This is a segment of the Supply Shock Newsletter. Subscribe to read the full edition.
Coinbase brought Bitcoin to Wall Street long before BlackRock and Fidelity.
Four years ago today, Coinbase was published at a $86 billion valuation. This is the number that jumped to $100 billion in 2012 to rival Facebook's debut.
And because he is familiar with all the business shown by CEO Brian Armstrong and his executive team, Coinbase's story is one of the things that harnesses the natural inertia of Bitcoin.
Coinbase will be open to this day
At the time of Coinbase's public debut in April 2021, Armstrong had commented that the list had cast 1,000 fresh billionaires overnight.
It also won Armstrong $16 billion in wealth with 40 million Coinbase stocks, allowing early investors, employees and other supporters to win billions of dollars on the first day.
They won it: Armstrong led the company for nine years, leading the way through regulatory crackdowns, fear, climate hysteria and brimstones within the community, leading up to Coinbase's Nasdaq debut. They appeared on the other side and first appeared in a powerful bull market.
Previous editions of Supply Shock looked back at Armstrong's posts on Hacker News in March 2012, where he searched for the co-founder of Ride or Die.
Coinbase was Bitbank at the time. This was an app like PayPal for sending and receiving Bitcoin via email. Three months after the hacker's news post, Coinbase was Coinbase, and Armstrong raised $165,000 for the startup to get off the ground.
Exchangeing Bitcoin for US dollars was a stuck business model. It took less than a year for Coinbase to reach an important milestone. By February 2013, users had exchanged $1 million worth of Bitcoin for 30 days. Coinbase revenues have since been positively correlated with Bitcoin's price.
Ultimately, these exchange services have transformed into what Coinbase, a full-fledged trading and financial suite, offers today.
So if Brian Armstrong was Ben Huh, and Coinbase was his tank, Bitcoin would be Ilderim's four white horses. Bitcoin set it to the highest ever since Coin was released. It is evidence of a symbiotic relationship, regardless of any side taken during the block-sized war.
Looking back, “Bitcoin For Bitcoin PayPal” was an elevator pitch with a clear expiration date. With a long enough timeline, all companies will become Bitcoin companies. This includes PayPal itself, which began rolling out cryptographic features within the months leading up to Coinbase's direct listing.
Coinbase is currently working to fight back on its valuation, diversifying its revenue somewhat from Bitcoin trading fees, currently worth about half of its April 2021.
At the same time, starting with Stablecoin Issuer Circle and potential trading platform Etoro, we are on track to see more crypto companies go public over the next year or two.
However, there is a clear difference. Bitcoin doesn't represent the heartbeat of these companies, at least for Coinbase, in its formative years.
– David
Historian's view
“On a long enough timeline, all businesses will become Bitcoin companies,” David writes above. However, with Coinbase, it seems to take longer than usual.
Certainly, there is a positive side to the company. Coinbase has been able to protect Bitcoin and its reputation in the industry for over a decade. Contrary to Ben-Hur's analogy, Coinbase claims to be truly a minivan in the crypto industry. A safe and reliable, an uncomfortable living room where you sit with your large family.
That said, Coinbase's legacy (from Bitconner's view) definitely depends on balance.
Appropriately, you can see that anemia Bitcoin investment. Coinbase has less BTC than Tesla despite its 10-year market benefits.
Next is the technical ambiguity regarding Bitcoin. Remember that Coinbase was one of the first bitcoin exchanges to Crypto, prioritizing developments and lists about Ethereum. It has invested millions in L2, Solana and other “competing L1s.”
But despite the fact that Bitcoin continues to maintain a critical portion of its business (which drives 30% of all transaction revenues last year), the company's product and development roadmap ignores it. Coinbase is the last mover for upgrades like Lightning and Taproot.
It appears Coinbase is sometimes trying to compensate, like when custody came as a surprise at this weekend's op_next meeting. It also simply pays lip service to Bitcoin (it's just a joke that says “Bitcoin” when Brian Armstrong is forced).
On multiple fronts, it is difficult to argue that Coinbase's legacy is not similar to AOL. It is difficult to argue that AOL is not an early web success story that fades completely from the relevance of the internet because it failed to build its architecture in the same way it builds most value in the long run. (You can read the latest investor hands on L2S issues.)
