Coinbase “the Google for the crypto economy.”
What is it?
Coinbase is an app that lets you buy and sell all sorts of cryptocurrencies, like bitcoin, Ethereum, Litecoin and about 50 others.
You can also use Coinbase to convert one cryptocurrency to another or to send and receive cryptocurrency to and from other people.
Like stock trading apps you may already be familiar with, Coinbase shows you the current price and trends for cryptocurrencies, a look at your portfolio of holdings and news stories about the industry.
Coinbase “the Google for the crypto economy.”
How does it make money?
Coinbase takes a percentage of the purchase, so if you’re aiming to buy $5, it’ll take about a 99-cent cut of the transaction.
If you’re buying $500 worth of bitcoin, it’ll charge about $7.34.
The IPO
Coinbase closed at $328.28 per share in Nasdaq debut, valuing the crypto exchange at $85.8 billion.
Founded in 2012 as a way to simplify the purchase of bitcoin, Coinbase has emerged as the most popular crypto exchange in the U.S. and soared in value alongside digital currencies bitcoin and Ethereum. The service now has 56 million users, up from 43 million at the end of 2020 and 32 million the year before that. In its last private financing round in 2018, investors valued Coinbase at $8 billion.
Impact
Legimises crypto
Makes it easier to use
Landmark moment in the crypto space. This is like the Netscape moment for the crypto currency economy. Netscape IPO in 1995 basically signaled the beginning of the internet age
Market appetite for Coinbase may lead to pressure in other tech stocks as some investors trim holdings in growth names to raise cash for Coinbase.
Upsides
The name of the game is absolutely growth, growth, growth.
For a lot of institutions, this is going to be their first chance to invest in the crypto space.
People have less trust in government and the media and Wall Street than they ever had before.
Downsides
The pressures of incumbent legacy businesses (the banks) that stand to lose from crypto becoming a big deal.
Central banks want to retain their monopoly over money.
Governments around the world may start to clamp down on the use of bitcoin & other cryptocurrencies- about the use of bitcoin for money laundering, terrorist financing and other illegal activities.
Institutional onboarding has slowed
India’s about to start banning trading, owning and mining crypto.
Everyone was at home and bored and playing around with their computers, which didn't hurt. Whether that buzz will persist as the world opens up and people are less glued to their devices is the subject of debate.
Advice
They don’t have any cash flow so difficult to analyze like a stock or bond
Will be volatile. Hence for people with higher risk tolerance.
A great buying opportunity could open up if early investors move to dump shares and take profit, inducing a big sell-off.
Position sizing is critical.
( Image credit: Financial Times)