If you choose to bet on Coinbase, you are essentially betting that Bitcoin will continue to be a speculative asset, not a substitute for the U.S. dollar.
Original title: ” About the listing of Coinbase, here is everything you want to know “
Written by: Taylor Tepper
Soon, you will be able to buy stocks in companies that help you buy Bitcoin-although this sentence sounds a bit convoluted.
Coinbase, the largest cryptocurrency exchange in the United States, has announced plans to go public on April 14 under the stock code COIN. They will bypass the traditional initial public offering (IPO) process. Instead, Coinbase plans to pass the so-called “direct listing.” listing) Landing on Nasdaq. In fact, this type of “direct listing” was initiated by large companies such as Spotify (SPOT) and Palantir (PLTR), and has been favored by technology companies in recent years.
Considering the biggest role that Coinbase has played in the cryptocurrency boom over the past decade, this “non-traditional” and slightly fashionable listing option does have a certain meaning for Coinbase. Of course, it remains to be seen whether Bitcoin can replace the U.S. dollar or will further develop into a speculative asset.
What is Coinbase actually doing?
Suppose you want to buy Bitcoin, there are currently two options:
- Deploy powerful and complex computers to solve complex mathematical problems for Bitcoin mining
- Buy on a cryptocurrency exchange.
The first option is expensive and requires a lot of technical knowledge, while the latter only requires opening an account at the exchange.
This is why most people will eventually choose to buy bitcoins on exchanges instead of buying mining machines for mining. This is also one of the main reasons why Coinbase came into being:
For ordinary crypto trading users, Coinbase is like a direct display trading platform, allowing retail buyers and sellers to “meet” and find the right transaction price.
For more experienced crypto trading users, Coinbase provides a powerful trading platform, Coinbase Pro, which has complete functions and analysis services, which can help you understand the depth of the cryptocurrency market. In addition, Coinbase Pro also provides a free wallet service that allows users to safely store their cryptocurrencies.
Coinbase has not only accomplished these tasks well, but more importantly, compared with other cryptocurrency exchanges that are frequently hacked or downtime, Coinbase has the ability to ensure the security and stable operation of the personal data of its users. (Odaily Note: One of the most high-profile cases is Mt. Gox, a Japanese exchange that eventually had to declare bankruptcy due to a hacking attack and lost billions of dollars worth of Bitcoin)
According to a report released in July 2020, Coinbase disclosed that it has more than 35 million users, including retail customers and institutional customers, an increase of 5 million over the same period last year.
How does Coinbase make money?
The Coinbase wallet service does not charge users for storage of cryptocurrencies. However, when you actually buy and sell cryptocurrencies such as Bitcoin and Ethereum, Coinbase will earn fees and commissions. Specifically, Coinbase’s main income mainly includes:
The margin fee, also known as the spread, Coinbase charges about 0.50% for the purchase and sale of cryptocurrencies. The rate will vary according to market conditions. The final margin fee to be paid depends on the price change between the user’s quotation and the actual completion of the order.
Coinbase Fee, this is a commission levied on all encrypted transactions. It is also a fee that you will be charged in addition to the spread. The actual amount of Coinbase Fee paid by the user depends on the location and the total transaction amount.
In addition to trading services, Coinbase has several other major businesses, including:
Coinbase Business, this service provides software that accepts cryptocurrency payments for display retailers, similar to PayPal, but for cryptocurrencies, Coinbase’s plug-ins can be used on various e-commerce platforms.
Coinbase Card, Coinbase is currently in the early stages of providing users with physical Visa debit cards and accompanying applications. This application allows consumers to use cryptocurrencies directly in physical merchants, and Coinbase will convert crypto transactions into U.S. dollars.
USD Coin (USDC), Coinbase has its own U.S. dollar stable currency USD Coin (USDC), which is based on the Ethereum blockchain and is anchored 1:1 with the U.S. dollar.
According to a document recently disclosed by the US Securities and Exchange Commission (SEC), Coinbase’s total revenue in 2020 is approximately $1.3 billion, which is more than double the revenue in 2019.
How much is Coinbase worth?
