Wednesday, October 10, 20186 likes

Coinbase is the most underrated company in crypto


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Coinbase is the most underrated company in crypto.

This statement may sound absurd at first, especially since the company did $1 billion in revenue in 2017, but hear me out though (Disclosure: I have financial exposure to Coinbase through a Morgan Creek Digital fund).

Currently, Coinbase only allows users to buy and sell five digital assets (Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and Litecoin). In the near future, the plan is to allow token creators to apply for regulatory compliant listings on a jurisdiction-by-jurisdiction basis. This increase in listings should drive significantly higher user acquisition and revenue. While Bitcoin and Ethereum dominate daily trading volumes, the long tail of token trading volume adds up quickly as well — just ask Binance, who did $1.1 billion in profit during Q1 of this year.

Coinbase has also publicly announced the intention to support the ERC-20 standard. This support opens up the possibility for the company to offer the future listing and trading of tokenized securities. If this were to happen, users would be able to leverage the trading platform to buy and sell tokenized real estate and stocks, right next to Bitcoin and Ethereum. The exact impact is hard to measure today, but I believe that trading volumes could increase 10X with the introduction of tokenized securities.

Additionally, it is important to remember that Coinbase is not operating in the most important crypto countries. There is no current access or support for potential customers in China, Japan, or South Korea. This is like trying to build a tech company, but not being allowed to operate in Silicon Valley. Luckily, a Coinbase executive recently stated that they should receive the proper licensing to operate the Coinbase exchange in Japan during 2019. In my opinion, the company’s revenue will 5-10X when they introduce these Asian markets.

Lastly, remember that Coinbase is not planning to simply be a trading platform though. They have already began to roll out their institutional custody product, along with rebranding their consumer digital wallet. Rather than comparing the company to a trading platform or brokerage, it appears that Coinbase is building the world’s first truly global, digital financial institution.

If Brian Armstrong and the Coinbase team are successful, they will have built a company that brings hundreds of millions of underserved people into the modern financial markets. In that case, it would not surprise me if Coinbase was able to reach $100 billion in annual revenue within the next 8-10 years. This would be almost double what Facebook’s revenue run rate is today.

Every few years a founder builds a special company that becomes important to the world. Coinbase is building a more equitable, global financial system — there are few missions more important than this one.

Achieving that goal would be priceless.

-Pomp


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THE RUNDOWN:

Forbes is trying out the blockchain: Forbes, the century-old business publisher, is joining forces with Civil, a journalism blockchain network, to become the first major media company to experiment with publishing stories to the blockchain. Forbes will plug in Civil’s software to its proprietary content management system called “Bertie.” Once plugged in, Forbes journalists will be able to upload their metadata to the Civil network early next year, while simultaneously publishing to Forbes.com. Read more.

Roger Ver: Bitcoin.com may launch its own crypto exchange: Digital-coin wallet provider Bitcoin.com plans to buy or develop its own exchange, according to Chief Executive Officer Roger Ver. The early investor in Bitcoin, who courted controversy last year when he switched his allegiance to an offshoot, Bitcoin Cash, said he’s considering finding a partner to produce the platform, or may “build one internally,” in an interview in Malta. He gave few other details. Read more.

Research says crypto market on verge of ‘implosion,’ cites low transaction volumes: Echoing sentiments of mainstream economists, Juniper Research is warning that many of the metrics in the cryptocurrency world are pointing to a market implosion. Industry bellwether Bitcoin had seen its daily transaction volumes fall from an average of around 360,000 a day in late 2017 to just 230,000 in September 2018. Meanwhile, daily transaction values were down from more than $3.7 billion to less than $670 million in the same period. Read more.

Report: Oldest UK crypto exchange Coinfloor laying off staff: British cryptocurrency exchange Coinfloor is laying off the majority of its staff. Coinfloor is a London-based digital currency trading platform founded in 2013. Coinfloor is reportedly the oldest crypto exchange in the U.K. and is focused on institutional and sophisticated investors. According to CoinMarketCap, Coinfloor’s daily trading volume is around $1 million at press time. Read more.

Mastercard patent hints at plan for multi-currency blockchains: Mastercard has won a patent for a proposed system that would allow for the launch of different kinds of blockchains – including those that support multiple currencies. Published Tuesday by the U.S. Patent and Trademark Office, the patent explains that a group or company may need to store different types of transaction information on a single platform – something that is currently difficult to do on a single blockchain. Read more.


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