8 Questions about Coinbase that Every Investor should know
1. What is Coinbase’s mission?
- “Increase economic freedom in the world.”
2. What market Coinbase is targeting?
- Crypto (Crypto Economy, Crypto Technology)
3. What is the market size?
- “2.321 Trillion”
4. What is the problem Coinbase tries to solve?
- Improve efficiency and accessibility of a system by removing the middle man (i.e., bank).
- Improve the transparency and reliability of a system by decentralizing it. (i.e., Defi)
5. What is Coinbase’s business strategy?
- Step 1: build Crypto Investing-related features: “Crypto investing remains our core business and it’s the foundation of growing the crypto economy. Investing is the first use case for every crypto holder and user, and we are the world’s most trusted onramp”.
- Step 2: build Crypto Financial Services: “As more users hold crypto, new products will be built to help them use their crypto. Coinbase will offer financial services that are powered by modern crypto infrastructure”.
- Step 3: build Crypto Technology Platform: “Finally, crypto companies and protocol teams are driving new innovations and products beyond financial use cases. Coinbase will invest deeply in discoverability and usability of third party products in the cryptoeconomy, and make crypto as easy to use as it is to buy”.
6. What are Coinbase users?
- Individual: retail users who “own a primary crypto account”.
- Institutions: “provide a platform solution for safely accessing and transacting in crypto markets to institutions”.
- Developers: “developers, creators, merchants, and asset issuers a platform with technology and services that enables them to build applications that leverage crypto protocols, actively participate in crypto networks, and securely accept cryptocurrencies as payment”.
7. How does Coinbase earn money?
- Consumption-Based Revenue: retail and institution crypto transaction costs.
- Subscription Revenue: such as blockchain rewards, custodial fee, and interest income.
8. What are Coinbase’s competitive advantages?
- Technology / Patent: “25+ native blockchain integrations and counting, Each protocol requires in-depth research and specific expertise both for initial integration and ongoing monitoring as transactions are recorded on the public blockchain.”
- Efficient Scalability: “our experience allows us to swiftly adapt to updates in the blockchain protocol, or “forks,” to safely support new products like staking, and to creatively reduce fees for our customers through strategies like batching transactions…We have significant scale, securely storing over 11.5% of global crypto-assets and we grow with our customers,
- Brand and Trust: “market-leading brand exclusively focused on the crypto economy…have a trusted platform owing to our heritage of security and culture of regulatory compliance”
- Network Effect: “have a deep pool of liquidity for exchanging a wide range of crypto assets”
Note: all quotes are from Coinbase’s 10-K report