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Argument in investing in Coinbase has seemingly decreased over time. Few users actually care about owning bitcoin in a true bitcoin wallet. Other apps such as R

Argument in investing in Coinbase has seemingly decreased over time. Few users actually care about owning bitcoin in a true bitcoin wallet. Other apps such as Robinhood, and Cash app have easier UI. It's unclear where Coinbase will get long term growth.

deleted 6y ago
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Dirlewanger 6y ago
>It's unclear where Coinbase will get long term growth. By being the easiest cryptocurrency broker to use, by far. By being based in the US, and not in some SEA country (not saying that's inherently bad, but I'd rather keep my money in the US if at all possible). They even have an insurance policy for everything on their platform. Let's see the Binances of the world provide that.
- astrange 6y ago
  They’re definitely one of the easiest if you actually want to do accounting and tax reporting properly. Decentralized exchanges don’t make it easy to get transactions off of and non-US exchanges have to be reported as foreign bank accounts.
  - Scoundreller 6y ago
    I’ve heard some aggressive interpretations that your personal Bitcoin wallet could be reportable as a foreign asset by saying that Bitcoin is in the cloud, not anyone country. Saying your keys are in the USA is kinda like saying your Swiss bank account’s login and password are in the USA. If that Swiss bank account is still reportable, why not your Bitcoin too? What matters is where the asset is, not where you can control it from.
- hnracer 6y ago
  The latter is largely due to regulatory capture, US customers being banned from Asian exchanges due to US regulations. Almost nobody outside the US actually prefers Coinbase, the fees and liquidity is just much worse. The volumes on Binance speak for itself.
piracy1 6y ago
I think most in crypto are and if not ought be of the mindset that if you yourself do not possess the coins keys you do not own them and are therefore disinterested in robin-hood cash app etc.
- Osiris 6y ago
  I would say that it depends on the sophistication of the user. I work for a crypto company and this is our belief. Users hold their own keys and must sign their own transactions. Of course that means that things like limit orders can't be done (easily) and it means all trades have more latency and more costs (due to fees for sending transactions vs. db entry). However, we've found it difficult to get market traction as a lot of people seem to prefer the ease of custodial wallets.
- beaner 6y ago
  You need to be careful with this message. A lot of people are not capable of responsibly managing their own keys. There are countless stories of fresh faces taking this message to heart and then finding they've lost their stash a year later. You do gain a higher degree of financial sovereignty by managing your own keys, and it's definitely an important option to have and fight for. Just be cognizant that you also gain a lot of responsibility, too. For some people, storing at a site like Coinbase will continue to be a safer option.
  - vmception 6y ago
    > You need to be careful with this message. A lot of people are not capable of responsibly managing their own keys. Nope, thank them for their contribution to the predictable frequency of lost digital assets and their scarcity. Praise be. Blessed be the fruit.
  - maipen 6y ago
    People that get into crypto and go to an exchange like coinbase, should already understand how it works and they are getting themselfes into. These people that are just buying to invest and don't understand how to make a wallet, will most likely be the same that make horrible decisions, investing wise. Crypto must be used as it was intended for. It's not that hard nowadays, actually pretty simple.
maipen 6y ago
Coinbase by itself is horrible, always buggy, goes down when you need it most. Coinbase and most exchanges will most likely get replaced by a freemium exchange one day.
- agumonkey 6y ago
  > goes down when you need it most. that is objectively true, it's so regularly so that it's become a meme in the btc community.
- hnracer 6y ago
  Coinbase has two things that are a solid moat, most important is network effects which lead to liquidity, second is trust in custody. There are literally hundreds of cheaper and well run alternatives that can't get any traction due to deficits in the former (chicken egg liquidity problem) or latter (brand, reputation).
solaarphunk 6y ago
Easier UI and much lower transaction costs.
vmception 6y ago
Transaction fees..... like everywhere else? There isn't a winner take all strategy in brokerage houses, its take enough to make a return, why would you apply a different higher fictional standard to crypto exchangers? Also they provide various interest-like services and keep the difference between what they earn and what you earn.
