Although there are thousands of cryptocurrencies vying for market share, betting on any single coin to provide exposure to this growth can be extremely challenging. Instead, there's one stock that might just do the job -- Coinbase Global (NASDAQ: COIN) .
As a clear industry leader driving innovation, Coinbase is the ultimate growth stock to buy with $1,000 today for three key reasons.
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1. The ideal proxy for crypto's growth potential
The crypto market is filled with excitement and potential, but the reality is that only a select few projects will thrive in the long run. Although it's safe to assume that blue chip cryptocurrencies like Bitcoin and Ethereum will remain strong, the risk increases significantly with other cryptos. Rather than attempting to pick future winners, investors might be better off with Coinbase, which offers broad exposure to the crypto market through its diverse business model, covering various crypto-based products rather than just a single asset.
Coinbase makes money from transactions occurring on its exchange, but its platform is much more diverse and productive than in the recent past. Beyond transaction fees, Coinbase generates income through staking services, custodial fees, stablecoin interest, and even its own blockchain, Base . This broad exposure ensures that Coinbase isn't reliant on a single revenue stream or cryptocurrency, making it a safer bet for those looking to capitalize on the crypto industry's growth.
2. Diversification and resilience exemplified
On the topic of revenue streams, Coinbase's business model wasn't always so diverse. For most of its existence, which dates back to 2012, Coinbase's revenue was heavily reliant on transaction fees. At one point, Coinbase derived more than 90% of its revenue from transaction fees. It was this overreliance that resulted in a $1 billion net loss in the second quarter of 2022.
But since then, things have changed as Coinbase went back to the drawing board. Today, transaction fees make up only about 60% of revenue as the aforementioned revenue streams are proving to be worth their weight in gold.
Moreover, during this same period, Coinbase was able to bring costs down by roughly 30% while developing new revenue streams. When you add it all up, you have an incredibly well-run business that operates efficiently, relentlessly innovates, and is much better positioned to weather volatility inherent in the crypto market.
3. Venture-capital potential
The last reason to consider Coinbase as a growth stock is a bit more speculative but could hold the greatest potential. It also reinforces the idea that investing in Coinbase is like investing in all of crypto.
Coinbase has a venture-capital arm that invests in companies, cryptocurrencies, and projects with long-term potential. To date, it has invested in nearly 400 different cryptocurrencies and companies spanning high-profile ones like Polygon and Aptos as well as up-and-comers like Aerodrome and Arweave .
Having invested billions of dollars into some of the industry's most promising projects, Coinbase is positioning itself to capture significant value from the next wave of technological advancements in crypto. This strategy is reminiscent of Google making early investments in companies like Android and Uber . Similarly, Coinbase's venture arm has the potential to be a key driver of growth for the company.
Venture-capital investing is often about taking calculated risks. Although there may be some losers in Coinbase's portfolio, the winners could more than make up for them. If just a few of these investments turn out to be big hits, they could pay significant dividends and ultimately lead to Coinbase earning a much greater valuation.
Should you invest $1,000 in Coinbase Global right now?
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. RJ Fulton has positions in Aerodrome Finance, Bitcoin, Coinbase Global, Ethereum, and Polygon. The Motley Fool has positions in and recommends Alphabet, Aptos, Bitcoin, Coinbase Global, Ethereum, Polygon, and Uber Technologies. The Motley Fool recommends Arweave. The Motley Fool has a disclosure policy .
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