Not sure what would've been the riskier bet. Coinbase of course could have pivoted away from Bitcoin if it didn't work out. But there are plenty of scenarios where Bitcoin succeeded, but this startup didn't. Pretty interesting that Coinbase wasn't an any more interesting investment than Bitcoin at the very start, and that while Coinbase was private, hard to invest in, and illiquid if you held it, Bitcoin was open to all to make the same bet.
Also find it interesting that the real bet that Brian made here in his post, on building a product to undercut CC fees, didn't really materialize. Coinbase invested heavily into this, building out a marketplace for merchants for payment processing. But virtually all money is being made on being a broker for people speculating on Bitcoin as if they're buying gold, with no significant intent to use bitcoin. And payment processing is still 99.99% non-crypto, with crypto-based payment processing still being slower, costlier and less trusty.
If you got me in 2012 in a time-machine to 2021 to only take a peek at the current virtually-zero level of actual use of Bitcoin, and the abundant alternative non-crypto digital banking/financial products available, and asked me to invest in Bitcoin or Coinbase... I'd have said no. (I was optimistic, so I did invest back then). I wouldn't have predicted the current price levels even with information of today.
And there is a ton of other exchanges that are both user-friendly for regular people who are looking to buy Bitcoin (Cash App) and trader-friendly for people looking to trade bitcoin (Kraken/Binance).
Most serious Bitcoin enthusiasts don't prefer Coinbase over the alternatives, so I'm not sure what Coinbase's real moat is? How is it able to charge higher fees than most other crypto exchanges?
Americans cannot access most of the other crypto venues because they are rampant money laundering machines. Coinbase is one that at least plays by some of the US KYC/AML.
This is why AML laws make much more than money laundering illegal, why in the vast majority of cases of AML law violation, no money laundering was proven to have taken place, and why none of the analyses on the volume of money laundering use this burden of proof when formulating their estimates on the scale of the phenomenon.
What you could say is that other venues are less compliant with warrantless surveillance requirements of US financial crime regulators. That is the phenomenon that is actually provably rampant in non-US-regulated crypto exchanges.
Reggie Fowler and Crypto Capital were convicted of money laundering for crypto companies just a couple years ago. This was Bitfinex’s bank, which caused big balance sheet problems for iFinex and likely spawned the current era of the Tetheral Reserve.
Compelling evidence? The biggest exchanges’ banks are being thrown in jail for laundering. I’m not sure how much clearer it could be.
In the vast majority of cases where a financial intermediary is convicted of violating an anti-money laundering law, this doesn't happen.
It would make discussions more constructive if you read the comment in full before responding to it.
They refused to support various blockchains until they were sure they could do it securely and reliably.
In a way it's somewhat poetic, as they sell trust for a trustless ecosystem.
The hard part isn’t predicting a crash it’s trying time when it will happen.
Coinbase, IIRC, is on track to do more than a $1B in profits for the year ending 2022 with a user base of 50M which is likely to grow even more as crypto breaks into larger markets since the interest in it has only been growing. Of course, the usual caveats apply, but the crypto economy is getting too big too fast for it to disappear overnight.
Finally, some $49B was transacted yesterday on Bitcoin. Whether billions is virtually zero is a matter of interpretation.
There were $2.6T of US treasuries traded last week (approx $520B/day) and average US equity volume is $200B+/day. $49B a day isn’t all that much in comparison.
You have to wrap your head around the idea that the main way to use a store-of-value is simply by holding it. Holding is using!
Nobody buys Bitcoin because they want to have the same amount of purchasing power next year (what a terrible investment objective anyway). They buy it because they want 100x the purchasing power. This works until it doesn’t.
It's really just not. It's wildly unstable and still far more complicated than putting the money in really any other kind of financial instrument.
The thing that it is absolutely amazing for is speculation. Which means you're basically correct in a sense: speculating is using.
The problem is that the use case of speculation is completely different than the use case of storing value. In face they are fundamentally in tension.
So if the speculation use case disappears the store of value use case will not suddenly replace it. A scenario where bitcoin is no longer useful as a speculative instrument would destroy any possible utility it has as a store of value as well, since a store of value needs to, you know, actually keep the value stored rather than collapse in price.
That's simply not true. Where I am (Germany) - it's way simpler to buy Bitcoin than stocks, let alone something more exotic especially if you want to invest a small sum. Tax implications and fees are also currently easier to work out (at smaller sums). It's been the same in other countries I've lived (e.g. UK) for over 5 years.
Completely disagree with this point which invalidates everything else you say.
Your opinion doesn't match reality. The reality is that it's been a great store of value since its inception. Anybody that has ever bought and held Bitcoin, at any time during its entire history, has had a positive return.
- The risk of losing your BTC would've been high if you used something like Mt Gox, or maybe you wouldn't have made the purchase because you didn't trust the purchasing channels.
- My guess is investing $300k back then would've raised the market price quite a bit before you finished your purchase, but I'm just speculating.
