Coinbase IPO: 5 things to know about the U.S. cryptocurrency exchange

Here’s what you should know about the popular trading platform before its public offering.

What is Coinbase?

The Silicon Valley crypto exchange was co-founded in 2012 by Brian Armstrong, 38, who heads the platform’s chief executive. Fred Ehrsam, director of Coinbase, also helped to create the company.

There are two classes of Coinbase shares. Armstrong owns 11% of Class A shares and 22% of Class B shares, while Ehrsam owns 11.4% of Class A shares and 9% of Class B.

According to Forbes, Armstrong’s net worth is currently $ 6.5 billion based on his stake in the company, which is likely to increase if the direct listing is successful.

Coinbase presents itself as a bet on the rapid growth of crypto-economy, which starts with active crypto bitcoin No. 1, but goes far beyond that, argue Armstrong and his company.

Bitcoin BTCUSD prices,
-1.64%
gained attention by reaching repeated records, most recently touching a recent peak above $ 58,000 over the weekend, before starting to lose some gains in recent trades.

Last week, bitcoin reached a market value of $ 1 trillion, and although the asset created by a person or persons known as Satoshi Nakamoto represents about 70% of the total crypto market, there are still a number of other crypto assets. traded on Coinbase, including ETHUSD ether,
-0.55%
on Ethereum’s blockchain, Bitcoin Cash BCHUSD,
-3.46%
and Litecoin LTCUSD,
-5.47%,
to name a few.

Who else owns Coinbase?

Venture capital firm Andreessen Horowitz is the largest owner of Coinbase, boasting about 25% of Class A shares and 14% of Class B. And Marc Andreessen, head of the venture capital group, sits on Coinbase’s board. .

Coinbase has ambitions that echo those of Robinhood Markets

“Coinbase is a company with an ambitious vision: to create more economic freedom for each person and company,” wrote Armstrong in a letter attached to the company’s public filing papers with the SEC.

Highest risk factor

Undoubtedly, the biggest risk factor at Coinbase is that it is a bet on an unproven asset class that was created just over a decade ago. Coinbase tries to make it clear that its fate is linked to the prospects of Bitcoin and ethereum and the thousands of other alternative currencies that have been created.

But a drop in interest rates and strict regulations in the US and elsewhere could hurt the exchange rate platform.

Here is Coinbase’s explanation now:

“There is no guarantee that any supported cryptographic asset will maintain its value or that there will be significant levels of business activity. In the event that the price of crypto assets or the demand for commercial cryptographic assets decreases, our business, results of operations and financial condition would be adversely affected. Most of our net revenue comes from transactions in Bitcoin and ethereum. If the demand for these cryptographic assets decreases and is not replaced by a new demand for cryptographic assets, our business, results of operations and financial condition could be adversely affected, ”Coinbase writes to his S-1 file.

How big is Coinbase?

The crypto exchange platform ranks 3rd among the largest exchanges of digital assets in the world, according to the CoinMarketCap.com data site. That ranking puts it behind Binance, based in Seattle, and Huobi Global, a cryptocurrency exchange based in Seychelles and founded in China.

In the U.S., Coinbase is by far the most popular cryptography platform, but there are competitors, including Gemini, run by Tyler and Cameron Winklevoss, who used the famous Facebook Inc. FB,
-3.64%
settlements to invest in bitcoins.

Kraken is another popular and direct competitor encryption platform in the USA

Odds & Ends

The company in its public process offered a series of tributes to the founder or founders of bitcoin and the digital currency era in its presentation.

For example, he listed the genesis block associated with Satoshi Nakamoto in “1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa”, whose white paper in 2008 set bitcoin on the move. (In addition, a “Satoshi” is the smallest bitcoin unit – 0.00000001 BTC).

The company does not provide the physical address of its California headquarters, citing the pandemic COVID-19, which has forced several companies to have most, if not all, of their employees working remotely. For this reason, Coinbase refers to itself as “a remote company first”.

However, not having an address for some was seen as an alignment with the decentralized nature of blockchain and bitcoins.

The company also offered a useful primer on cryptocurrency terms, including definition terms like “hodl”, which have become popular in cryptocurrencies. Hodl was accidentally coined on a 2013 Reddit and means a long-term holder of an investment.

Reading: Don’t fight FUD: HODL in this list of bitcoin terms you need in your vocabulary

Armstrong Crypto Charity

In 2018, Armstrong launched GiveCrypto.org, which makes direct money transfers to people living in poverty.

“People who invested early in crypto have accumulated an enormous amount of wealth in a relatively short period of time. Still, the reputation of the cryptographic community has been dominated by images of ‘homies in Lambos’, whose antics draw a lot of attention, ”wrote Armstrong in a separate post on the Medium blog in 2018.

Armstrong reportedly donated at least $ 1 million to GiveCrypto.