Coinbase IPO - anyone tempted?

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IRS-Gman
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Re: Coinbase IPO - anyone tempted?

Post by IRS-Gman »

JonnyDVM wrote: Thu Apr 15, 2021 9:08 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
As someone who is getting a kick out of playing musical chairs with this, to park six figures into AAVE would be insanity. The risk is palpably high. It is the exact opposite of safe.
Palpably high? This sounds hyperbolic.

There's smart contract risk but with the volume and longevity Aave has had, that risk seems minimal but is certainly not zero. There's also the chance of WW3 and nuclear war that destroys the internet. That's not zero either but the traditional banking system would be destroyed, too. I understand the risks and sleep well at night with deposits at Aave. It's a great protocol and a wonderful financial innovation.

Frankly, the biggest risks are for new users making mistakes when using Defi. (I'll always remember making my first transfer and feeling my heart pump from the anxiety for several minutes wondering if all that Ether I just sent would show up in my wallet (it did). Then I remembered how it takes DAYS for money transfers to happen in traditional finance!)

It doesn't take much knowledge to make a purchase on Coinbase but moving up to Defi requires some knowledge and practice. Prahasaurus is correct to start small. Get experience with using a wallet. Read and watch as much as you can on the basics of Defi. Watch out for scammers in Discord forums.

There's a learning curve but once you've figured it out it's not bad at all. I expect this will become easier as the industry matures. There's so much exciting innovation happening in this space.
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MortgageOnBlack
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Re: Coinbase IPO - anyone tempted?

Post by MortgageOnBlack »

I bought 5 shares at $320 yesterday... let it ride
Prahasaurus
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

txhill wrote: Thu Apr 15, 2021 3:32 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
What's your opinion of BlockFi? I like how smart contracts eliminate counterparty risk, but all it takes is an error in the code and any assets locked in the contract could be lost. I tend to think a centralized lending service like BlockFi might actually be less risky for the time being until DeFi develops a bit further.

I also think that DeFi will take the place of fixed income assets eventually. But I'm not sure we're there quite yet...
I'm not an expert, I have never used this services (BlockFi, Celsius, etc.). Might be a good option. But there is always risk when you deal with a centralized entity. They are not so transparent. The irony for most Bogleheads is I find more risk in BlockFi than I do in DeFi. Simply because I trust the code, not promises of an unknown team. Most of DeFi is open source, code is tested and reviewed, audited, stress tested daily, etc.

Badger DAO is a decentralized option I can recommend. A close friend is one of the key people on this project: https://app.badger.finance. Their goal is to be the "one stop shop" for Bitcoin on DeFi. Great project, great team. Disclaimer: I have a small stake in Badger through my DEGEN token (index fund). But it's a very small part of my portfolio, probably .1%. I like Badger a lot, I may soon invest directly in their project. I'm just waiting to see how some of their new products launch in the coming weeks.

As an example, they are about to launch Badger Bridge, allowing for quickly and easy use of Bitcoin within a dedicated vault, my guess is returns will be high, around 20-30% or more, at least for the first few months. More here: https://badgerdao.medium.com/badgerdao- ... 3f2b7548e2. Another disclaimer: I run Ren nodes so make money when anyone converts BTC --> renBTC, as many will if they use the Badger Bridge.

This is how I will use my BTC within DeFi, through decentralized options on chain. I won't use centralized entities. But again, for some, it may be a good option.

Just be aware because of the crazy US tax code for crypto (bureaucrats who cannot tell Dogecoin from Aave), you may have a taxable event when you use a project like Badger, as they convert BTC --> renBTC --> wBTC. It's a grey area regarding a taxable event, but I'm leading to the conservative side and assuming it is a taxable event (which is silly, but that's US tax law for crypto).
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Prahasaurus
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

JonnyDVM wrote: Thu Apr 15, 2021 9:08 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
As someone who is getting a kick out of playing musical chairs with this, to park six figures into AAVE would be insanity. The risk is palpably high. It is the exact opposite of safe.
What if I told you 85% of my net worth is in crypto? Fortunately I own my home and have zero debt, so I won't be out on the street if catastrophe strikes... This is a once in a lifetime opportunity, akin to working at Amazon in the 90's and realizing what is about to come. While reading everyone disparage the internet or on-line shopping as fads, tulips, etc.

And with crypto you are not just investing in companies, but networks. Where you will have a % of all future transactions. If Ethereum becomes that network, or at least one of the major networks, and ETH holders take a % of all transactions on the network as gas fees (as they will soon, after the switch to Proof of Stake later this year), can you imagine the value? What if the internet was not financed primarily through ads, but micro transactions? And you could own a piece of that? What if that network had a total market cap today of just 286 billion USD? Wouldn't you think that's insane?

