Coinbase S-1

Not OP, but also a skeptic and here are my thoughts:

- Market cap is sort of a misleading stat. Microsoft's market cap is ~1.75 trillion, but it's p/e ratio is 34. So if they stopped reinvesting in their business, I'd be making 3% yearly on that investment with a hedge against inflation since they can just raise prices. A lot more goes into their valuation than that, but my point is that even if you are a huge skeptic of Microsoft's current valuation, the company is still worth a ton of money. I don't have a number, but I'd imagine that at $500 billion, pretty much every investor on the planet would think that Microsoft is a crazy steal. On the other hand, bitcoin's value is based on perception of its value and nothing else. The fact that some people are willing to buy in at $50k doesn't mean that every investor on the planet would think that bitcoin is a steal at 10k. There'd still be plenty of people who consider that price to be way to high as well. Since market cap is determined entirely by people willing to pay the most, it's hard to say what market cap means for something like bitcoin.

- I agree that there comes a point in time where even a skeptic has to give in. BTC really started to explode about 3 years ago. For me, that's just not enough time. Subjectively, after 10 years at reasonably high values, I'd probably have to reconsider, assuming it gets less volatile over time.

- The volatility is the main concern for me. Gold had a low around 100 and a high close to 200 in the past year of craziness, so it almost doubled. BTC went up about 10x from it's 2020 low to its recent high. Even Zoom and Peloton are only up ~4x from a year ago and this pandemic has fundamentally changed their businesses. I think if BTC got to a point where it didn't change more than 25% value in a year with a normal-ish economy, I'd have to reevaluate.

Might get downvoted but HN opinions are based on a minority of people who are more technical and well informed to the point of elitism IMO. When something becomes too mainstream and doesn't cater to the HN demographic, its success is irrelevant and potentially a liability.

Bitcoin mining power is concentrated in China with about eight times the hash rate of number two United States, which in turn has a similar hash rate to Russia and Kazakhstan. Rounding out the top six, composing more than 90% of the total world hash rate, is Malaysia and Iran. Do you think these countries share the ideological goals of Satoshi Nakamoto's dream?

I have no doubt that a persistent 51% attack by a cartel of miners would make Bitcoin liquidity an indefinite hard zero for selected "owners" of BTC.

What you've described is also roughly how gold vs gold certificates work. You're correct that an owner of a gold certificate doesn't truly own the gold, and are exposed to extra risk on account of that. That being said, the value of gold has still remained stable/flat (relative to USD inflation). Also, every time you buy BTC, you can see the underlying transaction on the public block explorer. The day that stops being true is the day that Coinbase loses customers that consider BTC as a hedge on fiat.

You can still transact with Bitcoin using your own wallets against other exchanges/vaults. That's the entire point, Coinbase, like a (lower case "b") doesn't control the supply of Bitcoin, any more than precious metals bullions control the supply of gold despite their issuance of "gold certificates". Like any (lower case "b") bank, Coinbase can engage in bad behavior, and users are placing their trust in Coinbase to not do that. But those users aren't placing their trust in Coinbase to drive the monetary policy of Bitcoin, in the same way that the gold hoarder placing their gold bars in a Swiss vault doesn't really have to worry about the operator of the vault creating gold out of thin air. That fundamental fact drives the collective belief in the value of gold; as well as Bitcoin.

> * the new owners of those 100 bitcoins can roll down to exchange X and deposit them and accept 100 claims against exchange X in return

You can't deposit that purchased BTC at another exchange unless you cash out of Coinbase, because you don't have access to the private key, Coinbase does.

TransferWise Borderless accounts are permitted there for you to hold whatever currencies you want. [1]

Currencies that don't fall checks notes 26% in 4 days.

Generally folks look to switch from one problem into a solution, not into a different problem.

[1] https://wise.com/gb/multi-currency-account/