The mainstreaming of cryptocurrencies is on the cards with Coinbase listing. It is a watershed moment for digital currencies. The existing shares of Coinbase are now available on NASDAQ for purchase.
Coinbase went public via a direct listing on Wednesday. The company is the first major crypto startup to list on the US stock market. Crypto has become a real thing with this event. Now users can own stocks of Coinbase and take advantage of the volatile crypto market without actually buying the coins.
Crypto has come a long way in the struggle to establish itself. This industry now has the attention of the whole economic world. Cryptocurrency is built around the idea of an open and distributed financial system. It offers the verification of monetary activities without the need for any intermediary.
Crypto had its fair share of bad publicity in the past. Bitcoin, the parent cryptocurrency, was mocked as a tool for criminal. The anonymous nature of blockchain made it impossible for governments to track the person behind transactions. Moreover, decentralization took central authorities out of the equation. All this provided ground for suspicion.
Bitcoin was called out for being a flash in the pan for a very long time. Even after the magnificent rise of bitcoin's value, many financial analysts consider it a bubble.
Today cryptocurrencies market has crossed the value of $2 Trillion. The corporate sector is increasingly investing in bitcoin. Besides, crypto startups are attracting new members and customers.
Coinbase started its operation in 2012 when the crypto industry was in its infancy. Brian Armstrong, a former software engineer from Airbnb, and Fred Ehsram, a trader from Goldman Sachs, founded the company. They used their knowledge of the tech and finance industry to make Coinbase a success.
Coinbase exchange lets users buy, sell and trade cryptocurrency. Its headquarters is in San Francisco. Being the major cryptocurrency in the United States, Coinbase has a huge customer base. It has over 56 million verified users.
The not-so-distant past of cryptocurrencies is filled with booms and bust. Coinbase's fate has been linked with these market movements. During the bull market season, trading activities on the exchange increasing. On the other hand, bear days make trader shy away.
2021 is, so far, a good year for cryptocurrency. The surge of crypto markets is all over the news attracting new investors. Resultantly, Coinbase is also having its share of good luck.
The recent release of numbers before listing showed some fat profits for the company. It garnered $730 million to $800 million in net profit during the first quarter of 2021. Moreover, the total revenue in this time period is $1.8 billion. This is a ninefold increase from last year.
Coinbase listing gave the company a valuation of $85.7 billion. This is close to the valuation of Airbnb and Facebook when they went public. Coinbase's stocks also increased in price by 52%. COIN stock trading begins at $381, up from the reference price of $250.
The crypto enthusiasts are celebrating the Coinbase listing as the confirmation of cryptocurrency's potential. It proves that digital assets are worth mainstreaming. Moreover, it is a sign that a trustless, decentralized blockchain system can replace the centralized banking system.
The believers of cryptocurrency say that bitcoin and other altcoins can serve as an alternative payment system. Besides, bitcoin is immune to inflation. Governments and central banks can print as much cash as they want when it comes to fiat. However, bitcoin will cap at 21 million. There can be no more bitcoin beyond that number.
Despite criticism from the left, right, and centre, bitcoin never went to zero. It kept some gains from every bull run. At the time of this writing, bitcoin is trading at the price of $56,000. Besides, it reached the peak value of $64K in the past week.
The corporate sector's interest in crypto has been growing since 2020. The coronavirus pandemic provided a breeding ground for the bitcoin boom. Multiple companies invested a great share of their income into bitcoin.
MicroStrategy, a software company, led the way by purchasing bitcoin in 2020. The company has topped up their wallet with additional coins from time to time. At the moment, MicroStrategy owns 90,000 bitcoin.
Tesla, Elon Musk's car company, is also aggressively backing Bitcoin. The company revealed the purchase of bitcoin worth $1.5 billion in February 2021. Stepping further in the crypto's direction, the company has started Bitcoin in payment for their motor vehicles.
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Banks and financial services providers are also no far behind in making hay while the sun shines. Here are some highlights so far:
The corporate sector is already bullish on crypto. With Coinbase listing, we will see more involvement of the corporate sector and wall street in cryptocurrency.
Cryptocurrency has its own set of challenges. The same set of qualities that led Coinbase to popularity are the ones posing hurdles in mainstreaming crypto.
The first issue is the sudden price surge. The crypto market is extremely volatile. Coin prices can surge or plunge by a significant margin within few minutes. Moreover, much of the market movements come from speculations. Speculative mania can fuel pump and dump in the market. This often deters serious investors from investing in crypto.
Bitcoin is yet to be accepted as payment for products or services. No one uses bitcoin to buy coffee. The holders of BTC keep it as a commodity. Thus, the currencies cannot claim fiat's place.
The Crypto industry needs maturity to become truly mainstream. The number of crypto investors is still very few. Thus, the decision of few big whales can decide the fate of the whole market.
With institutional backing and investor's interest, cryptocurrency can stand its ground. Nevertheless, some crypto activists fear that regulations can threaten the free and open nature of decentralized finance.
Coinbase listing is a watershed moment for cryptocurrency. The digital assets now have the attention of financial Institutes as well as individual investors. We will likely see more purchases of bitcoin in the coming months. Thus, the era of the token economy has arrived. It just needs some time to establish properly.