jcfrei 6y ago
Coinbase is the leading US regulated crypto currency exchange. There are bigger ones outside of the US but if you want to actually buy cryptos and your are a US based investor chances are you will have to stick with them. I think they will do just fine.
- runako 6y ago
  PayPal is bigger, and they offer trading of some crypto currencies. And notably, PayPal's market penetration is much greater than Coinbase's. https://www.paypal.com/us/webapps/mpp/crypto https://www.paypal.com/us/webapps/mpp/crypto
  - tcoff91 6y ago
    Buying bitcoin with PayPal isn't equivalent with buying from Coinbase or other exchanges/brokers. You can't send your bitcoin outside of PayPal. You cannot withdraw to your own wallet/cold storage.
    - runako 6y ago
      Not equivalent, sure. PayPal's crypto appears to be aimed at the less-technical users who want crypto exposure. There's surely a market for that. Perhaps they can play the Windows to Coinbase's Linux. > You cannot withdraw to your own wallet/cold storage. The prevailing mass interest in Bitcoin is for speculation, which doesn't require an offline wallet. Letting PayPal hold it is fine for most users.
    - scurvy 6y ago
      It sounds like PayPal isn't actually buying Bitcoin, but instead created their own proxy bookkeeping instrument. Speculation, but that's what it sounds like to me if you can't have Bitcoin's utility and only its store/speculation.
      - tcoff91 6y ago
        That sounds extremely risky for PayPal. They're effectively shorting bitcoin by doing that. If the price rises dramatically they have to just come up with that money out of their own coffers. If they buy bitcoin they can merely liquidate it and pay you the proceeds when you sell your paypalcoins.
sna1l 6y ago
I bet their revenue distribution is pareto with most of it coming from whales/institutions. This is where the current growth + long term growth is and will come from.
nostrademons 6y ago
Coinbase should be viewed as a wealth & asset management company at this point. The real profit center of the company is Coinbase Custody, which is all about extremely secure holding of Bitcoins for extremely rich customers. The retail arm of Coinbase is more for free advertising - I think they make money off of it, but not huge amounts. It's much like how Dropbox is really an enterprise backup company where consumer Dropbox gets their foot in the door, GitHub is an enterprise code hosting company where open-source GitHub makes developers familiar with it, and Google is an enterprise advertising company where consumer Google gives them somewhere to advertise on. For that matter, Robinhood is an enterprise data company for hedge funds that sells information about what retail traders are about to buy. There's a fair bit of money in WaAM - my wife used to do it for Wells and had a $6B book (as a fresh college graduate!). Consumers don't have money, that's what makes them consumers. If you're managing money, you ought to do it for rich people that have a lot of it.
- seibelj 6y ago
  I would say Coinbase is making money hand-over-fist with retail. The basis points they charge are enormous compared to stock exchanges. Crypto is low-volume compared to traditional equity markets but very high-fee.
  - jcfrei 6y ago
    Of course they are. Let's assume they are making 0.20% per trade (you can lookup their fee tiers online) - at current volumes that's around $5mio a day in fees. I doubt coinbase even needs the money - the IPO market is just really hot for blockchain related companies at the moment and it would be foolish not to raise some funds.
  - nostrademons 6y ago
    My understanding is that retail is moving to DEXes. Uniswap just passed Coinbase in total trading volume. Retail investors are quite reasonably getting tired of getting screwed and opting out entirely.
    - 6y ago
mrharrison 6y ago
Staking is lucrative for customers and is non-trivial to setup. Robinhood and Cash don't offer these services. I guess an argument that can be made is that Coinbase understands the technology and will continue to offer products from the innovative defi/blockchain space. Most people will use Coinbase for its product offerings and security. It sits right between, Robinhood and Uniswap. If defi truly disrupts then I'm sure all financial institutions will start offering staking and defi products, then Coinbase hopefully has some first mover advantage.
agotterer 6y ago
I wouldn’t be surprised to see a large portion of their fees coming from their institutional investing platform. https://primebroker.coinbase.com/ https://primebroker.coinbase.com/
- mrharrison 6y ago
  Over time, institutions will create their own integrations. They don't need a middle man, when there is something like Uniswap.
  - hnracer 6y ago
    Even in the stock market the big institutions all use a prime broker for trading access and the sales and trading desks of IBs, and they all use bank run dark pools for liquidity.

