Coinbase Ipo: A Guide To Investing In The Exchange's Ipo

Coinbase is a major US-based cryptocurrency exchange platform that went public in April 2021, marking a milestone in the world of cryptocurrencies as the first pure-play crypto trading company to list on a US exchange. Coinbase shares can be bought and sold on the Nasdaq exchange under the ticker symbol COIN. The company's public debut was highly anticipated as it is the largest crypto platform in the US and the second-largest in the world. Coinbase's direct listing, rather than a traditional IPO, was also a unique aspect of its IPO, which means the company's shares are directly listed on a stock exchange without the need for an underwriter.

Coinbase's IPO is a risky buy

Firstly, Coinbase's revenue is heavily dependent on cryptocurrency trading volume. In 2020, when the price of Bitcoin rose fourfold, Coinbase's trading volume and transaction fees increased significantly. However, in 2018, when cryptocurrencies crashed and Bitcoin prices fell, Coinbase's trading volume and number of users dropped drastically. This shows that Coinbase's business model is vulnerable to the volatility of the cryptocurrency market.

Secondly, Coinbase's direct listing could value it at around $100 billion, which is excessive compared to other companies in the industry. This high valuation sets high expectations, and if the company fails to meet them, its valuation could collapse. Additionally, corrections in the tech stock market tend to hit expensive stocks the hardest, and Coinbase may be dragged along in such a crash.

Thirdly, Coinbase's success is tied to the popularity and trading volume of cryptocurrencies. As an investor, you need to assess the future of cryptocurrencies and whether you believe they are a long-term trend or just a fad. If you fully believe in the decentralized nature of cryptocurrencies, investing in Coinbase, a centralized company, might be a contradiction.

Lastly, Coinbase's IPO is not a traditional initial public offering. In a direct listing, there is no target price range determined by an underwriter, and share prices are solely dependent on market demand, which can lead to increased volatility.

In conclusion, while Coinbase has strong growth potential in the expanding cryptocurrency market, its heavy reliance on trading activity, high valuation, and direct listing approach make it a risky investment option. It is crucial for investors to carefully consider their risk tolerance and conduct thorough research before deciding to invest in Coinbase's IPO.

Coinbase's business model

In addition to trading fees, Coinbase generates revenue through credit card transaction fees, referral fees for promoting courses, a custody service, and profits from venture investments. The company also offers a Coinbase Wallet, which is more secure than the exchange wallet as it stores information on the user's device.

Coinbase has expanded its offerings to include educational courses about cryptocurrencies, for which users are rewarded with the currency of the course upon completion. The company also launched the USD Coin (USDC), a cryptocurrency with its value tied to the US dollar, and the Coinbase Card, a VISA debit card that allows users to spend their cryptocurrencies in the physical world.

Coinbase Commerce provides tools for businesses to accept digital currency payments, and the company has developed plugins for major eCommerce platforms. Coinbase Pro and Prime are aimed at professional traders, offering advanced features and insurance protection.

Coinbase's revenue model primarily revolves around transaction fees, subscription and service fees, and other revenues such as crypto-asset sales and corporate interest income. The company's profitability is closely tied to trading volumes and interest in cryptocurrencies, with subscription services helping to stabilize revenues.

How to buy Coinbase shares

Coinbase is a major US-based cryptocurrency exchange that went public in April 2021. Coinbase shares can be bought and sold on the Nasdaq exchange under the ticker symbol COIN.

• Research the future of cryptocurrency: Your investment's potential success is tied to the popularity and trading volume of cryptocurrencies. Cryptocurrency stocks give investors exposure to the cryptocurrency market without directly investing in cryptocurrency.
• Understand Coinbase's role in the future of crypto: If you believe there is a future for cryptocurrencies, consider whether Coinbase is positioned to capitalise on its popularity. Study the company's revenue, earnings, user growth, competition, and management.
• Decide how much to invest in Coinbase: Only invest an amount you can afford to lose. Don't invest cash that you might need in the near future.
• Open a brokerage account: You will need a brokerage account to buy stocks like Coinbase. You can then place your Coinbase order on the broker's website or trading platform.
• Search for Coinbase stock: Within your brokerage account platform, search for Coinbase stock using the symbol "COIN".
• Decide how much you want to buy: You can decide in dollars or shares.

It is important to note that Coinbase's revenue is linked to cryptocurrency trading volume. There is a risk that if trading activity drops, Coinbase could make a loss.

Coinbase's fee structure

Coinbase offers a cash and hosted cryptocurrency balance service that allows you to store your cash and supported cryptocurrency free of charge. However, the platform does charge fees for various other services.

Coinbase Fee Structure

Coinbase fees can be somewhat complicated, especially for beginners. There are multiple exchanges built into Coinbase, each with its own fee structure.

Coinbase Transaction Fees

Also known as the Coinbase Fee, this is a confusing fee structure that considers multiple factors. The user will pay either a flat fee or a variable percentage of the transaction, depending on region, product, and payment method. Coinbase does not publish these fees, but they are usually 1% or higher.

