Coinbase valued above $100B, ahead of direct listing • Hacker News Board

Re: Coinbase valued above $100B, ahead of direct listing

#171

Post by graeme » Sat, Feb 20, 2021, 5:28 PM UTC

naveen99 wrote: post #124

adventured wrote: post #88

Earlier quoted context omitted.

> We're just at a point in the economy where it doesn't make sense to hold on to cash. We're not at that point, and I'm speaking as someone that supports a gold standard or equivalent to prevent rampant fiat debasement. I take it you didn't live through the 1970s. There have been numerous times in the past century where currency in major economies was prominently debased far worse, far faster than what we're seeing t…

If the bull case was only $150k, I might agree with you. The bull case is $5 million. But bitcoin has always been risky and can always go to 0 rather quickly. Anyway, there is no point at looking at nominal values given inflation, population growth, general progress. I like to look at everything as a ratio against total global numbers (global wealth, global debt, global population, global equality etc.). Unfortunatel…

At $5 million, at current mining rates, it would cost $1.7 trillion dollars per year in energy and equipment costs to run the network. That is fresh capital that needs to be shovelled in and burned each and every year.

Not to increase the price, just to maintain the network. What is the network doing that would justify that investment?

After halving the cost would drop to $850 billion a year but still.

Re: Coinbase valued above $100B, ahead of direct listing

#172

Post by csomar » Sat, Feb 20, 2021, 5:29 PM UTC

radicality wrote: post #89

runako wrote: post #87

The chart here provides context: https://twitter.com/JohnStCapital/status/1362859527230672896 In case the tweet is deleted, a summary. Coinbase is now being valued at over half the combined market value of the companies that collectively own most major global markets outside of China. Those markets trade everything from currencies to stocks and bonds to commodities. For scale of asset pools: The value of all Bitcoins…

Something similar that intrigued me recently is that Airbnb is valued at more than all the USA publicly listed hotel chains put together (Marriott etc)

That's meaningless. For all we know, these companies could be buried in debt and thus have little value in their assets.

The price is a prediction of future payouts (whether in dividends or value of the assets the company is holding).

Re: Coinbase valued above $100B, ahead of direct listing

#173

Post by badjeans » Sat, Feb 20, 2021, 5:31 PM UTC

mewpmewp2 wrote: post #142

eloff wrote: post #136

Earlier quoted context omitted.

I don't think it was wrong then either. I think this is a greater fool style of bubble like the famous tulip bubble, eventually we'll run out of fools. That's my opinion, but we'll see.

The other possibility is that it will be widely used in the future as a store of value or for some other purposes. Might be rational to put at least some percentage of your net worth into it. People need and want something like that to exist where they have complete control over their assets without any worries about government or institutions.

> People need and want something like that to exist where they have complete control over their assets without any worries about government or institutions.

The government can always just make a law and take whatever it wants from you (or imprison you). Doesn't matter if it's from a bank account or bitcoin cold storage on planet Musk.

Re: Coinbase valued above $100B, ahead of direct listing

#174

Post by graeme » Sat, Feb 20, 2021, 5:31 PM UTC

soared wrote: post #168

graeme wrote: post #145

Only tangentially related: How do bitcoin network costs scale with market price? We can expect the marginal cost to mine a coin to scale with price. So if btc worth $52,000 then people will invest on average $52,000 in equipment and electricity. There are 6.5 coins mined every 10 min. So daily network cost approximates to 6.5 * 6 * 24 * $52,000 = $48,000,000 This is not strictly accurate as past equipment costs less…

> We can expect the marginal cost to mine a coin to scale with price. This feels correct but I don’t think it is. For example gold has decreased by $200/oz recently - it definitely didn’t just get cheaper to mine. I know mining is different and it’s not a great comparison, but costs don’t scale immediately, miners don’t make decisions entirely based on the price of btc now, etc. Economic principles like supply and de…

No no bitcoin mining and gold mining don’t have the same economics. Gold mining average costs are determined by the actual physical costs of mining. Marginal costs will rise in marginal mines if the gold price goes up. But that won’t affect average gold mining costs in existing mines.

But in bitcoin average costs have to work out to marginal costs. When more mining power enters mining gets harder to compensate and mining costs rise.

Re: Coinbase valued above $100B, ahead of direct listing

#175

Post by qeternity » Sat, Feb 20, 2021, 5:32 PM UTC

globular-toast wrote: post #170

emehex wrote: post #155

Perhaps a dumb question: why is Coinbase even entertaining an IPO? Give away shares for fiat money? Isn't that antithetical to what they're trying to do?

Maybe you're confused about what they're trying to do. I'm pretty sure they're trying to get rich and nothing else.

21st century Levi Strauss

Re: Coinbase valued above $100B, ahead of direct listing

#176

Post by usehackernews » Sat, Feb 20, 2021, 5:34 PM UTC

graeme wrote: post #148

martinko wrote: post #147

Earlier quoted context omitted.