To run a full Ethereum node, you need 32 ETH. That will cost you today 80k USD. My first purchase of ETH was 32 tokens, exactly. My initial thought was to just have enough to run one full node. I was thinking small. It cost me 6.2k USD. I was "late" in the sense that many bought ETH for pennies or dollars. I sooner realized I needed more, because as I started to play with ETH and DeFi, I became aware of the real potential.

Fortunately, you don't have to run a full node. There are ways to earn interest on your ETH without having to purchase 32 ETH, if you want to start small. I just wanted to have my own node, that's all. That was the initial plan. But then it took off from there.

By the way, I never bought another BTC after purchasing ETH. I still earn BTC through my Ren nodes. But I've never purchased BTC after finding Ethereum.
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SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

If BHers' antipathy towards Facebook is any clue, then we should be rushing into Coinbase, maybe? But not immediately, given that the FB IPO was botched. And I know they're different companies, but they are misunderstood by many people. I searched the threads related to FB's IPO in 2012, and the comments are interesting (mostly sad):

Go ahead and buy it. It sounds like you need to learn a lesson the hard way. Then for the rest of your life you will be a smarter investor.

The only reason Facebook went public is so that its owners could cash out while it was at the height of its value.

Buy it. Life is too short to regret what you wanted to do, but didn't. (WISE!)

Facebook has essentially one product and a static to declining user base in its primary market,

5 year prediction: minus 50-100%.

MySpace was a pretty hot thing until Facebook cam along. What happens to Facebook stock when the next website trumps it?

Our individual stock picking (i.e. gambling) days are long over.

Facebook has seen its best days already

I'll wait two or three months for the price to settle, then, yes, I'll probably buy some. (WISE!)

Facebook will be the next Myspace in a couple of years. Maybe even the next AOL.
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OohLaLa
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Re: Coinbase IPO - anyone tempted?

Post by OohLaLa »

Prahasaurus wrote: Thu Apr 15, 2021 11:44 pm What if I told you 85% of my net worth is in crypto? Fortunately I own my home and have zero debt, so I won't be out on the street if catastrophe strikes... This is a once in a lifetime opportunity, akin to working at Amazon in the 90's and realizing what is about to come. While reading everyone disparage the internet or on-line shopping as fads, tulips, etc.
I'm not JonnyDVM and I don't know your particular situation but I would say that I hope you are mentally prepared to lose it. A person really needs to acknowledge that potential outcome when going all-in, no matter how obvious success seems to be.

If you did that then I hope you make out like a bandit! :moneybag :beer
Prahasaurus
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

Here is a great video from Raoul Pal, summarizing in 9 minutes what I believe will happen, is already happening, and why I'm so massively overweight in this space. And that includes $COIN, purchased yesterday to sit beside my VT.

https://www.youtube.com/watch?v=6emt5ogS26s

Nobody knows how it will play out. But it's going to be fascinating to watch.
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Nathan Drake
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Re: Coinbase IPO - anyone tempted?

Post by Nathan Drake »

:twisted:
Prahasaurus wrote: Fri Apr 16, 2021 12:37 am Here is a great video from Raoul Pal, summarizing in 9 minutes what I believe will happen, is already happening, and why I'm so massively overweight in this space. And that includes $COIN, purchased yesterday to sit beside my VT.

https://www.youtube.com/watch?v=6emt5ogS26s

Nobody knows how it will play out. But it's going to be fascinating to watch.
That video just convinced me the opposite and to stay far away
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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JonnyDVM
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Re: Coinbase IPO - anyone tempted?

Post by JonnyDVM »

Prahasaurus wrote: Thu Apr 15, 2021 11:44 pm
JonnyDVM wrote: Thu Apr 15, 2021 9:08 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
As someone who is getting a kick out of playing musical chairs with this, to park six figures into AAVE would be insanity. The risk is palpably high. It is the exact opposite of safe.
What if I told you 85% of my net worth is in crypto? Fortunately I own my home and have zero debt, so I won't be out on the street if catastrophe strikes... This is a once in a lifetime opportunity, akin to working at Amazon in the 90's and realizing what is about to come. While reading everyone disparage the internet or on-line shopping as fads, tulips, etc.

And with crypto you are not just investing in companies, but networks. Where you will have a % of all future transactions. If Ethereum becomes that network, or at least one of the major networks, and ETH holders take a % of all transactions on the network as gas fees (as they will soon, after the switch to Proof of Stake later this year), can you imagine the value? What if the internet was not financed primarily through ads, but micro transactions? And you could own a piece of that? What if that network had a total market cap today of just 286 billion USD? Wouldn't you think that's insane?

To run a full Ethereum node, you need 32 ETH. That will cost you today 80k USD. My first purchase of ETH was 32 tokens, exactly. My initial thought was to just have enough to run one full node. I was thinking small. It cost me 6.2k USD. I was "late" in the sense that many bought ETH for pennies or dollars. I sooner realized I needed more, because as I started to play with ETH and DeFi, I became aware of the real potential.

