An interesting discussion between contributor Chris MacDonald and The Motley Fool's Eric Bleeker on what the future may hold for Coinbase (COIN -4.52%) following the company's recent earnings report took place on "The Crypto Show" on Backstage Pass on Nov. 10. 

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Eric Bleeker: Now, let's look at Coinbase's earnings.

Now, I had Coinbase drops 13 percent here because I wrote this slide last night after earnings. But I believe they've rebounded quite a bit today, and it's not nearly as big a drop.

We saw from the company earnings of $1.62 per share. Now here's the key figure that is going to be looked at by a lot of people -- revenue at $1.31 billion versus a consensus estimate of $1.57 billion. For a growth company, that is normally a massive miss that you would see deeply punished. One stock I personally own is Upstart (UPST -7.24%), which is off, I think about 20 percent today because it was a company that has been going through beat and raise cycles. Its price reflects that. If you can't keep up that momentum, you're often punished in the short run.

But, Bitcoin -- or, sorry -- Coinbase, looking at them, we look at this next slide, which was just a direct quote from the earnings presentation: "As our year-to-date results have clearly demonstrated, our business is volatile. Coinbase is not a quarter-to-quarter investment, but rather a long-term investment in the growth of the crypto economy and our ability to serve users through our products and services. We encourage our investors to take this point of view."

Chris, I think we normally talk about how short-term Wall Street is, but seeing the opinion monitoring, it does seem like people are actually taking the long-term view on these numbers.

Chris MacDonald: Yeah, I know it was down substantially initially this morning. I think it was down more than 10 percent. The last time I looked at it, it was down about four percent. It pared a lot of those losses today, and it seems like the market is taking the longer-term view with Coinbase.

From a fundamental perspective, this was a pretty big miss. I think the one takeaway that I had from these earnings, Eric, was the declining take rate from Coinbase on trading fees. Trading fees still make up about 80 percent of the overall revenue for Coinbase. It seems like other platforms that are offering lower fees are going to be putting downward pressure on the fees that Coinbase is able to charge. Being on Coinbase myself, I know the fees are -- at a percentage level are pretty high, especially if you're buying small amounts.

The movement toward zero-fee world in the crypto space is probably underway. I think a part of the initial scare when it was selling off in after hours was related to fundamental investors looking at these numbers and saying, well, where will the trading fees be this quarter, next quarter?

Those that are taking a longer-term view might not be as worried about it. There's certainly the potential that Coinbase could make up some of their transaction fee revenue with subscription-based revenue, which is what they're trying to do. How fast that transition happens is really going to define how well Coinbase is able to perform from a fundamental perspective. But there's this short-term concern and probably rightly so right now with Coinbase.

Bleeker: Yeah. In your opinion, are you a Coinbase investor?

MacDonald: I'm on the Coinbase platform but I don't own any COIN stock now.

Bleeker: Is it predominantly just because of the margin pressures that you referenced?

MacDonald: Yeah. Personally I think Coinbase -- its valuation is going to be, I would say, difficult for the company to catch up to probably over the medium term, unless the company is able to transition quickly away from -- or transition more of its revenue to a subscription-based model rather than treating fee model or have some way to make up that difference.

Because I think there's going to be competitors that continue to come and innovate on the user experience side. The UX of Coinbase's platform is superior to its competitors, and that's its competitive advantage right now. But that's not to say that someone can come around and try to replicate that at a lower cost.

There are those concerns and I think they're real concerns and that's partly the reason why I don't own the stock right now.

Bleeker: Got you. Yeah it is fascinating because we've talked on this show in the past about how network effects possibly take on fairly new dynamics and cryptocurrencies and you have such incredible network effects are growing for Coinbase already. But as you mentioned, the margin profile for them, especially when you compare to other brokers, I don't think anyone's arguing, it's going to face pressure across time.

Now, I will note too, we don't want to get too focused on the short term. You do look at the crypto rally, we just mentioned we started the show, I believe our first show was September 28, and Bitcoin is up from $40,000-68,000 since.

You have to imagine, platform revenues are going to be very healthy once again this quarter. What held it back in the prior quarter probably swings before then. I'm sure you'll look at similar effects.That's one side of Coinbase as well that, I'd put on the slide, Bitcoin is 19 percent of trading,  Ethereum is 22 percent. You look at a competitor like Robinhood, the volume explosion you are going to see from something like Shiba Inu because they are so reliant on those alt coins, is going to put probably a lot of upward momentum, at least in the short run.

MacDonald: That's a good point Eric. I think there's probably a little bit more stability with, let's say, a Coinbase versus a Robinhood in that regard. In terms of where the volume is coming from into which crypto assets.

The issue for me is what percentage of investors will be buying tokens as long term investments on something like Coinbase. For example, if you are buying Bitcoin or Ethereum to hold it for 10 years, you're not going to care about a two percent fee, let's say on your investment. But if you're trading it and you want your trading something like Shiba Inu and you want to play the upside, you want to play the downside, you're not going to do it necessarily on a Coinbase with those fees, you're going to go to a Robinhood or something like that.

What percentage of the capital flows that are coming in from retail investors are long term investments versus trades -- that's going to be something that investors need to think about as well.

But the volatility on something like a Coinbase might be lower. There's those pros and cons and I think investors are weighing right now and I think you see with the Coinbase stock coming back a little bit from this morning's drop that investors probably are thinking there's going to be a longer term view at this, considering how well crypto prices have done this quarter versus past quarter.

There might be a driver in the near term for Coinbase to exceed earnings expectations this coming quarter. We'll see, but I think the company's commentary that it's a longer term. You got to take a longer-term view. That echoes for the entire sector.