You've got it right. That being said, I dont think anyone realistically expects 1m / btc this decade.

Right just thinking through the claims of the boosters to their logical end. If it did happen in nine years the next halving is 2028 so the cost would be ~$85 billion per year. And that would be less than it is now due to inflation. Ok that’s actually not as bad as I thought, though still pretty expensive. You need $85 billion from new entrants in burnt capital just to maintain the value of existing bitcoins at that…

You seem to have a good grasp of creating high level models.

I always see people referring to the energy consumption of bitcoin as though it’s strictly additive.

What I’d be interested to know is how it compares relative to energy costs for transacting with and securing fiat currencies.

Second, what people tend to ignore is that innovation doesn’t come in a vacuum - there are second, and third degree improvements triggered from it. In a world where bitcoin is $1million, it means the world has agreed on the benefits, and we will see innovations to address the tradeoffs that come from this. For example, we could see significant investment into renewable energy as a means to support the energy consumption of bitcoin.

Third, and this isn’t directed at you, just a general statement based on arguments I see on HN - cryptocurrency itself does not have high energy consumption. Proof-of-work mining does. There are methods to support cryptocurrency that do not result in high energy consumption (Proof of Stake, DAGs). It’s wrong to generalize energy consumption issues to all cryptocurrencies.

Re: Coinbase valued above $100B, ahead of direct listing

#177

Post by skeeter2020 » Sat, Feb 20, 2021, 5:38 PM UTC

raiyu wrote: post #98

One important thing to note is that these are secondary transactions and not where the stock may potentially trade. Secondly, Coinbase doesn’t allow any secondary transactions, this was a company sponsored (approved) secondary. As a result this created immense scarcity so you can see how much the price changes just in these limited sales. Third, as we saw with the last bull run of Bitcoin everything with blockchain i…

>> When you look at the old staples like Coca-Cola they haven’t appreciated during this time.

Pretty tough to eat appreciation; meanwhile Coca-Cola (and all those other old, boring companies) pays ~ 3.5% dividends annually. I'm sick of companies using my money for free to only fund their own growth.

Re: Coinbase valued above $100B, ahead of direct listing

#178

Post by solosoyokaze » Sat, Feb 20, 2021, 5:39 PM UTC

Ekaros wrote: post #134

redact207 wrote: post #59

We're just at a point in the economy where it doesn't make sense to hold on to cash. It's just completely losing its value thanks to a long sustained QE. People are just putting their money into anything as a hedge - real estate, stocks, crypto, gold. Until the value of the at can be sustained and inflation comes back, it's unlikely much else will change.

I'm really starting to wonder what makes sense to hold? Maybe I need to start looking into land prices. And for that I mean forest or agricultural...

With land you'll have to pay property tax, which will be impacted by inflation as the land will be reappraised. Just something to keep in mind.

Re: Coinbase valued above $100B, ahead of direct listing

#179

Post by _rohan » Sat, Feb 20, 2021, 5:42 PM UTC

hiq wrote: post #120

_rohan wrote: post #93

I see a lot of people talking about the market being in a bubble, and that they’re holding cash waiting for a crash. Even if that’s true, I recently read about the bubble potentially “bursting up”: instead of prices coming crashing down, prices stay stagnant or grow slowly, while earnings grow quickly. The net result is the same (P/E ratios stabilize), but you lose out on a lot by staying out of the market.

> instead of prices coming crashing down, prices stay stagnant or grow slowly, while earnings grow quickly Do you have a link where I could read more about this? As a layman I fail to understand how this would work, and I couldn't find a page explaining it. My naive understanding is that a bubble pops when investors lose confidence in the market, and instead of anticipating growth, anticipates a correction and create…

The market is overvalued when the price-to-earnings ratio is too high (ie, valuations outweigh the actual money that a company makes). When it gets really high, investors can panic, and sell stocks, driving prices down and hence reducing the PE ratio.

The alternative I’m describing is one where panic selling doesn’t occur. Earnings can continue to rise (because earnings reflect consumer spending and other similar trends), whereas prices don’t go up as much because market speculation reduces and people are less bullish. It doesn’t have to devolve to panic selling.

Re: Coinbase valued above $100B, ahead of direct listing

#180

Post by bob33212 » Sat, Feb 20, 2021, 5:43 PM UTC

emehex wrote: post #155

Perhaps a dumb question: why is Coinbase even entertaining an IPO? Give away shares for fiat money? Isn't that antithetical to what they're trying to do?

They are trying to "Exit". That is what they call a IPO or a Sale in startups. They get paid with cash, then they buy houses, stocks, bitcoin, cars with that cash. The "Mission" of Coinbase exists because they don't want to say "Our mission is to build a 100 billion dollar company and then cash out" it sounds better and feels better to say that you are democratizing and decentralizing power for the people.