Fortunately, you don't have to run a full node. There are ways to earn interest on your ETH without having to purchase 32 ETH, if you want to start small. I just wanted to have my own node, that's all. That was the initial plan. But then it took off from there.

By the way, I never bought another BTC after purchasing ETH. I still earn BTC through my Ren nodes. But I've never purchased BTC after finding Ethereum.
I would tell you congratulations on foreseeing this meteoric rise, but I would also tell you that you should really consider diversifying a chunk of that 85% into other assets because this system appears to be rife with fraud, and that's a recipe for a meltdown. I'm not telling you to take all your money and run, because others have surely told you that along the way and yet clearly you've held firm and that tenacity has been rewarded. I'm just suggesting that you consider the amount of concentrated risk that you are taking and think about spreading it around.
I’d trade it all for a little more | -C Montgomery Burns
SlowMovingInvestor
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

FWIW, very few people (yes, there were a few exceptions) were disparaging the Internet or even online shopping as a fad in the late 90s. What people were saying is that Internet stocks (and telco stocks) were valued. And they were mostly right -- the large majority of such stocks turned out to be overvalued - even supposed first movers such as Netscape and Yahoo, pick/shovels sellers such as Lucent and Nortel, even ultra tech stocks such as MSFT, Cisco and Juniper.

Amazon did succeed, but note that it took many, many years to get back to it's highs, and it wasn't online shopping that did it - it was it's cloud services that finally generated profits. MSFT didn't recover until a few years back (although it was a good business even in the down years).

ADDED: I bought some COIN myself, FWIW. No illusions about how risky it is, but I don't intend to put in more than 1% of my net worth, if that.
Last edited by SlowMovingInvestor on Fri Apr 16, 2021 8:45 am, edited 1 time in total.
bitdocmd
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Re: Coinbase IPO - anyone tempted?

Post by bitdocmd »

SrGrumpy wrote: Thu Apr 15, 2021 11:46 pm If BHers' antipathy towards Facebook is any clue, then we should be rushing into Coinbase, maybe? But not immediately, given that the FB IPO was botched. And I know they're different companies, but they are misunderstood by many people. I searched the threads related to FB's IPO in 2012, and the comments are interesting (mostly sad):

Go ahead and buy it. It sounds like you need to learn a lesson the hard way. Then for the rest of your life you will be a smarter investor.

The only reason Facebook went public is so that its owners could cash out while it was at the height of its value.

Buy it. Life is too short to regret what you wanted to do, but didn't. (WISE!)

Facebook has essentially one product and a static to declining user base in its primary market,

5 year prediction: minus 50-100%.

MySpace was a pretty hot thing until Facebook cam along. What happens to Facebook stock when the next website trumps it?

Our individual stock picking (i.e. gambling) days are long over.

Facebook has seen its best days already

I'll wait two or three months for the price to settle, then, yes, I'll probably buy some. (WISE!)

Facebook will be the next Myspace in a couple of years. Maybe even the next AOL.
This is outstanding.
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topper1296
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Re: Coinbase IPO - anyone tempted?

Post by topper1296 »

I'll admit it. I threw ~$1k of "fun money" into $COIN in a tax deferred account towards the lower end of it's opening day price. Time will tell how "fun" it turns out to be.
Tingting1013
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Re: Coinbase IPO - anyone tempted?

Post by Tingting1013 »

Cautionary tale, check out the chart for $AI since IPO
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JonnyDVM
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Re: Coinbase IPO - anyone tempted?

Post by JonnyDVM »

bitdocmd wrote: Fri Apr 16, 2021 8:42 am
SrGrumpy wrote: Thu Apr 15, 2021 11:46 pm If BHers' antipathy towards Facebook is any clue, then we should be rushing into Coinbase, maybe? But not immediately, given that the FB IPO was botched. And I know they're different companies, but they are misunderstood by many people. I searched the threads related to FB's IPO in 2012, and the comments are interesting (mostly sad):

Go ahead and buy it. It sounds like you need to learn a lesson the hard way. Then for the rest of your life you will be a smarter investor.

The only reason Facebook went public is so that its owners could cash out while it was at the height of its value.

Buy it. Life is too short to regret what you wanted to do, but didn't. (WISE!)

Facebook has essentially one product and a static to declining user base in its primary market,

5 year prediction: minus 50-100%.

MySpace was a pretty hot thing until Facebook cam along. What happens to Facebook stock when the next website trumps it?

Our individual stock picking (i.e. gambling) days are long over.

Facebook has seen its best days already

I'll wait two or three months for the price to settle, then, yes, I'll probably buy some. (WISE!)