- Investing in the company gives you a little more agency. E.g. if you have a great idea, you can help the company become 1.5x or 10x more valuable. Investing in BTC is very passive. This is not worse or better, but a personal preference.
- I bet Coinbase contributed to Bitcoin's success by providing an easy onramp. If Bitcoin were 1 or 3 years behind where it is today because of mass adoption starting later, then $300k invested in Bitcoin in 2012 would be worth much less.
For those interested, Garry Tan, tells the story here
Folks are talking about mainstream acceptance of BTC, and that means holding 1-3% of the balance sheet in BTC and an eccentric billionaire with an electric car company accepting them for payment.
To be sure, the underlying crypto value has blown up, but it’s integration into society has fallen well short of Armstrong’s predictions in 2012.
More mature/older tech individuals have seen this cycle play out before, and so they’re just not as quick to embrace the unchecked enthusiasm and optimism.
But yeah, it didn't pan out as a payment processor, which is what I was hoping for. But mathematically, it was easy to predict that if things caught on, Bitcoin would go over $10,000. It killed me to sell mine 5 years ago.
Is it right to blame medical bills rather than blame bad luck for your misfortune and/or lack of a job or income to buy healthcare to cover those medical bills? (This is general w/o knowing your specifics).
> I started a crypto business that fizzled out
Example if your crypto business (or any business you started) didn't fizzle out you would not have to have sold your bitcoins possible. Also (and this is the larger point) if you had taken a traditional and less risky job at a large company (tech or otherwise) most cases the healthcare provided would have covered (once again generally w/o knowing your specifics) your healthcare bills.
I had health insurance and a job. I had just transitioned from a job paying ~$30,000 to one paying $100,000. Perhaps my only mistake was waiting 10 years to move to a software engineering job despite hobby programming my entire life, and loving programming (my prior industry originally paid ~$50,000/year but automation, globalization, and consolidation had whitled the average salary down over 10 years).
And you're stunningly naive to think that having health insurance and a job will save you from financial catastrophe if you face severe illness (and I was within 20 pounds of my ideal weight and in relatively good shape). Perhaps you can come out OK (not great) if you have a large nest egg and really good long-term care insurance (I didn't, having recently worked a $30,000/yr job with a family). If you have those, congrats: you're in the top ~5% of Americans.
But sure, let's blame "bad luck" instead of an obviously malfunctioning system. It's not necessarily capitalism. If you're not poor, it appears that medical costs are reasonable in countries with a functioning capitalist medical system (like India, Thailand, Mexico, etc). It's our weird hybrid system, where there's no competition and no downward price pressure on providers. And hospitals continue to consolidate, so prices will only go up.
> Also (and this is the larger point) if you had taken a traditional and less risky job at a large company (tech or otherwise)
You know nothing of my situation. Building that company, and programming that service (which I did while holding down a job in my old industry), was the exact thing that allowed me to flee a dying $30,000/year profession and transition into a bigcorp as a software developer making $100,000/year, a little over 1 year before my first major illness. I had tried to transition into tech once before, and was turned down for lack of experience (and to be fair, it was also during the great recession).
1. And I can tell you're the kind of person who would interject here, "maybe you were just a bad worker, and that's why your salary went down instead of up". Well, my salary has gone the other way (up, significantly) since I entered tech, even as I've struggled with significant chronic health issues. So let me stop you there.
Most ideas do not work and even most that work don't work as well (in terms of making money) as coinbase has. The only reason we are discussing what Brian was looking for in 2012 is because he is an outlier. Otherwise what he said back then would be of little interest.
We not now even using CompuServe on Commodores aver AT&T lines. Modula-2 and Prolog are just footnotes, and Lotus 123 is gone.
To be honest, decentralized crypto is terrible for any financial service.
If you get scammed, you're money is gone. Nothing in crypto is fixing this and i don't see a real future without it.
And i don't think it's even possible without keeping it's essence of existence.
I suppose it is when you predict opinion is going to work against this and public opinion seems a very slow moving thing. Unless some sort of crazy event occurs.
That is, you should NOT sell something because you're becoming emotional drained by it as someone else suggested. That implies you're not fit for managing and investing your own wealth. Don't jump off a rollercoaster while you're still riding it.
If you don't know what your strategy would be for bitcoin or some other asset, you should figure that out before trading.
But keep reading and stay informed as you go as everything is changing always.
Do you really think people would have predicted BTC can touch 60K?
You don't ever sell for good. The goal is to increase BTC not USD. USD is a trap.
I would say pay attention to overly critical nerds, and see of the opposite could be used to your own benefit.
Just like those HBS people who shoot down Bezos when he spoke about Amazon.
Thing is: common sense is right most of the times.
