Coinbase, the US cryptocurrency exchange platform, debuted on Nasdaq yesterday as a direct listing, marking a red-letter day for alternative finance as the first significant public move of its type by a crypto exchange.

By the close of trading, shares had reached $328, down from a high of $381. This valued the platform – which operates without a central headquarters – at $75.9 billion (not including other assets).

For comparison, a share in Nasdaq Inc is currently worth $157.

The platform has been buoyed by (or is tied to) recent valuations of Ethereum and Bitcoin, with the latter valued at $62,600 at the time of writing – double its value in January 2021, and more than three times its November 2020 value.

However, the true value of a cryptocurrency is hard to calculate, given that it needs to factor in the cost per watt of mining it, plus the purchase of GPUs and other expensive, energy-hungry, mining rigs.

Nevertheless, the recent stratospheric growth in the valuations of some digital currencies is likely to link Coinbase’s fortunes to the perceived health of the crypto and token market for the foreseeable future.

The problem is, at present superstar crypto valuations are closely linked with speculation and hyped by mega-wealthy individuals, such as Tesla/SpaceX supremo Elon Musk.

This can be summed up by the so-called ‘million dollar pizza’ problem: why spend a few low-valued crypto coins on a cheap consumer item today, if those coins might be worth a fortune tomorrow?

The reverse applies as well: your coin might buy you a Tesla today or a pizza tomorrow. The challenge, then, is that such extreme fluctuations are rarely found in traditional currencies, unless an economy is collapsing and there in runaway inflation in the cost of goods.

This big attraction for high-risk speculators makes it harder – but not impossible – for cryptocurrencies to make the leap to mass acceptance as money. At least, until the system stabilises or a country establishes a national digital token: a digital dollar or pound (hopefully one that doesn’t produce vast amounts of carbon).

One might hope that the UK would be imaginative enough to try this, post-Brexit. But that seems unlikely, with little appetite for risk locally (except politically, where the UK is suffering from a high-stakes gambling addiction).

There could be other factors at play in the Bitcoin market specifically, which may yet impact on Coinbase’s fortunes.

For example, research from Cambridge University’s Centre for Alternative Finance has established that two-thirds of Bitcoin miners are based in China (based on IP addresses and hash rates), nearly 10 times the number in the US.

According to Cambridge analysis, roughly 80 percent of mining takes place in Asia and Eastern Europe, with as much in Iran as in the US. That is likely to make Western investors nervous.

But for now, the future appears rosy for Coinbase as an exchange for all this frenetic activity and more. “What we hope is it just brings a lot more transparency to this industry, and a lot more focus,” said CFO Alesia Haas.

It puts it at the heart of Wall Street, certainly. However, Jay Powell, chair of the US Federal Reserve, has been critical, comparing cryptocurrencies to gold, rather than to money. “Human beings have given gold this special value that it doesn’t have from an industrial standpoint,” he said.

Others are likely to be puzzled by a comparison that was intended as a criticism, but which might imply to some that cryptocurrencies have a more fundamental and prized value.

This is particularly true for younger generations, who have come to distrust the traditional financial markets.

That sentiment is hardly surprising. The 2008-09 financial crash, triggered by high-risk, low-grade credit, led to more than a decade of austerity and a widening gulf between haves and have-nots that is partly generational.

Corruption, fraud, and market rigging among a number of big-name banks have only hardened some people’s resolve to replace the system with something better.

But the spectre of high-risk –potentially low-grade – investments is hardly absent from today’s crypto market, and neither are mega-wealthy individuals or institutions playing the market to their private advantage.

No one could look at Bitcoin today, for example, and claim it is the saviour of the young and financially excluded, unless they got lucky and grabbed some coins a few years ago, perhaps while huddled around a GPU for warmth in a rented room.

At present, Coinbase has 56 million registered users – a figure that is likely to rise on the back of its debut yesterday – and estimated Q1 net profits that are reported to be up to $800 million, on the back of $1.8 billion in revenue.

However, any investors expecting Coinbase shares to keep scaling a cliff face in value may be in for a fall, as there is nothing to stop more traditional exchanges, brokerages, and other players clambering into the market.

Players from the world of traditional finance are certainly interested: Goldman Sachs, JPMorgan, and Citigroup were among the organisations advising Coinbase on its listing.

Meanwhile, digital payments platform PayPal has added a crypto trading and retail function for its US customers, with plans to roll this out worldwide in the months ahead.

In summary, therefore, Coinbase’s public market debut is a milestone, but it is too early to say where the road is headed – beyond hope.