Why Investors Don’t See Coinbase’s Revolutionary Potential

Over the past three months, shares of Coinbase Worldwide (NASDAQ:COINS) are up nearly 20% after days of consistent sell-off from its overvalued IPO. Most of the skepticism surrounding the stock market stems from its over-reliance on trading costs. Coinbase is a brokerage platform for buying, selling and transferring cryptocurrencies and mostly relies on trading commissions for revenue.

Despite tremendous growth, the cryptocurrency brokerage industry is racing to provide the best prices available for consumers to invest in cryptocurrencies, pushing margins down. But luckily, Coinbase realizes this and is diversifying into a field with huge potential. So let’s see why the stock is a solid buy for investors.

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The rise of blockchain analytics

In recent years, malicious ransomware as a service (RaaS) has gained significant momentum, with more than 4,000 cyberattacks taking place in the US every day. Hackers infect victims’ computers with malware, lock them and make ransom demands in exchange for the “unlocking service”. In addition, hackers’ appetites have increased dramatically, with millions of dollars in ransom demands. In May, the hack of a major fuel pipeline disrupted services and forced operators to eventually cough up the ransom. Those funds were eventually tracked down.

That brings up the main topic: cryptocurrencies, such as Bitcoin(CRYPTO: BTC), are now the preferred medium of exchange for hackers to demand ransom from victims to unlock their computers. With blockchain analysis, Coinbase can play a vital role in detecting it. This works by comparing hackers’ wallet addresses with know-your-customer (KYC) information stored in the database and identifying it for law enforcement officers. It is a move that can restore confidence in the cryptocurrency community.

In addition, the same tactics now apply to stop illegal activities. Wallets associated with vendors selling items such as illegal firearms or narcotics may be blacklisted. It can also reveal the identities of criminals doing business with them if they are Coinbase customers. In addition, since most cryptocurrencies have a ledger, the company can also track the flow of funds to and from wallets suspected of practices such as tax evasion. Though small, Coinbase has signed a few contracts with government agencies such as the IRS and the Secret Service, with additional interest from immigration and customs enforcement.

Robust financial data

At the end of the day, keep in mind that Coinbase stocks are backed by solid fundamentals, unlike many of the cryptocurrencies themselves. In the second quarter of 2021, revenue and profit increased 1.040% and 4.918% to $2.033 billion and $1.606 billion, respectively. The financials are quickly catching up with the company’s $56.32 billion market cap. There are now 83 cryptocurrencies traded on Coinbase (the world’s 13th largest digital currency exchange by volume), up from 54 in the first half of 2020.

The company has an ambitious goal of convincing more than 1 billion people to trade cryptocurrencies, and it has developed a smart way to do it. Users can watch educational content on its platform and earn cryptocurrency ahead of its time – something it could easily change to attract advertisers to its platforms. Approximately 2.3 million users were involved in one of the learning campaigns during the second quarter.

What’s more, his latest venture involves taking a step towards cryptocurrency lending and borrowing, which has grown into a multi-billion dollar industry. Using this setup, investors promise their tokens to take out a low-interest loan to cover their costs while their principal continues to rise.

Overall, Coinbase is evolving quickly, just like cryptocurrencies themselves. I would expect his new ventures, especially blockchain analytics, to more than make up for the growth sluggishness if the trading volume declined. That makes it a top cryptocurrency stock to check out right now.