad financials?

Coinbase, IIRC, is on track to do more than a $1B in profits for the year ending 2022 with a user base of 50M which is likely to grow even more as crypto breaks into larger markets since the interest in it has only been growing. Of course, the usual caveats apply, but the crypto economy is getting too big too fast for it to disappear overnight.

Can’t speak for OP but I was referring to the overall landscape- the arks, Tesla’s, and even Bitcoin itself. People are buying these simply because they’ve been going up by orders of magnitude in a very short time. When hoards of people are flocking to investments because they’ve been going up and applying fundamentals after the fact, you’ve got yourself a bubble. Yesterday the complete mania around Bitcoin and the opportunity for Coinbase was palpable, particularly among those I follow who couldn’t have cared less about crypto six months ago.

This is spot on. Other than Coinbase(which is very risky), the overall financial statements of companies going public don't have great revenue growth and almost no shareholder's equity.

I've felt that the rise of meme stocks is a direct result of bitcoins meteoric rise in 2017/18(?).

"Virtually zero-level of actual usage" isn't true. Bitcoin has evolved into a store of value and settlement layer, and the majority of payment transactions happen on layer 2, with both centralized and decentralized solutions. This is something that wasn't predicted early on, but it's untrue that there aren't transactions which use bitcoin as a source of value. There are a lot, but there aren't any published numbers yet.

Fyi, it was predicted very early on. The first reply to Satoshi’s announcement email to the cypherpunks mailing list criticized the idea as unscalable. Satoshi implemented an early version of payment channels in Bitcoin Core around version 0.1. https://en.bitcoin.it/wiki/Payment_channels

Finally, some $49B was transacted yesterday on Bitcoin. Whether billions is virtually zero is a matter of interpretation. https://bitinfocharts.com/bitcoin/

> Finally, some $49B was transacted yesterday on Bitcoin. Whether billions is virtually zero is a matter of interpretation.

There were $2.6T of US treasuries traded last week (approx $520B/day) and average US equity volume is $200B+/day. $49B a day isn’t all that much in comparison.

So you're saying we're still early?

>But virtually all money is being made on being a broker for people speculating on Bitcoin as if they're buying gold, with no significant intent to use bitcoin.

You have to wrap your head around the idea that the main way to use a store-of-value is simply by holding it. Holding is using!

This of course has the unstated premise that Bitcoin is the best option for a store of value, or even a good or acceptable option for that.

It's really just not. It's wildly unstable and still far more complicated than putting the money in really any other kind of financial instrument.

The thing that it is absolutely amazing for is speculation. Which means you're basically correct in a sense: speculating is using.

The problem is that the use case of speculation is completely different than the use case of storing value. In face they are fundamentally in tension.

So if the speculation use case disappears the store of value use case will not suddenly replace it. A scenario where bitcoin is no longer useful as a speculative instrument would destroy any possible utility it has as a store of value as well, since a store of value needs to, you know, actually keep the value stored rather than collapse in price.

>It's wildly unstable and still far more complicated than putting the money in really any other kind of financial instrument.

That's simply not true. Where I am (Germany) - it's way simpler to buy Bitcoin than stocks, let alone something more exotic especially if you want to invest a small sum. Tax implications and fees are also currently easier to work out (at smaller sums). It's been the same in other countries I've lived (e.g. UK) for over 5 years.

Bitcoin isn't the best store f value, it just has to be a orthogonal store of value to dollars, euros, yuan, stocks, etc, which share the same systemic risk. It's just the most liquid thing in that category (vs real estate, gold) and people are willing to mess around, because TINA.

> s the best option for a store of value, or even a good or acceptable option for that. It's really just not.

Completely disagree with this point which invalidates everything else you say.

Your opinion doesn't match reality. The reality is that it's been a great store of value since its inception. Anybody that has ever bought and held Bitcoin, at any time during its entire history, has had a positive return.

The value is conditional on ongoing demand.

I think bitcoin in specific doesn't matter here, crypto in general is here to stay and there is a very high value on trust/goodwill for financial exchanges of any kind, not to mention all the regulatory barriers these days.

Store of value is something that roughly tracks inflation. Bitcoiners constantly parrot this label to keep the number go up engine alive.

Nobody buys Bitcoin because they want to have the same amount of purchasing power next year (what a terrible investment objective anyway). They buy it because they want 100x the purchasing power. This works until it doesn’t.

A few random thoughts on investing in Bitcoin vs Coinbase:

- The risk of losing your BTC would've been high if you used something like Mt Gox, or maybe you wouldn't have made the purchase because you didn't trust the purchasing channels.

- My guess is investing $300k back then would've raised the market price quite a bit before you finished your purchase, but I'm just speculating.

- Investing in the company gives you a little more agency. E.g. if you have a great idea, you can help the company become 1.5x or 10x more valuable. Investing in BTC is very passive. This is not worse or better, but a personal preference.

- I bet Coinbase contributed to Bitcoin's success by providing an easy onramp. If Bitcoin were 1 or 3 years behind where it is today because of mass adoption starting later, then $300k invested in Bitcoin in 2012 would be worth much less.

The bitcoin blockchain is full of transactions, and lots are probably being made offchain on Lightning Network or on centralized services. Your claim is that all these transactions are for speculation only (which is quite common claim). On what data do you base your claim?

>one of the early investors put $300k into this and got to $2 billion recently at the IPO

For those interested, Garry Tan, tells the story here https://youtu.be/x5YApjnTG10

It’s a good question - if you were willing to bet on coinbase, would you have bet on Bitcoin too or instead? I guess coinbase covered many coins so there’s some backup there. However it’s also a lot more liquid than a seed/series A!