Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Coinbase vs. Bitcoin: Which Is a Better Investment?

Stock MarketsMay 03, 2021 18:45
Saved. See Saved Items.
This article has already been saved in your Saved Items
Coinbase vs. Bitcoin: Which Is a Better Investment?

Coinbase (NASDAQ:COIN) had one of the most anticipated listings in recently memory. After months of preparation, the company finally went public in a direct listing, closing at US$328 on its first day.

But for some investors, the listing was actually disappointing. After going public, COIN immediately started to decline, thanks in no small part to heavy insider selling. The downtrend continued for weeks.

For crypto fans, as well, the Coinbase IPO was a mixed bag. Many lamented the fact that crypto had “gone mainstream” and bemoaned the increasing institutional adoption of crypto.

In light of these criticisms, it’s natural to wonder whether Bitcoin is a better way to play crypto-mania than Coinbase is. Bitcoin has always been the world’s largest cryptocurrency, and as such is the “default” investment for anybody to buy when they’re getting into crypto. Indeed, there are cases to be made for investing in both Bitcoin and Coinbase. But if you must pick just one, there are some factors to think about.

The case for Coinbase The biggest thing Coinbase has going for it over Bitcoin is measurable financials. With a direct Bitcoin play, you pretty much only have technical factors to inform your investing decision. With COIN, it’s possible to value the business based on earnings results. In its most recent quarter, COIN had the following metrics:

  • 56 million users
  • $1.8 billion in revenue
  • $730 million in net income
  • $223 million in assets on platform
Broadly speaking, these results depict a profitable enterprise that may be worth investing in. They don’t guarantee that COIN is worth its current price, but they do at least show that it’s a profitable business. There are no such “earnings” to speak of for Bitcoin, which functions much like a commodity.

There’s also a certain “diversification” benefit that comes with Coinbase. While COIN is just one stock, its business collects fees on a variety of different crypto transactions: Bitcoin, Ethereum, Litecoin, and more. This diverse array of coins means that Coinbase doesn’t depend on just one cryptocurrency to make money. When you invest in Bitcoin, however, you’re literally just betting on BTC itself.

The case for Bitcoin Compared to Coinbase, Bitcoin has one major advantage: decentralization.

Bitcoin is a community-controlled project with no middle managers determining its fate. With Coinbase, management could fail, leading the business to fail. With Bitcoin, there is no “management” to speak of, and therefore no “single point of failure” that could ruin the project.

A solid alternative to both If you’re still not sure whether to invest in Coinbase or Bitcoin, you could consider one solid Canadian alternative: Purpose Bitcoin ETF (TSX:BTCC.B).

This is an ETF that directly holds Bitcoin and nothing else. Effectively, when you buy it, you’re paying a team of asset managers a 1% annual fee to hold your BTC for you. That might seem like a steep price, but it gets around the biggest issue with holding Bitcoin by far: security. When you own Bitcoin, you’re responsible for keeping your coins safe. If you lose your password, you have no recourse. Coinbase does offer a recovery word, but if you lose both the password and the recovery phrase, you’re out of luck.

This is not so with BTCC.B. Like COIN, it’s a publicly traded company with world class security. You can never “lose” your shares, and you can trust at the fund’s managers are keeping the underlying BTC secure. It’s a great way to get exposure to BTC in a more secure form. Also, you can hold BTCC.B shares in a TFSA — something that isn’t widely available for direct crypto holdings.

The post Coinbase vs. Bitcoin: Which Is a Better Investment? appeared first on The Motley Fool Canada.

Fool contributor Andrew Button has no position in any of the stocks mentioned.

5 Years From Now, You’ll Probably Wish You’d Grabbed These Stocks…Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. You aren’t on the list to receive our newest stock picks — but it’s not too late. 2021

This Article Was First Published on The Motley Fool

Coinbase vs. Bitcoin: Which Is a Better Investment?

Related Articles

2 Oversold TSX Leaders to Buy Now
2 Oversold TSX Leaders to Buy Now By The Motley Fool - Jun 19, 2021

The Fed-induced selloff in recent days is giving investors a chance to buy some top TSX stops at undervalued prices. What happened? The U.S. Federal Reserve indicated markets...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email