Opinion: Coinbase Is a $100 Billion Crypto Cult

Coinbase Global Inc. plans to go public under a direct listing that values the largest U.S. digital-asset exchange at almost $100 billion. The service the company offers is the same basic principle as a stock brokerage, giving retail investors access to the cryptocurrency markets, but that’s where the similarities end. Coinbase has frequent service outages, nonexistent customer service and sky-high transaction costs. All of these are disadvantages are well known, and yet it remains the most viable option for individual investors.

I started getting bullish on Bitcoin two years ago, and opened an account at Coinbase in September 2019. I purchased $80,000 in Bitcoin over a period of about a week. I didn’t bother to check out the fee schedule ahead of time, thinking it would be a low commission structure analogous to what I might get from Charles Schwab. I was wrong, spending about $1,200 on those trades at a commission rate of 1.49%. I was a bit shocked because here we have this amazing new internet money and the fees are higher than what I would have paid in the stock market in 1981. I shrugged, figuring the fees would come down over time.

Fast forward to January 2021, when I was ready to close out the trade. By this point, $80,000 had turned into about $310,000. But the fees hadn’t changed, and I paid $5,000 on the way out. Not a bad business. No wonder Coinbase is going public with such a high valuation. Lower fees are available for active traders with large balances on Coinbase Pro, but I only intended to do one trade, so I didn’t think it was worth the effort.