Practice English Speaking&Listening with: What Coinbase’s Public Debut Means for Bitcoin and Crypto | WSJ

- [Narrator] Cryptocurrencies and Wall Street

have mostly been operating

in two separate worlds, until now.

- We are listing a stock on the Nasdaq.

- [Narrator] Coinbase, the US's most popular

cryptocurrency exchange, is going public

and that's a big deal for both Wall Street

and the crypto community.

- Not only does it make crypto

and Bitcoin a little more acceptable,

it actually now gives investors another way

to invest in Bitcoin.

- [Narrator] The company allows users

to trade and store cryptocurrencies

and charges fees on all transactions.

It profits when cryptos like Bitcoin trade higher

and in the first quarter of 2021,

when Bitcoin's price doubled,

Coinbase's revenue was $1.8 billion.

Coinbase's revenue being tied to Bitcoin's value

has led investors to wonder if the platform's share price

will be just as volatile as Bitcoin,

which is known for its big price swings.

Coinbase has said it wants to do much more

than selling Bitcoin.

- We're gonna basically try to make it easy

for our customers to access all the different things

they might wanna do with crypto.

- [Narrator] The crypto industry

has so far mostly grown outside of the traditional

and regulated investment system

and has an image of being a risky asset,

also due to hacks and cyber crime.

This listing is meant to help legitimize it.

So will Coinbase's public debut

be a turning point for crypto?

Nasdaq set the reference price for Coinbase

at $250, which would give the company a valuation

of about $65 billion.

That's about eight times its valuation

in a 2018 fundraising round.

To understand why the listing

is making waves on Wall Street,

you have to understand what attracted some 56 million users

to the platform.

When Bitcoin first emerged around 2010,

it wasn't exactly easy to trade.

WSJ crypto reporter, Paul Vigna,

has been following Bitcoin and Coinbase for quite some time.

- I've been writing about Bitcoin since 2013.

In the early days,

you had to basically download the Bitcoin software,

the actual program itself,

run it on your computer, maintain a wallet,

maintain a node on the network

and for a lot of people,

it was just technologically too big a deal

for them to bother with.

- [Narrator] Coinbase was created in 2012

and was one of several platforms

that offered an easier way for people to buy,

sell and store cryptocurrencies.

- The whole point of it was to be very simple

and if you look at the website, it is.

It is basically a very simple way to buy and sell Bitcoin.

- [Narrator] The company makes money

by charging a small fee when people buy or sell crypto,

much like a currency exchange would

if you were changing say euros to dollars.

And it's these transaction fees

that make up the fast bulk, 96%,

of Coinbase's revenue

and what has tied the company's performance directly

to those crypto markets.

The company made some $322 million in profit last year

as crypto gained more legitimacy

among traditional investors.

- Over the last year, it's become hip, right?

Bitcoin's usage has been sort of codified.

That really opened the door

for a lot of professional money managers,

institutional money, hedge funds

to come in and start playing

in this little exciting sandbox.

- [Narrator] And then in 2021.

- Crypto has matured to a point

where we wanted to be able

to share with all investors

and all the public actually

how far the industry has come

and we thought one way we could do that

was by going public.

- [Narrator] Rather than going public for an IPO,

the company has decided instead

to do it via a direct listing,

like companies like Spotify and Palantir.

That means that they'll save the money

that they would have paid to investment banks

but their shares will be sold

by whoever currently owns them.

So the company won't directly make any money in the process.

What makes Coinbase's listing really unique

is that it's the first time

a listed company's stock performance

will be so closely linked to crypto markets.

- This is the first direct connection

between the capital markets and the Bitcoin markets.

- [Narrator] While there are some

small crypto-based companies

that trade publicly in the US and overseas,

none handles as much crypto as Coinbase,

which has some $223 billion of assets on its platform.

That's why its share price is expected

to follow the path of its main currencies,

Bitcoin and Ethereum.

And that could provide a unique opportunity

for traditional investors.

- You could almost look at the stock

as an index on cryptocurrencies.

If you are a mainstream stock investor

and you really don't wanna deal with Bitcoin itself,

you can buy Coinbase stock.

It will be part of the daily conversation now.

What did Coinbase stock do today?

Was it up, was it down?

- [Narrator] Although crypto price swings

can be enticing to investors seeking high volatility,

for Coinbase, having its share price tied

to that fluctuating market creates a lot of risk

and may put off some investors.

- If you think the Dow had a bad day,

Bitcoin's was worse.

- It wasn't just Bitcoin getting bashed.

At one point, the global cryptocurrency market lost

over $100 billion in just 24 hours.

- Equities going higher, Bitcoin going lower.

- [Narrator] In 2019, when the price of Bitcoin fell,

Coinbase lost some $30 million.

- In Coinbase's regulatory filing

for the direct listing,

they had a very long section on risk.

They understand that Bitcoin is gonna go up and down.

- [Narrator] And it's not just volatility

that makes Bitcoin risky.

The currency has a long checkered history

of being linked to cyber crime, hacking and theft.

- Coinbase has never been hacked.

I have to be clear about that.

That's a really big deal.

But if Coinbase was ever hacked,

if their security was breached,

if Bitcoins were ever outright stolen

from the wallet that people have on Coinbase,

from their accounts,

that would be a disaster for Coinbase.

- We always wanna keep cybersecurity top of mind.

We've got a cyber crime insurance policy against that

but it doesn't mean that cyber security

is not a big, big threat

we have to keep in mind all the time.

- [Narrator] To try and distance itself from the risks

of Bitcoin, Coinbase says it has built out

a $1 billion war chest

and has started to offer a wider range of products

that it can sell to its consumers.

- Coinbase, we're a retail app

where people have their primary financial account

but we have an exchange underneath that,

we have an custodian underneath that,

we have an institutional business.

We also have a commerce merchant payments business.

- They're prepared to ride the ups and downs

but they also wanna build a bigger boat

to deal with those ups and downs in the future.

- [Narrator] Those investing in Coinbase

are betting that Bitcoin will continue to grow

and gain more legitimacy

but if the currency were to crash,

as of now, that could be a big problem

for the reputation of both crypto and Coinbase.

- I think it's really important to remember

that historically, Bitcoin has gone through a few periods

like this where the price has gone very, very high

and come crashing down.

Just because Coinbase is now public,

just because Bitcoin's perception has been changed

in the markets, that doesn't mean

that Bitcoin's never going to go down again.

(dramatic music)