Linkedin Note: This article comes from Forbes; original author Taylor Tepper; translator | Moni
Soon, you will be able to buy shares of the company that helps you buy Bitcoin - although this sentence may sound a bit convoluted.
The largest cryptocurrency exchange in the United StatesCoinbase 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 go public through a so-called "direct listing" ( direct listing) on Nasdaq. In fact, this "direct listing" method was pioneered by large companies such as Spotify (SPOT) and Palantir (PLTR), and has been favored by technology companies in recent years.
This “unconventional” and slightly trendy choice to go public does make some sense for Coinbase, considering it has played the biggest role in the cryptocurrency craze over the past decade. Of course, it remains to be seen whether Bitcoin can replace the U.S. dollar or further develop into a speculative asset. What does
Coinbase actually do?
Assuming you want to buy Bitcoin, you currently have two options:
1. Deploy powerful and complex computers to solve complex mathematical problems to mine Bitcoin
2. Buy on a cryptocurrency exchange.
The first option is very costly and requires a lot of technical knowledge, while the latter only requires opening an account on an exchange.
This is why most people will eventually choose to buy Bitcoin on an exchange instead of buying a mining machine to mine. It 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 that enables retail buyers and sellers to "meet" and find the right transaction price.
* For more experienced crypto trading users, Coinbase offers a powerful trading platform, Coinbase Pro, which comes with full functionality and analytical services to help you gain insight into the depth of the cryptocurrency market. Additionally, Coinbase Pro offers a free wallet service that allows users to safely store their cryptocurrencies.
Coinbase has not only accomplished these tasks well, but more importantly, compared to other cryptocurrency exchanges that are often hacked or frequently down, Coinbase has the ability to ensure the security and stable operation of its users' personal data. (Odaily note: One of the most high-profile cases is Mt. Gox, a Japanese exchange that eventually had to declare bankruptcy due to a hacker attack and lost billions of dollars worth of Bitcoin)
According to a report published in July 2020 In a report, Coinbase disclosed that it has more than 35 million users, including retail and institutional customers, an increase of 5 million from the same period last year.
How to make money with Coinbase?
The Coinbase wallet service does not charge users for cryptocurrency storage. 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:
1 , margin fees , also known as spreads, Coinbase charges approximately 0.50% for the purchase and sale of cryptocurrencies, and this rate will vary based on market conditions. The final margin fee to be paid depends on the price change between the time the user obtains the quote and the actual completion of the order.
2, Coinbase Fee, this is a commission levied on all crypto transactions. It is also a fee 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 transaction services, Coinbase has several other major businesses, including:
1 and Coinbase Business. This service provides software for display retailers to accept cryptocurrency payments, similar to PayPal, but for cryptocurrencies, Coinbase The plugin can be used on various e-commerce platforms.
2, Coinbase Card, Coinbase is currently in the early stages of offering users a physical Visa debit card and accompanying app that allows consumers to spend cryptocurrency directly at physical merchants, and Coinbase will convert crypto transactions to U.S. dollars. .
3, USD Coin (USDC) , Coinbase has its own US dollar stable currency USD Coin (USDC), which is based on the Ethereum blockchain and anchored 1:1 with the US dollar.
According to a recent filing disclosed by the U.S. Securities and Exchange Commission (SEC), Coinbase’s total revenue in 2020 was approximately $1.3 billion, more than double its 2019 revenue. How much is
Coinbase worth?
It's not easy to accurately value a startup, but Coinbase was a private company before going public, so it can understand the company's valuation through its financing transactions. The last official valuation of Coinbase occurred in 2018, when it was valued at $8 billion in a $300 million financing deal, according to Crunchbase data.
Until Coinbase releases financial information publicly, we won’t know the exchange’s true profitability or exactly how much revenue it generates each year. But if Coinbase successfully goes public, it means that the relevant data will be made public. Don’t be surprised if their income is high. After all, Bitcoin price and attention have risen sharply since 2018, bringing huge returns to investors and Coinbase. .
However, as Bitcoin has received more and more attention, Coinbase's competitors have also increased, such as:
* Commission-free crypto trading platform Robinhood allows investors to buy cryptocurrencies like PayPal and Square;
* Investment giant Rich Da began to provide Bitcoin index fund trading services to accredited investors.
Recently there was news that Coinbase’s current value is much higher than its 2018 valuation. According to industry media Axios, the exchange has been valued at $100 billion when it sells shares in the private market, but we still won’t know accurate Coinbase market capitalization information until it officially goes public. How to list
Coinbase?
In Wall Street , an IPO usually refers to the process by which a private company debuts on the public stock market. In the process, the company needs to hire large investment banks, which charge high fees but can actually help private companies navigate the hurdles of going public, to help sell shares to the public and set a viable IPO share price.
Coinbase did not take this approach, instead opting for a direct listing, which means that they will not seek help from investment banks, Coinbase company owners will convert their holdings into stock exchanges, and investors can then trade on the exchange. Buy these stocks.
It is worth noting that in an IPO, a listed company usually issues new shares to raise new funds, but in a direct listing, the company usually does not hope to raise more funds, but rather the company's employees and investors sell their existing shares directly to the public. stock.
What does Coinbase’s listing mean for the future of Bitcoin?
Although there are many cryptocurrencies on the market, Bitcoin remains the most talked about "King of Cryptocurrencies" for one simple reason: Bitcoin prices are rising rapidly.
At the beginning of 2017, the price of one Bitcoin was about US$1,000; at the end of 2020, when Coinbase first announced its public listing, the price of Bitcoin remained in the US$20,000 range; and on February 26, 2021, the price of one Bitcoin had exceeded $47,000.
In 2013, the slogan at the top of the Coinbase website read: "Welcome to the Future of Money." But in 2017, Coinbase changed the slogan to “Buy and Sell Digital Currency”.
In the early cryptocurrency community, many people believed that Bitcoin could potentially replace the U.S. dollar as the main means of transaction and payment. 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 mortgage loans and other businesses, all of which will be realized through blockchain technology.
Why did you choose Bitcoin? In fact, the real value of Bitcoin is that it is not affected by central institutions. For example, no matter how the Federal Reserve adjusts interest rates, Bitcoin will not change.
In 2013, Coinbase believed that Bitcoin could become a fiat currency alternative and that this was the future they were “talking about.” But by 2017, the situation changed, and instead of becoming a means of transaction in the mainstream economy, Bitcoin became an investment asset like gold. When people discuss 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 in terms of currency, which shows that Bitcoin has become an investment. Taste. When investors have an appetite for risk, they will flock to Bitcoin and no longer view Bitcoin as a form of currency.
Gold has no intrinsic value, but investors remain obsessed with the yellow metal, and neither does Bitcoin. Now, people are adding the concept of "digital gold" to Bitcoin. This narrative has driven Bitcoin's recent rise, and more and more institutional investors have begun to buy Bitcoin.
For now at least, if you choose to bet on Coinbase, you are essentially betting that Bitcoin will continue to be a speculative asset rather than a dollar alternative.
Indeed, it is better not to fight the Fed.
[This article was originally published on ChainDD, authorized to be published by Titanium Media App, author: Odaily Planet Daily]