Facebook will be the next Myspace in a couple of years. Maybe even the next AOL.
This is outstanding.
To be fair to the forum there have been many failed IPO investments along the way. We just forget about them. Being cautious is respectable. Go to reddit and every poster is willing to throw their life savings into anything and it's ok because "YOLO!" I wouldn't have endorsed anyone dumping an obscene amount into the Facebook IPO either. I would have said, it's risky, but throwing in some play money you can afford to lose is fine. I feel the same about COIN. Those that are extremely confident in the success of anything are just as bad as those extremely confident in its failure. Predicting the future is a hard business. As an aside, quite frankly, the world would be better off if Facebook had indeed done as poorly as bogleheads had predicted. :)
I’d trade it all for a little more | -C Montgomery Burns
SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

JonnyDVM wrote: Fri Apr 16, 2021 9:06 am As an aside, quite frankly, the world would be better off if Facebook had indeed done as poorly as bogleheads had predicted. :)
Amen!
Volando
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Re: Coinbase IPO - anyone tempted?

Post by Volando »

SrGrumpy wrote: Thu Apr 15, 2021 11:46 pm If BHers' antipathy towards Facebook is any clue, then we should be rushing into Coinbase, maybe? But not immediately, given that the FB IPO was botched. And I know they're different companies, but they are misunderstood by many people. I searched the threads related to FB's IPO in 2012, and the comments are interesting (mostly sad):

Go ahead and buy it. It sounds like you need to learn a lesson the hard way. Then for the rest of your life you will be a smarter investor.

The only reason Facebook went public is so that its owners could cash out while it was at the height of its value.

Buy it. Life is too short to regret what you wanted to do, but didn't. (WISE!)

Facebook has essentially one product and a static to declining user base in its primary market,

5 year prediction: minus 50-100%.

MySpace was a pretty hot thing until Facebook cam along. What happens to Facebook stock when the next website trumps it?

Our individual stock picking (i.e. gambling) days are long over.

Facebook has seen its best days already

I'll wait two or three months for the price to settle, then, yes, I'll probably buy some. (WISE!)

Facebook will be the next Myspace in a couple of years. Maybe even the next AOL.
I’m no expert but this seems like cherry picking to suit an argument. For every company that takes off there seem to be more that don’t. So it’s possible to be wrong about being cautious about a particular company excelling while being right more often about them not taking off. From what I’ve gathered the point seems not to be to never ever invest in a company that you believe will succeed. Instead it is to not assume that you can pick which of these will be the needle in the haystack and dump a lot of money into it. I’m sure you could find similar forum posts where people here advised caution and were right. Not saying it’s the best approach, just saying cherry picking is easy in hindsight.
SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

Volando wrote: Fri Apr 16, 2021 10:05 am
I’m no expert but this seems like cherry picking to suit an argument . . . I’m sure you could find similar forum posts where people here advised caution and were right. Not saying it’s the best approach, just saying cherry picking is easy in hindsight.
No so much cherry-picking as immediately thinking of Facebook - a cultish outfit of which a lot of people were/are similarly suspicious (including me). I'm sure plenty of people rightly warned against stocks that went belly up. But I feel this is the sort of forum where dogmatic acolytes with a kneejerk distrust of innovation would have talked people out of investing a few bucks behind Edison or Hewlett and Packard or Gates.
anoop
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Re: Coinbase IPO - anyone tempted?

Post by anoop »

runninginvestor wrote: Tue Apr 13, 2021 4:57 pm I read a decent article trying to justify the 100 billion valuation.
It was a good read.

https://www.google.com/amp/s/fortune.co ... rypto/amp/

"To justify that number, the math shows, Coinbase would need to mushroom into the biggest financial exchange in the world.
...
"
Not much different from the Tesla naysayers.

The circus will go on as long as the fed and congress are willing clowns.

My target for S&P 500 is 5400 by end of year. By then $COIN will be at $1000.

Right now we have a fed member & $BLK saying the economy is getting ready to rip.
SlowMovingInvestor
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

[Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
Always passive
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Re: Coinbase IPO - anyone tempted?

Post by Always passive »

SlowMovingInvestor wrote: Fri Apr 16, 2021 8:35 am FWIW, very few people (yes, there were a few exceptions) were disparaging the Internet or even online shopping as a fad in the late 90s. What people were saying is that Internet stocks (and telco stocks) were valued. And they were mostly right -- the large majority of such stocks turned out to be overvalued - even supposed first movers such as Netscape and Yahoo, pick/shovels sellers such as Lucent and Nortel, even ultra tech stocks such as MSFT, Cisco and Juniper.

Amazon did succeed, but note that it took many, many years to get back to it's highs, and it wasn't online shopping that did it - it was it's cloud services that finally generated profits. MSFT didn't recover until a few years back (although it was a good business even in the down years).

ADDED: I bought some COIN myself, FWIW. No illusions about how risky it is, but I don't intend to put in more than 1% of my net worth, if that.
I fully agree. We all talk about those companies that succeeded forgetting the many that disappear.
I also bought COIN, 30 shares. I can understand their business model, so if bitcoin is for real, they may do well. And if not, one of the many experiences that lost me a bit of money.
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
LOL... When the freaking CFO sells ONE HUNDRED PERCENT of his shares, you might want to heed that warning.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: Coinbase IPO - anyone tempted?

