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  • Richard Dulude

The Next Coinbase: Has No Equity



Published April 14th, 2021


As a user of Coinbase since 2014, and bitcoin miner since 2013, I cannot begin tell you the appreciation I have for what this entrepreneurial team has done to change the future of finance — bringing crypto assets to the masses, and now, institutional investors.

But you may be missing the key point of the Coinbase IPO — that ownership in the next $100+ crypto opportunity is in the tokens themselves. It is no doubt amazing that Coinbase is going public at a near $100B valuation, but that doesn’t even put it in the top ten (all happen to be technology!) market cap weighted companies. While that’s not a fair comparison, because it’s still early for the company, here is the list as of the end of 2020:

  • Apple- $2.14 trillion - equity & debt - publicly traded shares

  • Saudi Aramco - $2.05 trillion - equity & debt - publicly traded shares

  • Microsoft - $1.61 trillion - equity & debt - publicly traded shares

  • Amazon- $1.56 trillion - equity & debt - publicly traded shares

  • Alphabet (Google) - $1.17 trillion - equity & debt - publicly traded shares

  • Bitcoin - $1.1 trillion - no known equity or debt - publicly traded ***tokens***

  • Tencent - $797 billion- equity & debt - publicly traded shares

  • Tesla - $783 billion - equity & debt - publicly traded shares

  • Facebook - $716 billion - equity & debt - publicly traded shares

  • Alibaba - $637 billion - equity & debt - publicly traded shares

Errr, What? Wait a minute. Bitcoin, not Coinbase?

Bitcoin, a company with no equity or debt holders, run via decentralized governance, and has a $1T+ market cap as a piece of software technology? Moreover, Satoshi never pitched any venture partnership, growth equity investor, crossover investor, or investment bank. I bring this up to make a point —

The most interesting technology investments in crypto of the next decade will not go public. If you are waiting out for a big public IPO, you are entirely missing the point (and the most significant wealth creation events of the decade). For example, Ethereum will never go public, it already is. The project’s market capitalization as of today, is $265B, freely available for anyone to enter or exit, permissionlessly into the “cap table” or ledger. Good luck waiting for the IPO… It was designed as shared open source software and global infrastructure for the world, and is now underlying some of the most foundational financial applications being built today. We are talking a global financial settlements layer and web ownership security layer.

Today, while I have been reading and reflecting on the many fantastic accounts of Brian Armstrong and the entire Coinbase team bringing crypto assets to the masses, it feels like everyone is missing the point, that crypto assets are the future of finance and the web — and are here to stay, but many of those opportunities will grow through equity financing. So let’s celebrate this marquee moment, but with a caveat — that the most dramatic wealth creation events of the next decade may not be in the form of equity at IPO, but rather in the form of crypto assets themselves that are publicly tradable from day one.

And with that, I’ll leave you with my favorite chart from the Coinbase S-1:

Source: Coinbase S-1 Filing

Which makes me think we are just getting started with “other crypto assets”.

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Best, Richard

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