Most of the times BTC fad just dies out, most of the times Amazon never makes it to the point when they find the real cash cow of the company (AWS) and move from being a glorified Ebay to a 1.8T company
I’m not the type to conflate funding with utility, and while clearly there is massive interest in crypto, it’s still not clear to me that the entire space is more than just a speculative asset class. I don’t know anyone who uses it to purchase goods, in fact it seems that the bull case for it is that it shouldn’t be spent. Now that it’s gone from $20k to $60k in four months everyone suddenly believes in it. The absolute mania that has coincided with the price ascent alone makes me skeptical. It’s easy to cast aside naysayers when you see such a massive IPO amidst a speculative frenzy like we’re seeing in crypto and say “see, you’re wrong” but I think skepticism is healthy in certain cases and people buying coinbase and crypto now thinking they’re early to this party just feels like a suckers rally.
Companies that are IPOing these days are doing so after having been private for a decade. This results in early investors cashing out on the public markets after capturing the opportunity when the risk was still massive.
There is a misalignment between the Fed inflation preference of 2% and the public inflation preference which is 0% or even -2%
Enter crypto: what draws people to crypto is deflation. People love deflation, they gravitate towards crypto because deflation is hard built in protocol and it brings about financial nirvana for the saver: that is being able to increase one's net worth without doing any tangible work, manual or intellectual.
That's the value of Crypto, people have lost faith in the Fed. BTC gives people what they want (hard coded deflation) and has an amazing marketing story.
The narrative is important on this.
When a recession happens, the message which is brought to the population is :
"Recession is bad, we must end the recession"
When inflation hits the message is (not that it's necessary given that people feel the diminishing purchasing power) : "Inflation is bad, we must end inflation".
Deflation has never been painted as the enemy by institutions, and I think rightfully so, because the population would struggle to see it as an enemy due to the fact that it's desirable at the individual level.
So crypto is the perfect enviornment for this. People make up their mind to buy crypto within close doors without thinking about macroeconomics...they only think about their dollars being worth more
> It’s very concerning that the fed has basically become an extension of the White House and seemingly politically motivated.
It has always been. Everybody wants to be popular and keep their job.
Deflation can be ruinous at the individual level. If you are in debt (like many of the poorest members of our society) then significant deflation means that you'll have to pay back your creditors substantially more than you borrowed, and many won't be able to.
Consider, would you take a mortgage denominated in Bitcoin? Of course not! If its price continued to go up (i.e. it continued to be deflationary) then you wouldn't be able to pay back the loan and would face foreclosure.
Only so long as Bitcoin is pegged to the USD. Once Bitcoin becomes the basis of value, and the USD is pegged to Bitcoin instead, things become different. Bitcoin stabilizes. You take a loan in Bitcoin, you take a salary in Bitcoin. Bitcoin isn't going up anymore in this scenario because it's not related to fiat currency.
You're still thinking in terms of BTC going up in USD. 1 BTC = 1 BTC
That part is demonstrably false. The Fed has never been as dovish as it is now and at times has been extraordinarily hawkish and unkind to the equity markets- Paul Volker or Alan Greenspan, anyone?
The big difference to me is that there used to be this underlying assumption that if inflation went up, the fed must act, so people didn’t freak out because of a single hike. I also believe the fed operated in far greater silence, being “data-dependent” and not fully committing for years to a single policy. Because of that everyone wasn’t laser focused on the fed. These days it’s all anyone following the markets talks about. But because the markets are so keyed in on rates and every little thing Powell says, it just tells me the next crash won’t be caused by the fed but an externality which could be far more dangerous given how far the fed is willing to let this market run unchecked.
1) Price stability which is a way of saying keep inflation low. That's because the population was scarred by inflation in the past and wants institutions to protect against it.
2) Maximum employment: Is there anything more political than this? People were scarred by losing their jobs in the past and want institutions to protect against such thing.
If the Fed was harsh on equity markets before, then it solely means that in their perception it was the best way to be popular and keep their job.
Every human wants to be popular and keep their job, so that's the motive behind every choice, doesn't matter if you are the Fed chair or the POTUS or a McDonald's employee.
The only people who sort of have some freedom to sacrifice short term popularity in order to achive long term popularity are the ones which have their job as a guarantee: Dictators essentially...and only some of them.
Maybe deflationary preference with a moratorium on student debt and mortgages.
Point being: people want to sit on their couch and enrich their net worth without doing any work
That doesn't scale. It's not possible for society to offer this to a majority of people in any short term scenario, because if 'enrich their net worth' means anything beyond a number going up, there needs to be increased production of goods and services that they consume. That means that you can only get this if you win the risk lottery. Longer term, if we get massive levels of automated production, the number of opportunities for this kind of life can increase, but deflation is much more likely to diminish the production capacity of a society than increase it.
In an economy in deflation the pressure is for wages to go down - either by reducing the number of jobs, or by reducing what they pay. It's hard to imagine a society accepting such a situation happily.
And you know it.
And actually they might not be as ignorant as you might think. You have no control over Macroeconomics so you might as well play the game in order to have "your number going up" and let the Macroeconomic chips fall where they may.
