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There was an interesting event on Wednesday that could start a new phase in the development of cryptocurrencies. We are of course talking about the IPO of Coinbase, the second largest cryptocurrency exchange. What is the significance of this moment and why should we look again at cryptocurrencies?
BTC
We all remember well how throughout the formative years of cryptocurrencies, the US Securities and Exchange Commission refused to register Bitcoin instruments on more than one occasion. Now, amid these bans, Coinbase’s entry onto the exchange is a strategic victory. The fact that the SEC has approved the exchange’s application for a listing suggests that the SEC no longer perceives the business as “toxic” and uncontrollable. It is therefore safe to say that cryptocurrencies have been given another good signal to move forward. The introduction of digital currencies into the global financial economy is unavoidable.
Already quite a few “new” and traditional investors are starting to move into the camp of cryptocurrency supporters. Tesla has decided to sell cars for Bitcoins, and the total capitalisation of the major cryptocurrency is already estimated at more than a trillion US dollars.
So what will happen next? Clearly Coinbase going public will give investors the opportunity to invest indirectly in digital assets and further boost interest in cryptocurrencies.
But there are some doubts that many things could go wrong. Firstly, whether the company will be able to realise its long-term goals, namely to restructure the global financial system by widely introducing cryptocurrencies into all areas of business. After all, there will be a large number of regulators standing in their way who are not yet ready for this. Second, the vast majority of exchange revenues are commissions, so the share price will be highly correlated with trading volumes, and prolonged crypto winters can negatively affect a company’s financial health. Third, there are still enough security issues in the cryptocurrency world that it could be a catalyst for a future loss of confidence in the industry.
Coinbase’s IPO has now been compared to Netscape’s listing, which is seen as the beginning of the so-called dot-com boom. The cryptocurrency world and Coinbase still have a long way to go. The exchange itself stresses that growth and future development depends on a large number of factors that are difficult to predict and evaluate.
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