deleted 6y ago

[deleted]

Dirlewanger 6y ago

>It's unclear where Coinbase will get long term growth. By being the easiest cryptocurrency broker to use, by far. By being based in the US, and not in some SEA country (not saying that's inherently bad, but I'd rather keep my money in the US if at all possible). They even have an insurance policy for everything on their platform. Let's see the Binances of the world provide that.

astrange 6y ago
They’re definitely one of the easiest if you actually want to do accounting and tax reporting properly. Decentralized exchanges don’t make it easy to get transactions off of and non-US exchanges have to be reported as foreign bank accounts.
- Scoundreller 6y ago
  I’ve heard some aggressive interpretations that your personal Bitcoin wallet could be reportable as a foreign asset by saying that Bitcoin is in the cloud, not anyone country. Saying your keys are in the USA is kinda like saying your Swiss bank account’s login and password are in the USA. If that Swiss bank account is still reportable, why not your Bitcoin too? What matters is where the asset is, not where you can control it from.
hnracer 6y ago
The latter is largely due to regulatory capture, US customers being banned from Asian exchanges due to US regulations. Almost nobody outside the US actually prefers Coinbase, the fees and liquidity is just much worse. The volumes on Binance speak for itself.

piracy1 6y ago

I think most in crypto are and if not ought be of the mindset that if you yourself do not possess the coins keys you do not own them and are therefore disinterested in robin-hood cash app etc.

Osiris 6y ago
I would say that it depends on the sophistication of the user. I work for a crypto company and this is our belief. Users hold their own keys and must sign their own transactions. Of course that means that things like limit orders can't be done (easily) and it means all trades have more latency and more costs (due to fees for sending transactions vs. db entry). However, we've found it difficult to get market traction as a lot of people seem to prefer the ease of custodial wallets.
beaner 6y ago
You need to be careful with this message. A lot of people are not capable of responsibly managing their own keys. There are countless stories of fresh faces taking this message to heart and then finding they've lost their stash a year later. You do gain a higher degree of financial sovereignty by managing your own keys, and it's definitely an important option to have and fight for. Just be cognizant that you also gain a lot of responsibility, too. For some people, storing at a site like Coinbase will continue to be a safer option.
- vmception 6y ago
  > You need to be careful with this message. A lot of people are not capable of responsibly managing their own keys. Nope, thank them for their contribution to the predictable frequency of lost digital assets and their scarcity. Praise be. Blessed be the fruit.
- maipen 6y ago
  People that get into crypto and go to an exchange like coinbase, should already understand how it works and they are getting themselfes into. These people that are just buying to invest and don't understand how to make a wallet, will most likely be the same that make horrible decisions, investing wise. Crypto must be used as it was intended for. It's not that hard nowadays, actually pretty simple.

maipen 6y ago

Coinbase by itself is horrible, always buggy, goes down when you need it most. Coinbase and most exchanges will most likely get replaced by a freemium exchange one day.

agumonkey 6y ago
> goes down when you need it most. that is objectively true, it's so regularly so that it's become a meme in the btc community.
hnracer 6y ago
Coinbase has two things that are a solid moat, most important is network effects which lead to liquidity, second is trust in custody. There are literally hundreds of cheaper and well run alternatives that can't get any traction due to deficits in the former (chicken egg liquidity problem) or latter (brand, reputation).

solaarphunk 6y ago

Easier UI and much lower transaction costs.

vmception 6y ago

Transaction fees..... like everywhere else? There isn't a winner take all strategy in brokerage houses, its take enough to make a return, why would you apply a different higher fictional standard to crypto exchangers? Also they provide various interest-like services and keep the difference between what they earn and what you earn.

jcfrei 6y ago

Coinbase is the leading US regulated crypto currency exchange. There are bigger ones outside of the US but if you want to actually buy cryptos and your are a US based investor chances are you will have to stick with them. I think they will do just fine.