Post by Tingting1013 »

HomerJ wrote: Sat Apr 17, 2021 3:10 pm
SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
LOL... When the freaking CFO sells ONE HUNDRED PERCENT of his shares, you might want to heed that warning.
Maybe she’s a Boglehead just following the standard advice not to hold single stocks?
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

HomerJ wrote: Sat Apr 17, 2021 3:10 pm
SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
LOL... When the freaking CFO sells ONE HUNDRED PERCENT of his shares, you might want to heed that warning.
I don't own any Coinbase myself, but this doesn't seem right. I just checked their SEC filings. The CEO Brian Armstrong owns over 33 million shares. Looks like he sold 750k shares during the direct listing. So that 71% percentage above cannot be right. I didn't check other execs' share holdings but it looks like WSB is mistaken here.
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

Tingting1013 wrote: Sat Apr 17, 2021 3:16 pm
HomerJ wrote: Sat Apr 17, 2021 3:10 pm
SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
LOL... When the freaking CFO sells ONE HUNDRED PERCENT of his shares, you might want to heed that warning.
Maybe she’s a Boglehead just following the standard advice not to hold single stocks?
Looks like the CFO has 1.7 million shares and sold fewer than 200k of them. Similar story with the CEO. Those percentages are way off, I won't bother checking other ones.
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
These percentages are very inaccurate and misleading, judging from SEC filings. Or we'll need to see a credible source...
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

txhill wrote: Sat Apr 17, 2021 3:18 pm
HomerJ wrote: Sat Apr 17, 2021 3:10 pm
SlowMovingInvestor wrote: Sat Apr 17, 2021 2:08 pm [Data is misleading, see SlowMovingInvestor's correction below --admin LadyGeek]

Insider sales: (how much of their stock holdings were sold. From WSB]

Brian Armstrong, CEO 71%

Choi Emilie, Pres 63%

Hass Alesia, CFO 100%

Chatterjee Surojit, CPO (Product) 97%

Jones Jennifer, CAO 86%


This is a DPO, so shares come from insiders (no new shares), but that's a pretty big chunk of holdings for COIN's Executive team
LOL... When the freaking CFO sells ONE HUNDRED PERCENT of his shares, you might want to heed that warning.
I don't own any Coinbase myself, but this doesn't seem right. I just checked their SEC filings. The CEO Brian Armstrong owns over 33 million shares. Looks like he sold 750k shares during the direct listing. So that 71% percentage above cannot be right. I didn't check other execs' share holdings but it looks like WSB is mistaken here.
I went back to check some new replies in the WSB thread (they weren't there when I originally saw it). It seems that this does not count unvested shares or unexercised options (i.e. they exercised options to sell, so naturally a large portion were sold). So it is misleading. I would delete my post, but it's already been replied to.

As I mentioned earlier in the thread, I hold a small chunk of COIN myself. So I'm not a COIN bear.
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

Ah... Never mind

-Roseanne Roseannadanna (or was that Emily Litella?) :)
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Re: Coinbase IPO - anyone tempted?

Post by LadyGeek »

^^^ SlowMovingInvestor requested a moderator to help flag misleading information. I have edited the impacted posts to help point to the correction.
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Re: Coinbase IPO - anyone tempted?

Post by Freefun »

Cathie Wood thinks Bitcoin may go to 500k (3:00)

https://youtu.be/SYVCc6V4HUY
Remember when you wanted what you currently have?
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Re: Coinbase IPO - anyone tempted?

Post by jeffh19 »

SlowMovingInvestor wrote: Thu Apr 15, 2021 8:00 am
jeffh19 wrote: Thu Apr 15, 2021 1:23 am
alpenglow wrote: Wed Apr 14, 2021 1:32 pm
surfstar wrote: Wed Apr 14, 2021 1:21 pm I thought one of the great ideals of crypto is that you don't deal with banks and their fees?

Is overpaying transaction fees to use a digital "coin" somehow better than using venmo/paypal/etc?

I don't understand this and continue to sit by dumbfounded while more people pour money into "the cloud". I'm 40 and embrace helpful technology, BTW.
I think there is a lot of speculation and hype. It also seems to be a boon to criminals and such.
That’s just not true, and is just FUD.

You have to be an absolute moron to use Bitcoin for criminal activity.

There is literally a public ledger or what money moves where that is tracked.

Incorrect. Not all crypto tokens have public ledgers. ZeroCash and Monero do not, for instance.

And even for coins that have public ledgers, there are ways of getting around the ledger such as CoinJoin and other methods of laundering. [ Or using offshore exchanges to convert to cash]

I do think illicit usage of BTC is a small portion of legal trading these days, but BitCoin can and definitely is used by criminals, morons or not. And some other tokens such as Monero even more so.
I was *only* referring to BTC.

