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Coinbase valued above $100B, ahead of direct listing

206 pointsby DLayover 4 years ago

26 comments

graemeabout 4 years ago
Only tangentially related: How do bitcoin network costs scale with market price?<p>We can expect the marginal cost to mine a coin to scale with price. So if btc worth $52,000 then people will invest on average $52,000 in equipment and electricity.<p>There are 6.5 coins mined every 10 min. So daily network cost approximates to 6.5 * 6 * 24 * $52,000 = $48,000,000<p>This is not strictly accurate as past equipment costs less and people may over invest expecting appreciation. But it should be close enough.<p>So to run the network at a price of $52,000 you need $17.76 billion dollars to enter as fresh capital to be burned as electricity and equipment, correct?<p>And if the price hit $1,000,000 as boosters claim, mining difficulty would rise to adjust and the new annual maintenance cost would be: 6.5 * 6 * 24 * * 365 * $1,000,000 = $341,640,000,000<p>And then this would decrease as halving happened. In May 2020 and then 2024. So the annual cost to run a $1,000,000 btc network post the may 2020 halving would be about $170 billion per year. That much new capital needs to enter the market and be burned up simply to maintain the price at $1,000,000. And to be useful to the world a $1,000,000 bitcoin would need to generate $170,000,000,000 in value annually.<p>Have I got this right or did I make a grievous error somewhere?
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raiyuover 4 years ago
One important thing to note is that these are secondary transactions and not where the stock may potentially trade.<p>Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales.<p>Third, as we saw with the last bull run of Bitcoin everything with blockchain in the name had a halo effect so there is definitely upward momentum.<p>Fourth, there is no Bitcoin tracking security on public markets. Obviously if Bitcoin succeeds so does Coinbase, this is an Avenue to get exposure to that without having to invest in Bitcoin directly and since Coinbase makes money on volatility which Bitcoin has a tremendous amount you get to ride the swings up and down by investing in Coinbase and not having exposure to Bitcoin directly. Investing in the shovels not the gold.<p>Eventually companies grow in to their valuations and that is determined by supply and demand and ultimately revenue and profits. Coinbase is still growing rapidly and profitable so in today’s market there will be a huge premium for that.<p>Technically it most closely resembles zoom from a financial perspective and from a capturing the trends perspective so while the valuation may seem high if Coinbase isn’t worth this then neither is zoom.<p>When will there be a market correction it’s impossible to know. We could have said the same thing for the post two years and it still hasn’t happened.<p>Don’t forget that getting yield outside of stocks is increasingly difficult and while we are on HN trapped in the echo chamber of tech and tech stocks when you look at the old staples like Coca-Cola they haven’t appreciated during this time.<p>Large mutual funds could be rebalancing their portfolios to move more into tech which they should have done from 2010 onwards but largely resisted outside of FAANG stocks.<p>The only thing that is certain is that this is a wild ride.
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redact207over 4 years ago
We&#x27;re just at a point in the economy where it doesn&#x27;t make sense to hold on to cash. It&#x27;s just completely losing its value thanks to a long sustained QE.<p>People are just putting their money into anything as a hedge - real estate, stocks, crypto, gold. Until the value of the at can be sustained and inflation comes back, it&#x27;s unlikely much else will change.
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kevindeasisover 4 years ago
Ah yes, possibly the 5th company that I wished I joined this past 18 months...<p>Historically there were some exchanges that have been hacked. This caused not only the company to go bankrupt but people losing a lot of money. How does coinbase prevent this from happening? This is very much one of the reasons I will never hold crypto (FYI: I&#x27;ve wrote my own Golang flavour of ethereum blockchain and solidity when it first came out, since im gonna get bashed for this post. I also regret not putting 1k during ethereums ICO when that was the only money I had in my bank account. This is not an investment advice). If my etrade or bank account got hacked, I can still get my money back through FDIC and SIPC. If a non-tech personstarted hyping a cryptocurrency and placed 100k in it, and they get hacked, essentially their 100k evaporates right? I guess there are worse ways to gamble your money<p>What I like about crypto though is the 24&#x2F;7 market. I wish there was something like this in the stock market.
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emehexabout 4 years ago
Perhaps a dumb question: why is Coinbase even entertaining an IPO? Give away shares for fiat money? Isn&#x27;t that antithetical to what they&#x27;re trying to do?
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runakoover 4 years ago
The chart here provides context:<p><a href="https:&#x2F;&#x2F;twitter.com&#x2F;JohnStCapital&#x2F;status&#x2F;1362859527230672896" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;JohnStCapital&#x2F;status&#x2F;1362859527230672896</a><p>In case the tweet is deleted, a summary. Coinbase is now being valued at over half the combined market value of the companies that collectively own most major global markets outside of China. Those markets trade everything from currencies to stocks and bonds to commodities.<p>For scale of asset pools: The value of all Bitcoins ever mined just hit $1 trillion. The CME Group exchanges trade nearly 6x that <i>daily</i>. This funding values Coinbase ~50% higher than CME Group.
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randomopiningover 4 years ago
I don&#x27;t get how everybody is just making a killing right now. What goes up must come down? Are people going to get uber burned?<p>Like somebody who put in 50% of their net worth today, and maybe it drops?
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vmceptionabout 4 years ago
