Against all odds, we live in a time where cryptocurrency exchanges are becoming public. Perhaps for some, this industry breakthrough was well anticipated, but for the traditional financial sector, this is still a shock.
The biggest American cryptocurrency exchange, Coinbase Global Inc., announced that it has filed to go public on Nasdaq via a direct listing. Coinbase joining the Nasdaq family has been highly anticipated following the company’s tremendous success in correlation to Bitcoin’s price surge.
Coinbase is a cryptocurrency exchanged that was founded by Brian Armstrong and Fred Ehrsamin in 2012 in Silicon Valley. The broker exchanges popular cryptocurrencies like Bitcoin, Ethereum, Litecoin, and others, with fiat currencies in over 30 countries across the world. It also offers BTC transactions and storage facilities in as many as 180 countries globally.
The company has raised over $500 million from investors like Greylock Partners and Y Combinator. In 2018 the company was valued at approximately $8 billion.
Coinbase showed tremendous growth from 2019 to 2021; in 2020 alone, the company grew 139%, and its net income soared to $127.5 million against $1.28 billion in revenue. Coinbase’s direct listing on Nasdaq is amongst the first, as all previous ones were listed on NYSE instead. Coinbase could be the second biggest company to go public after Facebook.
Most of the revenue earned by Coinbase has been from Bitcoin and Ethereum. In that recent months, cryptocurrencies surged albeit the complex economic situation across the world. On Thursday, Bitcoin was trading around $50,000, following its latest all-time high of over $58,000 on 21st February.
Bitcoin is so important to Coinbase that in its public filing, the company listed numerous homages to the world’s first digital currency. One example is the listed block “1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa,” which is associated with Satoshi Nakamoto, the individual or group behind BTC.
There is no doubt that should digital assets lose their popularity, Coinbase will decline with it. According to Coinbase’s S-1 filing, “There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets declines, our business, operating results, and financial condition would be adversely affected. A majority of our net revenue is from transactions in Bitcoin and Ethereum.
Coinbase has two classes of shares: Armstrong owns 11% of Class A shares and 11.4% of Class B shares. Ehrsam owns 11.4% of Class A and 9% of Class B.
5% of Class A shares and 14% of Class B shares belong to Coinbase’s biggest stakeholders, Venture-capital firm Andreessen Horowitz.
Coinbase does not have a physical address for its headquarters in alignment with the decentralized nature of cryptocurrencies.
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