They can still track you through coinjoins, just takes longer. It's already been done.

Other cryptos sure. I've heard Monero might be the best for criminals, but I dont care about that and currently I only really care about Bitcoin. I dont mean that or this post to sound harsh so please dont take it so. :)
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Re: Coinbase IPO - anyone tempted?

Post by jeffh19 »

alpenglow wrote: Thu Apr 15, 2021 10:25 am
SlowMovingInvestor wrote: Thu Apr 15, 2021 10:17 am
alpenglow wrote: Thu Apr 15, 2021 10:04 am
SrGrumpy wrote: Thu Apr 15, 2021 9:21 am
jeffh19 wrote: Thu Apr 15, 2021 1:30 am If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
Very interesting, thanks.
Also interestingly, it is trading at a discount of about 14%.
There's a lot of discussion of GBTC on previous threads. The issue is that it went from a premium of around 25% to this discount. The discount shouldn't fall further, but then I wouldn't have expected a discount in the first place.
Here is the thread for reference:
viewtopic.php?t=341957

It sounds like, if/when GBTC becomes an ETF the discount should significantly narrow.
The premium has concerned or aggravated me...as long as BTC continues to do what we think it will, and they eventually convert it to an ETF, which they said they will the time is right....then yes the discount will close

so there is arguably a heck of an arbitrage move to be made by buying GBTC at a 10-15% discount and then holding it until it becomes an ETF. You've got a built in 10% gain or more by doing so. Now when they become an ETF/how motivated they are to become one first or the quickest remains to be seen. I've seen a few people comment that the guy that runs it only cares about making money for himself and nothing else. He doesnt pay his people anything etc. I wont get into a big GBTC discussion here, but buying now with BTC in a dip, and then GBTC giving you a 15% discount on top of that could pay off greatly for someone in the future.
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Re: Coinbase IPO - anyone tempted?

Post by cos »

Coinbase is nearly eligible for inclusion in the S&P 500. Looks like many more of us will be holding it quite soon.
  • Market capitalization must be greater than or equal to US$11.3 billion ✅
  • Annual dollar value traded to float-adjusted market capitalization is greater than 1.0 ✅ *
  • Minimum monthly trading volume of 250,000 shares in the past six months ✅ *
  • Must be publicly listed ✅
  • The company should be from the U.S. ✅
* Assuming current average volume is representative of long-term average volume
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Re: Coinbase IPO - anyone tempted?

Post by occambogle »

jeffh19 wrote: Tue Apr 20, 2021 1:03 am I wont get into a big GBTC discussion here, but buying now with BTC in a dip, and then GBTC giving you a 15% discount on top of that could pay off greatly for someone in the future.
I'm interested in this discussion... and we have an existing thread: viewtopic.php?t=341957
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Re: Coinbase IPO - anyone tempted?

Post by TheDoctor91 »

Virtually no one uses bitcoin for anything other than holding it in the anticipation that its price will be higher in the future.
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

jeffh19 wrote: Tue Apr 20, 2021 1:03 am so there is arguably a heck of an arbitrage move to be made by buying GBTC at a 10-15% discount and then holding it until it becomes an ETF. You've got a built in 10% gain or more by doing so.
Just buying GBTC is not an arbitrage move. An arbitrage move would imply that you can buy something else to hedge and wait for margins to narrow. An arbitrage move would be to short bitcoin (or buy puts on BTC futures) and buy GBTC. But that would be risky because one doesn't know how long it'll take for the discount to narrow.
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Re: Coinbase IPO - anyone tempted?

Post by TheTimeLord »

TheDoctor91 wrote: Tue Apr 20, 2021 2:37 am Virtually no one uses bitcoin for anything other than holding it in the anticipation that its price will be higher in the future.
True, but it becomes a more desirable asset I am guessing people will start using it more and more. Or it will collapse upon itself, whichever.

https://www.hgtv.com/lifestyle/real-est ... th-bitcoin
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

TheTimeLord wrote: Tue Apr 20, 2021 8:08 am
TheDoctor91 wrote: Tue Apr 20, 2021 2:37 am Virtually no one uses bitcoin for anything other than holding it in the anticipation that its price will be higher in the future.
True, but it becomes a more desirable asset I am guessing people will start using it more and more. Or it will collapse upon itself, whichever.

https://www.hgtv.com/lifestyle/real-est ... th-bitcoin
That article doesn't make too much sense. Why would one buy a house (let alone smaller items) with BTC ?

You have to pay taxes on BTC sales (at least in the US). That and the spread alone would make it worthless to buy smaller items with BTC. And if you're a BTC devotee, you wouldn't want to sell BTC at all. The infamous pizza worth half a billion now comes to mind. In fact, it becomes more desirable, people will use it less for regular transactions.