Coinbase will make a lot on their staking products, I can see huge growth there!<p>I am surprised by this multiple but I can see it, as the law of diminishing returns has not set in and won&#x27;t for a while.<p>Pretty much all aspects of this require growth in other parts of the market to support, but they are all things I agree with.<p>For example, Coinbase should be allowing people to pool their REN to run hosted darknodes - darknodes function as a progressively more trustless exchange letting people move assets across blockchains. Coinbase already lists REN. Taking a cut of that as the volume grows there will essentially allow Coinbase to double dip. They get the transaction fees when people trade, move funds off of their exchange, and a cut when people move funds to other blockchains through RenVM, which will be a many-to-many relationship. The Forex market does several trillion $ a day in trades, so another mere order of magnitude in growth of the crypto economy would support the growth of all the infrastructure projects inside of the economy.
_rohanover 4 years ago
I see a lot of people talking about the market being in a bubble, and that they’re holding cash waiting for a crash.<p>Even if that’s true, I recently read about the bubble potentially “bursting up”: instead of prices coming crashing down, prices stay stagnant or grow slowly, while earnings grow quickly. The net result is the same (P&#x2F;E ratios stabilize), but you lose out on a lot by staying out of the market.
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bpodgurskyover 4 years ago
The same week SpaceX raises at $78B.<p>Doesn&#x27;t quite add up, but what do I know.
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1helloworld1over 4 years ago
I am afraid that we might be on the verge of another dot com level bubble. It&#x27;s interesting to see how one inflated asset is propping up another. Tesla - which rose by 1000% in 2020, bought bitcoin. Ark Invest Etfs - some of the biggest actively managed etfs, hold significant amount of Tesla, and with the profit generated from Tesla&#x27;s phenomenal rise, they are investing more on bitcoin. I believe in the future of cryptocurrencies, but the current state of bitcoin is abysmal. It&#x27;s slow, expensive and the hacky patches on top (lightning network) either haven&#x27;t been widely adopted or are still buggy. This all seems so much like the pets.com of the dot com bubble era. Great idea but terrible implementation. <a href="https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;billybambrough&#x2F;2020&#x2F;07&#x2F;09&#x2F;bitcoins-lightning-network-is-struggling-to-overcome-fundamental-issues&#x2F;?sh=6e803af45f77" rel="nofollow">https:&#x2F;&#x2F;www.forbes.com&#x2F;sites&#x2F;billybambrough&#x2F;2020&#x2F;07&#x2F;09&#x2F;bitco...</a>
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fergieover 4 years ago
What about the environmental impact &#x2F; physical limitations of cryptomining? At this point BTC alone consumes more energy than Argentina (<a href="https:&#x2F;&#x2F;www.bbc.com&#x2F;news&#x2F;technology-56012952)-" rel="nofollow">https:&#x2F;&#x2F;www.bbc.com&#x2F;news&#x2F;technology-56012952)-</a> will legislators allow this to continue? Will it even be possible for it to continue much further?
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wave_functionover 4 years ago
Maybe coinbase stock becomes the next cryptocurrency! One coinbase is one coinbase?
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onlyrealcuzzoover 4 years ago
ICE who owns the NYSE had a net income of $3Bn last year and is worth $68Bn - for context.
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willyg123over 4 years ago
No matter if you think we&#x27;re in a bubble or if this valuation supports your view that we are in a bubble, at the end of the day we are all losers who have decided to spend our precious time on a Friday night glued to HN.
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technotonyover 4 years ago
How does the lay person get in on these test the market secondary offerings?
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endisneighover 4 years ago
So what happens to global valuations once the world population starts shrinking? I also wonder what would happen if there was another significant war - surely peace cannot continue forever.
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moneywoesover 4 years ago
Low interest rates and secular trends justify this I guess?
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wyxuanover 4 years ago
I think a bet on coinbase, not bitcoin is the best bet for anyone who is looking toward betting for a future of cryptocurrencies.<p>Bitcoin has a lot going against it- the tether fraud stuff, connections to money laundering, slow transaction speed.<p>Coinbase is tied to none of those things, and has the unique advantage of having a reputation in both security and compliance in an industry full of greenhorns.
vmceptionover 4 years ago
The ICE man is going to pump this so hard. Too bad his wife isn&#x27;t still on the Senate oversight committee, but it wont matter
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practicalpantsover 4 years ago
I wish Coinbase would support more cryptos or allow storage of ERC-20 tokens so people would be more encouraged to spin up ETH projects. Feels like Coinbase is trying to be the big corporate face of crypto, kind of going against the spirit of it IMO.
Gunaxover 4 years ago
It&#x27;s great for coinbase, but I don&#x27;t understand why it&#x27;s winning the competition. It&#x27;s fees are incredible, and it doesn&#x27;t even seem to offer basic features like limit orders.
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ggmover 4 years ago
It doesn&#x27;t much matter to me if its crypto currency or real goods, when markets, stock exchanges float, I think we&#x27;re insane.<p>The marketplace should not of itself be valuable. If it is, its extraction of value for the goods&#x2F;utility being traded. Its rent seeking. The only possible value derives from what is a tax on trades by volume and value, to NOT fund the engine which runs the trades. Sure Lloyd&#x27;s of London is priceless. Priceless really should mean &quot;does not usefully have a price, in that sense&quot;<p>If coinbase is worth $100b what does that even mean in terms of the sustained value of the dollar?
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awatover 4 years ago
I will preface with I don’t have much domain knowledge in crypto. Is there a good faith expectation that this can even go higher?
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ketamine__over 4 years ago
What is the biggest crypto exchange? Binance?
airhead969about 4 years ago
I have a large selection of common tulip bulbs. They&#x27;re only $800 USD each. Get them while they&#x27;re still a bargain.