It is not easy to accurately value a startup company, but Coinbase was a private company before going public, so you can understand the company’s valuation through its financing transactions. The last official valuation of Coinbase occurred in 2018. According to Crunchbase data, Coinbase was valued at $8 billion in a $300 million financing transaction.
Before Coinbase publicly released financial information, we did not know the true profitability of the exchange or how much revenue it would generate each year. But if Coinbase goes public successfully, it means that relevant data will be made public. Don’t be surprised if they have a high income. After all, Bitcoin prices and attention have risen sharply since 2018, which has brought huge returns to investors and Coinbase. .
However, as Bitcoin has received more and more attention, Coinbase’s competitors have also increased, such as:
Robinhood, a commission-free crypto trading platform, allows investors to buy cryptocurrencies like PayPal and Square;
Investment giant Fidelity began to provide bitcoin index fund trading services to accredited investors.
It has been reported recently that the current value of Coinbase is much higher than its 2018 valuation. According to industry media Axios, the exchange’s valuation at the time of selling shares on the private market has reached US$100 billion, but before the official listing, we still cannot get accurate Coinbase market value information.
Interestingly, the cryptocurrency exchange FTX has already launched the Coinbase Pre-IPO product before Nasdaq. According to the quotation of the equity token products exclusively launched on the FTX platform, the latest price of Coinbase Pre-IPO is US$455.82.
How does Coinbase go public?
On Wall Street, an IPO usually refers to the process by which a private company makes its debut on the public stock market. In the process, the company needs to hire large investment banks to help it sell stocks to the public and set a viable IPO stock price. These investment banks charge high fees, but they can indeed help private companies tide over the difficulties of listing.
Coinbase did not adopt this approach, but chose a direct listing, which means that they will not seek help from investment banks. The owners of Coinbase will convert their holdings into stocks in the stock exchange market, and then investors can trade on the exchange Buy these stocks.
It is worth noting that in an IPO, a listed company usually offers new shares to raise new funds, but in a direct listing, the company usually does not want to raise more funds, but the company’s employees and investors directly sell their existing stocks to the public .
What does the listing of Coinbase mean for the future of Bitcoin?
Although there are many cryptocurrencies on the market, Bitcoin is still the most watched “King of Cryptocurrencies” for a simple reason: Bitcoin prices are rising rapidly.
At the beginning of 2017, the price of a bitcoin was about US$1,000; at the end of 2020, when Coinbase announced its public listing for the first time, the price of bitcoin remained in the range of US$20,000; and on February 26, 2021, the price of one bitcoin had exceeded US$47,000.
In 2013, Slogan at the top of the Coinbase website wrote: “Welcome to the Future of Money” (Welcome to the Future of Money). But in 2017, Coinbase changed Slogan to “Buy and Sell Digital Currency” (Buy and Sell Digital Currency).
In the early cryptocurrency community, many people believed that Bitcoin could replace the U.S. dollar as the main transaction and payment method. But in the future, this idea may change. People can use bitcoin to pay, but at the same time bitcoin can also be used to pay for mortgages and other businesses, all of which will be realized through blockchain technology.
Why would you choose Bitcoin? In fact, the true value of Bitcoin is that it is not affected by central agencies. For example, how the Federal Reserve adjusts interest rates will not change Bitcoin.
In 2013, Coinbase believed that Bitcoin could become an alternative to legal tender, and this is the future they “talked about.” But in 2017, the situation has changed. Bitcoin has not become a trading method in the mainstream economy, but has become an investment asset like gold. When people talk about Bitcoin, the most common word is “market capitalization”, but “market capitalization” is a term people use to describe the size and influence of a company. It has no meaning for money. It shows that Bitcoin has become an investment. Product. When investors have a risk appetite, they will flock to them instead of seeing Bitcoin as a form of currency.
Gold has no intrinsic value, but investors are still obsessed with this yellow metal, and Bitcoin has no intrinsic value. Now, people add the concept of “digital gold” to Bitcoin. This narrative has promoted the recent rise of Bitcoin, and more and more institutional investors have begun to buy Bitcoin.
At least for now, if you choose to bet on Coinbase, you are essentially betting that Bitcoin will continue to be a speculative asset, not a substitute for the U.S. dollar.
Indeed, it is best not to confront the Fed.
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