There was a time when would have loved to buy Coinbase stock.
Just a few years ago, they were by far the easiest was to buy crypto (IMO). At that time they also felt like the most legitimate site and for people who didn't 100% know what they were doing, but wanted to buy some Bitcoin, that perception of legitimacy is important. For those reasons, I feel like they kind of dominated the casual coin holder space, and I think they could justify the fees they were charging.
In the last year or so it feels like that's all changed. Because of things like Apex Crypto, it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase. It seems like their market (non-crypto people looking to buy crypto) is being eaten alive. I don't understand their value prop or why their higher fees make sense anymore.
I've been burned too many times, so I don't short stocks or buy puts, but I just can't see this being a good buy. Unless they drastically lower their fees, I just don't see them continuing to grow users.
I am not being obtuse or sarcastic here. Is it this? http://apexcrypto.com Because that website tells me nothing at all. And past that, Google only shows a few press releases.
-
But on the consumer crypto coin collector criteria, it still seems like Coinbase has the mind-share. And I imagine they have the reach and scale to be in compliance with regulators, which is what makes them a more attractive investment.
Me? Square’s Cash app is awfully slick, and makes buying drugs…I mean…buying non-fiat currency to stick it to the man all very easy. But I have no idea if people use that feature frequently.
Apex Crypto is a crypto clearing house, similar to the clearing houses we have for the stock market. Companies like Robinhood, WeBull, SoFi, etc aren't building their crypto trading infrastructure from the ground up. They're plugging into services like this, which handle the exchange between fiat and crypto and a lot of the regulatory compliance. This drastically cuts down the complexities and lowers the barrier to entry for offering buying and selling of crypto.
I don't know all the details of the services they offer, but services like this are the reason it seems like every app under the sun will now let you buy and sell crypto.
I'm not 100% sure. I actually tried to do some research on that a few months ago and couldn't find anything definitive one way or the other (I haven't looked since then).
When I did look, I found some press releases about them partnering, but it was light on details. Based on the name and the fact that their logos now match (they didn't used to), my guess is that they aren't two separate companies.
Or a hell of a clever ruse to cause exactly this confusion by consumers to think it’s more legit than it is. All of this is buyer beware outside of CoinBase. Why? CoinBase and regulators are best buddies. Hard to be dodgy with Big Brother peering into your customer data via IRS subpoenas.
> But I have no idea if people use that feature frequently.
Looks like they made 4.57B$ in revenue with 97M$ in profit [1]. And "We’ve continued to see strong adoption, with 3 million customers [buying bitcoin] through the past year, and in January we saw 1 million new to bitcoin in just one month."
I'm having trouble finding a good citation, but I think the GP is referring to a quirk of US accounting rules that causes crypto trades specifically to be counted as revenue. The same does not apply to traditional financial market trades, which I think is what your numbers are.
Weirdly, it seems there are no GAAP accounting rules for cryptocurrencies yet. Apparently there is informal guidance that it should be treated as an intangible asset:
Many Stock brokers like Webull let you buy crypto, but you can't transfer them to your wallet or use them to make purchases. Also, they claim no fees, but they add the fee to the spread (the spread is artificially increased to 1% both ways (2% total)) ... so it is like a hidden fee that ends up being more then what you pay on Coinbase, especially if you trade a substantial amount each month [1]. So Coinbase is still one of the best even though they can't handle the loads when the market get busy.
> Many Stock brokers like Webull let you buy crypto, but you can't transfer them to your wallet or use them to make purchases.
Fair, but I feel like most people I know aren't using crypto as a currency right now. They're more interested in holding or speculating on the price, so transferring to another wallet is a non-issue.
> Also, they claim no fees, but they add the fee to the spread (the spread is artificially increased to 1% both ways (2% total))
I'm not up to date on Coinbase's latest fee structure, but I think 2% still may be less than, or at least comparable, to what they are charging. Even if it isn't, the illusion of no fees will attract a certain amount of people.
> especially if you trade a substantial amount each month
Do people trade a lot using Coinbase (serious question)? I was under the impression that there were better platforms out there more suited to day/swing trading crypto.
The maximum that you can get charged at Coinbase is 1% for a buy & sell transaction pair (0.5% each way), if you don't trade much... so half of webull : https://i.imgur.com/IohYn4o.png
But it goes down quickly. It gets cut in half if you trade $50k/month and goes to down to 0% if you trade a lot.
