Cryptocurrency Goes Public

Another major milestone for cryptocurrency occurred on Wednesday, April 14th, 2021, as Coinbase took itself public, making it the first major crypto company to go public. Coinbase is a relatively young company in the infant industry of cryptocurrency, therefore this move to go public is a significant step forward and sets a precedent for other major crypto companies. Without accounting for options and restricted stocks, Coinbase was valued at a little over $60 Billion USD when it ended the day on Wednesday, April 14th, 2021. This high valuation gives crypto companies and investors more confidence that the digital currency space can be just as bullish and valuable as any traditional company. This is a huge win for the crypto industry and the financial tech industry as a whole. Let us examine this momentous occasion in more detail.

For the uninitiated cryptocurrency is a digital asset or token that represents a form exchange or value that is tracked on a secure ledger on the blockchain. Basically, cryptocurrency uses a decentralized banking system, where everyone in the blockchain controls and verifies the ledger; as opposed to traditional banking where a central banking institution controls the ledger. This is important as the ledger is decentralized and uses very advanced technology in order to stay secure by recording transactions and ownership and essentially triple verifying that the ledger is never tampered with by nefarious entities. Bitcoin was the first cryptocurrency and many other currencies now exist such as Ethereum and Dogecoin. Now about 12 years old, cryptocurrency has been the subject of much debate among the finance and technology community, so Coinbase going public has in many ways reignited some of the typical debates surrounding the viability of blockchain-based currencies.

As with other ultra-modern tech companies such as Spotify and Roblox, Coinbase listed its stock directly to avoid the traditional IPO process. This permitted their employees and current shareholders to immediately sell their shares if they desired to. So even as Coinbase joins the traditional stock market, they are still using modern tactics that have been used by other tech companies in the past. Coinbase joins many other companies in the last few financial quarters to take advantage of the huge cash flow associated with the recent changes to investing. During the Covid 19 pandemic, investors moved away from brick and mortar companies and started investing more heavily in technology companies that have resisted or even grown during the pandemic economic climate. Unlike private offerings that require taking reasonable steps to verify accredited investors, going public allows Coinbase to freely trade shares in their company to anyone interested.

Since the advent of cryptocurrency, many naysayers have called the form of exchange a scam, a bubble, and all other manners of negative names. Warren Buffet famously swore off cryptocurrency when he said, “They don't reproduce, they can't mail you a check, they can't do anything, and what you hope is that somebody else comes along and pays you more money for them later on, but then that person's got the problem.” So the cryptocurrency naysayers considered this evaluation by the CEO of Berkshire Hathaway as a smoking gun. However, crypto and crypto companies have proven time and again that there is serious growth potential and a huge value in their decentralized offerings. When new radical technology emerges that threatens to completely change the landscape of the specific industries, many disregard or swear off those new ideas. Many of the same accusations are thrown at modern crowdfunding, however, private placements such as Rule 506(c) have proven just as magnificently successful as cryptocurrency offerings. Sometimes the naysayers are correct, however, those who have not jumped on the crypto bandwagon may be left in the past in dying industries.

It is hard to say who is right and wrong about crypto, although, from stories like Coinbases IPO and the constantly growing crypto space, it is hard to deny that crypto has been and is maintaining a huge upward tick. Just take a look at the drastic growth of Bitcoin in recent years! Crypto is an important asset in any modern portfolio. For instance, investors seeking accredited investor status who are verifying using the net worth method may use crypto currency as an asset. This transformation of modern investing is very exciting and to stay up to date on the ever-evolving world of crypto stay tuned to VerifyInvestor.com’s blog.