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Coinbase valued above $100B, ahead of direct listing

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

#251

Post by beaner »

graeme wrote: post #167
csomar wrote: post #161

Earlier quoted context omitted.

You are not wrong. However 1= $1m/bitcoin is x20 from here. And here is already a pretty high price. 2= $170bn is a lot of money. But on an international/global scale, it's a drop in the bucket.

Yeah I just want to think through the claims of the maximalists. For example I often hear them say “it’s digital gold, so it has 10x to grow”. That would be $85 billion for mining, whereas gold mining annually is about $1.3 billion. ~$1000 per ounce mining cost * 130 million ounces mined. Of course it’s not an exact comparison as you prob ought to add in storage costs for gold but then maybe you’d need to add crypto…

> you need that much capital flowing in to maintain the market price

There's something off about the argument that you're making and I think it's that you have cause and effect backwards.

You keep phrasing this as if mining moves first before price, and investments in hardware are necessary to sustain high prices. But the reality is that high prices come first and incentivize investment. That investment is not required for Bitcoin to continue to operate, it's just an expected effect for a given cause.

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

#252

Post by Sparkle-san »

ric2b wrote: post #193
Sparkle-san wrote: post #157

Earlier quoted context omitted.

Yes, and it's been sitting around or below 2% for some time which economists generally consider a good level for spurring spending.

Sure, until you want to go to college, or buy a house, or have access to healthcare or buy some stocks to save for retirement. But if you don't want to improve your life and just want to survive until the next paycheck sure, I guess inflation is low.

Given that all of those things have increased in cost at rates far beyond 2%, I don't really see how you blame that on the inflation of the USD as a whole. They have their own systemic problems attributing to their astronomical costs.

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

#253

Post by beaner »

tracedddd wrote: post #111
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…

“Obviously if Bitcoin succeeds so does Coinbase” This seems obvious, but I’m not sure it’s the case anymore. DeFi has been growing, although hampered by ethereum right now, could eventually consume much of Coinbase’s income stream. They may need to pivot to more of a banking role as ethereum solves tx fees and DeFi grows on L2. Whether that means more or less profit is not clear. I have a theory this IPO is really a…

Coinbase's primary function isn't to supplant blockchain transaction volume, it's to provide a fiat gateway to acquiring cryptocurrency. Transaction throughput on ethereum only helps Coinbase, because it makes what they sell more attractive.

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

#254

Post by graeme »

dragonwriter wrote: post #238
anm89 wrote: post #226

Earlier quoted context omitted.

They also just listed the set of the largest expenses for a vast majority of our society (even if you don't pay for education)

> They also just listed the set of the largest expenses for a vast majority of our society Buying a house is an asset acquisition, not an expense. Housing is an expense (and typically the single greatest household expenses), but that expense has increased in price less than home prices. The next greatest expenses are food and transportation.

Further people are buying more housing than they used to.

If people buy four household computers that isn’t inflation, but how does buying a 4 bedroom home rather than two bedroom show in inflation stats?

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

#255

Post by graeme »

pilord8 wrote: post #244
graeme wrote: post #174

Earlier quoted context omitted.

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 mi…

That makes a lot of sense. On the other hand, that also suggests that if the price of bitcoin were to rise rapidly, mining costs would take some time to catch up, no? The connection between mining costs and price is an economic one (that can be in temporary disequilibrium), right?

Depends how rapidly. You can buy the hardware as a commodity, and connect to the power grid. Existing miners prob have expansion plans too they can accelerate. So the market may move pretty fast.

Though I read an analysis that there were surplus profits in the 2017 bubble.

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

#256

Post by graeme »

andruby wrote: post #200
graeme wrote: post #167

Earlier quoted context omitted.

Yeah I just want to think through the claims of the maximalists. For example I often hear them say “it’s digital gold, so it has 10x to grow”. That would be $85 billion for mining, whereas gold mining annually is about $1.3 billion. ~$1000 per ounce mining cost * 130 million ounces mined. Of course it’s not an exact comparison as you prob ought to add in storage costs for gold but then maybe you’d need to add crypto…

Just wanted to point out that 130M * $1000 = $130B, not 1.3B

Whoops. That’s a radical difference. Thanks for catching that.

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

#257

Post by graeme »

dragonwriter wrote: post #221
graeme wrote: post #212

Earlier quoted context omitted.

