Coinbase is the only exchange I know off that still supports sending coins to a private wallet in WA and NY. Localbitcoins and Kraken stopped supporting that, and RobinHood never did. It's a shame.
Wait how does this work. If you can't withdraw then in what sense do you even own the coins?
Does this mean that if you are, say, a New York based Robinhood customer, and you buy Bitcoin, then the only thing you can do with them is sell them later?
Yeah congratulations to the Coinbase founders, employees, VCs, investors and institutions who have a stake in Coinbase. They are the real winners in this IPO.
The losers will be the foolish late retail investor who buys on IPO day. (Since it will dump due to the institutions selling off) and the past employees who walked out due to Coinbase's stance during the woke revolt of 2020.
Surely they will now tell you that it was all worth it. /s For them, they can now buy it again for >$200 a share on IPO day with a smile on their face like the rest of us. :)
Downvoters: So you want to buy Coinbase stock at over $200 a share on IPO day and be holding the bag when it drops when the founders, investors and employees start selling 10% of their shares? Sounds like a FOMO investor mindset to have.
Funny. If you believe in bitcoin, then you would already have invested.
Otherwise what you (and many others, but not all) believe in as an investor is the possibility of a return from storing your dollars in bitcoin and retrieving the value later.
If you think this announcement would affect the price, look at price history data for the time of the announcement up to the date of going public. That could serve as some kind of signal given some model assumptions. Avoid confirming your own biases and establish your margin of risk as damage tolerance.
As I see it, betting on coinbase is betting on the volume of transactions increasing over time.
Normies will be buying their bitcoin on cash app, paypal, etc. In this way I feel CoinBase is a niche product with limited growth capabilities long term. The more CoinBase makes, the more the big names in tech/finance will expand their efforts to compete. CoinBase is a decent short to medium term play imo, whereas bitcoin itself is a longer term play.
Under what circumstances would it make sense to invest in Coinbase compared to Bitcoin/underlying? Doesn't really make sense if you're bullish on crypto. Even seed investors who invested in Coinbase when it was founded would've been financially better off just buying Bitcoin/underlying.
The situation here is unique because all of the popular coins have fixed supplies so any increase of popularity will have the commensurate increase in price. I don't see any situation in which Coinbase grows in price faster than the underlying.
CoinBase makes money through purchase and transfer fees even if the underlying crypto doesn't go up in value or even goes down.
Mature coins no longer go up in value in double digits multipliers but their trade volume is bigger than ever because of the increased interest and online markets, be it the ones on (dark.fail) or Tesla.
Your other choice to benefit from the increase in the trade volume is to setup your own rig and join a mining pool, but that's more involved than what most people are willing to do.
Most people don't understand Bitcoin, and they get their references from the gold rush.
Here the situation is different: in the gold rush gold circulation went up, and gold was devalued, so mining that was even worse business than mining Bitcoin.
The problem with Coinbase is the Coinbase vs Coinbase Pro distinction and the huge margins for the Coinbase product that I expect to go down when people realize it.
You could see an investment in Coinbase as more diversified. It's an investment in the entire cryptocurrency space.
If you buy a specific cryptocurrency and that particular one is hacked or whatever, you lose. But Coinbase won't be sunk by any one cryptocurrency failing. It will be approximately as successful as the most successful cryptocurrency regardless of which one it is, because they all eventually need some kind of connection to the banking system and the US dollar.
There are plenty of possible outcomes that would be better for Coinbase than for Bitcoin. Popularity of Ethereum, any other coins, or other sorts of crypto-based financial instruments. So far Bitcoin has done well but past performance does not necessarily predict future results.
Also, anyone who holds index funds and no cryptocurrency, that strategy essentially ends up in them holding some Coinbase but no Bitcoin.
Because they have huge revenue and even profit in 2020.
1.14 billion revenue 2020, $322 million net income.
A thesis of the risk of their profit being tied to crypto prices is that big retail trading volume relies on rising prices or at least rising sentiment/popularity.
On the other hand, can argue probably not super important (unless they have huge settlement risk). Falling price = sell orders (and someone buying on the other side of transaction). Unless everything goes to zero, which seems like a low probability barring extreme world-wide government regs.
Consider the end game where Bitcoin achieves its stable store of value. It doesn't go up, but when people buy houses they sell their Bitcoin savings and when people sell their vacation home they park the money in Bitcoin. The more that happens, assuming Coinbase is the intermediary, the more Coinbase revenue goes up with flat coins.
I'm not much of an investor, but I would probably do both. Coinbase is (or at least was) an important company for making bitcoin and other cryptos usable for the general public. If you only bought bitcoin and coinbase and other exchanges died on the vine, it hurts your value.
I guess investing in Coinbase is like investing in Bitcoin _plus_ a lot of other cryptocurrencies. That's a subtle difference compared to investing _only_ in Bitcoin.