I agree with you, I think their coinbase pro fees are relatively reasonable, but I just don't see why anyone would use the "normal" coinbase, the fees are very high, I suspect it's probably name recognition, ease of use and trust.
Coinbase is just a money grab to extract money from people who don't know about Coinbase Pro. Really shady if you ask me and I'm surprised it doesn't seem to have damaged their brand name. The fees on "regular" Coinbase are outrageous and no one should ever buy through there.
Nope, you can just use your existing coinbase account to login to it, it's just more "advanced" as in the UI isn't just a buy and sell button, but still very easy to use.
So I don't get that impression because the trading fees are a sideshow.
Coinbase Vault is providing access and liquidity to the whole DeFi market without ever saying it.
Its like not investing in Amazon because you didn't notice AWS. The similarity being limited to there being a non-consumer facing product that might be bigger than the visible one. Coinbase has a lot of growing revenue streams, which has almost nothing to do with the retail platform of non-crypto people looking to buy crypto.
> Because of things like Apex Crypto, it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase.
Which stock broker app lets you deposit in Bitcoin? Or withdraw your Bitcoin to your own address?
I think the bull case may be more about their future sources of revenue. If crypto succeeds, exchanging it with fiat may end up being only a relatively small amount of the economic activity. Traditional brokers are not likely to be able to compete with Coinbase in those future markets.
Of course it's really hard to predict what those future markets might be or how much value Coinbase will be able to extract from them, so I have no idea if $68 billion is a reasonable valuation.
Well first, how are you gonna get Eth or whatever to use that DEX? Some apps have payment options but hoooo boy are the fees outrageous. Coinbase doesn’t have the best fees in the world but just mosey on over to Coinbase Pro and it’s a whole lot better.
Then there’s the gas fees on Uniswap. Not even worth bothering with unless you plan on making $1000+ trades.
The other thing to consider is that for newbies they offer a safe platform with a list of established coins. That counts for something.
> Coinbase anticipates that its Class A common stock will begin trading on the Nasdaq Global Select Market under the ticker symbol “COIN” on April 14, 2021.
Honest question, why is Coinbase listing on the NASDAQ (edit: tangentially also NYSE)? If their whole business model is predicated on the success of crypto-currency shouldn't the whole world of fiat currency be completely irrelevant and a distraction?
Well, (a) just because they invested in Coinbase, which does crypto, doesn’t mean they have as much confidence in crypto as they have in Coinbase—betting on Coinbase is a bet on the volatility of crypto + Coinbase’s ability to win, not a bet on the price of crypto, (b) you have to pay taxes in dollars, (c) their investors probably want dollars.
Why is it a direct conclusion that the investors want dollars? it's currently the only system that is available to Coinbase within the US and they're utilizing that. What is stopping the investors from buying back in with the dollars they gained? (you can't know that for sure either)
If there was an alternative option allowed by the SEC in the US, I'm certain that they'd have chosen that. This is not a cut and dry conclusion (that the investors want dollars).
coinbase is still a company with shareholders - decentralized or not. there are shareholders who want liquidity; there are investors who want in now.
the choice of listing has nothing to do with the monetary unit of trade ($, euro, btc, doge etc). the exchange simply enables them to trade the equity of their company. NASDAQ/US is just the most liquid one (and likely where their immediate investors past and future are going to have access to already)
but perhaps I'm not aware of alternatives where one can trade equity in the crypto/defi market?
happy to learn if you point me to the right places.
> If their whole business model is predicated on the success of crypto-currency shouldn't the whole world of fiat currency be completely irrelevant and a distraction?
I'm not following this line of logic, where are you getting this from? Why would the success of crypto-currency imply the demise of fiat, if that's what you're saying? Or why would you have no interest in fiat just because crypto-currency turns successful?
Nasdaq, but in any case coinbase is predicated on crypto interacting with the normal banking/fiat world. They're basically in the middle ground. They aren't crypto-denialists who say crypto will go to zero. They aren't crypto-bulls who say crypto will replace all currency in the near future. They see crypto as coexisting with the existing banking and finance sector.
I was referring to the US equities and treasuries markets
Which in this context includes cross linked index and futures markets
As this is a conversation about listing an equity versus a security token on a crypto venue, the liquidity is unparalleled (even if crypto venues were trading registered securities tokens)
> If anyone has fiat lying around causing them problems I'd be happy to take it off your hands. I'm certified for proper fiat handling.
You can't be trusted not to manipulate the Bitcoin market, as you just got fined; your customer service is abhorant and you keep shutting down accounts and trades for no explicable reason. Why would anyone trust you with anything at this point is beyond me.
