Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Coinbase is so profitable it does not need Venture Capital

Coinbase’s revenues are growing so fast it no longer needs to raise venture capital. The popular digital wallet provider’s revenues expanded fast enough to cover its expenses and generate a healthy profit in 2017.

Coinbase’s revenues grew by more than $1 billion in 2017, Recode claimed. Note: the Recode article is based on “industry sources” so it is not reliable. “Industry sources” is business journalist doubletalk for “rumor and hearsay.”

The digital wallet unicorn had expected to generate $600 million in revenue by September 2017, instead, it brought in more than $1 billion, Recode claimed. That means Coinbase’s valuation might double to $3.2 billion next year. Coinbase’s valuation was estimated at $1.6 billion in August 2017.

Coinbase’s financial numbers are not available because it is a privately-held company. As far as I know, Coinbase has no plans for an initial public offering (IPO) or initial coin offering (ICO). Despite that, Coinbase is now listed as a privately-held company in Seeking Alpha’s database of ticker symbols.

Interestingly, Coinbase’s management is going out of the way to squelch IPO speculation it even issued this warning to fraudsters:

“As a private company, Coinbase does not allow trading of stock on secondary markets for a variety of reasons, including the fact that there is not full and equal information available to the market,” a Coinbase press release warned. “We will take appropriate action if we find people have sold Coinbase shares in violation of our agreements not to do so.”

That sounds as if some predator has been peddling fake Coinbase shares.

Coinbase is growing like a Weed

The source of Coinbase’s prosperity is obvious: it makes money by charging .25% to 1% fees on all transactions. The size of the revenues indicates a massive increase in Coinbase’s transaction volume; probably generated by the media interest in high cryptocurrency prices.

Coinbase is adding new sources of revenue on a regular basis. Its; wallet now supports four cryptocurrencies; Litecoin (LTC), Ethereum (ETH), Bitcoin Cash (BCH), and Bitcoin (BTC).

Coinbase; which operates the GDAX exchange, now has more than 13 million brokerage accounts more than Charles Schwab (NYSE: SCHW), Recode claimed. Coinbase claims to serve more than 10 million members in 32 countries and exchanged more than $50 billion worth of cryptocurrency.

Real World Lightning Network Transaction Reported

A Reddit user is claiming to have made a purchase with Bitcoin over the Lightning Network, Coin Telegraph reported. /u/btc_throwaway1337 claims to have purchased a VPN router from TorGuard via Lightning.

If true this would be big news because Lightning is the payment solution designed to make Bitcoin as fast and as scalable as Visa (NYSE: V) or MasterCard (NYSE: MA). Among other things, the Lightning Network is supposed to enable instant payment transactions with Bitcoin, something currently impossible with most cryptocurrencies.

If this is true, it means Lightning has beaten the Ethereum-based Raiden Network to an important milestone. Note: this claim should be viewed with skepticism because the Lightning Network team has not confirmed it. Some observers report that a few of the Nodes which would enable such transactions over the Lightning Network are up and running for testing.

Expect to see the Raiden Network launch its own tests soon, to counter Lighting’s move. Also, do not hold your breath waiting for Raiden and Lighting to roll out to the public, I suspect e-commerce with those solutions is about a year in the future.

Revelation: your friendly neighborhood blogger has a Coinbase account and holds a small position in Ethereum (ETH).