Coinbase’s direct listing is ‘an Amazon moment for crypto,’ and will bring cryptocurrency further into mainstream finance, D.A. Davidson says
Coinbase Founder and CEO Brian Armstrong Steven Ferdman/Getty Images
Coinbase’s upcoming direct listing will be an “Amazon moment” for cryptocurrencies, according to D.A. Davidson.
The firm initiated coverage of the crypto exchange with a “buy” rating and $195 price target.
D.A. Davidson said the public debut will be a milestone for the convergence of cryptocurrency and traditional finance.
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Coinbase’s upcoming direct listing will be a milestone event, marking the covergence of cryptocurrency and traditional finance, according to a team of D.A. Davidson analysts.
In a recent note D.A. Davidson initiated coverage of the cryptocurrency exchange with a “buy” rating and a price target of $195. Analysts led by Gil Luria said Coinbase’s public debut will be the “Amazon moment for crypto,” as cryptocurrency will move from “a large curiosity to becoming the future path for much of the financial system.”
Coinbase will be the first major cryptocurrency exchange to go public. According to the analysts, the exchange’s superior user experience has positioned it as the “leader” in facilitating the onramp/off-ramp from government currency (like dollars) in crypto (like bitcoin.)
“With a big target on its back as a crypto wallet, (to date) Coinbase has been able to manage both government regulators as well as highly motivated hackers, while providing consumers with the experience they expect from a large financial institution,” the analysts added.
As both an exchange and broker, Coinbase’s competition includes Grayscale, Kraken, and Gemini, as well as broader consumer digital wallets like Square, PayPal, and Robinhood, said D.A.Davidson.
The firm’s $195 price target is based on 2021 revenue estimates, but the firm has not been able to connect with Coinbase during its quiet period. Revenue in 2020 was $1.28 billion, a jump from $553.7 million in 2019, according to a consolidated operations statement included in Coinbase’s filings.
For the year ended December 31, 2020, transaction revenue represented over 96% of net revenue. Bitcoin has soared 68% in 2021 and it’s unclear how that affects revenue estimates.
D.A. Davidson noted Coinbase is a more speculative investment than other companies it covers. They also noted the unusually high risks associated with the volatility of crypto prices, and said it’s too early to tell if Coinbase will actually become the Amazon of crypto or the Netscape.
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Crypto Has Come a Long Way Since the Last Bull Run in 2017. Here’s Why.
March 4, 2021 5 min read
Opinions expressed by Entrepreneur contributors are their own.
It’s official — is once again having a moment. Thanks to a sustained bull run that started in October, Bitcoin has been making mainstream headlines across the board as it seeks to break through its previous all-time high of $20,000, achieved in December 2017.
Anyone around in cryptocurrency at that time will recall the slew of newcomers that entered the space. However, things were a lot different back then. Institutions wouldn’t have touched digital assets with a 10-foot pole and interoperability between blockchains wasn’t even discussed.
This time around, it’s a lot easier to navigate the cryptocurrency space. After the 2017 bull run, many entrepreneurs and innovators recognized the potential of cryptocurrency. They entered the sector to reduce friction, improve the user experience and generally making it easier to navigate. Those who want to get into cryptocurrency during this Bitcoin bull run will experience a much smoother ride as a result. So what’s changed?
Related: ‘Prepare to Lose All Your Money,’ Warn Crypto Investors
Accounting, tax and portfolio management
Back in 2017, crypto was very much still considered to be “magic internet money.” This was an era dominated by memes about crypto bros buying Lamborghinis with their stellar gains, laughing in the face of the IRS.
However, things quickly moved on following the 2017 price spike. Although cryptocurrency had been officially taxable in the U.S. since 2014, in 2017, Coinbase was the subject of a court order that ruled it had to hand over transaction and identity records for its users. Since then, the IRS has been clamping down on crypto exchanges and users.
Several forward-thinking startups were savvy enough to spot this coming. However, tax reporting is only one side of the equation. It can be complicated enough for individual users, but for businesses, the obligations can be even more arduous.
Cryptoworth launched in 2017 and now offers an end-to-end cryptocurrency accounting, portfolio management and tax reporting platform that scales according to your requirements. Crypto users come in many different types — merchants that accept payments in Bitcoin, day traders who take profits, miners running different kinds of hardware, even employers and employees transacting in crypto payments for earnings. Cryptoworth covers all of these and also offers solutions covering crypto auditing, asset management, custody and payroll among others.
An all-in-one solution like Cryptoworth means that any enterprise can fit into any or all categories of cryptocurrency users and keep ahead of all their obligations to the IRS, as well as customers, employees and other stakeholders. This is a significant step forward from 2017.
DeFi and surrounding infrastructure
DeFi barely existed during the 2017 bull run, aside from an early version of the Maker Dai stablecoin. Now, it’s an entire sub-segment of the cryptocurrency space, worth nearly $15 billion and growing fast. However, there are still only a few projects blazing the interoperability trail in DeFi, and one of those projects is Kava, the multichain decentralized lending platform. Kava makes it easy to generate DeFi yields on your cryptocurrency holdings while profiting from assets issued outside of the Ethereum ecosystem.
Related: Why We Should Advocate for Decentralized Finance and Its Regulation
Kava recently made another step forward in enhancing user experience thanks to a partnership with PlasmaPay, a global payment and remittance platform for DeFi. The partnership will initially allow users to purchase Kava’s suite of tokens at the PlasmaPay checkout. This makes it easy for 100,000 PlasmaPay users in 165 countries to purchase Kava tokens with their credit cards.
However, the two firms aim for a deeper long-term collaboration involving the integration of Kava’s full range of services into PlasmaPay’s infrastructure.
Security
Security in cryptocurrency is an issue that pre-dates the 2017 bull run and continues to plague exchanges, wallets and application users to this day. Blockchain security firm Slowmist estimates that crypto users have lost over $13.5 billion worth of digital assets to hackers over the years. While exchanges tend to get a bad rap, and often justifiably so, wallets are a more significant attack vector. Even “cold” (i.e., party offline) hardware wallets that are supposedly the most secure, like Trezor and Ledger, have been found to contain vulnerabilities and as of late, also significant data breaches.
So it’s about time that crypto users had a glimmer of hope of outsmarting the hackers. Belgian startup NGRAVE has developed what it dubs “The Coldest Wallet.” This hardware wallet has absolutely no connectivity, with the only cable designed for wall charging and no WiFi, Bluetooth or other network functionality included. It’s also the only wallet (and product in the entire crypto space) to feature an EAL7 security certification — the highest security certification in the world.
Related: Why Coinbase Will Be the Hottest IPO of 2021
Users interact with the wallet via a touch screen. They can also use NGRAVE’s LIQUID app to view their balances and make payment requests using a QR code. These are then scanned by ZERO, which signs the transaction request with the private key that is kept offline and out of sight of remote hackers.
We’re sure to see another raft of newcomers joining the cryptocurrency space seeking gains during this bull run. However, thanks to the last three years full of innovation, development and entrepreneurship, the newcomers this time around have a lot less to worry about than the previous generation — a sure sign that cryptocurrency is growing up.