SAN FRANCISCO – The digital currency, once ridiculed as a tool for reckless speculators, is slipping into the mainstream.
Traditional banks help investors invest their money in cryptocurrencies. Companies like Tesla և Square are accumulating bitcoins. And celebrities are pushing for digital art spending using technology called NFT.
Digital or cryptocurrencies made their biggest move to widespread acceptance on Wednesday when Coinbase, a start-up company that allows people to buy and sell cryptocurrencies, went public. Shares of Coinbase started trading at $ 381 each, 52% higher than the $ 250 reference price, eventually closing at $ 328.28. That gave the company a valuation of $ 85.7 billion, based on all its outstanding shares, more than 10 times higher than Coinbase’s latest private valuation.
Call it a secret party. The San Francisco-based Coinbase is the first major cryptocurrency to go public on the US stock exchange. This was done as a result of an evaluation that competed with the evaluation of Airbnb և Facebook when they appeared in public.
Proponents of cryptocurrency, many of whom expect technology to tear down the global financial system, cite the watershed as a justification for their long-held belief in the potential of their business.
Coinbase listings answer the question “Is cryptography a real thing?” said Bradley Tusk, a venture capital investor whose company, Tusk Venture Partners, supported Coinbase. “Industry Any industry that can run an IPO of this magnitude is definitely a real thing, it is proven by the market.”
The merger gives key investors, who may be wary of buying risky digital currencies directly, the ability to have stocks in a business approved by the Securities and Exchange Commission, which facilitates transactions.
It also gives the financial world a glimpse of Coinbase’s healthy profits, something most high-tech startups do not have. Coinbase, which has 1,700 employees and 56 million registered users, reported a net profit of $ 730 to $ 800 million in the first three months of the year. During that period, it generated revenue of $ 1.8 billion, which is 9 times more than last year.
“It takes a lot of traditional tech-financing companies out of the water,” said Alak Alak Job, founder of Future Perfect Ventures, a category investor. “For a long time, they did not think that the cryptocurrency was not big enough.”
But Coinbase listing also raises questions about the future of digital currency. Industry evangelists have long predicted that cryptocurrency, the underlying blockchain technology, could create a decentralized financial system without governments or banks, a revolution that competes with the Internet. This morality is reflected in Coinbase’s “building a financial system open to the world” and “enhancing economic freedom.”
For now, however, cryptocurrency is mainly a means of financial manipulation. Few people want to use Bitcoin for everyday coffee-like shopping because its price is so volatile. It has also become a thunderbolt for environmental issues, as its technology uses a huge amount of computing power and electricity.
Many of the early buyers became rich simply by keeping their cryptocurrencies or “buying at a price” when prices fell. Others are reluctant to tell the story of a sushi dinner bought years ago with bitcoins that cost $ 200,000 today, or millions of dollars worth of pizza.
Coinbase facilitates this trading by acting as a central exchange. Before it was created, people had to create their own digital wallets, wire money.
“Can there be more than one asset class?” Tusk asked. “It’s still very much in the air.”
Coinbase’s trajectory follows the flourishing աշխարհի busts of the wider crypto world. Brian Armstrong, a former Airbnb software engineer and former Goldman Sachs salesman Fred Ersam, started at the company in 2012, when Bitcoin was the only digital currency, և it’s not very useful և valuable.
“It was perceived as frivolous or shadowy,” just like the early days of the Internet, said Mark Bernerger, an investor in Crypto Finance Group and an asset manager in Switzerland.
Headlines about the “Silk Road”, the market for buying, selling and selling drugs with weapons on Bitcoin until the federal authorities close it և Mt. Gox, the cryptocurrency that collapsed on charges of theft and embezzlement, later contaminated young industry.
Coinbase tried to change that. The company joined the prestigious startup Y Combinator և raised money from major venture companies, including Union Square Ventures և Andreessen Horowitz.
Armstrong was one of the few people in the industry who seemed ready to comply with the inevitable rules rather than cut corners to avoid them, says Nick Tomayno, who left business school to join Coinbase in 2013.
Coinbase also persuaded popular retailers to accept Bitcoin. “It was good for credibility when people saw that you could actually use bitcoin to buy a mattress at Overstock,” said Tomaino, who left in 2016. Coinbase has earned money on transaction fees.
But the highly volatile price of Bitcoin, the slow computer network that managed it, made transactions difficult, and people began to see the currency as an investment. In 2015, Ethereum was introduced, a cryptocurrency network with more technological capabilities, which attracted enthusiasts to create technology companies և funds.
The flood of “coin pre-orders”, in which companies were selling tokens to build their technology, created a new boom in cryptocurrency trading. But it quickly plummeted after it was discovered that many of the projects were forged, և US regulators considered the offers securities, demanding that they comply with financial rules.
Over the past year, the epidemic և cash surplus pushed the value of bitcoin, ethereum (Ethereum network currency) և and other symbols to new heights, recording another boom.
That prompted Tesla to buy $ 1,5 $ 1.5 billion worth of Bitcoin payment company Square for $ 170 million. In March, Morgan Stanley began offering its wealthy clients access to three Bitcoin funds, and Goldman announced that it would soon offer similar access. The mayor of Miami offered the city to accept tax payments in bitcoin and invest the city funds in the assets.
The Robinhood stock trading program announced that its 9.5 million customers had sold cryptocurrency in the first three months of the year, more than five times as much as in the previous quarter. Corporate funding for cryptocurrency startups rose to an all-time high of $ 3 billion in the first quarter, according to PitchBook.
PayPal recently added a cryptocurrency feature to its customers in the US. The company was driven by consumer interest առաջ advances in technology to accelerate transactions. It plans to rapidly expand its offer to customers around the world.
“It looks like the time is right,” said Jose Fernandez da Ponte, head of PayPal’s blockchain, cryptocurrency group. “We believe that this has the potential to revolutionize payments and financial systems in general.”
Still, the so-called revolution faces some challenges. Coinbase sometimes struggled to keep up with demand, and some customers who lost their accounts complained that the company did not respond. It has also been criticized for its treatment of female employees.
Finance Minister Ethan Yellen has threatened to crack down on currencies, including restricting their use.
And again, these would mean that you have to spend for these processes. In its financial statement, Coinbase warned that the results of its business would fluctuate with the instability of cryptocurrencies, “many of which are unpredictable, in some cases beyond our control.”
The industry’s biggest challenge, fulfilling its promise that technology is more than just a place to make money, could take another decade.
“There is no doubt that we are in the last boom, I do not know if it will turn tomorrow or in two years,” said Tomaino. “But the busts and booms are always higher than the previous ones.”