Nine years after Coinbase was founded, it’s all still a bit revolutionary. But there’s a rather rich irony at play: To make the dream a reality, Coinbase first has to thrive in that old world of traditional money and the traditional stock market. Before it can create a new future, the company might have to beat the past at its own game.
So far, so good.
Coinbase filed for a direct listing this week on the Nasdaq, an enormous crossover event between the crypto market and the stock market that could value the company at more than $100 billion. And that’s one of nine things you need to know from the past week:
1. Coin of the realm
Excuse me for the dorm-room philosophy on a Sunday morning, but money is a social construct. In a slightly different reality, no reasonable person would exchange a tasty hamburger and fries for a piece of strangely decorated paper with Alexander Hamilton’s face on it. Fiat currency isn’t intrinsically valuable. But because our society has agreed that strangely decorated piece of paper has a certain value, the trade works. Ever since the abandonment of the gold standard, that’s been the bargain on which our whole economy rests.
On the one hand, it seems kind of ridiculous to try to create that same grand bargain again from scratch, completely digitally, a whole system of payment and trade based on nothing but lines of ones and zeros on a screen. But on the other hand, why not?
I can’t sit here and explain the nitty-gritty details of cryptocurrencies and blockchains, just like I can’t give a detailed breakdown of the many minute processes going on inside my laptop that allow me to push buttons on a keyboard and see these words appear on a screen. I’m not a technologist. But as with other technological breakthroughs, I can certainly see the appeal. The ideal vision of bitcoin and other cryptocurrencies could provide people around the world with a safe way to operate financially without regard to national borders or financial institutions, cutting out middlemen and bankers to create a new sort of economic freedom.
When Coinbase was founded in 2012, that idea was still in its infancy. The overall market cap of all cryptocurrencies was less than $500 million. Slowly but surely, though, it caught on. The first real boom came in 2017 and 2018, when the price of a bitcoin, by far the most popular cryptocurrency, soared from less than $1,000 to more than $19,000. But the boom ended, and for the next two years or so, cryptocurrencies receded…