Like it or not, you should probably start paying attention to bitcoin
Like it or not, you should probably start paying attention to bitcoin
On Wednesday, Coinbase, the largest US trading platform for cryptocurrencies, is going public. Michael Nagle/Bloomberg via Getty Images This story is part of a group of stories called
Uncovering and explaining how our digital world is changing — and changing us. Coinbase, a platform for buying and selling cryptocurrencies like bitcoin, became the first major cryptocurrency company to go public in the United States on Wednesday. It’s a clear sign that crypto is firmly in the mainstream of the finance industry — and it’s not going away anytime soon. Coinbase stock — which is trading under the ticker COIN — ended its first day at $328 per share, putting the newly public company at a more than $85 billion valuation on Wednesday evening. Throughout the day, Coinbase’s price stayed far above the $250 reference price that the Nasdaq set before trading began, and at one point swung as high as $429. Ahead of the listing, the value of several cryptocurrencies also surged , with bitcoin hitting an all-time high . In other words, if you’ve been pressing snooze on the bitcoin and blockchain conversation for the past decade, now’s probably a good time to wake up. The company’s direct listing on the Nasdaq is a “ coming-out party” for cryptocurrencies, according to Erin Griffith of the New York Times. The tech policy site Protocol similarly declared Wednesday as the “biggest day yet for the crypto world.” As Paul Vigna, a Wall Street Journal cryptocurrency reporter, recently said , “Not only does it make crypto and bitcoin a little more acceptable, it now gives investors another way to invest in bitcoin.” Even if the average investor doesn’t want to buy or sell cryptocurrencies on their own, Coinbase’s direct listing means average investors can invest in the cryptocurrency economy by investing in one of its biggest players. If you’re still catching up on the trend, cryptocurrencies are virtual currencies built using blockchain technology, a type of decentralized database that can record interactions, like purchases, across a network of devices. Instead of trusting one system to record all these interactions, a record is kept on every single node of the network. Bitcoin was the first cryptocurrency, created in 2009 by an anonymous developer under the pseudonym Satoshi Nakamoto, and is still the most prominent example of a payment method that’s facilitated along the blockchain. Here’s how Vox’s Timothy Lee explained bitcoin back in 2015: Like MasterCard or PayPal, it allows money to be transmitted electronically. But Bitcoin is different from these conventional payment networks in two important ways. First, the Bitcoin network is fully decentralized. The MasterCard network is owned and operated by MasterCard Inc. But there is no Bitcoin Inc. Instead, thousands of computers around the world process Bitcoin transactions in a peer-to-peer fashion. Second, MasterCard and PayPal payments are based on conventional currencies such as the US dollar. In contrast, the Bitcoin network has its own unit of value, which is called the bitcoin. Since then, lots of cryptocurrencies have popped up, and they’ve become their own economic sector , potentially worth trillions of dollars. Cryptocurrencies have historically been very volatile, but in recent years, more traditional financial institutions , including banks , investors, and regulators, have increasingly taken notice. Related Bitcoin, explained Here’s where Coinbase comes in. While people can buy cryptocurrencies directly — one individual buyer selling it to another — Coinbase aims to make the process easier by becoming a platform for people to buy, trade, and sell several of these various currencies, including bitcoin. Following its founding in 2012, the company has become the largest of these cryptocurrency platforms by volume in the US, and the second-largest in the world, according to Marketwatch . In its filing with the Securities and Exchange Commission, the company reported that it had about 43 million retail users and that it had raised $3.4 billion in revenue up until the end of 2020, with most of those funds coming from transaction fees. “What Netscape did for the internet in 1995 is what Coinbase will do for crypto and blockchain in 2021,” Roger Lee, a general partner at the investment firm Battery Ventures, which has invested in Coinbase, told Protocol last week. “The internet was very opaque and a very abstract concept to most people in the mid-’90s. Netscape created a lens through which to interact with it.” Starting on Wednesday, regular investors now have the opportunity to get their own stake in this marketplace. While the company has gone public, it’s doing so as a direct listing, not a public offering ( you can read more on what that means here ). Regardless, it’s a big step for cryptocurrencies as they become a more recognized part of the economy. Cryptocurrency and the blockchain are increasingly commonplace Coinbase’s public listing is just the latest milestone on cryptocurrency’s journey from nerdy curiosity to mainstream investing opportunity and payment method. Since 2018, Square, the payment processing service, has let most of its payment app Cash App users buy and sell bitcoin . And lately, more and more of them have been doing so. Square CFO Amrita Ahuja said in February that 3 million people did transactions in bitcoin on the app last year, while 1 million did so in January 2021 alone. Similarly, PayPal began to allow users to buy cryptocurrencies through their accounts last year. The platform expanded its cryptocurrency capabilities this March and started allowing users to exchange their crypto holdings into US dollars in order to pay for things, which is just one step short of allowing users to make purchases with actual cryptocurrency. Paypal has also indicated that users of Venmo, which it owns , will soon be able to transact in cryptocurrencies, too. More broadly, applications for blockchain technology are appearing in a growing number of domains. The blockchain is key to the digital art being sold as NFTs, or non-fungible tokens, that have become more popular in recent weeks . Blockchain technology has also popped up in vaccine passport apps , voting technology , and even managing supply chains. At the same time, the use of blockchain technology has also raised a wide range of challenges, including the risk of hacking , lack of regulation, and concern that its intense computing requirements can come with a whopping environmental footprint . So even if you think bitcoin, cryptocurrencies, and the blockchain are weird or confusing, you should expect to see them continue to creep into everyday life. Update, April 14, 5:10 pm ET: This piece was updated to include the news that Coinbase went public and to include its end-of-day trading price. Open Sourced is made possible by Omidyar Network. All Open Sourced content is editorially independent and produced by our journalists.
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