Coinbase is Tarnishing Its First-Mover Advantage
Coinbase Global (NASDAQ: COIN), the biggest American cryptocurrency exchange, has had a terrible year so far. Coinbase has dominated headlines in 2022 thanks to disappointing first-quarter earnings, a hiring freeze followed by broad layoffs, and macroeconomic factors that have sent crypto into a tailspin. Analysts and investors alike tend to conflate Coinbase with crypto and crypto markets – but it is time to separate Coinbase from crypto and ask some hard questions about the company's strategy, instead of assuming that its shortcomings are merely reflections of crypto volatility.
The company's first-mover advantage is evaporating, and this is particularly concerning due to its revenue mix. Yet Coinbase's strategy depends on an indefinite first-mover advantage. How did it get to this point?
Coinbase's role in shaping crypto markets and adoption cannot be overstated. Founded in 2012, a time when most lay-people had only heard of Bitcoin in the context of the dark web, Coinbase developed one of the first US-based cryptocurrency exchanges. Crucially, Coinbase targeted the self-directed individual investor, which opened up cryptocurrency to markets beyond the digital subcultures of the tech-savvy enthusiasts who had been involved in Bitcoin since its inception. These factors gave it a moat by default during a time when it had very few competitors. For many years, Coinbase's role as a fiat on-ramp through which investors could change dollars to Bitcoin or Ethereum allowed US-based investors to buy crypto with ease. It's indisputable that Coinbase has played a powerful role in driving broader interest in cryptocurrency investing, as well as in bringing institutional money into cryptocurrency. But does its first-mover role still matter in today's cryptocurrency landscape?
Source Fool.com
