'The expectations are so absurdly sky high,” Decrypt Executive Editor on Coinbase

Executive Editor of Decrypt Jeff John Roberts joined Yahoo Finance Live to break down his thoughts on Coinbase's market debut.

Video transcript

JEFF JOHN ROBERTS: Well, I think it's probably pretty par for the course. I mean, this seems to be happening with every IPO. There's froth, it pops, it falls down again. I mean, I think the expectations are so absurdly sky high. And Coinbase is kind of responsible for that by putting out this first quarter earnings right before going public. And so I think the appetite and the froth is ridiculous. But I think where it settled is where I think a lot of people would have predicted.

ADAM SHAPIRO: I would love that is a headline, absurdly sky high. There was a guest on with Brian Sozzi early this morning who said that, look, Coinbase may be something right now, but they face competition that'll make them yesterday's news. I mean, what's to prevent a Goldman or someone else opening up an exchange to compete?

JEFF JOHN ROBERTS: Yeah, the bearish are throwing that around a lot, there's something to it. I mean, I think it's kind of worrying that 94% of their profit or I think maybe revenue is from trading commissions. I mean, that's not sustainable, especially since we've seen commissions and trading become sort of a commodity in other fields and equities.

But I think people underestimate how long the runway is. I mean, this stuff is harder to do. It's harder to stand up a full-blown crypto exchange than it is to set up a stock trading platform. And in the meantime, I think they'll, and they're developing their other revenue streams too, custody and all the rest of it. They're going to dabble in NFTs I think.

And longer term, I think, I mean, I think the end game is one day they're anticipating every stock will trade as a token. Like Walmart stock will trade on a blockchain. Question is, is that going to be like in two years or five years or 10 years? And that's I think where they want to be. But you're right, I think they're in a race against time to show they're more than one trick pony.

SEANA SMITH: Jeff, you've profiled Coinbase. What can you tell us just about the company's culture there during I guess, what you learned while writing the book?

JEFF JOHN ROBERTS: Their interests, I mean, companies are defined a lot by their CEOs. I mean, you know, Facebook is Zuckerberg, Amazon is Jeff Bezos. And Brian Armstrong is just a very odd dude. He does not like press, he does not like the limelight. He's incredibly introverted, which is sort of unusual. And I think his judgment has been suspect a few times. Like the thing "The Times" reported on, putting out that letter saying, you have issues with politics, don't work here, in the middle of Black Lives Matter. That was a pretty unforced error, picking fights with "The New York Times," not a good idea.

But that said, I think people underestimate him. You don't get to be the CEO of a company that goes public at $100 million for, $100 billion, if you don't know what you're doing. So it's an introverted culture, it's a workaholic culture. And I think they do, like the rest of crypto and finance generally, struggle with diversity and to try to translate how their products can be inclusive to more people than a bunch of like white and Asian dudes in their 20s and 30s.

ADAM SHAPIRO: I want to flip the question I asked you around, because it was based on that Sozzi interview this morning. But what's to prevent Coinbase from expanding and being a threat to already established exchanges or platforms that might want to go in this direction?

JEFF JOHN ROBERTS: That's a terrific question. And I mean, I think you're right. I think it's Coinbase's to lose. And their infrastructure, if you look at like the next era of stock trading and markets is being defined by blockchain, I mean, they're in a pole position. So I mean, barring major screw-ups or regulatory trouble, I think they're in a good place.

One weakness though they have, is they don't have cloud [INAUDIBLE]. I mean, the banks are all very good at protecting their turf, protecting their interests. And just like Silicon Valley 10 years ago, we're kind of above the political fray. That's where the crypto industry is now. And I can also see as some of the incumbents dirty tricks in Washington to kind of try and kneecap Coinbase and other crypto players.

SEANA SMITH: Jeff, right now crypto market cap topped out at just over $2 trillion. What's the size of the opportunity in this space? Are we just scratching the surface?

JEFF JOHN ROBERTS: I think in the long-term, yeah. I mean, I think there's the saying I like in tech that people overestimate the short-term impact of technology and underestimate the long-term. That was the case with the internet like in the late '90s, and I think that is with crypto right now. A lot of what we're seeing right now has to be a bubble.

I mean, these prices, like Dogecoin, or I mean, Litecoin, what's the point of Litecoin and why is it worth that? So a lot of the stuff is just kind of dumb money sloshing around. And as in 2017, I think we're due for a pop, or a pop of the bubble, I should say. But the longer term, I think this will prevail.

ADAM SHAPIRO: My computer froze, I apologize. I'm cheering what you're saying, because you're speaking so directly about, when you call this a bubble. I'm not sure if crypto's a bubble, but things like NFT, that's where the money is, but where's the value? I mean, a digital image that I can replicate 1,000 times at no expense with no licensing, what good is that to anybody?

JEFF JOHN ROBERTS: That's above my pay grade. I mean, I'm not an art critic. I agree with you. I think there's that cartoon going around. I was listening to a song, there's some nerd in the corner going, you know, don't they know I own the NFT to this? So I think, but you know, I don't think it's going to go away.

You know, NFTs aren't brand new. They've been around since like 2016. And I think there's a there there, but again, they're going to, the bubble's going to pop. They'll probably be, a lot of it's going to be garbage that's never worth anything. But then certain specific stuff, maybe sports memorabilia, maybe art something, is going to have some lasting value is my prediction. But in the short-term, I think a bunch of people are going to take a beating.

SEANA SMITH: Jeff John Roberts, Executive Editor of Decrypt. Thank you so much for taking the time to join us here on Yahoo Finance. We look forward to hopefully having you back here again soon.