Coinbase, a Bitcoin startup, goes public. Is Crypto Really “The Future of Finance”? : NPR
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Coinbase, a San Francisco startup that lets people buy and sell digital currency, became the first major cryptocurrency company to go public when it made its public debut on Wednesday.
Trading started around $381 per share, pushing the company’s valuation close to $100 billion. That’s about what Facebook was worth when it had its IPO in 2012.
Coinbase’s listing on the Nasdaq under the symbol “COIN” was heralded by enthusiasts as a turning point for once-obscure digital currencies.
“Today was a defining moment,” said Ian Lee, cryptocurrency investor. “Crypto is the future of finance.”
Bradley Tusk, a political consultant and venture capitalist who has backed Coinbase financially, said the company’s public offering shows that more Wall Street banks and other traditional investors are getting ready for the idea of the cryptocurrency.
“People have had doubts about crypto for a long time. And I don’t blame them,” Tusk said. “But what it has become, whether intended or not, is an asset class – something that people looking for a truly balanced portfolio want to be in.”
But Tusk admits that cryptocurrencies are notoriously volatile.
“Will cryptocurrency ever be used for everyday items? Not sure,” Tusk said. “But another way to think about it is, are we going to reach a point where all payments will be digital and we won’t use cash or credit cards anymore? Absolutely.”
This point, however, may be far off.
Investment firm Wedbush Securities predicted on Wednesday that less than 5% of public companies would invest in cryptocurrency over the next 18 months, but that “could increase markedly as more regulation and acceptance of this currency increases.” will prevail later”.
Coinbase’s Mission: To Build the “Cryptoeconomy”
In 2012, former Airbnb software engineer Brian Armstrong became Frustrated with the “high fees” and “opaque” nature of overseas digital transactions, he and former Goldman Sachs trader Fred Ehrsam founded Coinbase, where people can easily buy and sell cryptocurrencies without having to to go through a bank.
Like many startups in the crypto world, Coinbase has positioned itself as having the potential to disrupt the global financial system.
“Today, the way we generally invest, spend, save, and manage our money remains cumbersome, inaccessible, costly, and regionally isolated,” Coinbase wrote in a deposit with the Securities and Exchange Commission. “We are building the cryptoeconomy – a fairer, more accessible, efficient and transparent financial system in the age of the Internet.”
At the time of filing in December 2020, Coinbase told regulators that 7,000 financial and retail institutions and 43 million users were active on the platform.
Armstrong, 38, is now considered one of the richest individuals in the world, with his 21% stake in the company worth around $13 billion.
“There is a saying that the best way to predict the future is to create it. I hope we have helped to make the future happen a little sooner than it would have done otherwise in the crypto space,” Armstrong tweeted Wednesday.
The researchers have long tip to the attractiveness of cryptocurrency for those who engage in fraud and other illicit activities like money laundering, as largely unregulated markets make it easy to conceal transitions. And Washington lawmakers have I worked to devise rules and regulations to bring government oversight to the industry.
But with laws slow to adapt, interest in crypto markets has skyrocketed, especially during the pandemic.
At the end of 2020, for example, a single Bitcoin cost around $28,000. The price has more than doubled since. On Wednesday, a Bitcoin costs around $62,000.
Other cryptocurrencies, like Ether, which is bought and sold on the Ethereum system, have also hit new records.
They were helped by the hype around non-fungible tokens, or NFTdigital collectibles that fetch sky-high sums for what is essentially a string of computer code that confirms a buyer has a unique version of something that only exists on the internet.
For venture capitalist Tusk, a larger theme emerges from the froth around crypto-related spending during the pandemic.
“People have less faith in government, the media and Wall Street than they ever have before,” Tusk said, adding that many now trust the decentralized system that supports cryptocurrency.
But, he said, there is a less noble component to this moment that brings a crypto craze: “Everyone was home and bored and playing with their computer, which didn’t help. no harm.”
Whether this buzz will persist as the world opens up and people become less glued to their devices is up for debate.
Tusk said he invested in Coinbase because it made money from both sides of crypto transactions, but he himself didn’t feel comfortable buying cryptocurrency.
“I don’t have a good read on whether Bitcoin will go up or down,” he said. “So I don’t trade in the currency at all.”