Also, Coinbase might come up with additional income sources in the future.
Unfortunately not. Brain and Alesia addressed this in their AUS on Reddit. They thought hard about this and wanted to do it, but weren’t quite there yet.
After not paying attention to cryptocurrency for a few years and then opening a Coinbase account earlier this year, I was SHOCKED how fast and easy everything was. From what I can discern as a user, they've made a great platform.
My one worry-- it seems like they use a similar pattern to Robinhood where upon purchase they grant an asset immediately (synthetically?), and then settle up actual holdings after the fact. What kind of risk does that open them up to in an asset class as volatile as crypto?
Was looking for the same kind of information. Do they publish proof of ownership of underlying assets? Or are they going naked for some amounts? Do they consider themselves as a bank, and vie for a 8% non-naked rate?
In the MTGox days, the discrepancy could be viewed in the delay to take out one's coins; as well as in their market, which was displaying a very different prices than on other exchanges. Scary stuff I'm sure some HNers here will remember.
I believe coinbase holds a lot of crypto - in the robinhood analogy, coinbase is their own clearing house. So they don't have to post collateral to themselves, but if crypto movement was all in one direction on a given day, they might rely on the market instead of the liquidity they themselves provide. Maybe in such a scenario they would be clever enough to NOT resolve all the trades instantly.
Fraud is a big part of any business with payments, but particularly crypto since if a fraudster can use a stolen credit card to acquire crypto and send it off platform before it's reversed, and Coinbase cannot reverse that loss like you can do with traditional financial systems.
To make up for this, the risk & fraud team at Coinbase does incredible work to have very low fraud rates compared to other tech companies and has specific product features to help mitigate this too.
For example, one of those is that when you buy with certain types of payment methods, you can't actually remove the asset from the platform until after some computed period of time. That value is based on a variety of factors powered by some fancy ML stuff and other things to help reduce the risk of loss. Actually recently an ex-Coinbase employee founded a new startup offering fraud-prevention as a service (https://www.sardine.ai/).
In short, Coinbase is very good at reducing fraud on the platform and invests a lot in improving that.
Interesting since the platform seems to go down, be unaccessible to users, most times that the price of Bitcoin starts to skyrocket - preventing many from impulse selling.
What does a brokerage/exchange going public have to do with the top of crypto currencies????
Crypto is here to stay. There's plenty of exciting projects like filecoin for decentralized storage, cardano for 3rd gen smart contracts, and more exciting projects that are coming online.
I hate when people treat cryptocurrencies and stocks as just something you buy and sell.
There's actually a vast amount of people and effort underneath blockchain projects that are trying to solve very hard problems. Just as stocks are an actual part of a company where people work hard to solve problems and create value in the economy.
If history is any indication, we are still in the early cycle of the current bull run. I think they have delayed their IPO long enough, they were founded in 2012.
Getting a big price for the company isn't the only motivation for going public. They have employees and investors to take care of, even if they'd be 2X bigger in 2030 or something.
[+] [-] sn_master|5 years ago|reply
[+] [-] dcposch|5 years ago|reply
Does this mean that if you are, say, a New York based Robinhood customer, and you buy Bitcoin, then the only thing you can do with them is sell them later?
[+] [-] blhack|5 years ago|reply
(Now please do better at customer service <3)`
[+] [-] rvz|5 years ago|reply
Yeah congratulations to the Coinbase founders, employees, VCs, investors and institutions who have a stake in Coinbase. They are the real winners in this IPO.
The losers will be the foolish late retail investor who buys on IPO day. (Since it will dump due to the institutions selling off) and the past employees who walked out due to Coinbase's stance during the woke revolt of 2020.
Surely they will now tell you that it was all worth it. /s For them, they can now buy it again for >$200 a share on IPO day with a smile on their face like the rest of us. :)
Downvoters: So you want to buy Coinbase stock at over $200 a share on IPO day and be holding the bag when it drops when the founders, investors and employees start selling 10% of their shares? Sounds like a FOMO investor mindset to have.
[+] [-] nwhatt|5 years ago|reply
[+] [-] wmeredith|5 years ago|reply
This is not financial advice.
[+] [-] Tallasatree|5 years ago|reply
[+] [-] diplodocusaur|5 years ago|reply
Otherwise what you (and many others, but not all) believe in as an investor is the possibility of a return from storing your dollars in bitcoin and retrieving the value later.
If you think this announcement would affect the price, look at price history data for the time of the announcement up to the date of going public. That could serve as some kind of signal given some model assumptions. Avoid confirming your own biases and establish your margin of risk as damage tolerance.
As I see it, betting on coinbase is betting on the volume of transactions increasing over time.
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] Consultant32452|5 years ago|reply
Normies will be buying their bitcoin on cash app, paypal, etc. In this way I feel CoinBase is a niche product with limited growth capabilities long term. The more CoinBase makes, the more the big names in tech/finance will expand their efforts to compete. CoinBase is a decent short to medium term play imo, whereas bitcoin itself is a longer term play.
