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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

#261

Post by frankbreetz »

lottin wrote: post #218
_rohan wrote: post #179

Earlier quoted context omitted.

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 tre…

Bitcoin has no earnings so I don't know how that could possibly work in the case of the bitcoin bubble.

I think growth in value could be substituted for earnings in the case of something like Bitcoin or a stock without dividends

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

#262

Post by graeme »

beaner wrote: post #251
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…

> 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 requir…

Hmm. I’m not 100% sure I follow so I’ll restate and see if we can go from there. I’m saying:

1. The market price is set by people deciding to buy bitcoin, and

2. Bitcoin miners will invest in equipment and energy up to whatever the market price is

3. Thus, at a market price of X, at current mining rates, the miners will have costs roughly equal to 6.5 * 6 * 24 * X per day, or C

4. So to maintain a given market price, $C must enter the market at any given time, to covet the costs of the miners.

5. If less than the miners costs enters the market in money, the price will drop and miners will exit the market until their new cost structure is in equilibrium with the new price.

In other words, as new coin at a given break even point enters the market, that dictates how much new capital must enter the market to keep prices steady. If more capital than that enters prices rise, if less then they fall.

This is so because unusually in the bitcoin network marginal cost equals average cost as the network adjusts difficulty based on miner effort. So I think this makes things kind of backwards and breaks our intuitions.

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

#263

Post by danny021 »

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.

bye bye cash

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

#264

Post by hfsp »

martinko wrote: post #147
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…

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

Have fun staying poor.

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

#265

Post by hfsp »

hnrodey wrote: post #160
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…

>Fourth, there is no Bitcoin tracking security on public markets. $MARA and $RIOT are publicly traded companies in the US that professionally mine for Bitcoin. Their stocks ride the same wave as that of Bitcoin.

Wave crest is higher. Similar to gold and gold miners.

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

#266

Post by hfsp »

dan-robertson wrote: post #143
maxilevi wrote: post #140

Earlier quoted context omitted.

> Fourth, there is no Bitcoin tracking security on public markets Because of their big purchases Microstrategy stock (MSTR) tracks Bitcoin pretty well.

If you buy microstrategy because you want to be exposed to bitcoin then you will be overpaying by a lot.

If you don't gain exposure to btc through MSTR or otherwise, then you will have fun staying poor.

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

#267

Post by tracedddd »

beaner wrote: post #253
tracedddd wrote: post #111

Earlier quoted context omitted.

“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.

I’m talking about DeFi - distributed exchanges, yield generating savings accounts, and collateralized loans. Additionally ERC20 stables so on and off ramps are significantly less important. I see Coinbase’s primary function as an exchange and a way to convert to dollars. Both are threatened now. They have low fees, low latency, and more usability... but will that last?

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

#268

Post by beaner »

tracedddd wrote: post #267
beaner wrote: post #253

Earlier quoted context omitted.

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.

I’m talking about DeFi - distributed exchanges, yield generating savings accounts, and collateralized loans. Additionally ERC20 stables so on and off ramps are significantly less important. I see Coinbase’s primary function as an exchange and a way to convert to dollars. Both are threatened now. They have low fees, low latency, and more usability... but will that last?

Could be true, but the "de" in "defi" prevents it from killing Coinbase's main purpose, which is being the fiat -> crypto gateway.

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

#269

Post by hfsp »

ianai wrote: post #103
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…

https://en.wikipedia.org/wiki/Gresham%27s_law Not sure of how it applies but there it is. One way I could see this going: the smallest unit of a Bitcoin is a Satoshi. What happens when that value is greater than a transaction base cost? Right now it’s $0.0005 or 100 millionth the cost of a coin. This implies a lot of runway.

Swift:Visa/Venmo/Zelle, as Btc:Lightning/other Layer1 solutions.

In other words, off chain transactions are a potential solution.

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

#270

Post by rhodozelia »

lottin wrote: post #240
stass wrote: post #228

Earlier quoted context omitted.

CPI might not be high, but inflation can show itself in different places. Asset inflation has been increasingly high since 2019, which is clearly visible in stock market, real estate and commodity markets. Similarly, construction materials are up significantly. It may or may not show up in consumer prices eventually.

Sure, but this is not inflation. Inflation is an increase in the price level. When some prices are up and others down so that there is no general increase in prices, we cannot speak of inflation.

What prices are down? Big Macs? Flat screen TVs? Crap from Walmart?

How about the actual things you need: housing, groceries, college, gas, electricity, a vacation?

Due to the pressure on government to keep inflation low to avoid devaluing their dollar inflation is a gamed number and the goal posts have been moved to keep it low so things look good. Meanwhile the price on everything that I buy or want to buy is through the roof and I can’t find a job that will pay me more than my current one - guess I should have gone with software instead of hardware

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