The company has been listed on NASDAQ since mid-April – can Coinbase keep the investor promise and establish itself as the “Apple of the crypto world”?
On April 14, the US company Coinbase opened a new chapter in the crypto market: the trading platform has since been listed on the New York tech exchange NASDAQ, the stock market that also includes big names such as Apple, Amazon, Microsoft, Tesla and Google -Mother alphabet houses. In the run-up to the DPO, there was much speculation about the move – would investors rush to $ COIN and shoot the price straight through the roof, or would the market not be ready for a crypto trading platform on the high finance floor?
The crypto space is currently going through a change. Driven by the investments of institutional investors, the hype of influencers and CEOs, who show their trust in the developments of Bitcoin and the blockchain on Twitter and Co. and projects that offer better and better products through rapid development progress, almost all crypto currencies are currently booming although the Flash Crash from the middle of last month made some Hodler skeptical.
Nevertheless: In addition to numerous new investors who have seized the opportunity to invest and were thus able to generate enormous returns within a short period of time, one corporate division in particular benefits from the bull market – apart from minor dropouts – and the attention that Bitcoin, Ethereum, Cardano are attracting and also currently enjoy Dogecoin: the trading platforms. One of these platforms, which is now making its debut on the high finance floor, is Coinbase.
Impractical fiat money and the way into the mainstream
Coinbase was founded in June 2012 by Brian Armstrong, who had previously worked as a software developer for Airbnb, and Fred Ehrsam, a former Goldman Sachs trader with the aim of enabling crypto fans to trade coins. The then 29-year-old Armstrong had already come across the whitepaper published by Satoshi Nakamoto in 2010, which was supposed to lay the foundation for the crypto scene. At Airbnb, he was constantly faced with the problem of reconciling over one hundred different currencies from the countries in which Airbnb users offered their apartments, rooms and houses, as he told the business magazine last year Forbes admitted.
The two entrepreneurs generated their first start-up capital thanks to the Y Combinator start-up center, which provided the young company with 150,000 US dollars – and enabled the platform to be launched in October of the same year.
The young team celebrated advancement into the “Big League” just one year later, when the venture capital company Union Square Ventures gave Coinbase 5 million US dollars as part of a Series A financing round. Another USD 25 million should follow in the same year, thanks in part to the investment by Andreessen Horowitz. The user numbers also indicated that the investments were worthwhile – the magic mark of one million was broken in 2014.
Also in 2014, the first signs that Coinbase should be more than just a tool for techies in the crypto niche, when the company partnered with a small number of US companies to enable these Bitcoin trade-ins – Dell , Expedia and Time Inc. were among them: big steps towards mainstream.
A place at the adult’s table
Despite the millions that Coinbase was able to raise from year to year in financing rounds – according to the portal TechCrunch In 2017 it was already 117 million US dollars – the big players on Wall Street didn’t take the Californian start-up really seriously. At the latest since Coinbase, with an enterprise value of 1.6 billion US dollars, which the team achieved in August of the same year, claimed the rank of the first “crypto unicorn”, Coinbase got the attention it deserved. The bear sentiment that dominated the crypto market from the beginning of 2018 to the end of 2019 could not change that.
Rumors of a possible IPO of the company have been making the rounds for years. However, they were only made concrete in December of last year, when Coinbase Global announced its first direct public offering (DPO) vis-à-vis the US financial supervisory authority SEC expressed.
Since then, crypto reporting has been rolling over news about the move. Crypto portals and business magazines never missed an opportunity to speculate about the effects of this first crypto IPO. There was talk of corporate values up to 100 billion US dollars, of an IPO that would change the financial world forever.
Then, on April 14th of this year, the time had finally come: Coinbase was launched on the US tech exchange NASDAQ under the ticker symbol $ COIN at a starting price of 381 US dollars. The share closed the first day of trading at $ 328.28, since then the price has been moving slowly south, trading around the $ 237 mark at the time of going to press (June 3, 4:59 p.m.) – among other things planned Tax increases by the Biden administration have put a damper on the stock (and the market as a whole). The price explosion that some investors had certainly hoped for did not materialize. However, that should not be a reason for not investing – they are more likely to be seen in the ever-increasing competition.
Coinbase against the rest of the world
Just a few weeks ago, we received the news that the California-based crypto trading platform Kraken is receiving support from the multi-billion dollar investment fund RIT Capital Partners. The reason? According to media reports, a possible upcoming IPO. At the same time, established NASDAQ players are also daring ever bigger steps towards crypto adaptation.
Both PayPal and its subsidiary Venmo offer US customers the trade and custody of crypto currencies – including payments via Bitcoin and Co. in thousands and thousands of shops. For Coinbase, this can only mean a declaration of war – and a duel that Armstrong and his team have to win.
And then there is the SEC, which under US President Biden has been given a crypto-affine new boss in Gary Gensler, but at the same time has the power to not only put stones in the way of Coinbase and Co., but insurmountable mountains put. And while Paypal could probably put up with a loss in its crypto business, a crypto trade ban, as some are calling for, meant the total loss of any business foundation for Coinbase.
Brian Armstrong himself doesn’t have to worry about that. As part of the direct public offering, he sold a large part of his company shares for a total of 291.8 million US dollars.
Disclaimer
This article has been reviewed and updated, and was first published in the May issue of our monthly magazine, Kryptokompass. For information about a subscription, click here.