Nick Chong · 4 days ago · 2 min read · Insights via Grayscale Investments
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Cryptocurrency Exchange Giant Coinbase Valuing Itself At $8 Billion
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Since its inception in 2012, San Francisco based cryptocurrency exchange, Coinbase, has always been a differentiator in the crypto space. As digital currencies strove to normalize their adoption and foster deeper integration, Coinbase was on the front lines of the movement providing an easy-to-use app for buying cryptocurrencies. It’s undoubtedly the most mainstream entity, and, last year, it briefly topped the charts in Apple’s iOS App Store.
This week Recode is reporting that Coinbase is self-valuing its company at $8 billion, an astonishing amount for a digital currency exchange. The valuation was disclosed as part of a common stock offering to investors of Earn.com, a startup focused on providing a blockchain-based paid email service.
In April, Coinbase purchased Earn.com for an estimated $120 million, and they installed Earn.com CEO, Balaji Srinivasan, as their first chief technology officer.
— Balaji S. Srinivasan (@balajis) April 16, 2018
As Theodore Schleifer writes:
“Coinbase offered its stock at the approximate price when pitching an equity package to Earn.com investors, according to people familiar with the negotiations.”
Although it’s unclear at what level Earn.com investors received their common stock, it’s believed that Coinbase floated this $8 billion valuation based on their end of the year earnings and the growing interest in their platform.
The Most Popular Platform
According to their own metrics, Coinbase has more than ten million active users, and they’ve surpassed $50 billion in trades on their platform.
Coinbase’s user base has steadily increased over the past year, and, at times, their popularity has surged as crypto mania became increasingly prolific. This raging popularity led Coinbase CEO, Brian Armstrong, to tell The New York Times:
“we can’t guarantee the website’s going to be up exactly when you need it.”
Last August, Coinbase was valued at $1.6 billion as part of the company’s series D funding round that brought it more than $100 million in new investment. This valuation made the company the first crypto unicorn – a designation for privately held companies with an estimated net worth of more than $1 billion.
However, their revenues ballooned at the end of 2017. As crypto mania hit a fever pitch and investors poured into crypto markets, Coinbase greatly benefited. In a separate account, Recode estimates that a strong November and December boosted Coinbase’s revenue well above $1 billion for the first time.
These strong numbers may have contributed to rumors earlier this month that Coinbase is pursuing a brokerage license and an official designation as an electronic-trading platform. This designation would provide the company with regulatory cover should U.S. officials impose restrictions on digital currencies in general or crypto trading platforms in particular.
Positioned For The Future
Although Coinbase only exchanges four cryptocurrencies, its app and digital exchange are extremely popular. What’s more, the company has voided many of the scandals or thefts that plagued other exchanges. Its ease-of-use, availability, and reliability make it a fan favorite among investors.
Recently, the company was named one of the best places to work in the Bay Area, and they are continually publishing new additions to their team.
We’re proud to be named one of the best places to work in the Bay Area.
“While most companies will focus on building up themselves, it’s not always the case that a company also has to focus on building up an entire industry along with it.” https://t.co/PKFwbwnySt
— Coinbase (@coinbase) April 20, 2018
Although its $8 billion valuation is an internal metric, it could represent a harbinger of things to come. Its popularity, brand recognition, and relatively spotless record make Coinbase well-positioned to be the first mainstream investment entity to arise from the crypto economy.