{"id":461608,"date":"2021-04-20T00:00:48","date_gmt":"2021-04-20T00:00:48","guid":{"rendered":"https:\/\/wncen.com\/?p=461608"},"modified":"2021-04-19T11:35:21","modified_gmt":"2021-04-19T11:35:21","slug":"coinbase-addresses-future-revenue-concerns-with-plans-to-become-cryptos-amazon","status":"publish","type":"post","link":"https:\/\/wncen.com\/news\/coinbase-addresses-future-revenue-concerns-with-plans-to-become-cryptos-amazon\/","title":{"rendered":"Coinbase Addresses Future Revenue Concerns With Plans to Become Crypto’s Amazon"},"content":{"rendered":"
A well-received Nasdaq debut from Coinbase last week opens what many hope to be crypto’s cross into the mainstream. Nonetheless, controversy has surrounded its IPO, including valuing the firm on a fully diluted basis<\/a>. Using this methodology, a higher number of shares is included in the company valuation, essentially overvaluing the company by some $20bn.<\/p>\n But perhaps the biggest controversy lies in Coinbase’s ability to maintain and extend its profitability going into the future. With concerns that high spreads and trading fees will see a race to the bottom as the competition heats up, some analysts have warned against investing in $COIN.<\/p>\n Coinbase CEO Brian Armstrong said he plans to increase the firm’s product lineup over the next five to ten years in a bid to combat these concerns.<\/p>\n <\/p>\n In the run-up to last week’s IPO, Coinbase released its Q1 2021<\/a> figures, revealing an impressive set of numbers. Highlights include $1.8bn revenue and the doubling of its monthly active user base to 6mn.<\/p>\n Its biggest money-spinner is trading fees, which came in at $1.1bn<\/a> and accounted for 86% of its total revenue last year. This equates to 0.57% of every transaction.<\/p>\n “In 2020, Coinbase collected about 0.57% of every transaction in fees, which totaled $1.1 billion in trading revenue on $193 billion in trading volume. These trading fees made up 86% of revenue in 2020.”<\/p><\/blockquote>\n But competition from the likes of Kraken, Gemini, Bitstamp, and Binance, will see trading fees fall away in a race to the bottom. Some analysts have pointed out, based on Q1 2021’s figures, this is already in motion.<\/p>\n “If we assume a similar breakdown of Coinbase\u2019s reported $1.8 billion in total revenue in the first quarter of this year, trading fees would equal around $1.5 billion on $335 billion in trading volume, or about 0.46% of every transaction.”<\/p><\/blockquote>\n To address this, Coinbase CEO Brian Armstrong<\/a> said he expects 50% of the company’s revenue to come from non-trading sources over the next five to ten years. But is this a reasonable expectation?<\/p>\nSource: COINUSD on TradingView.com<\/a><\/pre>\n
Analysts Sound Alarm on Coinbase Future Profitability<\/h2>\n
The Amazon of Crypto<\/h2>\n