Regardless of where the macroeconomics chips fall...you'd be better off with a higher number than a lower number.
A small proportion of a big pie can be much more filling than a large proportion of a small pie.
But yes, whether running a whole economy on a deflationary currency is a good idea is an entirely separate question to whether some use of bitcoin makes sense.
Having said that, and speaking for at least myself, the (in my opinion) misguided narrative around deflation and 'store of value' that is common in bitcoin core world makes me much more interested in bitcoin cash and ethereum commmunities where niche economic philosophies I don't agree with are not as common as in bitcoin core.
There are so many interesting things we can do with smart contracts and a widespread settlement system that doesn't have gatekeepers. Creating value is much more interesting than storing it.
That works for pies, but not necessarily for human psychology. Rationally, yes, you'd prefer to have more in absolute value, but humans are not rational - they work on relative comparisons.
Having more of a small pie gives you an advantage in mate selection, influence (political/social) and options. So the richest man in a village that has $X is probably happier than the wall-street banker that has $10X but is surrounded by people who have $100X. That's just how our psychology works.
The internet and widespread access to statistics and lifestyle content has sort of ruined that.
The guy in the village is happy as long as he doesn't turn the TV on, or goes on forbes.com to take a look at the billionaires index
Look at the village boss net worth vs Bezos.
We all measure our success with net worth in dollars. That plus the internet changed the game. Now we approximately know each person net worth and especially the net worth of the leaders in the standings.
Also just because Bezos is not around the village to steal your girl doesn't mean you don't think and predict what would happen if he were to come to the village and hit on your girl.
This is for sure. But with regards to pure "increasing one's net worth while sitting on the couch" then deflationary is always better than inflationary.
Of course there are other considerations. For sure there is a currency more deflationary than USD, but such currency doesn't give you access to the US equity and bond markets. So what you lose on the inflation side you recoup with the use side.
> Having said that, and speaking for at least myself, the (in my opinion) misguided narrative around deflation and 'store of value' that is common in bitcoin core world makes me much more interested in bitcoin cash and ethereum commmunities where niche economic philosophies I don't agree with are not as common as in bitcoin core.
I think if we are talking price prediction, then the only people who invest in crypto are the ones who embrace a "misguided narrative around deflation"
Those who have an academic view around deflation won't ever invest.
Those who don't care and stick to predicting price such as myself will invest in moderation to trade on the true believers we just mentioned.
If you have more debt than you do cash in your back account, then inflation can enrich your net worth without you doing any work.
Never in a million years the regular borrower would be able to increase their net worth with inflation.
Regular borrowers can't borrow anywhere near the consensus projected inflation rate.
I know a large number of people at the moment who have ended up with an impressive property portfolio without even trying all that hard. They bought early in their career, and the value of the property they bought inflated, their income inflated, and their debt didn't keep pace.
People ascribe credit for their rising income and increasing salary to their performance on the job....some more humble ascribe it their employer and their boss.
That's who takes credit for it. For sure not inflation and for sure it's not the Fed with their 2% target.
Inflation is in all the wrong places with regards to the narrative, for one reason or another only the negatives are outlined and the population somehow is very scared of it.
Deflation is in the opposite spot. When deflation happens the culprit in the narrative is the economic recession/depression and the wealthy who played roulette in the stock market etc. The negatives of deflation are only known to academics, wheras the positives are known to everybody (e.g. currency strenght of the USD when you go on a trip to Mexico)
It is clear to me that this might offend the economics professor, but that's the reality of it.
That's the reality we all have to trade on. Narrative is very important.
The rationale for the Federal Reserve Act was not inflation but financial crises, more or less like the 2008 one. Inflation in the U.S. before the Fed was rare and episodic, e.g. "not worth a continental". (BTW I think it's far from clear the Act made us better off wrt financial crises either, considering the 1930s for a start.)
All the other parameters in the economy such as the stock market, real estate, interest rate are free to fluctuate but the Fed can use its powers to keep prices stable and people employed.
It's clearly a political entity
The inflation-targeting policy framework dates from 1980ish, influenced by Friedman's monetarism and "rational expectations", as I understand it (poorly). In the decades before that, after the Depression and WW2, the official policy was more Keynesian in flavor. But that was not the rationale to create the Fed, again.
More recently since 2008 and especially 2020, it's looking like a new regime again, and I wouldn't count on the next decade looking like the past several.
It was never obvious at all. Practically all predictions were wrong. Even the predictions by bitcoin advocates of all stripes were wrong. Everyone was wrong. It is just that some people won big despite being wrong. I don't think Brain Armstrong foresaw that Bitcoin would turn into what it is today either.
In any case, building an exchange seems pretty hard. I wouldn't know where to start with all the legal stuff.
