Coinbase’s Big Announcement
Coinbase is a San Francisco-based crypto exchange that was started in 2012 by Brian Armstrong and Fred Ersham. Since 2012 the exchange has grown immensely and is currently hosting 43 million clients worldwide. To date, Coinbase has executed more than $456 billion worth of trades, according to the SEC. Coinbase has recently announced they will be going public on the NASDAQ. There is currently no confirmed date yet, but what we do know is they will be going public through a DPO rather than the more traditional IPO. The difference between the two is explained well by Shobhit Seth, a derivatives trader. He explains: Initial public offerings and direct listings are two methods for a company to raise capital by listing shares on a public exchange. While many companies choose to make an initial public offering (IPO), in which new shares are created, underwritten, and sold to the public, some companies prefer a direct listing, in which no new shares are made and only existing, outstanding shares are sold with no underwriters involved.
Because Coinbase is an online platform for buying, selling, transferring, and storing digital currency, they host thousands of cryptocurrencies for investors to trade. Going public wouldn’t change what they do but it could come with some potential revelations. This is because the identity of Bitcoin’s creator, who goes under the alias Satoshi Nakamoto, is in Coinbase’s S-1 filings. Suppose his true identity is revealed, and he decides to sell his over 1.1 million bitcoin, worth $46 billion and 5% of the total crypto market. In that case, the value of Bitcoin could become deflated. Although the likelihood of this occurring is doubtful, the consequences are still daunting. But when looking at Coinbase as a whole, are they the only exchange on the block? The answer is no because although Coinbase is the most notable crypto platform, competitors exist. For example, Gemini is run by Tyler and Cameron Winklevoss, who used their settlements from the infamous Facebook lawsuit to invest in bitcoins. The future of crypto seems optimistic, but only time will tell what will truly happen.
What do you think about Coinbase and will you invest in it when it goes public?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.