And if you're someone based in the US accepting payments in BTC, then you have to pay taxes on the amount received. Plus, it's a highly volatile asset. How many people would want to buy/sell a house for a value that fluctuates 15% in less than a week ?

[It is possible some people deliberately (or through ignorance) want to avoid taxes by swapping BTC directly for something else. At least in the US, that isn't so]
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

SlowMovingInvestor wrote: Tue Apr 20, 2021 8:21 am
TheTimeLord wrote: Tue Apr 20, 2021 8:08 am
TheDoctor91 wrote: Tue Apr 20, 2021 2:37 am Virtually no one uses bitcoin for anything other than holding it in the anticipation that its price will be higher in the future.
True, but it becomes a more desirable asset I am guessing people will start using it more and more. Or it will collapse upon itself, whichever.

https://www.hgtv.com/lifestyle/real-est ... th-bitcoin
That article doesn't make too much sense. Why would one buy a house (let alone smaller items) with BTC ?

You have to pay taxes on BTC sales (at least in the US). That and the spread alone would make it worthless to buy smaller items with BTC. And if you're a BTC devotee, you wouldn't want to sell BTC at all. The infamous pizza worth half a billion now comes to mind. In fact, it becomes more desirable, people will use it less for regular transactions.

And if you're someone based in the US accepting payments in BTC, then you have to pay taxes on the amount received. Plus, it's a highly volatile asset. How many people would want to buy/sell a house for a value that fluctuates 15% in less than a week ?

[It is possible some people deliberately (or through ignorance) want to avoid taxes by swapping BTC directly for something else. At least in the US, that isn't so]
I'm bullish on BTC but I completely agree that without changes to the tax code, making direct purchases with BTC seems like more trouble than it's worth. Totally possible to pull off, but the system isn't that accommodating for it yet. I do imagine that house purchases eventually will be done on digital ledgers (although probably centralized I bet), but that's many years away. I think when people make purchases of physical assets with BTC, it's probably to advertise the network itself.
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

jeffh19 wrote: Tue Apr 20, 2021 1:03 am
alpenglow wrote: Thu Apr 15, 2021 10:25 am
SlowMovingInvestor wrote: Thu Apr 15, 2021 10:17 am
alpenglow wrote: Thu Apr 15, 2021 10:04 am
SrGrumpy wrote: Thu Apr 15, 2021 9:21 am

Very interesting, thanks.
Also interestingly, it is trading at a discount of about 14%.
There's a lot of discussion of GBTC on previous threads. The issue is that it went from a premium of around 25% to this discount. The discount shouldn't fall further, but then I wouldn't have expected a discount in the first place.
Here is the thread for reference:
viewtopic.php?t=341957

It sounds like, if/when GBTC becomes an ETF the discount should significantly narrow.
The premium has concerned or aggravated me...as long as BTC continues to do what we think it will, and they eventually convert it to an ETF, which they said they will the time is right....then yes the discount will close

so there is arguably a heck of an arbitrage move to be made by buying GBTC at a 10-15% discount and then holding it until it becomes an ETF. You've got a built in 10% gain or more by doing so. Now when they become an ETF/how motivated they are to become one first or the quickest remains to be seen. I've seen a few people comment that the guy that runs it only cares about making money for himself and nothing else. He doesnt pay his people anything etc. I wont get into a big GBTC discussion here, but buying now with BTC in a dip, and then GBTC giving you a 15% discount on top of that could pay off greatly for someone in the future.
I don't know much about GBTC honestly. But a discount implies that investors think that they won't get approved as an ETF for years, since they are discounting the price by X years of paying high expense ratios (or they distrust management or have other reasons not to like GBTC that would not be affected by changing into an ETF). So arbitrage will only work if you're sure that ETF approvals are coming soon.
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Re: Coinbase IPO - anyone tempted?

Post by LateFire »

No, it's a house of card. I am not interested in buying DogCoin or CatCoin that was coded in Russia or Belarus.
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Re: Coinbase IPO - anyone tempted?

Post by LateFire »

Having TESLA included is bad enough and now Coinbase where DogCoin and CatCoin are traded? God help us.
Dunning-Kruger cognitive test: People think they are more capable than they really are. Sufferers don't know how much they don't know, and the most ignorant are the most confident.
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Re: Coinbase IPO - anyone tempted?

Post by OohLaLa »

LateFire wrote: Tue Apr 20, 2021 9:53 am Having TESLA included is bad enough and now Coinbase where DogCoin and CatCoin are traded? God help us.
Don't worry too much. Coinbase does not allow trading of either.
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Re: Coinbase IPO - anyone tempted?

