How Did You Get Involved with Coinbase?
Checkout my referral link for Coinbase to get a better experience.. This helps streamline the KYC process, which is now a requirement for new users. The KYC documents include a driver's license, which I omitted when first signing up, but it seems almost everyone now needs to provide these.
Understanding the Current State of the Crypto Market
Even though Coinbase's revenue has surged over the past 12 months, the company has a slim chance of meeting the profit expectations that underpin its EV of 100 billion. The crypto markets are still in their infancy, with many players vying for the profits that Coinbase currently enjoys. For comprehensive insights, do not hesitate to submit a request to Coinbase.
As the market matures, we anticipate significant drops in Coinbase's transaction margins, mirroring the "race-to-zero" scenario that characterized stock trading fees in late 2019. This trend will likely extend into the crypto trading space, with competitors slashing fees to zero in pursuit of market share. This assertion underscores the volatility and competitive nature of the crypto sector, which is largely yet to be fully recognized as a mainstream financial tool.
Valuation of Coinbase: Is 100 Billion Too High?
When adjusted for more reliable fundamental data, the EV of Coinbase is estimated to drop from 100 billion to 18.9 billion, a staggering 81% decrease. This analysis draws on Nasdaq Inc. and Intercontinental ICE (the parent of the New York Stock Exchange) as key reference points for established exchanges, which are integral to the overall valuation comparison. Investors stand to benefit from a more nuanced understanding of the company's prospects and valuation.
Fundamentals and Investor Expectations
Coinbase has positioned itself as a revolutionary force, akin to the internet. While this narrative contributes to exceptionally high valuations, the reality is quite different. Only 34% of U.S. adults are interested in cryptocurrencies, and around 18% have never heard of it. CivicScience also reveals that, despite rapid growth in investment in crypto, only 9% of U.S. adults are actively involved in these investments. These metrics highlight a significant gap between investor sentiment and actual market penetration.
Getting Started with Coinbase
To begin trading on Coinbase, follow these steps:
Sign up (here), and make sure to use the referral link provided. This will help expedite the KYC process, which now mandates the submission of identifying documents, such as a driver's license, for verified accounts.
Once your account is set up, navigate to the "Buy/Sell" tab and choose your preferred payment method, either a bank account (lower fees but longer verification period) or a credit/debit card (higher fees but instant verification).
After confirming your payment method, you can either specify the amount of USD you'd like to spend or the amount of BTC to buy.
If you elect to use a bank account, you'll receive your Bitcoin after a week, while a credit/debit card provides instant access. However, for maximum control over your funds, it's recommended to transfer your Bitcoin to a secure Bitcoin wallet, such as Ledger Nano, Trezor, Jaxx, or Exodus, where your assets are decentralized.
To transfer your Bitcoin, go to the "Accounts" tab, click on the "Send" option under Bitcoin, and enter the wallet address provided. Care should be taken to ensure the correct address, as mistakenly sending Bitcoin to the wrong address is irreversible. Once in your wallet, it will be under your full control.
For those deeply involved in the crypto space, the journey to understand Coinbase's financials, market positioning, and valuation has only just begun. This report aims to provide a deeper dive into the complexities and nuances of investing in Coinbase, armed with a more pragmatic and data-driven assessment.