In the midst of this gold rush mood, Brian Armstrong built the crypto trading exchange Coinbase in 2012: "We are selling picks and shovels in a gold rush," he told the British "Economist". Armstrong made Coinbase the largest cryptocurrency exchange in the United States.
Now there is a gold rush atmosphere on the New York technology exchange NASDAQ. Coinbase wants to have a so-called direct listing on the trading floor there on Wednesday. Based on the reference price of the shares, Coinbase is worth around $ 68 billion. Analysts even credit Coinbase with a valuation of 100 billion dollars - a ludicrous price for a company with 56 million customers and a good 1700 employees.
Does Coinbase embody the ultimate bubble, as critics fear - or will the company become a fixture in the financial world of the future, as its fans hope? Analysts explain the dizzying rating with the hype surrounding crypto currencies such as Bitcoin, which professional investors are also increasingly interested in. The result is reminiscent of a perpetual motion machine: if the Bitcoin price rises, the market value of Coinbase rises - and vice versa. According to data from the Reuters agency, the rating has increased almost thirteenfold since the end of September alone.
Company boss Armstrong also benefits personally from this. The founder holds nearly 40 million Coinbase shares valued at 10 to 15 billion dollars. Since there is no blocking period for the IPO, the Coinbase boss could open the papers immediately. Thanks to lavish stock options, the American is already one of the best-paid company bosses in the world. The Bloomberg News Agency estimated his salary at a million dollars a day.
Argentina as a warning example
Armstrong was born near San José in 1983 California born. The parents worked as engineers. He is said to have shown business acumen in the schoolyard when he was selling sweets to classmates. At the university he founds a start-up that brings students and tutors together. For a year abroad in Argentina Armstrong claims to have understood how unstable a financial system can be: "It was an interesting experience to see a financial system in another country that has gone through hyperinflation," he told Forbes Magazine.
It is a legend that Bitcoin followers can tie directly to. Because the Bitcoin software ensures that there can never be more than 21 million Bitcoins - a built-in protection against inflation. Armstrong first found out about Bitcoin in 2010 when he was visiting his parents over the Christmas holidays.
Armstrong, who was still working for the housing broker Airbnb at the time, quickly sensed a business model: trading Bitcoins was quite complicated. And so in his spare time he writes software that is supposed to simplify the buying and trading of bitcoins. Fred Ehrsam, a former trader at the investment bank, helps him with this Goldman Sachs. The duo can convince venture capitalists to put $ 150.000 into the idea. Coinbase, that's the pitch for that Silicon Valley, be like "Gmail for Bitcoin" - so simple that anyone can use it.
The boss declares Coinbase an "apolitical company"
Armstrong manages to obtain the necessary licenses for its trading center from US supervisors. And he finds well-known partners such as the credit card company Visa or the car manufacturer Tesla. In addition to being well prepared, there is probably a portion of luck. Of spectacular bitcoin thefts, that sealed the fate of stock market rivals like Mt.Gox, Coinbase has so far been spared.
There was still trouble. For controversy provided, for example, a blog post from Armstrong, in which he declared Coinbase a "mission-based company" with an "apolitical culture". Political and social issues should therefore no longer be discussed at work. Employees had a week to think about it: Those who did not agree had to leave - for a generous severance payment.
And only in March CFTC Coinbase sentenced the US stock exchange regulator to a million-dollar fine because of the transmission of "false, misleading or incorrect trading data" and the market manipulation with so-called "wash trades" in Bitcoin. A financial instrument is bought and immediately sold again without actually changing hands. It seems that there is brisk trading activity - this can make a stock exchange more attractive to other investors. The Coinbase IPO has been postponed for a few weeks.
Coinbase is likely to have paid the $ 6,5 million fine from the postage. In the first quarter of the year, the exchange profited massively from the rising Bitcoin price. The bottom line was according to the company, a profit of at least 730 million US dollars. Coinbase wants to expand internationally - and is also looking for staff in Germany.
The fate of the exchange and its boss is inextricably linked with that of the cryptocurrencies: 96 percent of Coinbase income comes from trading proceeds. If the Bitcoin rate falls, the income also falls. At the same time, aggressive competitors are trying to steal market share from Coinbase with lower trading fees. In addition, there is concern about stricter regulation of cryptocurrencies. The list of possible risks in the securities prospectus is more than 50 pages long.
If things go wrong, the Coinbase boss has a second mainstay: In his free time, he works as a music producer. He and a DJ have just put a song up for sale as a Non Fungible Token (NFT) - this is unique content that can be assigned to its owner via the blockchain, a decentralized database. (A detailed explanation of the phenomenon can be found here).
Tweet from Brian Armstrong
The message was probably no coincidence: "The song is about the fact that there are always a lot of doubters and haters on the way when building something new," tweeted Armstrong. "Ignore them and trust your gut feeling."
For the song, the equivalent of almost $ 20.000 was recently offered, payable in the crypto currency Ether. This can also be traded at Coinbase.