Coinbase from YC to DPO

I just realized that at travala.com , it is possible to book hotels and pay with crypto. Another point that indicates just how much the revolution is here.

Coinbase is actually like Vanguard. It offers "investment funds".

Main difference: Instead of ETFs, you buy the different crypto coins.

The similarities are actually extensive:

1. People go to Coinbase mainly to invest their money. Sure, maybe, one day, in the distant future, perhaps, coins will be used for commercial purposes; but now and in the foreseeable future they are investment (speculation) vehicles

2. Vanguard has a direct relationship with consumers; you can open an account, wire money, and buy Vanguard funds. Same with Coinbase (and not the case with stock exchanges as some have suggested)

3. There is a certain amount of trust in the brand that makes people want to buy the funds/assets or wire their money to these brands. But that has limited power (see point below)

4. Vanguard's products are commodities, just like crypto coins are (you can buy the same bitcoin in many places, and you can buy essentially the same S&P 500 ETF from many platforms)

The difference is that Vanguard is successful thanks to a focus on low cost funds; Coinbase still rides first movers advantage. But inevitably it'll have to compete on cost.

Vanguard is managing $6+ T of actual assets; that's many times the total market cap of all cryptos.

And now here's the question: if they had the same valuation, would you put your money on Vanguard or Coinbase?

Amazing to see.

But what I find interesting is that his vision was way off- crypto is nowhere near replacing credit cards, now or in the future.

But he did build a huge company because crypto became a speculative asset bubble instead.

Armstrong is based, I'm not trying to bring in politics here or start any flamenation, I just love this clarity of the juxtaposition (the paradox of undermining something you pretend to support) in this quote from Greendwald's invective about using woke ideology, and abusing other people's suffering, as a disingenuous disguise:

In the wake of the George Floyd killing last summer, it became virtually obligatory for every large corporation to proclaim support for the #BlackLivesMatter agenda even though many, if not most, had never previously evinced the slightest interest in questions of racial justice or policing.

One of the very few companies that refused to do so was the Silicon Valley-based cryptocurrency exchange platform called Coinbase — which announced that it would remain apolitical and not involve itself in partisan debates or causes of social justice unrelated to its core business mission. When announcing that policy of political neutrality, the company’s co-founder Brian Armstrong explained that “the reason is that while I think these efforts are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.” That once-anodyne announcement — to stay out of politics as a corporate entity — produced instant backlash. And exactly two months after, the notoriously censorious and politicized “tech reporters” of The New York Times punished the company for its heresy of neutrality with a lengthy article depicting Coinbase as a bastion of racism and toxic bigotry (the company was also savaged by journalists because of its audacity to reveal and respond to the NYT’s allegations in advance of the paper’s decision to publish).

Scott Sumner has an interesting argument that it's not a bubble.

Similar for the so called 'tech bubble' around the start of the millennium: if you bought all the tech stocks back then and held them until today, you would have made an OK return.

(Of course, many companies have gone out of business, but there were a few outsized winners to make up for it.

Any individual tech stock was extremely risky, but the overall sentiment that 'tech is the future' was right on the money.

If anything, it's not the high valuations of the 'dot-com bubble' that seem off, but the low valuations of the bust.