Enter BTC: what draws people to crypto is deflation. People love deflation, they gravitate towards crypto because deflation is hard built in protocol and it brings about financial nirvana for the saver: that is being able to increase one's net worth without doing any tangible work, manual or intellectual.
I see the personal, anti-social case for "giving in to our greed", as the time traveler put it , but what are the social benefits of lowering production, wages, demand?
"Why didn't we abandon Bitcoin, and move to another system? Well, we tried of course. We tried to step over to an inflationary cryptocurrency, but nobody with an IQ above 70 was willing to step up first and volunteer. After all, why would you voluntarily invest a lot of your money into a currency where you know your wealth will continually decline? The thing that made Bitcoin so dangerous to society was also what made it so successful. Bitcoin allows us to give into our greed."
The whole social benefits thing that we somehow had up to now was pure luck.
If bitcoin hodlers keep a low profile and don't spend there would not be any way to identify them and redistribute wealth. This is especially true for those who mined btc.
> While this view of Bitcoin might sound like it is a betrayal of Bitcoin's original vision of fully peer‐to‐peer cash, it is not a new vision. Hal Finney, the recipient of the first Bitcoin transaction from Nakamoto, wrote this on the Bitcoin forum in 2010: Actually there is a very good reason for Bitcoin‐backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases. Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others. George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self‐regulating.
Bitcoin as currency did not fail because of technical issues. It failed because the financial incentives to use it as such are not there.
Cryptos provide no value to the world at least today, and consume tremendous amounts of energy, it's probably a net negative.
Amazon has clearly some externalities, but it's obviouos that people 'want stuff' and they dominated on the industry shift to e-commerce.
Amazon will probably be around for a while, selling useful stuff to people.
If Crypto dissipated tomorrow, or by the stroke of a pen were made 'illegal' - the world wouldn't skip a beat. Nothing would change. A bunch of people who invested in 'Digital Baseball Cards' had them burned up in a fire but who cares. Nothing material to the economy has changed - other than some money changed hands for said 'Digital Baseball Cards'.
So Coinbase is not obvious in hindsight, and the kinds of valuation and leverage going on are not obvious either.
I suspect that 'Financial Populism' will remain and Coinbase will be around in one way or another, but they are in a different territory than most other new companies.
"common sense is right most of the times." <- there is basically no 'common sense' in crypto, or rather 'common sense' would imply that the value of crypto is still 'potential'. Since we don't actually use crypto for anything, but it is really cool and 'could be used', then 'common sense' would indicate we value it for it's potential and not much more.
Valuing things that have no material value in the order of 100's of billions is the opposite of common sense, I think future historians will probably wonder what we were thinking.
There are institutions which only exist because humans project themselves into the future and imagine the consequences that they'd suffer because of adverse events and they create institutions to protect them against such events.
People are scared as hell of inflation and that's why the Fed was created. The "stable prices" thing is an elegant way to say "prevent inflation". Now people are really upset that the Fed won't allow deflation and is pretty much encouraging inflation. They see this as a betrayal to the public and the reason why the Fed was created in the first place.
You can try to remove it but efforts will fail and it will take a whole lot of effort just to prevent it from getting bigger.
The government pretty much gave up on removing drugs, cash, tax evasion..
Crypto is the same thing, great for the individual, but very bad for society. Tragedy of the commons can't be solved , so the work is to contain because they can't extinguish it.
Better yet it can be extinguished but it would require government to do the one thing it can't possibly do:
A similarly deflationary dollar
Governments have millions of extremely well organized heavily armed people who can kill you if you don't accept the medium of exchange they're proposing.
Which medium of exchange are those extremely organized and heavily armed people compensated with?
When societal shifts happen they happen at a similar rate across every profession or job.
TikTok was just as big among military members compared to people of similar age demographic.
Governments and Central Banks create immense value, they serve many purposes.
They can do things we don't always agree with but that's inevitable.
If government disappeared civilization would halt.
If Central Banks disappeared, basically the same - everything would stop.
Most of the important things that the Central Banks do are published, you can watch it happen.
Aside from their obvious value, the very concept of a 'common medium of exchange' is also immensely useful for society.
Despite your claim, you're free to use 'Santa Claus Dollars' to do what you want, but that would server no purpose.
And you also don't have to hold currency - we live in an era of computers, you can immediately exchange any USD you have for any zillion other kinds of store of value or currencies.
You like Swiss Frans - go ahead - buy as many as you want.
Crypto serves no real purpose as a currency or a store of value - if BTC and every crypto went to $0 tommorrow, the only thing that would change is we'd stop wasting energy on factoring prime numbers.
Obsevers comments about 'governments extinguishing BTC' are nonsensica: nobody is trying to stop crypto, and frankly, as of today they don't care. If the US and EU decided together to ban crypto you can be assured that it would probably be worthless very quickly - there are very few people who want to put vast sums in an asset that could land them in jail.
Finally: "Better yet it can be extinguished but it would require government to do the one thing it can't possibly do:
A similarly deflationary dollar"
Is also missing the point because nobody wants hyper strong currency but a few people who misunderstand currency.
