Unicorn Visions: Bitcoin's Startups Aren't Startups Anymore
Marc Hochstein is the managing editor of CoinDesk.
The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.
With all the regulatory actions and anti-climactic cable television appearances last week, you may have missed some telling news from two of the cryptocurrency space's bonafide unicorns.
First, Coinbase announced two high-profile hires: Emilie Choi, formerly of LinkedIn, who is charged with scouting out acquisitions and partnership opportunities; and Eric Scro, a former executive at the New York Stock Exchange, who will focus on institutional clients and financial and regulatory matters.
And while Chief Operating Officer Asiff Hirji's unveiling of the Coinbase Index Fund on CNBC may have been a letdown to those who were sure he was going to announce the exchange would be listing a new token (SFYL), taken together with the hires, the new product suggests this company has longer-term horizons than many people in the space assumed. (Hirji, it should be noted, is himself a recent hire who came on board in January.)
In other words, Coinbase may not be just a seven-year startup that aims to get acquired by PayPal. Rather than merger bait, it sees itself as a consolidator.
Consider Choi's comments in a Fortune interview.
"There were just a bunch of really interesting startups that helped Google take things to the next level," she told the magazine, adding
"So it feels like that kind of an atmosphere. We're seeing so much, so many interesting startups and entrepreneurs in the space...and Coinbase wants to capitalize on that."
To be sure, Coinbase still has significant issues to work through.
Customer service complaints are a longstanding problem, one that Twitter veteran Tina Bhatnagar, another January hire, surely can't fix overnight. Also, the resolution of Coinbase's fight with the IRS, while providing valuable certainty going forward, is likely to leave a sour taste with many of the thousands of cryptocurrency users whose account information will now be reported to the tax collector.
And once the only game in town for retail purchase of digital assets, Coinbase faces new competition in that field from Square and Robinhood.
Still, all things considered, the narrative that Coinbase is simply looking for an exit is a lot harder to support now.
Taking on the Fed?
Similarly, Bitmain last week revealed a somewhat out-of-left-field plan to invest in blockchain-powered "private central banks" - a signal that the company's controversial co-founder, Jihan Wu, has bigger ambitions beyond its flagship businesses of mining cryptocurrency and manufacturing the tools for it.
With China recently becoming less hospitable to miners, Bitmain has also quietly been setting up a subsidiary in the U.S. But Wu's comments at the D.C. Blockchain Summit made it clear that he has a lot more on his mind than running a back office for bitcoin.
"Since blockchain technology has been established for nine years, the technical barriers to running a central bank and issue a kind of private money [have fallen]," he said.
Such private money "may not be accepted but is at least theoretically easy to issue and use worldwide."
That sounds closer to John D. Rockefeller or J. Pierpont Morgan than one of the green eyeshades those tycoons employed - much less a modern-day techbro looking to cash out.
All this talk of emulating Google or the Fed makes an awkward fit with the ethos of decentralization that inspired the technology that made Coinbase and Bitmain the companies they are today.
But say what you will about these two startups, you can't accuse them of thinking small.
Unicorn float via Shutterstock