How to Buy Coinbase Stock (COIN)
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In 2021, the U.S. cryptocurrency exchange Coinbase went public, with its shares opening at $381 on the Nasdaq stock exchange under ticker symbol COIN. This marked a milestone in the world of cryptocurrencies, as Coinbase is the first pure-play crypto trading company to list on a U.S. exchange.
COIN's share price has trended lower since its IPO, and cryptocurrency itself has been battered as of lately. But Coinbase still stands out among cryptocurrency exchanges.
Below, learn how to buy Coinbase stock.
1. Research the future of cryptocurrency
What's unique about Coinbase stock is that your investment’s potential success is tied to the popularity and trading volume of cryptocurrencies. Cryptocurrency stocks give investors a way to get exposure to the cryptocurrency market without directly investing in cryptocurrency.
When you invest in a company, it’s a vote of confidence in the company itself, but it also shows you expect demand for its product or service to rise, too. Do you believe there’s a future for cryptocurrencies, like Bitcoin, Ethereum and the dozens of altcoins available to trade on Coinbase? Do you believe cryptocurrency is the “future of money” that could usher in an “open financial system around the world,” as Coinbase states on its website?
Or, is this all just a fad? An exchange like Coinbase is highly susceptible to changes in demand, and if crypto loses its appeal and users stop exchanging on Coinbase, this could impact revenue.
Just as you would want a thorough understanding of the renewable energy market before investing in a renewable energy company, you’ll want to fully wrap your head around cryptocurrencies before investing in a pure-play crypto company.
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2. Understand Coinbase’s role in the future of crypto
If you believe there’s a future for cryptocurrencies, the next question to ask yourself is whether Coinbase is positioned to capitalize on cryptocurrency’s popularity. This is where investors might perform a fundamental analysis as they would with any other public company: studying the company’s revenue, earnings, user growth, competition, management and dozens of other factors.
But investing in Coinbase comes with a Catch-22: If you fully believe in cryptocurrency — that is, believe in the applications and value of a decentralized public ledger — then do you have confidence in Coinbase, which is itself a centralized company?
In addition to the Coinbase app, the company does offer its Coinbase Wallet separately, which lets users store their own cryptocurrencies and explore decentralized applications.
» Learn more: How to buy bitcoin
3. Decide how much to invest in Coinbase
When it comes to actually investing in Coinbase, the same rules apply for buying equity in any company: There’s inherent risk, and you should invest only an amount you can afford to lose. Moreover, don’t invest any cash you might need in the near future, say for at least the next five years. Building in this buffer will give you time to potentially recover from any near-term drops in the stock price.
Lastly, if you’ve yet to start a long-term, index fund-based investment plan, most financial advisors would suggest funding such an investment before diving into the stock of a company that has recently gone public — or any individual stock, for that matter.
4. Open a brokerage account
If you don't already have an investment account, you'll need to open a brokerage account to buy stocks like Coinbase. Brokerage accounts also offer you access to other investments, like mutual funds, bonds and exchange-traded funds — and these days, some brokers even offer cryptocurrency trading themselves.
The process to open an account takes only a few minutes, and once the account is funded, you can place your Coinbase order on the broker's website or trading platform. For more about the process, including details about the various order options, read our full guide to how to buy stocks.
The author owned Bitcoin and Ethereum at the time of publication.