I want you personally to know that YOU and Coinbase (and what it represents) are the bane of Bitcoin and all of HN and YC should know that.
Yes, this is a missed opportunity for crypto. Unfortunately, securities and exchanges for securities are so heavily regulated, that it is very hard to try something like this with a “fail fast” approach and we will probably have to wait for quite a while until we see such markets happen, if at all.
To me as a computer scientist, it is astonishing that even something as simple as a web service that matches willing buyers and sellers of securities requires a license that costs millions of dollars to obtain.
About a decade ago BATS tried to IPO on their own exchange and failed pretty spectacularly. Coinbase probably doesn't want to "fail fast" with their IPO when there are billions on the line.
Since there is a good chance you have not read the details within stokr.io, I'll offer some details, this is not just for retail investors, there is a minimum required investment in most projects, for example: https://stokr.io/blockstream-mining has a minimum of 200K EUR. This is similar to how IPOs function, but this is more open and you hold the tokens in your wallet, instead of a custodian like DTCC.
They are in full compliance of EU regulations:
"The issuance of securities is governed by EU regulations and is available in a number of European countries. STOKR is constantly working on making the securities available in as many countries as possible. Both individuals and legal entities can invest on STOKR."
Coinbase has been using Morgan Stanley's Shareworks platform to manage the direct listing, which has been a nightmare to use. ACH transfers take over a week and the platform has a ton of technical issues.
In my experience, financial literacy is so poor and Dunning Kruger so high that typical non-finance human beings constantly blame the process for extremely basic mistakes, like sending money between accounts of different titles but saying that you own both of them.
Even the word "title" would detonate the average person.
I'm a pretty experienced trader and worked on the Payments team at Coinbase, dealing with ACH, wires, and whatnot. If it's hard for me, can't imagine what the platform is like for others.
Coinbase has an alumni Slack filled with complaints on Shareworks.
This sounds like a case of blaming the user for poor UX design. If the users that the system is designed for are constantly making the same "basic mistakes", then the system isn't designed well for them.
Look for an order type called "limit on open," or its radioactive cousin, "market on open."
The reason people don't do this is, that kind of order requires having an opinion about what a stock should be priced at. And retail traders basically never have that opinion.
RBLX just did a direct listing. They set a reference price at $45. Later in the day (they did not start trading until midday) the reference price was adjusted to $60. I had two limit orders. One from day before at $50, another placed at noon at $62. None of them executed, since it opened at $64+.
People have been saying that ever since Bitcoin existed.
1) they don't see it as a threat (ex: Powell comparing it to gold rather than USD)
2) it's actually generating capital gains tax, jobs and revenue for the country (by creating business around it, etc)
3) US has auctioned off seized Bitcoin in the past, so it would be weird if they make something illegal after selling it themselves
Last, but not least, they can't ban it, they can ban the on/off ramps and cause short term disruption, but that wouldn't be sustainable in the long term, how do you stop millions of people from running some code on their computer (case in point, torrent is still very much alive)?
The US won't ban Bitcoin, because USG philosophy isn't based on obtuse assaults like that. What will happen is ever more "money laundering" laws making it irrelevant for its original purpose. You can already see startups gearing up for this with things like "cross border payment compliance" and the like. Eventually if you want to convert to fiat, you'll be forced to have good provenance coins as determined by such gatekeeper companies, effectively undermining the whole point.
1. No, because if a company announced that the SEC had given them go-ahead to go public “for the lulz”, that company would then be in deep shit with investors and the SEC for the rest of time.
2. No, because that wouldn’t even be a funny joke.
3. No, because we are done with April Fools, the internet drove that into the ground looooong ago.
If you have direct market access and a clearing house you can do whatever you want, its the reliance on brokers that limits all the other market participants
Just a few years ago, they were by far the easiest was to buy crypto (IMO). At that time they also felt like the most legitimate site and for people who didn't 100% know what they were doing, but wanted to buy some Bitcoin, that perception of legitimacy is important. For those reasons, I feel like they kind of dominated the casual coin holder space, and I think they could justify the fees they were charging.
In the last year or so it feels like that's all changed. Because of things like Apex Crypto, it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase. It seems like their market (non-crypto people looking to buy crypto) is being eaten alive. I don't understand their value prop or why their higher fees make sense anymore.
I've been burned too many times, so I don't short stocks or buy puts, but I just can't see this being a good buy. Unless they drastically lower their fees, I just don't see them continuing to grow users.