How to Buy Coinbase Stock: Invest in the Biggest Crypto Exchange
Coinbase (NASDAQ: COIN) is the world’s biggest cryptocurrency exchange, supporting dozens of cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.
The company has recently gone public, giving investors the opportunity to invest in cryptocurrency technology in a unique way.
Whether you’re a cryptocurrency enthusiast or just curious about the technology, you may be considering investing in Coinbase. If you want to invest in the company, here’s how to do it.
How to Buy Coinbase Shares
If you’ve decided that investing in Coinbase is right for you, here are the steps that you have to take.
You'll need a brokerage account
Brokerage companies help to facilitate investments in stocks, bonds, ETFs, mutual funds, and other investments. If you want to start investing, the first thing you’ll need to do is open a brokerage account.
There are many brokerage companies out there, each with its pros and cons.
Some companies, like Vanguard and Fidelity, offer brokerage accounts and run their own mutual funds and ETFs. If you use a Vanguard brokerage account to invest in Vanguard funds, a Fidelity account to invest in Fidelity funds, you might get perks like reduced fees.
If you know you want to invest in a specific mutual fund, that can be a good way to choose the brokerage to work with.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
Once you’ve opened and funded your account, it’s time to start buying shares.
Tbuy shares, you’ll have to submit a buy order (remember to specify the right ticker symbol: COIN).
There are two types of buy orders that you can use.
The most common is the market buy order. With this order, all you have to do is specify the number of shares you want to buy. Your brokerage will buy those shares for you at the cheapest price available.
With a buy-limit order, you specify the number of shares to buy and the maximum price you’ll pay. Your broker will buy those shares at the cheapest available price, but not if the cheapest price available is above your limit.
Market orders are simple but somewhat less predictable.
You’ll buy the shares you want at the cheapest available price, even if that price is more than you expected to pay. This is most common if you’re buying shares in a company that isn’t traded frequently.
Limit orders are safer because you can specify the maximum price you’ll pay. That means you know exactly how much you’ll spend in the worst case.
The drawback of limit orders is that if no shares are available below the limit you set, you won’t buy the shares at all. If prices are jumping quickly, you could miss out on potential profits.
Coinbase is a cryptocurrency exchange that was founded in 2012 to help people buy and sell cryptocurrencies like Bitcoin.
The company also helps facilitate transactions between traditional currencies like the dollar and cryptocurrencies.
By 2014, the site had more than 1 million users and today it is the largest cryptocurrency exchange in the world. Out of the almost $800 billion held in cryptocurrencies across the world, roughly $90 billion is held with Coinbase.
Coinbase went public on April 14th under the ticker COIN, giving investors their first opportunity to purchase an ownership stake in the company.
Conduct Your Research and Analysis
Whether you’re investing in a century-old blue-chip stock or a fresh, new company that relies on cutting-edge technology, it’s essential that you do your due diligence and research before making an investment.
Every investor’s approach to research is different.
Many investors use a technique called fundamental analysis. This method looks at things like the company’s cash flows, revenues, profits, and debts to try to arrive at a fair price for a stock. If they think the fair price is higher than the price the stock is trading at, then it may be a good opportunity to buy.
They may also look at some of the company’s competitors to see how they match up.
Coinbase is the first major cryptocurrency exchange to go public, so it does not have much in the way of competition that investors can buy shares in.
Other investors use technical analysis.
Technical analysts look at stock price charts and try to identify patterns in the charts. These patterns may indicate future price movements and give technical analysts signals as to when to buy and sell shares.
Keep in mind:
Even companies with good fundamentals or positive technical indicators aren’t guaranteed to gain value.
The company’s prospects might change as consumers find another product they prefer to use or a competitor unveils a new product. The management team may also simply fail to grow the business.
Whenever you invest in a company, you’re taking a risk.
If that company performs poorly, you could lose some or all of the money you’ve invested.
The success of a company relies on a few things, including its ability to produce, maintain, and sell new products and services.
If a company can’t maintain its products or services, there’s no reason for customers to buy things from that company.
With a company like Coinbase, that means responding to the quickly evolving nature of cryptocurrency transactions and maintaining consumer confidence when it comes to keeping information and assets safe.
One major risk that Coinbase faces is the regulation of cryptocurrencies.
In recent years, the government has taken more interest in cryptocurrencies.
For example, the IRS has issued specific guidance on how taxpayers should treat cryptocurrency investments when filing their taxes.
One major concern:
Cryptocurrencies is that they make it easier for people to complete transactions anonymously.
This makes them popular for some illegal purposes, such as money laundering or purchasing illegal goods and services such as drugs.
If the government places regulations on cryptocurrencies to combat things like money laundering, it could make cryptocurrency less popular, which will have a negative impact on Coinbase.
Other Ways to Invest in Cryptocurrency Technology
It can be exciting to invest directly in a single company.
The fate of your investment is tied to that company. If the company does well, you could make a lot of money.
However, if the company’s success falters, you might lose your investment.
Putting all of your eggs in one basket is a risk, so many people seek to diversify their investments.
Instead of holding shares in one company, you can hold shares in many companies. Even if one goes bankrupt, you’ll only lose a portion of the money you’ve invested.
A popular, easy way to build a diversified portfolio is to invest in mutual funds and exchange-traded funds (ETFs). These give you an ownership stake in dozens or hundreds of companies, even though you only have to buy shares in a single fund.
Because cryptocurrency is a new field, there aren’t many public companies involved in the industry.
One way to invest in cryptocurrency without investing directly in Coinbase is to invest in businesses that have started using Cryptocurrency, like PayPal, or to invest in companies that make computer chips for cryptocurrency miners.
Consult an Advisor
All investing is subject to risk but buying shares in an individual company is even riskier.
It can be exciting to follow a company and place a bet that it will succeed but keep in mind that diversification is an important part of building a strong portfolio.
Consulting with a financial advisor is a good way to make sure that you’re on track to reach your financial goals. If you’re doing well financially, then you can afford to take a risk by buying shares in an individual business like Coinbase.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.