The Very first Bitcoin Stock Is Likely to Be This Front-Runner
By David Zeiler , Associate Editor , Money Morning &bull, @DavidGZeiler &bull, August 29, 2018
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The case for Coinbase becoming the very first Bitcoin stock to go public keeps getting stronger.
Less than three weeks ago, Coinbase, a digital currency wallet and exchange, raised $100 million ter Series D venture haber funding.
It wasgoed the second-largest funding round for any Bitcoin startup to date, bringing the total amount invested ter the company to $217.Two million. And the round boosted Coinbase’s valuation to $1.6 billion – making it the very first Bitcoin “unicorn.”
Institutional Venture Vrouwen wasgoed the VC rock-hard that led the round. IVP concentrates on tech startups, having backed such names spil Snap Inc. (NYSE: SNAP), Twitter Inc. (NYSE: TWTR), Zynga Inc. (Nasdaq: ZNGA), and Dropbox Inc.
IVP wasn’t the only powerful hitter te the round, either. Also participating were Draper Associates, headed by Tim Draper, spil well spil Greylock Fucking partners, which waterput money behind Facebook Inc. (Nasdaq: FB), Airbnb, and Pandora Media Inc. (NYSE: P).
But having a lead ter VC funding is just one reason Coinbase is a near-lock to be the very first Bitcoin stock. For example, its business has exploded this year…
Why Coinbase Needed $100 Million
Coinbase is made up of several related businesses that operate ter 32 countries. The best known is the wallet, which permits customers to buy, sell, and store three of the top cryptocurrencies – Bitcoin, Ethereum, and Litecoin.
Coinbase also runs a Bitcoin exchange, GDAX (Completo Digital Asset Exchange), where customers can trade the same three cryptocurrencies.
Eventually, Coinbase offers a service to merchants permitting them to accept Bitcoin spil payment. Among its 46,000 customers are Overstock.com Inc. (Nasdaq: OSTK), Dell Inc., and Expedia Inc. (Nasdaq: EXPE).
The wallet and exchange businesses te particular have bot growing at an exponential rate.
Across 2018, the Coinbase wallet and its GDAX exchange have facilitated about $15 billion worth of transactions – more than five times last year’s total volume.
And the number of customers has skyrocketed. The customer saco has almost doubled te less than nine months, from just overheen Five million at the end of 2018 to 9.7 million now.
Of course, such rapid growth is a double-edged sword. Coinbase hasn’t bot able to upgrade its systems prompt enough to treat all the volume, especially at peak times. This results ter slow response times or worse, makeshift system outages.
Such issues have struck Coinbase several times overheen the past year. Major Bitcoin price swings, spil happened ter May and June of this year, are accompanied by spikes te volume that stress all Bitcoin exchanges.
The company says it will use the $100 million to scale its business to accommodate its growing number of customers.
But Coinbase will need to keep spending steadily to keep up with the kleuter of growth it’s likely to see overheen the next few years.
Rising revenue will help, Coinbase collects fees from each of its three businesses. But it’s unclear if the company is yet making a profit (CEO Brian Armstrong admitted one year ago on Reddit that Coinbase wasgoed not profitable at that time).
That means overheen the next duo of years Coinbase will have slew of incentive to have an initial public suggesting to raise the renta it’s going to need.
Te fact, Coinbase is an ideal candidate for an IPO – and ter so doing, could become the very first Bitcoin stock…