Could Coinbase become the “App Store” for the DeFi and NFT space?


One of the most intriguing crypto-related companies is Coinbase (NASDAQ:CURRENCY). A business that is intrinsically tied to the crypto markets, but operates independently, could see renewed interest in new opportunities. On the January 5 episode of “The Crypto Show” on Backstage pass, Eric Bleeker of The Motley Fool and contributor Chris MacDonald discuss a potential catalyst for Coinbase.

Eric Bleker: “The race is on to be the app store for crypto, a major lesson of web 2.0 is that consumers love platforms. I don’t think that’s going to change for web 3.0. Currently there isn’t of crypto platform that owns the customer relationship and aggregate providers. I predict that in 2022 many companies will rush to build this platform with Coinbase in the lead as it integrates DeFi and NFT.

Now Chris part of the reason I wanted to put this is there’s a kind of duality in crypto that’s built on the idea of ​​decentralization and you look at Web 3, taking that at a whole other degree, so to speak than a platform, is in many ways the most valuable idea of ​​this may seem a bit incongruous. And yet you are looking at an opportunity with Coinbase here. We noted when they first announced their NFT platform, the kind of interest that was there precisely because of what we just talked about, which is that people need trust in these markets, and while there is a certain level of early adopters who tend to drive the initial narratives, you see in this next wave a lot of people looking for a level of simplicity.

My question here, I personally put off buying Coinbase partly because I feel like I’m already exposed to the same things that drive this stock, and just look at its past history and how bad it is aligns with price movements and more specifically Bitcoin. Could there be something bigger here that investors are missing in the future where Coinbase potentially has the opportunity to be a much bigger platform because a lot of people just focus on the risk factors of losing trading fees? Is there another side that they could become a dominant feature in things like DeFi and NFT that investors are simply overlooking today?

Chris McDonald: I think that’s a very interesting thing to think about, Eric. The level of centralization needed to get things done.

Even going back to the LinksDAO conversation we just had, one thing we didn’t talk about was the idea that in order to buy a golf course they would have to build a business which is inherently centralized. Maybe the DAO, the voting structure is decentralized and maybe you can invest through cryptocurrency, which is decentralized. But eventually, at some point, a centralized entity has to be in place for real progress to happen.

Coinbase is interesting and obviously it’s a publicly traded company, it has a CEO. Many innovations are happening right now via companies in the crypto space centralizing and organizing to achieve a goal. In a way, when you think about decentralization, it’s a good thing because everyone has a say. It’s really democratic.

But at some point it goes back to the messy comment from the previous slide. There can be a lack of focus or a lack of structure, and sometimes that structure is a good thing. This is an interesting argument for Coinbase.

Personally, I don’t own some of the risks that you pointed out regarding trading fees and margins, etc., the fundamentals. But that being said, this idea that Coinbase could be a leader in building a platform that brings vendors together and builds the platform needed to create much of the change that people have been hoping for in a decentralized way. But being that centralized entity to do it.

It’s a very deep discussion. We can probably talk about this for an hour, but it’s a bit of a paradox right now in the crypto world, because in some ways that lack of focus that decentralized entities can bring. There is good and bad in both and I think people and investors are starting to see that.

Bleek: Yeah, paradox of duality, it can be a lot to understand.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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