Post by LateFire »

They will sooner or later. Who is creating these cryptos and what does it take to create one? If I could write some code to create one, can I take all the profit from listing into one of these crazy exchanges such as coinbase?
Dunning-Kruger cognitive test: People think they are more capable than they really are. Sufferers don't know how much they don't know, and the most ignorant are the most confident.
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

LateFire wrote: Wed Apr 21, 2021 11:01 am They will sooner or later. Who is creating these cryptos and what does it take to create one? If I could write some code to create one, can I take all the profit from listing into one of these crazy exchanges such as coinbase?
Creating a crypto token on an existing blockchain such as Ethereum is very simple for an experienced developer/operations person (especially with some knowledge of TypeScript). Even easier if one starts with source code for an existing token. But as with all software, the larger and more complex the functionality one wants to provide, the harder to code and the more prone to security problems and bugs.

If someone wants to design their own blockchain, then it gets significantly more difficult. And you need to make sure that wallets support it. But again, one could start with an open sourced server.

But the hard part is defining an application which has a real use, and is not just for pure speculation (*). And finding out if there any legal issues associated with the token release. And working out the economics. And while I'm not sure what criteria Coinbase uses to list a token/coin (especially if it involves a new blockchain), I'm sure it's not easy to get them to list a token.

(*) Although without speculation, there would be very little incentive for people to buy, stake, mint your token.
Last edited by SlowMovingInvestor on Wed Apr 21, 2021 2:09 pm, edited 1 time in total.
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Re: Coinbase IPO - anyone tempted?

Post by YeahBuddy »

It's getting harder by the day to avoid all the crypto talk. Yesterday at work half the break room was either talking about how to buy, what they were buying, or trying to buy various coins. And on the elevator into work, another coworker from a different department discussed how he was up $70k in bitcoin. Avoiding FOMO.
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Re: Coinbase IPO - anyone tempted?

Post by surfstar »

Freefun wrote: Mon Apr 19, 2021 1:21 pm Cathie Wood thinks Bitcoin may go to 500k (3:00)

https://youtu.be/SYVCc6V4HUY
She believes in other things with no factual basis, also *shrug*
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Re: Coinbase IPO - anyone tempted?

Post by F150HD »

SlowMovingInvestor wrote: Tue Apr 20, 2021 8:21 am ...That article doesn't make too much sense. Why would one buy a house (let alone smaller items) with BTC ?

You have to pay taxes on BTC sales (at least in the US). That and the spread alone would make it worthless to buy smaller items with BTC. And if you're a BTC devotee, you wouldn't want to sell BTC at all. The infamous pizza worth half a billion now comes to mind. In fact, it becomes more desirable, people will use it less for regular transactions.
Heres that pizza: viewtopic.php?p=5802425#p5802425
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Re: Coinbase IPO - anyone tempted?

Post by nisiprius »

Wheeee!

Image
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Re: Coinbase IPO - anyone tempted?

Post by LearnMarket »

HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because those are risky loans, with a high chance of default.

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.

AAVE is in a good position. They won't lose any money. You, the lender, might... But not AAVE...

Seems more evil than normal banks to me. If normal banks could loan your money out and lose YOUR MONEY by making bad loans, and you couldn't do anything about it, that seems WORSE than the current system. Why is AAVE such a great replacement?

(and let's not mention that if a normal bank is robbed, you personally are made whole; if AAVE somehow gets robbed, you will lose it all, and too bad).
Nice arguments. My thoughts as well. 10% APR Aave provides is not based on efficiency gains over traditional banks. I think online banks (for instance, Ally) have efficiency gains over brick and mortar banks. They pass the savings to consumers. This 10% APR can only be compared to junk bonds.

Having said that, I am investing <1% of my networth in crypto just to learn.
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

LearnMarket wrote: Wed Apr 21, 2021 10:34 pm
Nice arguments. My thoughts as well. 10% APR Aave provides is not based on efficiency gains over traditional banks. I think online banks (for instance, Ally) have efficiency gains over brick and mortar banks. They pass the savings to consumers. This 10% APR can only be compared to junk bonds.
I agree, with one caveat. AAVE isn't like banks. It's like a margin loan with collateral that can be liquidated.

Crypto true believers like to claim that the banks are making big money of retail consumers with their low rate deposits, while charging high amounts to lenders. But when it comes to margin loans (which is what AAVE is), IBroker loans out $s at 0.75-1.57%. It's very easy to charge low rates when you have collateral you can liquidate instantaneously. That doesn't imply any 'efficiency' or that banks are somehow making huge margins on consumer loans without collateral, or collateral that is hard to liquidate.

We have Peer to Peer Lending (well funded by VCs), but that didn't kill banks, in fact Lending Club seems to have decided to just exit the space. Uncollateralized loans are tricky.

On another topic, I spent sleepless nights rolling out patches and releases to deal with the HeartBleed bug (to take just one example out of many). Open source, widely used code with millions of users can definitely have major bugs. And Smart Contracts have the vulnerability of front running --- since nodes can see not just transactions, but updates and push a transaction through to exploit a bug by offering a higher gas price.
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