[+] [-] ball_of_lint|5 years ago|reply
[+] [-] berberous|5 years ago|reply
[+] [-] unknown|5 years ago|reply
[deleted]
[+] [-] rawtxapp|5 years ago|reply
[+] [-] endisneigh|5 years ago|reply
The situation here is unique because all of the popular coins have fixed supplies so any increase of popularity will have the commensurate increase in price. I don't see any situation in which Coinbase grows in price faster than the underlying.
[+] [-] xeromal|5 years ago|reply
[+] [-] sn_master|5 years ago|reply
Mature coins no longer go up in value in double digits multipliers but their trade volume is bigger than ever because of the increased interest and online markets, be it the ones on (dark.fail) or Tesla.
Your other choice to benefit from the increase in the trade volume is to setup your own rig and join a mining pool, but that's more involved than what most people are willing to do.
[+] [-] xiphias2|5 years ago|reply
Here the situation is different: in the gold rush gold circulation went up, and gold was devalued, so mining that was even worse business than mining Bitcoin.
The problem with Coinbase is the Coinbase vs Coinbase Pro distinction and the huge margins for the Coinbase product that I expect to go down when people realize it.
[+] [-] modeless|5 years ago|reply
If you buy a specific cryptocurrency and that particular one is hacked or whatever, you lose. But Coinbase won't be sunk by any one cryptocurrency failing. It will be approximately as successful as the most successful cryptocurrency regardless of which one it is, because they all eventually need some kind of connection to the banking system and the US dollar.
[+] [-] lacker|5 years ago|reply
Also, anyone who holds index funds and no cryptocurrency, that strategy essentially ends up in them holding some Coinbase but no Bitcoin.
[+] [-] dillondoyle|5 years ago|reply
1.14 billion revenue 2020, $322 million net income.
A thesis of the risk of their profit being tied to crypto prices is that big retail trading volume relies on rising prices or at least rising sentiment/popularity.
On the other hand, can argue probably not super important (unless they have huge settlement risk). Falling price = sell orders (and someone buying on the other side of transaction). Unless everything goes to zero, which seems like a low probability barring extreme world-wide government regs.
https://www.cnbc.com/2021/02/25/coinbase-files-for-direct-li...
[+] [-] kurko|5 years ago|reply
[+] [-] tedunangst|5 years ago|reply
[+] [-] freedomben|5 years ago|reply
Also diversification is a good thing.
[+] [-] endorphine|5 years ago|reply
Also, Coinbase might come up with additional income sources in the future.
[+] [-] xenihn|5 years ago|reply
[+] [-] twostorytower|5 years ago|reply
[+] [-] runawaybottle|5 years ago|reply
[+] [-] therealmarv|5 years ago|reply
[+] [-] chrisked|5 years ago|reply
[+] [-] rory|5 years ago|reply
My one worry-- it seems like they use a similar pattern to Robinhood where upon purchase they grant an asset immediately (synthetically?), and then settle up actual holdings after the fact. What kind of risk does that open them up to in an asset class as volatile as crypto?
[+] [-] BenoitP|5 years ago|reply
In the MTGox days, the discrepancy could be viewed in the delay to take out one's coins; as well as in their market, which was displaying a very different prices than on other exchanges. Scary stuff I'm sure some HNers here will remember.
[+] [-] tigger0jk|5 years ago|reply
[+] [-] throwaway192874|5 years ago|reply
To make up for this, the risk & fraud team at Coinbase does incredible work to have very low fraud rates compared to other tech companies and has specific product features to help mitigate this too.
For example, one of those is that when you buy with certain types of payment methods, you can't actually remove the asset from the platform until after some computed period of time. That value is based on a variety of factors powered by some fancy ML stuff and other things to help reduce the risk of loss. Actually recently an ex-Coinbase employee founded a new startup offering fraud-prevention as a service (https://www.sardine.ai/).
In short, Coinbase is very good at reducing fraud on the platform and invests a lot in improving that.
[+] [-] loceng|5 years ago|reply
[+] [-] hn3333|5 years ago|reply
[+] [-] gt565k|5 years ago|reply
Crypto is here to stay. There's plenty of exciting projects like filecoin for decentralized storage, cardano for 3rd gen smart contracts, and more exciting projects that are coming online.
I hate when people treat cryptocurrencies and stocks as just something you buy and sell.
There's actually a vast amount of people and effort underneath blockchain projects that are trying to solve very hard problems. Just as stocks are an actual part of a company where people work hard to solve problems and create value in the economy.
[+] [-] rawtxapp|5 years ago|reply
[+] [-] jdminhbg|5 years ago|reply
[+] [-] cblconfederate|5 years ago|reply