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America’s largest cryptocurrency exchange, Coinbase, reached a market value of approximately $86 billion in its stock market listing. The crypto broker, where clients can buy, store, and trade Bitcoin, Ethereum, Litecoin, and other cryptocurrencies, went public on the Nasdaq on Wednesday, April 14th, 2021.
Shares were introduced at $381 per share and closed below $330. Fluctuating throughout the day, they hit a high of nearly $430 and a low of $118. After its initial valuation, Coinbase found itself ahead of multiple established firms, including oil giant BP.
Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. The pair, who met on Reddit, launched the company out of a two-bedroom apartment. They faced their fair share of hardships over the years as interest in cryptocurrencies fluctuated. But by the end of March 2021, Coinbase had over 56 million users in over 100 countries. The company holds around $223 billion in user assets.
In 2018, investors estimated that Coinbase was worth about $8 billion in private funds. Since then, the company’s value has multiplied more than ten times.
During the first three months of 2021, Coinbase reported $1.8 billion in estimated revenue, which was more than its total for the whole of 2020. The soaring interest in cryptocurrencies caused this, but especially Bitcoin.
Owing to Wednesday’s listing, Coinbase co-founder and Chief Executive Officer Brian Armstrong was set to become one of the world’s richest people. The 38-year-old, formally a software engineer for Airbnb, owns approximately 21% of the company.
The listing highlights how cryptocurrencies are gaining wider acceptance among traditional investors who were hesitant at first.
During an interview with CNBC, Brian Armstrong told Andrew Ross Sorkin, “hopefully, Coinbase going public and having its direct listing is going to be viewed as kind of a landmark moment for the crypto space.”
The surge in Bitcoin’s price is also doing its part to raise the integrity of cryptocurrencies. However, it has seen ups and downs over the years. At the beginning of 2015, Bitcoin’s price hit a low of $315. That was followed by considerable growth that took its value to a record-breaking high of approximately $20,000 in 2017. Shortly after came the 2018 crash, where it dropped back down to $3,000. Since then, Bitcoin has built its way back up. Its value soared more than 300% last year and continues to skyrocket in 2021 as its market cap exceeds $1 trillion. On the Tuesday prior to Coinbase’s listing (April 13th, 2021), the value of Bitcoin hit a record high of $63,000. Companies such as Tesla and Mastercard have announced that they will be incorporating digital currencies into their businesses.
Even digital currencies that are not as well-known are making gains. Dogecoin, which was set up as a joke and named after a popular internet meme, saw a rise in its value of more than 70%, driving the price of one coin up to 13 cents. This may seem like an insignificant amount, but it serves to prove the rising interest in cryptos. Coinbase is benefitting from this demand. Its primary source of income is rooted in charging transaction fees. So, the ever-rising demand works to their advantage.
Outside investors are keen to buy shares in Coinbase. It is seen as potentially less risky than investing directly in a cryptocurrency, like Bitcoin or altcoins. Buying into Coinbase means that investors can still tap into the cryptocurrency market but in a way that is considered safer.
This has drawn in warnings from financial regulators. “There’s a lot of concern that at some point the regulators, the central banks, might just say, ‘well, no,’ and make this a lot more difficult, and at that point, many people could stand to lose a lot of money,” said Senior Currency Strategist at Rabobank, Jane Foley.
It is uncertain whether the public listing will be to the detriment of cryptocurrencies over time. However, the people behind Coinbase are more than willing to work through any issues. “We’re very excited and happy to play by the rules,” says Armstrong.
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