For reference, BP the number five global oil behemoth with 200B in revenues in 2020, has a market cap of 85B. Coinbase that sells pumped speculation for a fee has a market cap of 100B.
So if their business model is raking it in by selling pumped-up speculation, and the pumped-up speculation market is a growing sector, then that's what is called an efficient business model which has nothing to do with the fact that markets are 'efficient'.
Also, since when does anyone care if casino's business is based on pumped up gambling. As long as there are millions of transactions going on, the business model will stay 'efficient'.
Not really. We already had one - COVID + decade of economy reset cycle - combined rolled into one. Next one - will not happen (probably) until at least 2027\2028
With the emergence of a new group of people that have massive crypto reserves at their disposal, paying for a timeshare in crypto would make that asset accessible to them natively.
It’s not a bad idea. If crypto is a new paradigm, the world will need crypto-XYZ to appeal to that crowd. Cars (Tesla), and timeshares are among them.
There is lots of speculation now but I think eventually real-world applications will be made with crypto. At the very least, it will be likely that the bigger cryptos will start to be accepted by major companies to buy goods/services.
Crypto doesn't make a good currency for average consumers due to its instability. Who would do day to day purchases w/ funds that fluctuate +/- 10 percent? This is why you want centralization.
Store of wealth? Aight, you got me. Solid arguments to be made for it as a new anti-fiat. Its recent divergence from gold concerns me though. That seems bubbly.
As a settlement protocol between nations and financial institutions? Already well proven out and in use. No argument to be made.
Yes, perhaps this is correlated with the fact that the successive number of years that crypto has been hyped and failed to deliver anything of value only grows as time goes on.
I would reply to you and describe the burgeoning ecosystem of economic activity and the speed at which the entire sector is growing, but I have a feeling that convo will not go anywhere. Crypto is eating finance. It's going to eat everything else too. The longer you fight that, the harder the 21st century is going to be for you.
What problem does crypto solve apart from being a digital alternative to gold? It's not anonymous (except Monero which is centralized), transaction fees and times tend to be high (depends on which currency and exchange you're using), there's zero recourse for stolen funds currently (which makes it ripe for fraud). And in addition to that, at least for Bitcoin, it's an environmental disaster.
Yeah but how does Crypto make stuff happen in the real world? Like a bank can repossess people's houses and stuff and have the law applied. Crypto only has power over what's on that specific blockchains contracts.
On blockchain, the code is the law, for better or worse. It brings a lot of powerful advantages but certainly comes with some tradeoffs. Loans on DeFi today, tend to be overcollateralized, so that a loan's collateral can be liquidated by a "watcher" if the loan goes into default or is at risk of becoming undercollateralized.
Arbitration, insurance, etc. can also be recreated on-chain and already exist to some extent although it is quite early days still.
1) The energy consumption of bitcoin mining alone is estimated to have reached the levels of entire countries (Argentina was the latest country I've heard it being compared to), while actual usage of bitcoin (except for speculation) is still a fringe niche thing
2) When shown that the coins do not scale, instead of moving on to an improved version, those coins continue to grow. Instead of 'okay, proof of concept done, it does not scale, let's move on to an improved version', the bonanza just continues.
There are probably more reasons like these, but I think it would be straight-up weird if the technically versed audience of HN would disregard the reasons above as much as the current crypto-markets do.
BP has been in business for decades making 20-80B/year in profit. If anything, their financials should be an indication of what a 100B company looks like.
AUM is the absolute wrong metric to measure for an exchange. This is why I tell everyone to never pretend they understand a subject the moment you read the first Wikipedia page you come across.
USD 90 billion "assets on platform" (which, as has been pointed out, is not a good metric for an exchange at all). That's about 5-12% of total crypto assets (depending on the time of day) [1].
By the way, Coinbase revenue in the last quarter was nearly 0.1% of the entire crypto market cap.
So, Coinbase took around 60$ of any 10,000$ traded on Coinbase, and 10$ of any 10,000$ crypto market cap, which implies that 1/6 of the entire crypto market cap traded through Coinbase once this quarter, unless I'm mistaken.
[1] more likely, the percentage is fairly constant, while the USD value fluctuates a lot with crypto prices, so "AUM" might be around USD 200 billion now (as crypto market cap is USD 2 tr).
q4 2020 and q1 2021 were anomalies. The government put $900B in stimulus money into individuals pockets. There is probably no single company that got more benefit from those payments than Coinbase. The fear of inflation from unfettered spending drove investors into crypto with the idea that it was a hedge against inflation. I don't buy that value proposition for crypto but it did drive prices higher. The stimulus also put money directly into individuals pockets many of whom were hoping to cash in on the boom.
Coinbase did $1.28B revenue in 2020 with something like half of it coming in q4. This was before Venmo, Cashapp, Paypal, etc. started selling crypto. The cost for customer acquisition is about to skyrocket at the same time fees are about to plummet.
There's a reason Coinbase is rushing to DPO right now. The stars are perfectly aligned for them to get out while the getting is good.
The efficient market hypothesis means that valuation of Coinbase reflects all available information. I'd wager that this is true. It doesn't mean that the services Coinbase provides actually are actually worth that much or will ever be in the future.
Yeah it sucks that the valuation for a company that inefficiently mines a resource that's going to be stored forever and mostly used to speculate, with only a small part of it ever put to productive use has such a high valuation.
But yeah the valuation for Coinbase is also insane!
Oil is mined super inefficiently except for shallow wells, it has tight margins. Some operations, specially fracking, actually shut down pretty often when the barrel price goes down near 60 which is were we are now.
If you look at production vs. consumption in the world there's usually a bit more consumption than production. If you look per country on the US there's more production than consumption. That's because "extraction" is heavily played with to speculate with the price.
Well first of all everything is speculation, it goes both ways, you mentioned BP, well people use barrels of oil today because they think it won't be worth more tomorrow
Coinbase takes a fee for every transaction in the assets traded on the platform.
The asset in question is the one which people choose as the asset to hold on to express their fears of inflation
This is not unlike 2010 when people like Stanley Druckenmiller and libertarians alike predicted hyperinflation due to QE.
Normies are where Druckenmiller was back in 2010, they have an irrational fear of inflation and they express it by buying BTC.
Coinbase is perfectly positioned to gain from this movement which emerged, and it will only continue given that like anything the more authorities tell humans what to do (in this case to spend) the more they rebel by doing the opposite
Markets are efficient.