Cryptocurrency has been booming in recent weeks. Bitcoin reached a new all-time high and other alt-coins are also performing well. Coinbase, one of the world’s most popular crypto marketplaces, aims to build on that momentum.
The company just filed to go public on the NASDAQ exchange, The Verge reports. It’s a big step forward for not only Coinbase but also for the rest of the cryptocurrency industry. The company’s S-1 filing was published on Thursday morning.
Financial Alternative
Global opinions on cryptocurrency are split. Some believe that it is the only logical currency of the future. Others believe that it is a danger to current financial institutions due to its unregulated nature. Regardless, one thing is certain—cryptocurrency isn’t just for nerds and hipsters anymore.
Companies and governments around the world have started to adopt cryptocurrency. That has helped increase consumer interest and the price of many coins.
In a letter to investors, Coinbase founder Brian Armstrong wrote, “The current financial system is rife with high fees, unequal access, and barriers to innovation. If the world economy ran on a common set of standards that could not be manipulated by any company or country, the world would be a more fair and free place, and human progress would accelerate.”
Armstrong, of course, is referring to cryptocurrency. Coinbase plans to be at the center of that movement in the years to come. Thanks to the rapid growth of cryptocurrency, Coinbase has seen record revenue growth. In 2020, the company brought in $1.2 billion. That was enough to help it turn a profit for the first time ever to the tune of $322 million.
Perhaps more importantly, Coinbase claims that it had 43 million verified users at the end of 2020. Roughly 2.8 million of those users made monthly transactions.
In total, Coinbase is responsible for $90 billion worth of user crypto assets and has processed $456 billion in transactions.
Fragile Foundation
Despite its current success, Coinbase warns investors that there is a high level of risk involved with its operations. That risk comes from the same thing that has made it profitable over the past year—the price of cryptocurrencies.
The company’s S-1 filing reads, “All of our sources of revenue are dependent on crypto assets and the broader cyrptoeconomy. There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our business, operating results, and financial condition would be adversely affected.”
As a publicly-traded company, Coinbase would be in a unique position. Its performance in the traditional finance world would be largely dictated by cryptocurrency markets.
Interestingly, Coinbase also discussed Bitcoin founder Satoshi Nakamoto in its filing. It says that “the identification of Satoshi Nakamoto, the pseudonymous person or persons who developed Bitcoin, or the transfer of Satoshi’s Bitcoins.”
As such, Coinbase’s attempt to go public is associated with a strong element of risk. That won’t scare away all investors but certainly gives regulators something to consider in the coming days.