It would be nice to have dollars that increased in value over time, but that feature of currency would be very costly and having damaging effects on the economy.
What we want is a currency that maintains it's value but very slightly depreciates over time. Just a tiny bit. That's ideal. That way you don't have to worry about your current accounts falling in value, and if you want a better store of value you can do that.
If there is an issue with the Central Banks then we should address it because we need 'good money' a lot more than we need to collectively imagine that 'special long numbers' have some kind of value.
People who are confident in themselves and have the guts to go alone...they don't want any government protection, matter of fact they never asked for it and don't want to pay for it.
Government doesn't leave these people a choice to opt out of their protection, hence they start prosecuting them
> if the US and EU decided together to ban crypto
Coinbase has 50m users, and that's just one exchange. Nobody has the political goodwill to upset hundreds of millions of cryptocurrency investors who'd vote them out next time around. Maybe only China and Russia can. For sure not the US or the EU
> Is also missing the point because nobody wants hyper strong currency but a few people who misunderstand currency.
BTC success proves that the majority of the population wants that, it might be ignorant but in the end academic papers are not how decisions are made in megasocial groups such as nation states. The population comes up with an idea about how things should be run and dealt with, then people expresses such idea via voting with their wallet, voting with their feet, proper ballots, pressure on institutions etc.
Your beloved Fed is the most political agent out there, which was created to calm the population's worries and in response to people worries about inflation and unemployment. Sure enough it's mandate is super political and the answer to people's worries:
People are realizing that the Fed is not doing the best job it can possibly do with #1, instead it is actively hoping for more inflation. So they are looking around to see if there's any concept which is dealing with their worries in a better way and they found crypto
> If there is an issue with the Central Banks then we should address it because we need 'good money' a lot more than we need to collectively imagine that 'special long numbers' have some kind of value.
That's not what you do. You don't fight, you leave and go where are you served better. People hate inflation and want deflation (regardless of the macroeconomics implications, that's what they want. Period), and sure enough they are voting with their wallets and abandoning the Fed which has a 2% inflation target towards BTC which has an inflation target heavily in the negative and a limited supply
Yeah, all those people living in 'countries' are kind of weak, what their 'laws', 'regulations', 'infrastructure' like roads, bridges, and 'education'.
More seriously "BTC success" - no, BTC is a total failure as a currency, nobody is using it.
People are piling in for a variety of reasons, but even as a 'store of value' it's probably the 'least good option' where real estate, stocks, bonds, commodities - or a very low cost ETF would serve considerably better.
Leaving it no reason to exist other than as a hyped up scheme.
I won't bother to respond to the rest of your treatise other than to point out the obvious, which is that BTC is not remotely a solution to any of the things you're hinting at as being wrong.
People who try and find "real solutions" to stuff, they miss out on narrative driven price appreciation.
Just saying...we are traders and investors not world builders.
Our job is to predict whatever goes on in people's minds and how will they express their vision in the capital markets...predict, anticipate and position. It's really all there is to it.
> Real estate, ETFs, stocks etc.
That's not what price says, price says that btc outperformed all those things, denying that is foolish, I remind you that the market is like the ocean, you don't fight the ocean, you position to ride the strong waves it provides us.
BTC is not a 'store of value' is a wild speculation.
"People who try and find "real solutions" to stuff, they miss out on narrative driven price appreciation.
Just saying...we are traders and investors not world builders."
Yes - it's clear that you're not a 'builder', but thankfully there are a lot of people out there not distracted by Ponzi schemes, who are actually 'doing things'.
As Nassim teaches us, "long term stability is only achieved via short term volatility"
> Yes - it's clear that you're not a 'builder', but thankfully there are a lot of people out there not distracted by Ponzi schemes, who are actually 'doing things'.
You are the one who is against and adversarial towards btc. People who are secure about themselves, they just ignore something if they don't agree with it, they don't hate on it and call it in a derogatory way.
If you are sure and secure about your strategy of increasing your net worth by doing things vs. trading, then why are you attacking btc with such vitriol?
You really need to educate yourself if you truly believe this. Things are moving quickly in the space. I think you'd be shocked.
Not sure. In fact, I invested in bitcoin some 8 years ago, just like Brian Armstrong I was optimistic about bitcoin not as a popular speculative eccentric store of value, but as the standard for digital money that would drive substantial portions of global finance.
That hasn't materialised at all. If I could see the number of merchants accepting bitcoin and their effective average turnover paid in bitcoin, the number of business to business transactions in bitcoin, the amount of loans being issued in bitcoin, remittance etc, 13 years after launch, today... I'd certainly not have invested in bitcoin or Coinbase, in retrospect, with the information today.
That's the crazy thing, and even with this new attention, I still haven't seen anything exciting around the corner. All price increases are now purely speculative, instead of changes in functionality or use.
