Onchain Is The New Online: Armstrong

Coinbase's CEO says that on-chain companies have a shot at becoming the tech giants of tomorrow.

Coinbase is not yet profitable, despite improving figures

In Coinbase's Q3 earnings call, CEO Brian Armstrong made what he described as a "provocative statement", comparing the rise of blockchain technology to the birth of the internet.

On chain is the new online. The Internet was and is a game-changing technology that redefined our modes of communication, business and social interaction. It broke down barriers, democratized access to information, and made knowledge universally accessible.

The blockchain will do the same by reintroducing decentralization into an ecosystem that has become concentrated in the hands of a few powerful corporations, such as Google and Facebook. "Blockchain and crypto are doing the same thing today with a re-decentralization of the web and the introduction of a new building block: ownership. Instead of just reading and writing on the traditional Internet, onchain, you can now read, write and own. Onchain is about digital assets, broader access to financial services, and even changes how we think about identity, governance, artwork and non-financial services."

Coinbase CEO Brian Armstrong (image: Coinbase)
Coinbase CEO Brian Armstrong argues that blockchain companies will be the new tech giants.

Improving Q3 Revenues Mask Losses

Following a series of disappointing results and plummeting share price as volumes and revenues dried up in the crypto winter, Coinbase's position has improved. Q3 this year saw revenues of $674 million, hopefully putting the company back on the road to recovery following a rocky spell.

The beginning of this year saw Coinbase stock hitting a low under $32, a dramatic fall from grace since its IPO price of $250. The early days of trading saw it push above $400, before reality set in. Following the earnings report, COIN is trading around $87.

Coinbase is still making a net loss. In answer to a question about when the organization would see positive earnings-per-share, CFO Alesia Haas referenced the historically low volumes currently seen in the market, and emphasized that the company was targeting positive EBITDA (earnings before interest, taxes, depreciation, and amortization).

As Investopedia notes, "EBITDA is not a metric recognized under generally accepted accounting principles (GAAP)... Increased focus on EBITDA by companies and investors has prompted criticism that it overstates profitability. The U.S. Securities and Exchange Commission (SEC) requires listed companies reporting EBITDA figures to show how they were derived from net income, and it bars them from reporting EBITDA on a per-share basis."

Leveling The Playing Field

During the earnings call, Armstrong explained how crypto democratizes financial services by removing middlemen, unnecessary fees and delays, as well as giving users greater control over their data and money.

It is for all of these reasons that we believe that crypto is the greatest tool in increasing global economic freedom. We also think that onchain will be as essential and impactful as the Internet is today. If we look back to the early years of the Internet, the companies that ignored the noise and built for the future of the Internet now stand as tech giants.

For this reason, he stated, today's blockchain companies will become "the tech giants of tomorrow".

He might have a point, but Coinbase has got some way to go before its earnings rival Google's.

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