In late spring April, a piece of news hit the front pages of major news around the world: the token trading platform Coinbase was officially listed on the Nasdaq.
As one of the most influential token trading platforms, the listing of Coinbase on the U.S. stock market is a milestone for the entire crypto market.
It is in such a costume that Coinbase’s share price has fallen since its listing, and has now fallen to $224.63. Compared with the USD 429.54 on the first day of listing, Coinbase’s share price suffered a cut.
All of this can’t help but thought-provoking: What caused such a situation?
When trying to explore the origins and answers of all this, one has to start with Brian Armstrong, a diligent and intelligent genius.
Success lies in toss
Born in the 1980s, Brian grew up in San Jose, California, “the heart of Silicon Valley.”
This precious place where high-tech companies gather seems to have the magic of nurturing geniuses. In high school, Brian was already able to develop using languages such as Java and CSS. In the process of learning and practicing, Brian began to build websites for some shops in the town. At this time, he had never thought that his fate with computer technology could help him to become one of the world’s top richest people in the future.
After entering the university, Brian began to show his amazing talent and strength in computing and finance. He has worked in companies such as IBM, Deloitte and Touche. In his junior year, he and John Nelson co-developed and founded UniversityTutor, a service website that helps teachers and students freely choose tutoring or teaching outside the classroom.
This Internet education company founded by Brian and served as CEO has accumulated a wealth of experience for him. While starting a business, his studies have not fallen.
In eight years, Brian received a bachelor’s degree in economics and a master’s degree in computer science from Rice University. He also “spent time” as a software engineer at Airbnb briefly.
In 2009, Satoshi Nakamoto released the Bitcoin white paper. Brian read this world-changing document for the first time and was impressed by the design of Bitcoin. He was keenly aware of the huge potential of the crypto market and entrepreneurial space, and found inspiration from the stock trading model, and began to conceive the development of a trading platform, with the idea that “people can trade bitcoins like online stocks in the future”. The seeds of the birth of legends are planted here.
In 2012, Brian quit his job at UniversityTutor, and in June of the same year, he co-founded the token exchange service platform-Coinbase.
In 2012, Brian Armstrong (right) and Fred Ehrsam (left) founded Coinbase in a San Francisco apartment
No one will know that Brain Armstrong and Coinbase will become two prominent names in the crypto world in the future.
Leadership comes from step by step
If we look back at the development history of Coinbase, it is not difficult to find that this company whose main business is rooted in the crypto field has been integrated into the traditional financial market to the greatest extent.
When Coinbase was founded, it entered the list of Y Combinator startup incubator projects, which are famous for its vicious investment vision. Y Combinator has invested in many companies such as Dropbox, Airbnb, Reddit, Weebly, etc., and the selection of startups is evident.
In just 4 months, Coinbase was ready to fully face the market and provide users with bitcoin trading services through bank transfer channels.
In 2013, Coinbase received a US$5 million investment from Union Square Ventures (USV); in December of the same year, it received a joint investment of USV, Ribbit Capital, and Andreessen Horowitz of US$25 million.
In 2015, Coinbase became the first official bitcoin trading platform with a formal license in the United States, and received US$75 million in investment from the New York Stock Exchange, Draper Fisher Jurvetson, and multiple banks.
With many investments from traditional financial markets, Coinbase has expanded rapidly. According to its public data, as of 2016, Coinbase has 4.7 million users.
At that time, Coinbase had become one of the world’s largest and most influential token trading platforms. However, a life-or-death decision is faced by Brian Armstrong and Coinbase: Is it to continue the path of compliance development, or to maximize the number of users and interests, and prioritize the expansion of the market when the relevant rules are not perfect?
Obviously, Brian chose the former.
- In 2017, Coinbase received a BitLicense from the New York State DFS (Department of Financial Services) and was approved to provide token trading services in New York;
- In 2018, Coinbase obtained an e-money license from the UK Financial Supervisory Authority, and was authorized to operate payment services in 23 EU countries to serve as a token cash substitute service;
- In July of the same year, the US Securities Regulatory Commission approved the company to use token transactions and wallet services in the United States.
Coinbase eventually became the most compliant token trading platform in the world. For users, if they have a choice, most people would prefer to choose a platform with “compliance” endorsements like Coinbase. As a result, Coinbase’s number of users and platform transaction volume continue to grow. According to the prospectus, the platform already has more than 43 million retail investors, 7,000 institutional users, and 115,000 ecosystem partners. As of the end of 2020, the transaction volume reached 193.097 billion U.S. dollars. Coinbase is a leader in the crypto industry. With the wealth and prestige brought by Coinbase, Brian Armstrong was included in the Forbes rankings among the top 500 richest people in the world and the number one crypto rich. Regarding his choice towards compliance at every step of the Coinbase development process, the answer is undoubtedly successful.
The wrestling of empty singers and fans
Coinbase opened at $381 per share. But since then, the stock price has been falling, and the current stock price has fallen to $224.63.
A large amount of Coinbase’s assets and investments have been deposited in the crypto market, and the market value of the crypto market and Bitcoin has experienced a huge drop, which directly aggravated the downward trend of Coinbase’s stock price. Therefore, it can be said that the continued downward trend of the external crypto market is the biggest incentive for Coinbase’s share price to be cut in half.
The curse of “Debut is the pinnacle” has been fulfilled on Coinbase, and it has also spawned the carnival of empty singers.
The income structure is the focus of criticism from most empty talkers. Although Coinbase has developed a number of services such as custody, investment, and subscription, its core business is still the online transaction of tokens, and related fees and storage service fees account for 90% of its revenue.
After all, the industry threshold is not that high, and the higher the profit, the more powerful competitors will be attracted. Therefore, in the eyes of short-sellers, Coinbase’s stock price will continue to fall.
Many times, the enemy is not even outside. According to statistics from the US data analysis website GuruFocus, several Coinbase internal executives, including CEO Brian Armstrong, CFO Alesia Haas, COO Emilie Choi, CAO Jennifer Jones, etc., sold a total of 12.965 million shares in the two trading days before listing, according to the period. Calculated with an average price of 354.1 US dollars, the amount of cash set is close to 4.6 billion US dollars (approximately RMB 30 billion).
There are strong enemies on the outside and “traitors” on the inside. David Trainer, CEO of investment research company New Constructs, said that Coinbase’s stock price may continue to fall, possibly falling to $100 or even lower.
But Coinbase fans don’t think so. They only worry about missing the development potential of Coinbase, after all, it has established a fast-growing and profitable business.
Cathie Wood, headed by “Mutual Sister”, has many ETFs under her Ark Investment that continue to support Coinbase stocks. On July 15, Wood bought another 69,172 shares of Coinbase, valued at approximately $15.5 million. ARK’s ARKK, ARKW and ARKF have all heavily invested in Coinbase.
Fans have a different view of the high-level selling. They believe that Coinbase adopts a direct listing method and has not launched an IPO, so it is a reasonable and compliant behavior for the main shareholders to sell their shares at the beginning of the listing. On the contrary, some media chose to report this incident one-sidedly, vaguely revealing their malice towards the encryption industry.
In any case, the listing of Coinbase has a profound impact on the crypto industry. And the name of Brian Armstrong has already been tightly tied to Coinbase.
The road to “breaking the circle” is long, and the test of the mainstream world will continue. With the global tightening of policies on the encryption industry, whether the “compliance” chosen by Coinbase is a pass or a curse, only Brian Armstrong, who stands in the center of the stage, knows what it feels like.