Coinbase Is Going to Public on NASDAQ for $100 Billion https://ift.tt/3snuUaC

On April 14, Coinbase, a cryptocurrency exchange located in San Francisco, will go public. With an initial capitalization of US$100 billion (£73 billion), the business will trade under the symbol COIN and list 114,850,769 shares on the NASDAQ.

Coinbase aims to issue its shares directly on the NASDAQ exchange, bypassing the usual IPO path, a strategy pioneered by large names like Spotify and Palantir in recent years. In contrast to an IPO, which involves a firm generating new shares and having an underwriter acquire them for a fixed price before selling them to the market, a direct listing includes a corporation selling existing shares with no underwriter.

But what exactly is Coinbase, and why is it such a significant development to buy bitcoin in Dubai in the bitcoin market?

The business model of Coinbase

Coinbase was launched in 2012 by Brian Armstrong, a former Airbnb developer, and Fred Ehrsam, a Goldman Sachs trader. Their goal was to make investing and trading in cryptocurrencies simpler, more efficient, and more equitable.

Since then, the business has grown to become the largest bitcoin exchange in the United States. Even though several other exchanges, like Binance, Huobi, and OKEx, have far greater trade volumes, Coinbase’s growth has been phenomenal recently.

It just released preliminary statistics for the first quarter of 2021, with sales increasing to $1.8 billion. This is a ninefold increase over the first quarter of 2020 and more than the company’s whole 2020 revenue of US1.3 billion. The first quarter’s net income is estimated to be between US$800 million and US$322 million, compared to US$322 million in calendar 2020.

So, how does Coinbase generate revenue? When clients purchase or trade cryptocurrencies, it generates fees and commissions, but there is no charge to hold cryptocurrencies in consumer wallets. The costs include margin fees, which are charged at a rate of 0.5 percent for purchases and sales, however this rate varies depending on market circumstances.

It also charges a “Coinbase fee,” which is a commission on all crypto transactions that is based on your location and transaction amount. Other businesses include the worldwide payment system Coinbase Commerce, a Coinbase Visa card, and USD Coin (USDC), a stablecoin cryptocurrency with a price tied 1:1 to the US dollar.

Is it Long-term Viable?

When it comes to investing in Coinbase, the same principles apply as when purchasing any other stock: there is risk, and the stock’s performance will be determined by demand and the company’s future success. The future of Coinbase is inextricably linked to the performance and adoption of bitcoin and other cryptocurrencies. Coinbase’s business will be jeopardized if investors lose interest in cryptocurrency. Coinbase also needs to deal with new rivals every day, many of whom grow to be extremely large very rapidly.

However, with the recent rise in cryptocurrency values to buy bitcoin in Dubai, particularly bitcoin, more and more people and huge organizations, such as MassMutual and Tesla, are looking to participate in this alternative investment. Many investors are concerned about inflation, which would devalue “fiat” currencies like the dollar and pound, as the COVID-19 epidemic forces governments to spend lavishly on support measures and central banks to create gobs of extra money to revive their economies. These investors perceive bitcoin as a store of value to preserve their investment from this problem because it is meant to never have more than 21 million in circulation.

However, much of this is a case for owning cryptocurrency, so why would investors want to invest in crypto exchange shares instead? It’s a way to profit from the market’s explosive growth without having to acquire cryptocurrencies directly. Coinbase might be an appealing option for investors concerned about the extreme volatility of cryptocurrency values, as well as the stress of storing bitcoins safely.

Coinsbase Will Become a Trend

Coinbase will undoubtedly attract a lot of interest when it lists under the ticker COIN. Demand will be considerable, and as with any listing of this scale, there may be significant price changes over the next several days due to heavy trading volumes. However, if you want to invest in cryptocurrencies, you’re probably better off buying the digital coins themselves, as their success is solely determined by the degree of demand for them.

COIN’s performance will be determined by Coinbase’s ability to remain ahead of the competition by providing low-cost, safe access to cryptocurrencies, therefore it has an underlying vulnerability apart from the assets themselves. Nonetheless, the listing will bring more investors into the cryptocurrency realm, and it is another indicator that the financial environment is noticing cryptocurrencies.