runako 6y ago
PayPal is bigger, and they offer trading of some crypto currencies. And notably, PayPal's market penetration is much greater than Coinbase's. https://www.paypal.com/us/webapps/mpp/crypto https://www.paypal.com/us/webapps/mpp/crypto
- tcoff91 6y ago
  Buying bitcoin with PayPal isn't equivalent with buying from Coinbase or other exchanges/brokers. You can't send your bitcoin outside of PayPal. You cannot withdraw to your own wallet/cold storage.
  - runako 6y ago
    Not equivalent, sure. PayPal's crypto appears to be aimed at the less-technical users who want crypto exposure. There's surely a market for that. Perhaps they can play the Windows to Coinbase's Linux. > You cannot withdraw to your own wallet/cold storage. The prevailing mass interest in Bitcoin is for speculation, which doesn't require an offline wallet. Letting PayPal hold it is fine for most users.
  - scurvy 6y ago
    It sounds like PayPal isn't actually buying Bitcoin, but instead created their own proxy bookkeeping instrument. Speculation, but that's what it sounds like to me if you can't have Bitcoin's utility and only its store/speculation.
    - tcoff91 6y ago
      That sounds extremely risky for PayPal. They're effectively shorting bitcoin by doing that. If the price rises dramatically they have to just come up with that money out of their own coffers. If they buy bitcoin they can merely liquidate it and pay you the proceeds when you sell your paypalcoins.

sna1l 6y ago

I bet their revenue distribution is pareto with most of it coming from whales/institutions. This is where the current growth + long term growth is and will come from.

nostrademons 6y ago

Coinbase should be viewed as a wealth & asset management company at this point. The real profit center of the company is Coinbase Custody, which is all about extremely secure holding of Bitcoins for extremely rich customers. The retail arm of Coinbase is more for free advertising - I think they make money off of it, but not huge amounts. It's much like how Dropbox is really an enterprise backup company where consumer Dropbox gets their foot in the door, GitHub is an enterprise code hosting company where open-source GitHub makes developers familiar with it, and Google is an enterprise advertising company where consumer Google gives them somewhere to advertise on. For that matter, Robinhood is an enterprise data company for hedge funds that sells information about what retail traders are about to buy. There's a fair bit of money in WaAM - my wife used to do it for Wells and had a $6B book (as a fresh college graduate!). Consumers don't have money, that's what makes them consumers. If you're managing money, you ought to do it for rich people that have a lot of it.

seibelj 6y ago
I would say Coinbase is making money hand-over-fist with retail. The basis points they charge are enormous compared to stock exchanges. Crypto is low-volume compared to traditional equity markets but very high-fee.
- jcfrei 6y ago
  Of course they are. Let's assume they are making 0.20% per trade (you can lookup their fee tiers online) - at current volumes that's around $5mio a day in fees. I doubt coinbase even needs the money - the IPO market is just really hot for blockchain related companies at the moment and it would be foolish not to raise some funds.
- nostrademons 6y ago
  My understanding is that retail is moving to DEXes. Uniswap just passed Coinbase in total trading volume. Retail investors are quite reasonably getting tired of getting screwed and opting out entirely.
  - 6y ago

mrharrison 6y ago

Staking is lucrative for customers and is non-trivial to setup. Robinhood and Cash don't offer these services. I guess an argument that can be made is that Coinbase understands the technology and will continue to offer products from the innovative defi/blockchain space. Most people will use Coinbase for its product offerings and security. It sits right between, Robinhood and Uniswap. If defi truly disrupts then I'm sure all financial institutions will start offering staking and defi products, then Coinbase hopefully has some first mover advantage.

agotterer 6y ago

I wouldn’t be surprised to see a large portion of their fees coming from their institutional investing platform. https://primebroker.coinbase.com/ https://primebroker.coinbase.com/

mrharrison 6y ago
Over time, institutions will create their own integrations. They don't need a middle man, when there is something like Uniswap.
- hnracer 6y ago
  Even in the stock market the big institutions all use a prime broker for trading access and the sales and trading desks of IBs, and they all use bank run dark pools for liquidity.