Coinbase includes the fees for spread in the price whenever you purchase or sell your crypto. It will also be included in the exchange rate if you convert your crypto. The spread allows Coinbase to temporarily lock in a price for trade execution while you review the transaction details before submitting your transaction. This spread applies to all cryptocurrency transactions on the Coinbase platform and while using the Coinbase Card.

Network Transaction Fees

For transactions on cryptocurrency networks (i.e. transfers of cryptocurrency off the Coinbase platform), Coinbase incurs and pays network transaction fees (e.g. miner fees). When you send cryptocurrency from your Coinbase wallet to another wallet, Coinbase will charge a fee based on its estimate of the prevailing network fees for a standalone wallet-to-wallet send. The final fee that Coinbase pays may differ from the estimated fee due to factors such as batching transactions or changes in network congestion levels. All fees are disclosed at the time of the transaction.

Lightning Network Processing Fee

The Lightning Network is a micropayment network that enables the transfer of bitcoin without incurring the transaction fee associated with the Bitcoin blockchain. When you send bitcoin from Coinbase via the Lightning Network, a processing fee equal to 0.1% of the amount of bitcoin transferred is charged.

Adding Cash and Cashing Out

When you add cash or cash out, you may be charged a fee depending on the payment method selected. It is important to review the fee details before completing the transaction to understand any associated charges.

Trading Fees and Spread

When you buy, sell, or convert cryptocurrencies on Coinbase, fees are charged. These fees are calculated at the time you place your order and can be influenced by factors such as your chosen payment method, order size, market conditions, jurisdictional location, asset, and other costs incurred to facilitate your transaction. Before submitting your transaction, you can view the fees in the trade preview screen. Please note that fees may vary for similar transactions. By completing an order, you agree to pay the applicable Coinbase fees for that transaction.

Coinbase One is a subscription product that offers fee-free buying and selling of cryptocurrencies, with certain limitations. Members may still have a spread included in their quoted prices.

Staking Fees

When you stake your crypto on the Coinbase platform, Coinbase charges a commission on the rewards that you earn. Here’s a breakdown:

• 35% for ADA, ATOM, DOT, MATIC, SOL, and XTZ
• 26.3% for ADA, ATOM, DOT, SOL, and XTZ if you’re an eligible Coinbase One member

Coinbase Advanced Fees

Coinbase Advanced is the advanced trading platform of Coinbase that is suitable for more experienced traders. Coinbase Advanced fees are based on a maker/taker model. The fees have a maximum of 0.40% maker and a maximum of 0.60% taker, based on your 30-day trailing volume.

Maker orders: “Makers” create orders for other traders to take. They add liquidity to the order book. These orders are not filled immediately.

Taker orders: “Takers” take orders created by makers. They remove liquidity from the order book. These orders are made at market price and filled immediately.

Partial orders: Partial orders are when a portion of the order is filled immediately, while the rest is left on the books to be filled at a later time. If this happens, the first part is assessed on the “taker” side. The remainder will be filled as a “maker” order.

How to Minimise Coinbase Fees

If you already have a Coinbase account, you should be able to toggle on the “Advanced” feature to enter the trading platform. Once you’re in advanced mode, focus on the order form, which lets you choose a currency pair (such as BTC-USD), and trade one asset for another.

Coinbase's security protocols

Coinbase is a major US-based cryptocurrency exchange that allows users to trade crypto assets. Coinbase stock gives investors exposure to the cryptocurrency market without directly investing in cryptocurrency.

Coinbase shares can be bought and sold on the Nasdaq exchange under the ticker symbol "COIN". The company went public in 2021, marking a milestone in the world of cryptocurrencies as it was the first pure-play crypto trading company to list on a US exchange.

Coinbase prioritises the security of its users' accounts and data. The platform offers a range of security features to protect its users' information and assets. For example, Coinbase provides a Lock Wallet feature, which automatically locks the user's wallet after a certain period of inactivity. Users can also manually lock their wallets for added security. Additionally, Coinbase recommends that users keep their recovery phrase safe and private. This recovery phrase acts as the master password to the user's wallet, and it should be stored securely as losing it will result in losing access to the user's assets.

Coinbase also advises users to revoke access to their wallets from decentralised applications (dapps) that they are not using. Dapps that are granted access can view the contents of a user's wallet, so regularly reviewing and disconnecting unused dapps is an important security measure. Users should also be cautious when using public Wi-Fi networks as they can pose a security risk. Public networks are hotspots for cybercriminal activity, and Coinbase warns against using a wallet on an unsecured network.

Coinbase also has measures in place to protect users' bank account information. The platform uses encryption and other security measures to safeguard users' financial details. Coinbase also offers two-step verification for added security during the login process.

Furthermore, Coinbase provides users with resources to help them identify and report phishing sites, technical support scams, and other fraudulent activities. The platform also provides guidance on how to keep devices secure and how to report unauthorised transactions.

Overall, Coinbase implements a range of security protocols to protect its users' accounts, data, and assets. These measures aim to provide a secure environment for users to buy, sell, and manage their cryptocurrencies.

Frequently asked questions