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Coinbase ($COIN) Breakdown "1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa"
What does it take to build a world with more economic freedom for every person and business regardless of their location? Today, we will breakdown, Coinbase ($COIN), a company building the infrastructure to propel a crypto revolution that is decentralizing the world of money and finance.
If you want to read the full breakdown, click here ➡️ Coinbase Breakdown Substack
If you want to download my pdf report, you can click below ➡️
📖What is Coinbase?
Coinbase is the largest cryptocurrency exchange in the US. The company is positioned to provide end-to-end financial infrastructure and technology supporting crypto assets. The crypto ecosystem is shaped by three types of customers:
- Retail: The everyday citizen can invest, store, spend, earn, and use crypto assets, such as Bitcoin, in a safe and secure space
- Institutions: Financial institutions (corporations) can access crypto markets with safe trading and storage tools. The ecosystem ensures liquidity for transactions using crypto assets.
- Ecosystem Partners: Merchants, developers, and asset issuers (governments) can build applications that use crypto protocols and participate in the crypto network.
Coinbase is positioned to power the evolving crypto economy. The invention of Bitcoin created a revolution of digital scarcity. This scarcity does not require authenticity or approval from central institutions. Scarcity is proven through the decentralized ecosystem. This has enabled the company to potentially be a leader in creating an open financial system.
📈Market Opportunity
Technology is sweeping human society, while the existing financial system continues to experience legacy limitations. The crypto economy is organically evolving due to a series of fundamental shifts:
- The need for financial access, efficiency, and cost: Humans should have no intermediary barriers, inefficient procedures and protocols, or high costs to exchange in the financial system.
- The need to cultivate value from the internet: The exchange of digital assets (NFTs) in the past has been difficult to ensure authenticity and scarcity. The crypto ecosystem ensures secure exchange and consensus-backed record-keeping (blockchain technology) to ensure resiliency and value. Additionally, the network is on 24 hours allowing for peer-peer financial transactions (DeFi applications).
- The need for frictionless applications: The crypto economy is built on software networks on top of the internet. This ultimately ensures programmable smart contracts, which are self-reinforcing agreements between parties, and removes the need for intermediaries.
- The need for a reliable store of value: Inefficient institutions have been notorious for wiping out wealth. The need for a digital asset class that can maintain its scarcity and preserves wealth is critical.
As a result, today the addressable crypto market is valued at $1.5 trillion which is about 10-13% of the value of all mined gold on the planet. Coinbase re-iterates that the market is still in the early stages. Coinbase will aim to target the 3.5B customers connected to the internet through smartphones around the world or translating into ~228 million monthly transacting users.
🤯Key Insights for Time Investors:
- Your location in the world unfortunately will define the opportunities you are presented. The current financial system is built with many obstacles to access financial services. However, with the invention of Bitcoin, a new movement emerged that could provide the core pillars to economic freedom to any individual. The current market to Bitcoin is around ~1.5 trillion representing about 10% of the Gold market. To propel this future, Coinbase emerged as one of the first trusted largest brands in America and currently the second-largest crypto exchange in the world.
- The company also operates in a heavily regulated environment and will experience new regulations as the political climate wraps its thoughts around the co-existence of a crypto ecosystem in the current financial world. Coinbase dedicates 10% of its employees and has ensured appropriate leadership to meet security and compliance risks.
- It is important to note that Coinbase’s success is tied to the overall growth of the crypto-economy and specifically the demand for Bitcoin and Ethereum. As Bitcoin and Ethereum scale, Coinbase will also benefit as it stands to be the one-stop-shop for a multitude of assets.
- The company has experienced rapid growth (137% YoY) and more importantly, 90% of their customers to date have been acquired for free (organically).
- The fact that Coinbase is founder-led with the mission of creating an open financial system brings assurance and clarity to the overall goal the company is trying to achieve. The company maintains an 11% share in the market and holds $90 billion assets in its platform with 43 million verified users and 2.8 million monthly transacting users.
- It is important to as Coinbase attempts to expand into international markets and their digital asset framework evolves beyond their core business model of generating transaction fees. What will Coinbase do with their B in cash to expand share? For long-term growth, the company is well-positioned to maintain market leadership.
Investor Lineup + Equity Stake:
- Top Tier VCs: Andreesen Horowitz (15.8%) and Union Square Ventures (7.5%)
- Top Investors: Marc Andreesen (15.8%) | Frederick Ernest Ehrsam (9.5%)
- Brian Armstrong (CEO): (21.3%)
- As a group the executive leaders and directors: (58%)
- In their most recent secondary share sale, Coinbase has sold shares ranging from ($200-$373) resulting in a potential 00B valuation
Google Docs
Coin Breakdown.pdf
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