Amazon was all about re-investing the extra revenues over costs.
Bezos wasn't very popular on Wall St. for this strategy...or at least less popular than he'd have otherwise been.
Just the opposite, the amount of money chasing 'money losing operations' is extraordinary.
Most high flying startups today that have working capital needs (like 'food delivery') run at a loss in perpetuity with the backing of entities like SoftBank picking up where public markets used to.
I wouldn't dismiss how hard it is to get something like that off of the ground, but once it is, it's almost comical how badly you can screw up and still get money.
'Sonder' formerly 'Flatbook' spent years screwing everything up, they continue to screw up, but because they had a basis of a critical mass and some basis of operations, they've continually been able to get investors to hand over to a net money losing operation that doesn't look like it will have the scale to work.
So this issue is relevant to the overall 'Coinbase' picture because we're living in an era of tremendous liquidity, never really before seen in human history, and due to COVID, basically government/central-bank backed guarantees of money and credit. There's no real precedent for what we're doing right now.
> Transferring bitcoin funds is already easy with the GUI. Sure a wrapper around it might make it slightly more user friendly but it's trivially easy to implement. Not to mention the fact that Bitcoin is illegal in most developed countries.
> I don't think alternative currencies have a long-term future. The only reason they exist now is because people and governments in most countries are quite ignorant about technology. Once they become more widely used, they will start causing a whole lot of problems* and will be banned by governments.
> Did you invest in Bitcoin when it was $21, and want to bring that price back up?
Personally i don't care if they're not the cheapest as long as they don't screw me when i need them the most.
Case in point: for a long time they covered all network fees when withdrawing from Coinbase Pro, while most exchanges charged a flat rate which inevitably was abused as a profit source.
Coinbase is backed by respected investors, the founder is well known and they seem to be in for the long run.
Security wise, they have implemented many counter measures to prevent funds being stolen and so far i haven't heard of any breaches.
They can handle large sums of money with no issues.
So to sum up, they don't do sloppy work and the founder won't mysteriously disappear with the funds.
Coinbase pivoted to being an exchange for crypto speculators, which is why it's worth billions. Something like BitPay continue to focus on being a crypto payment processor, which is why it's an also-ran, despite being even older than Coinbase.
If Brian had phrased the request as "Bitcoin will be digital gold" and people were dismissive, you'd be closer to say that people lacked vision. If the pitch were "Bitcoin will be an asset class that allows institutional investors to evade the regulations applied to traditional financial instruments in a time of unprecedented government money printing during a global pandemic that also drove huge numbers of retail investors into the space," you'd be right (and also from the future).
Where do you get that impression from?
There's a reason why threads like this one are routinely posted here (as famously with DropBox), and the comments are always so negative. You see a similar outcome in most Show HNs that gain attention.
HN is hyper cynical, mildly negative, and very tech-interested (which means new tech things are often posted / discussed). Visionary? If you were placing bets, you'd want to figure out the majority position of the comments then bet against that.
SV and techies in general are every bit as prone to regressive, myopic, stagnant thinking as the wider world, despite the self-touting nature of the industry as supposedly being forward looking.
I already posted a similar comment elsewhere, but I wanted to test your theory out myself on the original Dropbox thread.
Sentiment of top-level comments, as judged by me:
Negative or skeptical: 5
edit: ok I just checked and it's more like four or five. Still, they were mostly positive.
I love HN, but c'mon... we are a bunch of nerds or people with nerd tendencies haha, 99.99% of us (statistics made up by me...) are not visionaries at all.
He’s committed. He’s Already built a prototype and includes screenshots.
He has a well thought out plan and posted a compelling pitch. Plus He’s not afraid to share his idea.
And finally he understands that it’s going to be a lot of hard work and warns you instead of suggesting an easy opportunity.
PG said once that successful founders are relentlessly resourceful, and that's the vibes his post gives me.
His original motivation (Bitbank) was a "WesternUnion/Visa/Mastercard/Paypal/Stripe" payments processor using bitcoin. At the time bitcoin was ~$5 instead of ~$60000 today.
Instead of that, his Coinbase is more like a forex market maker. E.g. https://en.wikipedia.org/wiki/Foreign_exchange_market
It was other entities (e.g. Blockstream bitcoin Lightning Network) that pursued the "small payments" space.
So the only constant theme was to do something in the cryptocurrency space.
Every crypto enthusiast was wrong about that including Satoshi. The economists who shat on Bitcoin from the very beginning were right about that one thing, it was never suited to be a currency.
While Coinbase does function as something like a forex market market at this point, I think its business is not nearly as commoditized as that label would suggest.
"Credit card fees are too high. In the next five years merchants are going to start moving away from..."
I think it's fair to say he was actually wrong. But succeeded nonetheless because everyone now wants to get rich speculating on cryptos, which is the dominant reason they are so popular.
The threshold to being famously anti-crypto seems to be quite low. Like, not everyone being completely uncritically positive about crypto.
