Is Coinbase Legit? For now, yes.

Icons of various crypto currency like Bitcoin and Ethereum.

Is Coinbase legit? Quickly becoming one of the leading cryptocurrency exchange platforms. Listed on the Nasdaq on Wednesday, April 14th, 2021, it has generated momentum and increased polarization over the company’s future and that of the cryptocurrency market in general. This IPO is a historic moment for bullish early adopters and the crypto industry as a whole. 

Coinbase legitimacy grew quickly

Just four years ago, Coinbase was valued at $1.6 billion and now it has wildly surpassed expectations and its valuation of $100 billion. Riding NFT hype and the coattails of the $GME/Robinhood moment in early 2021, Coinbase’s MFactor increased to 47 in March 2021, up from 33 the previous year. Nevertheless, investors have been polarized on the future of cryptocurrency and Coinbase’s business model and many have asked the familiar question "Is Coinbase legit?" 

MFactor is a proprietary tool that measures cultural momentum through topic modeling and sentiment analysis.

In contrast with other recent hypergrowth IPOs, such as Roblox, Coinbase is already in the black and booked a net profit of $322 million in 2020. Coimbase benefited greatly from timing its IPO immediately after 2020, which was a meteoric year for many cryptocurrencies. Consider just last year Bitcoin’s price rose fourfold from $7,184 per token to $28,972 per token and is currently priced at $62,935 per token. This is great news for a company whose transaction fees for trading account for 86% of its revenue. 

Future of Coinbase

Those bullish on Coinbase and the crypto market are quick to highlight the company’s revenue, which outpaced projections, and cryptocurrencies’ 2020 value boom. However, bearish investors are worried about the bottom line of Coinbase’s revenue stream, noting a high reliance on transaction fees can mean bad news.

If future years for the cryptocurrency market are similar to 2018, when cryptocurrencies crashed and market leader Bitcoin fell 72%, this could have a devastating impact on Coinbase. With a heavy dependency on cryptocurrencies performing well, some investors are worried Coinbase’s offering may be too thin.

Is Coinbase legit? For now, yes, but no one's momentum is safe in this quickly changing NFT and Crypto world.