Is Tezos the next Coinbase breakout cryptocurrency?
On October 20, 2018 bitcoinexchangeguide published an article (https://bitcoinexchangeguide.com/is-coinbase-listing-tezos-or-is-ceo-brian-armstrong-really-tweeting-about-weight-loss/) about whether Coinbase's CEO had just tweeted out a hint about listing Tezos. This article seeks to examine the Tezos to Coinbase Rumors in greater detail
Recent Coinbase Rumor Coins
Over the past number of months we have seen the ongoing rumors about 0x (ZRX) being added to Coinbase and the positive price action that was associated with it. There have been hints of inclusion and rumors for many months. ZRX has now been added to Coinbase.
After the ZRX rumors began, new rumors then centered on Basic Attention Token (BAT) being added. BAT has, of late, been following an upwards price trajectory as well. That upwards price trajectory appears to be (largely) correlated with the rumors of it being added to Coinbase. The flames of those rumors were probably fanned by the ZRX addition, since it does show that Coinbase is following through on adding new coins.
What is clear is that even the rumor of a Coinbase addition has been enough to trigger bull runs in both ZRX, BAT and other coins.
Is Tezos Next?
Coinbase has made it clear that it plans to considerably increase the number of tokens available. In offering some hints about coins that it views as potentially suitable and worthy of investigation, Coinbase earlier released a list of coins that it was considering adding first to its Coinbase Custody service. That list was released on August 3, 2018 and can be found here: https://blog.coinbase.com/coinbase-custody-is-exploring-a-range-of-new-assets-e700496844be
Coinbase's list above notably includes Tezos, a coin that the Winklevoss brothers (owners of the Gemini exchange) have also added to their investments in July 2018: https://icorating.com/news/2018-7-winklevoss-twins-quietly-add-tezos-to-portfolio/ and that Kraken and Bitfinex very recently added to their exchanges as well.
There have been rumors about Tezos being added to Coinbase since the ICO, including references to the fact that Olaf Carlson-Wee (who is famously known as the first Coinbase employee) and his investment fund were heavily involved in Tezos, as they also are in ZRX. Many people on Twitter voiced concerns that Olaf and his connections to ZRX unfairly helped it to get on Coinbase before other coins. Olaf is now sitting on the board of directors of the Tezos foundation.
The tweet itself from Coinbase's CEO was as follows:
"Sugar free drinks and snacks have grown in popularity (and everyone is doing keto/low carb). A safe sugar substitute that you could [star]bake[star] into cookies, pies, cake, chocolate etc would find a huge market. Something "heat stable" like this".
The reason that this sparked the rumors is because Tezos' ecosystem is based on proof of stake that relies on "baking". A recent medium post explained as follows:
“Baking is what Tezos refers to as the action of signing and publishing a new block in the chain. Bakers need at least 10,000 XTZ (~ $22,000) to qualify as a delegate, and having additional delegated stake increases their chances of being selected as a Baker or Endorser.”
The tweet used stars on either side of the word "baking", which appears to have been done to cleverly emphasize the word. It is unclear why this would have been done if it was not a teasing reference. The syntax of the subject matter certainly did not call for that.
The tweet from Coinbase's CEO is admittedly somewhat vague (perhaps intentionally), but it could be a teasing reference and, notably, the CEO has not come out and denied the interpretation, despite BitcoinexchangeGuide's article being published. If there was nothing to it, one might expect the CEO to immediately quash the interpretation - there is an old saying that sometimes the sound of silence can be deafening.
One of the challenges that many noted about Tezos in the past were the difficulties that the project went through with its former board of directors. There was a significant lack of clarity about whether the funds raised in the ICO had disappeared or been stolen. The Tezos foundation put that issue to rest when it hired a Top 4 Accounting Firm (Price Waterhouse Coopers) to act as its auditor and announced that it had $500,000,000 plus its allocation of XTZ tokens, making it one of the most well funded blockchain projects in the space - https://tezos.foundation/news/funds-and-asset-management-update Notably, if you subtract the $500,000,000 in cash plus its allocation of XTZ, Tezos' remaining market cap attributable to the actual chain is tiny.
Tezos has been putting that to work, with considerable numbers of grants and projects building on top of it.
What may well be attractive to Coinbase is the ability to draw customer's interest into purchasing the token since they can "Bake" or delegate to other bakers and earn rewards simply by holding the Tezos tokens. That ability to earn tokens just by holding tokens and clicking a button may well be more attractive to Coinbase's less Tech based customers, than proof of work coins are.
While the Coinbase CEO's tweet was vague, there are reasons to believe that it was a reference to Tezos, and in the face of the other factors that point to an eventual Coinbase listing, perhaps a Tezos listing is more imminent than some had expected.