Wait is my whole calculation wrong then? I thought miners only got paid for receiving bitcoins. They also get additional payments in fractions of a bitcoin for transactions and this is in addition to the costs I wrote above?

> They also get additional payments in fractions of a bitcoin for transactions and this is in addition to the costs I wrote above? Yeah, the basic design of bitcoin is for the block rewards to dominate early on with no/low transaction fees, but transaction fees to gradually take over as the main reward for miners maintaining the network.

Ah interesting. Any estimates of how transaction costs scale? Currently iirc it is 100 million transactions per year at $20-$30 each, so adds about 10-15% to network upkeep costs at that transaction volume.

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

#258

Post by adventured »

naveen99 wrote: post #137
adventured wrote: post #129

Earlier quoted context omitted.

Once the bullish case is set at $5 million you might as well set it at $5 trillion. At $5 million it's approaching the value of all stocks on the planet. I don't have to elaborate on the economy those stocks represent, the annual profit generation. $100 trillion is nearly all household assets in the US, and nearly double all household assets in China. I like Bitcoin, it's simply not a believable bullish case at all.

Total wealth 500 trillion. Frequently Recommended institutional allocation 30-50% bonds. Bitcoin replaces the bulk of cash equivalents. Not impossible.

Getting nearly everyone on the planet to do that, including all governments to allow it, is impossible. As one very prominent example, the odds are dramatically higher that China will banish Bitcoin from being legal inside of their country than that they'll allow everyone to switch to using Bitcoin instead of the currency system they directly control (and can manipulate as it fits their aims). All nations generally feel the same way about controlling their own currency, they more than overwhelmingly prefer to retain that power in their political system. If Bitcoin actually threatens that they have all the guns that matter and will act accordingly legislatively. They might be willing to allow Bitcoin to be a store of value competitor to gold however, but that's all they're going to allow.

We don't have gold backed currencies for the same reason we're not going to see Bitcoin overtake all national currency systems. The guys in power with the guns determine how your currency system works and they all universally say no: you may not have your fiat currency backed by gold (or in the future, swapped out for Bitcoin).

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

#259

Post by bob33212 »

TheBlight wrote: post #239
bob33212 wrote: post #232

Earlier quoted context omitted.

Why did they create their Etsy store? Was it to make as much money as possible? If the goal is just to make money then they should cash out at the peak of their brand.

What I meant to convey with my original reply is that making as much money as possible and trying to improve society aren't necessarily mutually exclusive. Then you proceeded to seemingly present a mutual exclusion of either someone making art for art's sake or making art simply to make as much money as they can.

You can only have one #1 priority. Maybe following your #2 priority helps achieve #1. Is that what you are saying? Selling a Crypto Company for Fiat makes Crypto more legit?

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

#260

Post by adventured »

lottin wrote: post #209
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.

It has never made sense to hold on to cash, and it has absolutely nothing to do with QE. Read Keynes' theory of demand for money.

Cash is what you want to be sitting on when discounted opportunities abound. The people that lack cash at such critical times, suffer enormously for that error.

How nice was it to have plentiful cash after the real-estate implosion? They were practically giving homes and condos away in markets like Nevada or Florida, condos that were going for $250,000 during the bubble were being given away for $35k-$50k at the bottom of the implosion and there were few takers, entire buildings were sitting empty in formerly hot markets in Florida.

How nice was it to have a lot of opportunity cash at the ready as the S&P 500 collapsed in late 2008 / early 2009 (or March 2020 for that matter), while everybody else was getting mauled, worried about margin calls, fleeing the market in fear. You wanted to be buying from those people as they were dumping nice assets for $0.25 on the dollar. To do that you needed cash on hand.

The time period after steep asset declines or crashes, is when the majority of investors lack for cash the most, they're always pinned, scared by the hits they took, and can't seize the opportunities that become available; and that's when you make the biggest killing, that's when you take up your greatest potential return positions, not during rah rah times (that's when you cash out your prior opportunistic positioning and build cash, rinse & repeat).

That's not to suggest you should always be holding nothing but cash, that isn't the point. The notion that it never makes sense to hold cash is way off the mark however. At a minimum you want some opportunity cash on hand at nearly all times, and you can increase or decrease how much that is depending on the context of the economy/market/personal/etc.

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