Feb 26th, 2020: Coinbase is Worried About Satoshi

Pat and Amy are back to talk about Coinbase’s S1, Tether’s NY Court beatdown, and the market’s general reluctance to keep printing unlimited amounts of money. Happy Friday!

Automatic Transcript:

Amy    00:00:01    Hello, and welcome to the DeFi daily, a 10 minute or less DeFi and crypto update. I’m Amy here with Pat and we’re recording. Live on clubhouse. Follow Pat at Pat white SF to listen in live. We’d love to have you join and ask us some questions. Today is Friday, February 26th, 2021. 

Pat    00:00:19    Bitcoin is way off. Oh man. What a brutal day. I can’t even begin to say, uh, I almost died. That’s why we haven’t recorded a few days. It was just too much, too much pain. I think the last time we recorded, we are running like we are living large around 56,000. Today. We are, we’re off only $150 today, but over the last few weeks, we are down just about $10,000 to 47,232 on, on Bitcoin. Ethereum is down off of its high of about $2,000 to 1480, pretty much everything’s down dashes down off its high at three 50, two to 14 Zcash cash is doing relatively well, but it is also off its high of one 70 down to one 22. XRP is XRP is doing its XRP thing. Hang holding steady at 44 cents. I still think is cause no one can actually hear it. Um, one of the big winners though, that has bucked, every trend is Cardone. 

Pat    00:01:12    Cardone is up and up and up and they’re at one 25 right now, $1 and 25 cents, which has put them number three in the crypto market. So they are now the third largest coin by market cap, somewhere running a $38.75 billion market cap, which is impressive because the, the foundation owns a lot of that money. So I mean, that’s, that’s, there’s real, there’s real money in there. Um, sitting round, I is one of the other big winners that really hasn’t taken a big hit from the, from the various, uh, articulations of the market where it’s actually staying pretty stable up and it’s near its high of one 15, $1 and 15 cents. 

Amy    00:01:47    The DFA daily is sponsored by bit wave wave is a digital asset management platform that does tax tracking for crypto and DeFi gain loss, reporting, accounting, crypto invoicing, and more, you can check them out [email protected] or on Twitter at fit wave platform. So up first, the biggest news of course is coin basis direct listing. 

Pat    00:02:09    Yep. Everyone’s excited. Coinbase has come out of the gate, direct listings skipping the, the normal public road. No, the normal road show where you go and show it to a bunch of investors so that you can get front run by JP Morgan’s customers. Uh, this seems like the normal way everyone’s doing this now is not through an investment bank, but direct that should scare JP Morgan, just like everything else happening in the markets right now. Like literally everything happy in the markets and the DeFi markets and all this stuff should just, just terrify these, um, these companies. But, but here you go, Coinbase. It it’s super exciting. They are. So it’s funny this, this article that we are sharing out today talks about their, uh, when you go public, you have to list the risks to the investors. And this is so fun because it is just, uh, the first re we, we have two different articles here that we’ll talk about, but the first one talks about how Coinbase is at a structural disadvantage because it is not, um, operating in a jurisdiction without loss. 

Pat    00:03:06    So you compare that to you to swap, or you compare that to Binance who, who the hell knows where Binance is located. You compare it to pretty much any of the other companies out there that Coinbase is competing with except for crack and Gemini those and is both a competitive advantage because, you know, once crypto picks up more steam, most people will want to use regulated exchanges that are in, in, in countries that have well-governed financial systems. So in that case, it is actually a good thing to have to be under regulation. On the other side of that is that you have very low taxes for someone like Binance. You have no regulation, very low taxes. You can print as much money as you want through tether, which we’ll also be talking about today, uh, Bitfinex. And, uh, and, and that’s a great way to sort of do all this. 

Pat    00:03:50    So I, you know, it’s, it is certainly a risk. It’s not the biggest risk in the world, but it just sort of hammers in this idea that essentially the U S is still so slow picking this kind of these types of things up, that it is going, it is hurting the U S more and more and more everyday that they don’t make decisions about how to, how to really treat, uh, uh, cryptocurrency exchanges. And the more that they punt on, you know, bringing them into the fold. It’s, it’s just bad for the, for the U S economy. 

Amy    00:04:20    Another thing Coinbase, Coinbase listed as a potential risk was the unmasking of Bitcoin’s creator. 

Pat    00:04:28    I, I racked my brain on this, which is, I, I genuinely, I guess what they’re saying is that there is that essentially if a million, so if a million Bitcoin where suddenly actually came into circulation, it would, it would certainly be a deflationary event. So maybe that’s what they’re talking about, which is essentially like, if they found the creator and he suddenly felt comfortable spending as Bitcoin or whatever, um, then, then that would be bad for them. I don’t know how that, like, I honestly don’t, I can’t think of any other reason why it would be bad if, if Sitoshi, if we found out who Satoshi was for, for Coinbase, I guess, but there are a lot of terrible people in the crypto world. So I don’t know, even that one, I’m not sure would actually make a difference. I think maybe it’d be bad if it was like the NSA, if it was like really nefarious and like straight up conspiratorial theory, then that’s, that’s one thing, but it’s a, it’s not, um, the other thing that they mentioned was DeFi as a risk, which absolutely 1% hundred percent that is a real risk. 

