Congrats to the CMC team, but I fail to see how barring some special IP this makes sense at that valuation; they're an index that, while useful to an exchange, can't really be worth $400 Million in a current (albeit resilient) crypto Bear Market.
Binanace must be wanting to get rid of some Yuan as the CCP is just dumping Billions of it into the Market via bailouts, while people in Wuhan are supposedly coming [1] back online and wanting to 'Revenge shop.'
As for the idea of monopolizing such information, sites like Coingecko have been around for nearly as long as CMC, so it makes no sense. The other notable purchases Binance as made have been other exchanges, and a news site in China, which make actual sense to strengthen their position or get a foot-hold in other Markets in their core business as an exchange.
400 Million?! Maybe I'm missing something, but last time I checked, CoinMarketCap was just a stock ticker website for cryptocurrencies. Where is the value...?
You're underestimating the influence CMC has over the space.
They determine what exchange volume is legit and what isn't, also what coins are worthy of being listed. At the least, this gives Binance additional stability, at the most, they can really consolidate trading volume at their exchange and for Binance approved coins.
The coinmarketcap volume is not legit at all. They created the adjusted volume metric but it's still plain wrong. They currently show a 24h volume of $112Bn and a total market cap of $182Bn - that's just ridiculous.
That makes more sense, if the assumption is that institutional level investment is primed to get in and CMC's SIMETRI rating system is the seen as the most trusted way in.
Which I have serious doubts given how so many Banks and Hedge Funds already have established systems in place. Fidelity being the most notable in the US for example, but are much larger outside of the US.
> I'm one of the paying client for the API, people in the comments fail to understand that CMC API has many paying customers
Ok, I'll bite as I think I have somewhat of an idea what their underlying value is from this service, even though I admit I don't trade; do you honestly believe that without that rating system offered to the Institutional Investment crowd I mentioned earlier they'd be at even a fraction of their valuation/purchase price?
I ask because gaining a paying client list, which is probably a rounding error in comparison to Binance's current accrued trading fees, cannot really be the main selling point for this deal. Especially when investing in various cryptocurrencies itself is likely to have a higher risk-reward ratio than this API being the best thing since Bitcoin's Layer 2.
It's at best a (minor) value added service, in comparison to the potential of targeting and capturing the (predicted?) incoming waves capital flight risk, now that all this hot money is entering the Economy from China, US, EU, Australia, UK etc...
>do you honestly believe that without that rating system offered to the Institutional Investment crowd I mentioned earlier they'd be at even a fraction of their valuation/purchase price?
Standard license is $299/ mo, even with only 3000 paying customers, and there are likely way more than 3000 paying customers, that would be $10M a year in revenue
CMC is a good asset and a valuation/purchase price of $400M is a fair price for the API product only, let alone the ranking /rating aspect
I've also used their paid API and the overall sale is not too much of a shock to me considering how CMC have established their position as the most popular platform for market data.
$400 million for a consumer-facing analytics company with some SaaS data streams. HN can hate on crypto all it wants, but that's a real startup success! Great work CMC
Perhaps this isn't $400M in cash, but instead is $400M in binance-coins, which are virtually worthless, but make crypto startups appear much more valuable.
Which would effectively give them close to 1/4 of the entire token supply, which they could dump at any time and disrupt Binances financials? That's worse than giving them cheaply printed fiat from all of these bailouts/stimulus.
Agreed. The bailout money will go straight into crypto.
I predict that people are going to start taking out bank loans at 0% interest to buy crypto. Crypto assets have a very unusual attribute that they cannot always be recovered in case of bankrupcy because only the owner knows the private key to their wallet and they can claim to have 'lost their keys'. Cryptocurrencies therefore offer a decentralized mechanism to allow people to convert their ever inflating debt-money (which is not even their own money) into money that is their own and in limited supply.
Is it unethical? Yes, but we all know what happens when everyone start doing the wrong thing; it becomes OK. That's how fiat money came about; it's also highly unethical (compared to gold-backed currency), but when all the banks started loaning money backed by gold which they didn't actually have, it became OK too.
Our financial system's incentives which reward reckless behavior are going to be its own demise.
I also predict some utter idiots will indeed take out low interest loans and stake them in the heavily manipulated, volatile casino that is the cryptocurrency market.
Then they will find themselves with a pile of debt and no way to pay it off, just as many have before when 'investing' in hokey schemes and outright scams.
> Then they will find themselves with a pile of debt and no way to pay it off, just as many have before when 'investing' in hokey schemes and outright scams.
Oh, you mean like the rest of the entire banking and financial markets that led to all of the bailouts in the first place? And enriched and further consolidated the power of the 'too big to fail' institutions that continue to be rewarded for their corruption.
I'm not going to engage with the same tired arguments we had last time, and I don't doubt the scenario above happening either now that the Federal Reserve essentially got Carte Blanche to buy up so many loans should they go bad from the Banks, but given the current situation you have to at least see the BLATANT irony in your statement.
The SEC shuts down the mainly algo-trained, bot-trading driven stock market because they're taking on too many loses and you're decrying Crypto as the hotbed of malfeasance and manipulation?
If you can't see regulatory capture when it stares at you in the face this way, maybe you should really be looking at another more pertinent axe to grind.
But think about it. What does bankrupcy actually mean if all of the bankrupt person's assets are in crypto and only they know the private key? The bank/creditors cannot recover these assets.
So by that definition, is the person actually bankrupt if they still control all of these crypto assets?
One could argue that crypto makes reckless individuals bankruptcy-proof.
> What does bankrupcy actually mean if all of the bankrupt person's assets are in crypto and only they know the private key? The bank cannot recover these assets.
There are two cases: either the person declares these assets, or the person tries to hide these assets. If these assets are declared, they must be sold to pay as much as possible of the debts, or the debts won't be forgiven. If the person tries to hide these assets, the consequences are much worse; a quick web search tells me the debts won't be forgiven (or the forgiveness will be revoked after the fact), these debts cannot be forgiven later on another bankruptcy, and the person can even be arrested and/or pay a heavy fine (source: https://www.nolo.com/legal-encyclopedia/bankruptcy/hiding-as...).
I think you may be right. What we would get after with cryptocurrencies might be some kind of unregulated anarcho-capitalism.
According to Marx, the absence of regulations should clear the path for capitalism's self-destruction. So I don't know if this would mark the end of Marxism or be a catalyst for its revival. But it probably won't be a smooth transition.
But who knows, maybe anarcho-capitalism will work if the communities are small enough.
Holy moly $400m for website that aggregates crypto coins data. Congrats to Coinmarketcap. I remember first using it in 2013, it was just another crypto website but it became the most popular soon after.
Binanace must be wanting to get rid of some Yuan as the CCP is just dumping Billions of it into the Market via bailouts, while people in Wuhan are supposedly coming [1] back online and wanting to 'Revenge shop.'
As for the idea of monopolizing such information, sites like Coingecko have been around for nearly as long as CMC, so it makes no sense. The other notable purchases Binance as made have been other exchanges, and a news site in China, which make actual sense to strengthen their position or get a foot-hold in other Markets in their core business as an exchange.
1: https://oklahoman.com/article/5659041/time-to-revenge-shop-c...