In the world of crypto-currency, Coinbase has become the go-to place for crypto enthusiasts. While the company is still a young player on the market, it is already a well-established and profitable brand. Read on to learn more about the company and its valuation, as well as a few factors that could potentially affect its valuation.
Profitable since 2016
Coinbase is the largest exchange in the United States by volume. It serves retail customers and institutional clients. In 2017, the company generated revenues of almost $1 billion.
Its transaction fee is between 0.50% and 1.5% of the dollar value of a trade. This fee is dependent on the volume of transactions. Some other exchanges, such as PayPal, charge lower fees.
Coinbase’s revenue is primarily driven by transaction fees. As a result of higher crypto prices, it has been able to attract more active users to its platform. However, a continued decline in Bitcoin prices could affect its revenues. Moreover, more players are likely to drive down the prices of transaction fees.
Despite these factors, Coinbase is still a very richly capitalized company. The company’s margins are much better than those of the top two giants, ICE and Nasdaq.
A foundational piece of the crypto economy
Coinbase has long been anticipated for its potential to transform the crypto economy. The company has posted monster profits in recent quarters and has a user base with a substantial amount of capital. Yet it has yet to chart a future free of potential setbacks.
Among the many factors affecting the crypto economy are the various governmental organizations studying its use, security and safety issues, the growing number of platforms, the potential for manipulation, and the possibility of increased liability. These concerns have led to several consumer advisory sheets. Some of these have been issued by governmental entities and others by private industry.
Although cryptocurrencies are often portrayed as the next frontier of finance, their value has not been correlated with the broader U.S. equity markets. This is because the crypto economy has very little access to policy makers in most jurisdictions. In some cases, existing laws are being interpreted in new ways.
A hub of crypto activity in Nigeria
Nigeria has become one of the biggest markets for cryptocurrency trading in the world. While the country’s economy is still struggling, it has emerged out of a second recession in less than five years. And with high inflation and currency devaluation, crypto activity is growing. But some investors and businesspeople are considering moving to more hospitable environments.
As a result, the country’s economy is in dire need of a boost. The government is working on a new law that will outline the regulatory roles of digital currencies. This could pave the way for mainstream adoption of the digital currency. However, many of the investors will continue to trade using overseas bank accounts.
One of the leading digital asset management companies is Coinbase. According to its website, the company offers a wide range of products, including mobile wallets. It is also developing products that function like a traditional bank.
Unknown factors that could affect Coinbase’s valuation
When it comes to the valuation of Coinbase, there are several factors that are unknown. One is the potential for the crypto industry to become mainstream. Another is the competition that the company faces in the crypto industry. Finally, there is the future of the company. If the company fails to chart a path for its future, there is the chance that the value of the company may decline.
One of the biggest reasons that people are interested in Coinbase is its ability to generate a significant profit. The company’s operating margins are above those of some of the largest investment banks. Its revenues are in line with those of one of the largest exchanges in America, the Nasdaq. This is despite its high fee. The fee is around 0.5% of the dollar value of a trade.