Pat    00:05:35    And it is a, it is an existential risk to, to Coinbase and every other centralized exchange. And that’s why we have the DeFi daily, because the end of the day, I think that the, either the DeFi wins, even if we’re going through growing pains right now with fees and all the other things, I think that the DeFi wins on this. I don’t think we see, I don’t think we see centralized exchanges other than D and other than for like institutions getting into it, maybe institutions would be nervous about using a Dex. Um, maybe they want to use over the counter. Like I can imagine them doing more over the counter stuff where like, if I need to buy seven figures with a Bitcoin, it’s hard, it’s gonna be hard to do that on a Dex without really moving the market. Actually, that’s not even true, but whatever it’s different, different issue. 

Pat    00:06:13    So, so there’s, there’s places where you would use like a, an, a service to basically figure out the most, the most capital efficient way to actually buy a bunch of coins. But besides that, I mean, this is their real risk, but all that being said there, and the rest one, they said they made a billion dollars last year up from $230 million a year before. I mean, it is incorrect. They are just making money, hand over fist. Part of that was they got rid of, they used to have, uh, for, for market makers. They, if you, if you did a limit order, they didn’t charge you commission on it. They only charge you a commission on, on a straight market order. They stopped doing that over the last year. So that’s, that’s where a lot of this money came from that’s and, but good for them, the a billion dollars. 

Pat    00:06:55    Now, I think they’re going to, I mean, they’re going to come out of the gate with their, with their IPO, just swinging. I mean, there’s, they already, there’s already like, they, they officially priced at 77 billion, but I mean, they’re going to hit a hundred billion easy because people will see Coinbase as a proxy until there is actual ways to get exposure in your, in your, uh, retail investment account to Bitcoin. Coinbase is the closest proxy you have to that. So people are actually going to treat Coinbase as a proxy for crypto in general. And it’s just going to go, it’s going to move to a, to use a, the common parlance. So I think Coinbase is you can go nuts. I mean, good for everyone who works there and is making money off of it. 

Amy    00:07:34    Yeah. So next a different exchange. So attorney general, James ends virtual, uh, Bo Bitfinex illegal activities in New York. Yeah. 

Pat    00:07:43    This was the attorney general of New York. This is a great article, read it. It’s uh, they essentially said that they are under collateralized and committing fraud and they give them $18.5 million fine. And they said to stop all operations with people in New York, which essentially stops all operations with people in the United States. There is good reason to believe that the downturn in the market over the last week is due to this. There’s good reason to believe. It’s also due to a lot of people just wanting to profit take and everything else that’s out there. And in normal normal movements of the market and the stock market heating ups that people sort of taking a little bit money out of the, uh, the crypto market, but it is very believable that a major component of the slide this week is, is related to Bitfinex, uh, and, and tethers, uh, essentially the beginning of the end for this service, you know, people that are super anti crypto tend to point at tether as the end all be all for, for why crypto is a scam. 

Pat    00:08:40    And you can certainly, you know, I, I understand where they’re coming from. I don’t tend to agree with them because even just tethers printing hundreds of millions of dollars, they are still a small fraction. I mean, the, the, you know, the market cap for all Bitcoin is $1.7 trillion right now. So even if they printed a hundred million dollars or billion dollars or whatever it is, they’re not really actually making that big of a dent in the market. They can certainly do some market manipulation. They can certainly do things like that, but it’s, they are not the end all be all of it. So I think that that’s a reason it’s down. I don’t think, I don’t think that it, it is pretentious of a imminent crash of all things crypto. 

Amy    00:09:15    All right. And last, the federal reserve suffered a widespread disruption in multiple payments services on Wednesday, including assistant that banks and businesses rely on to move around trillions of dollars. 

Pat    00:09:27    I wish I wish this wasn’t a family friendly podcast, so I could really drop a few truth bombs, but like this has made this story makes me so happy because at the end of the day, it is so ridiculous that we people talk about the federal reserve as, as the rock solid foundation of, of, of the economy. And yet it is still run by people. It is still open to, you know, go into outages, just like any other centralized financial system in the entire world. Phenomenal, just like it was a tough day in the markets. It was a tough day all around and they decided to go down. So people can’t move money around for that day. Um, absolutely just ridiculous. Whatever. I love it. Like screw you federal reserve. 

Amy    00:10:06    All right, well, that’ll do it for today. Thank you. As always for listening to the DeFi daily, have a good one.

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