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Bitcoin

'You Don't Own Web3': A Coinbase Curse and How VCs Sell Crypto To Retail (substack.com) 37

Posted by msmash from the closer-look dept.
Fais Khan, writing in a blog post: First, Coinbase is like the New York Stock Exchange of crypto -- a listing there is a huge deal, and usually leads to massive profits for everyone involved. But unlike the NYSE or NASDAQ, Coinbase gets to choose whatever assets they want, using their own process. Second, a16z and Coinbase's own returns are particularly interesting, given a16z is supposedly the best investor in this space, and there's a potential for conflict of interest. Is the game rigged? Third, Coinbase pivoted its strategy last year to go from being cautious to listing as many coins as they can. That raises the ante even higher for them and their users.

So I started to dig in, and what I found surprised me: most coins underperformed, returns got worse over time, and VC-backed coins did worst of all. But I was able to do one better - for the last few years, Coinbase put out the names of coins they were thinking to list, but never did. I analyzed those coins - and found they did even better than the ones that made it, and the VC-backed ones didn't show any of the same underperformance. Let's dig in. For years, being listed for trading on Coinbase has been the holy grail of crypto - the equivalent of an IPO on Wall Street. And like an IPO, that seems to come up with a "pop" -- Messari, a crypto research firm, documented in a report that the average Coinbase listing leads to a 91% gain in 5 days, on average.
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'You Don't Own Web3': A Coinbase Curse and How VCs Sell Crypto To Retail More

'You Don't Own Web3': A Coinbase Curse and How VCs Sell Crypto To Retail

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  • wow cool! thx maybe i can try it

    • Re: (Score:2)

      by stooo ( 2202012 )

      >> most coins underperformed, returns got worse over time, and VC-backed coins did worst of all.

      No shit sherlock !
      Cryptomoney is a giant ponzi scheme.

  • Slashcoin: News for CryptoBros. (Score:4, Informative)

    by rlwinm ( 6158720 ) on Monday January 17, 2022 @03:58PM (#62181901)
    Am I the only one who thinks all this stuff is useless? NFTs? Really? Crytpocurrency - yeah, I trust having Internet access when I really need my money. Sure the actual algorithms involved are interesting. But the application reeks of the same kind of uppity crap day trading stonks weenies have.
    • Let me guess, you still pay for everything in gold and silver?
      • It is a good idea to hold some silver (and maybe a little gold) just in case the SHTF with the economy and communication technologies. There is no reason not to have 0.5-1% of your net worth in precious metals as insurance.

    • yeah, I trust having Internet access when I really need my money.

      Ever try to pay for something with a credit card when the merchant's internet is out?

      • Re: (Score:3)

        by taustin ( 171655 )

        Depends on the merchant. We have no trouble at all taking credit cards offline. We accept a small degree of risk of bogus cards being rejected on upload, but that's not the customer's problem.

        And that's a completely different issue that the one at hand.

      • Ever try to pay for something with a credit card when the merchant's internet is out?

        Yeah, but that internet outage is most likely a connection problem between a client and a server. With defi it's exactly that, decentralized. Much less chance of outage (or censorship and surveillance).

        • Re: (Score:1)

          by rlwinm ( 6158720 )
          My question wasn't due to connectivity failure but government action. As in the government says: No Internet in this area (for whatever reason). Imagine if the Holocaust happened in this period of history. That would be one of the first things Germany would have done: Jews are forbidden from accessing the Internet. Think it can't happen? Think again.
          • The first thing that would have to happen for 'no internet in this area' to be effective would be the geographic grouping (rendition, internment) of a persecuted class (Jews in your example). I don't think that's likely to happen in the United States. Why? The 2nd and 14th amendment to the constitution.

      • Re: (Score:1)

        by rlwinm ( 6158720 )
        Then I take out my cash.

    • I think NFTs are actually more legit than crypto currency. Allowing ticketing companies to release tickets as NFT smart contracts would allow them to ensure they have some control over how tickets are resold and even give them a cut on the resale of tickets.

  • IPOs are an exit strategy (Score:1)

    by Anonymous Coward

    IPOs are an exit strategy. Coinbase listing are like IPOs. Thus, coinbase listing is somebody's exit strategy.

    Note that in the case of IPOs, it isn't *always* a bad deal. Companies like Amazon, Google, etc. are counter-examples that prove the rule. If you bought them on IPO day, you still took a loss but after the lock-out and various market fluctuations (I think Amazon bottomed shortly after 9/11) you came out way ahead.

    In the case of companies, you evaluate it after the IPO "dust" has settled. In the

  • Stock exchanges mostly get to choose who is on them. A company pays an agent to get attention, bribes the right people with sweetheart deals and then get listed. A low price can get you knocked off.

    Performance is varied and indexes are created as a measure of an e Ganges or industry or sectors performance. Different indexes will do better at different times. And fund mangers who do better of course are going to promote their success. A lot of time this success is based on fraud.

    • Ah, but don't you see? Cryptocurrencies are a great innovation over traditional financial instruments—their success is always based on fraud.

    • Re: (Score:2)

      by fedos ( 150319 )
      There's a big difference between having a list of requirements that have to be met for a stock to be listed and arbitrarily choosing cryptocoins to list.

  • Fetch (Score:3)

    by algaeman ( 600564 ) on Monday January 17, 2022 @04:37PM (#62182025)
    Stop trying to make Web3 happen. It isn't going to happen.

  • Returns got worse over time ? (Score:4, Insightful)

    by Darkling-MHCN ( 222524 ) on Monday January 17, 2022 @07:37PM (#62182605)

    Returns on pyramid schemes decreasing over time? What a relevation !

    All these digital currencies are created by people who've usually already mined hundreds of millions of coins. As with all pyramid schemes the value of the coins go up until those initial coins start to get sold (converted back to fiat). As soon as that happens it represents a transfer of real wealth from those further down the pyramid to those who got in above. All these coins are the same, bitcoin has only held its price because the coins mined by "Satoshi" have never been sold, if / those coins ever started getting sold the price of bitcoin would completely collapse.

    I'm absolutely staggered that bitcoin has become so legitimized when the creator "Satoshi Nakamoto" is actually a fiction, created by people who've chosen to remain anonymous. Everyone's too busy being greedy to think about who these people are and why they've chosen to remain anonymous. If these people still have access to these millions of coins, and they started selling them, it would be the greatest swindle of all time, they'd literally be stealing billions from their "investors".

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