It's surprising that so many of the negative responses (and commentators themselves!) are still around today, seemingly impervious to the profound developments over the last near-decade.
Brian used to give everyone he met who didn't have bitcoin $10 worth so I guess that was who you met
It seems like a blunder, him not being open and transparent when he was so desperate to find a co-founder quickly and needed to establish trust. But perhaps it even helped by filtering out all those smart and cautious guys sniping at him in the comments?
As one of the comments mentioned, it wasn't hard to discover his real name anyway
That post is an amazing example to show anyone who believes good opportunities are always controlled by gatekeepers and limited to people with the right connections
> Because bitcoin worked out so well. Have fun with that, dude.
> No thanks. I'd rather sell sugared water.
(This from someone who refused to bet against bitcoin ten years ago because "the markets can remain irrational longer than you can remain solvent". And still today would rather sell sugared water.)
 haven't heard too many trying to sell it as "speculative asset with practically no underlying value whatsoever". That has admittedly been working so far quite well.
If every other car is driving on the wrong side of the road...
Its not completely irrational though. Interest rates are at record low levels which encourages debt and you also have the US Fed printing money which is why people use BTC as a hedge.
> Boy. This is the 60000 dollar question isn't it? Who wants to be my partner? Good luck. I really hope you find them. Taking on the credit card industry is going to be awesome!
BTC is now 60,000 dollars. Weird.
In 2012 he’s talking about changes on 5-10 years that really haven’t manifested. It’s not that they won’t eventually happen, but we often miss where the change will occur.
In the last 10 years, the only material change has been adding the mobile payment layer on top of the existing infrastructure (I.e. ApplePay).
We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. -Bill Gates-
And I can’t fault my family either. I saw it all right in front of my face. My father did great work that established his employer as a leader in the field. I spent my life wanting to be just like him. Plaques and appreciation awards all over the house. It was a big company which eventually failed and that was it, career over, entry-level job hunting at 50. My uncle started a very simple sales business, spent 5 years doing a lot for a little, and then 35 years doing very little for a lot.
I had my performance review yesterday during the Coinbase IPO. I still have a job. I still have a boss. I started working when I was 13, and every year of my life, I feel more and more consumed by whatever some other arbitrary person thinks about me. I take these jobs because I want to focus on doing great work without thinking about any of the other stuff. And then I get the 120-point checklist on all of the ways that I am being evaluated, mostly raving corporatist bullshit that boils down to somebody’s feelings, so I’m supposed to spend my life on that, and if I don’t, I get fired, which is supposed to be a really terrible thing. Except, all my fiends that got fired early on in their careers are winning big now, on their own, nobody telling them that they are less of a person than they believe themselves to be.
Sure, BA is a cherry-picked example. Sure, there are thousands that failed for each that succeeded. But what does success look like on the other side? It sucks. I did well, but I’d rather be broke and have the last 25 years of my life back. Own yourself. I thought I was a renegade. I thought I was immune. I’m not. You aren’t either. Look at all those responses asking BA to qualify himself as a 10x googler before they will talk to him. Those are the losers. Not you. You are powerful beyond measure. Your instincts are correct. You don’t need Stanford or google or whatever. Those places have nothing to teach you except how to outsource your self-worth. Don’t go down that path.
Cheers to Brian and Fred and everybody else that did it because they believed in something when everybody shat on them for it.
> I spent my life wanting to be just like him. Plaques and appreciation awards all over the house
That was your mistake: trying to please people. Life is not about being appreciated by others.
I would even say it is a measure of being wrong, because if you are appreciated by others, it means you got a sucker bargain, exerting way too much effort for too little gains.
> My uncle started a very simple sales business, spent 5 years doing a lot for a little, and then 35 years doing very little for a lot.
That's the idea! I bet he must not be very popular or appreciated by people.
> But what does success look like on the other side? It sucks
From the other angle, it sucks too. I am like your uncle: I see people destroying their lives by refusing to listen. I tried to help, more than once, only to see them laugh at me but fail while I succeeded.
I do not care much about the laughing part. I care more about the failing part. Because it is sad to see that people you want to see succeed keep failing, again and again.
I've tried to engage people - I think a year ago I was saying the same thing: buy just enough BTC than you can afford to lose, and you will eventually get a nice car. No more, no less, as the time of much larger opportunities are unfortunately in the past
Can't find it right now, only these similar conversation:
Most hackers are too emotionally invested. They are unable to say "I was wrong".
BTW, Brian vision (replacing CC) will eventually happen, but with 2nd layers or stablecoins which have only recently become good enough, and were battle tested through the 2020 crash.
Message me on Twitter (same username) if you want to know more. (I'm being cryptic in public just to be polite to the other parties.)
Surely this is a case where if CB hadn't provided a centralized exchange someone else would have? If CB didn't exist people would buy cryptocurrency with a different app and there lives would be the same.