Coinbase (COIN +1.94%) has become synonymous with cryptocurrencies because its platform often provides people's first interaction with the crypto market. But cryptocurrency trading is just the start of Coinbase's long-term aspirations.
We know that a non-fungible token (NFT) marketplace is on the way and a recent partnership with Mastercard (MA +1.63%) shows more of a bridge to the traditional finance industry. If Coinbase can become a central part of our digital financial future, it could be a great growth stock for investors.
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Expanding on a market lead
Coinbase is the biggest cryptocurrency platform in the world, with over 73 million users and $255 billion of assets on its platform. And the company has built this lead by having an easy-to-use platform that makes the complex world of cryptocurrencies seem easy.
But the vision for Coinbase isn't just to be a place users go to buy and sell cryptocurrencies; it wants to be a next-generation financial hub. Users can now direct deposit paychecks to Coinbase, do regular spending on a Coinbase Card, generate yield from crypto assets, and soon buy and sell NFTs on a Coinbase NFT marketplace.
These moves are all bridging the traditional financial world and cryptocurrencies, which could play a huge role in digital transactions in the future. Coinbase itself is becoming more like a bank or a brokerage firm than just a crypto trading platform, and that focus is expanding with a new partnership in NFTs.
Coinbase could make NFTs easy
What's important about these moves is how easy Coinbase is making it to transact between the traditional financial world and cryptocurrencies. Today, to buy most NFTs, you need to buy cryptocurrency on an exchange like Coinbase, transfer crypto to a crypto wallet, and then buy an NFT on an NFT marketplace. The process is complicated for users.
Last week, we found out that Coinbase and Mastercard are partnering to allow customers to buy NFTs with credit cards, once again bridging traditional finance with the world of cryptocurrency and Web 3.0, or the next generation of the internet defined by cryptocurrency blockchains and personally portable data. Details haven't been released, but it's likely a credit card purchase would effectively buy a cryptocurrency (like Ether) and then the NFT, all in one seamless transaction for users.
The Mastercard partnership could be a sign of what's to come from Coinbase NFTs. Coinbase could simplify the process of buying and owning NFTs significantly by being the financial intermediary, marketplace, and custodian of assets, just like a broker is the custodian of stocks you own. This would make it easier to buy NFTs and reduce financial risk for holders.
An underlying cryptocurrency may be used for an NFT, but the transaction complexities could be handled in the background by Coinbase. Given how Coinbase is trying to make all parts of the cryptocurrency process easier, I think this is the direction we will see it move in NFTs as well.
Crypto's future will be won by companies building great user experiences
To onboard the next billion users of cryptocurrencies and NFTs, companies need to make the process of buying, owning, and spending digital assets easier. The complexity of the industry needs to be shifted to the background, and whoever can make a seamless user experience will be a winner.
I think we are seeing Coinbase move in the direction of better user experiences. The company's app is arguably the best in the industry, and if it can build a simple NFT platform that's accessible from the traditional finance infrastructure, I think the company will be a huge winner. Crypto prices may not be going up right now, but Coinbase's position in the market is getting stronger, and that's a great long-term opportunity for investors.
