Coinbase Global (COIN +0.03%) is a cornerstone of the cryptocurrency ecosystem, providing investors with an easy on-ramp to convert their dollars into a plethora of different tokens. While it isn't the only company providing those services, it's clear that with such a privileged position, its offerings tend to have big impacts for cryptocurrencies, including popular ones like Solana (SOL +0.33%).
Coinbase recently launched a new service that'll likely catalyze growth for Solana, as well as for the many meme coins that are on the chain. Here's what's happening, and how you can position yourself to profit.
NASDAQ: COIN
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Crypto infrastructure matters
It's difficult to get into cryptocurrency investing for the first time. Much of the blockchain technology itself is clunkier than typical consumer-grade software applications. Plus, the space has so much technical lingo to learn, so many slang terms to be aware of, and a reputation for scams and risk that it's enough to keep many people away altogether.
Coinbase is working on solving some of those issues by launching a new and highly streamlined platform for people to hold and utilize their coins.
The new Coinbase "smart" wallet is compatible with Bitcoin, Ethereum, and Solana, as well as every ERC-20 chain. It can interface with decentralized applications (dApps) and decentralized exchanges (DEXes), store non-fungible tokens (NFTs), connect to a user's bank account, and freely transact with a user's Coinbase account. Everything that people could do with a self-managed wallet, including staking tokens to a liquidity pool, swapping token pairs, and borrowing or lending crypto, is doable with the new wallet.
Coinbase hopes that its innovation will bring as many as 1 billion people into the crypto markets because of how easy investing in the space will become compared to how it is now. It's unclear whether the company will be able to onboard all of the users it's hoping for. But if it succeeds in bringing in even a fraction of the population it's hoping for, the implications for the cryptocurrency markets, especially Solana, are likely to be gargantuan.
On the Coinbase website currently, users are limited to transacting in the cryptocurrencies that the company selects as being appropriate, which tend to be the currencies that are the most reputable. That means the biggest meme coins, like Shiba Inu and Dogecoin, are tradeable, but up-and-coming coins are often not available until long after an investor might prefer to start a position.
With the new wallet there is still the constraint of only being able to transact in coins that Coinbase has opted to list the information of, and it can still take a long time for the company to list promising new issues. But as the wallet allows for trading via decentralized exchanges (DEXes), the business does not need to hold the tokens itself, so the accessible universe of investable projects is much larger. So investors will now have a chance to invest in coins much earlier than before, and are generally able to invest in much smaller coins should they choose to do so.
For coins on the Solana chain, where many of the smaller and riskier meme coins reside, the new wallet could drive significant growth across the board. If Coinbase opts to list projects more loosely than it currently does for users of its wallet, which will be necessary if it intends to defend the claim that its wallet enables people to maintain full custody and control of their cryptocurrency holdings, the impact will be even larger.
Either way, this is a big green flag for Solana and meme coin investors alike.
CRYPTO: SOL
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You don't need to go out on a limb to capture some of the upcoming growth
It isn't necessary to start investing in meme coins yourself to take advantage of the influx of capital spurred by Coinbase's new wallet. Nor is it necessary to actually download the wallet yourself if you already have a setup that works for you. The safest way to get exposure to the anticipated upside is to simply buy Solana and hold it for the long term, as anyone doing meme coin trading on the chain will need to buy its native token first.
If you want to get a bit fancier by additionally dabbling in meme coins, do yourself a favor and stick to the proven winners rather than the allegedly rising contenders. The reigning champions will still be very risky and volatile.
But they're also going to be the entry point that most new cryptocurrency investors will have to meme coin investing by virtue of their size and proven effectiveness at winning attention share over time. And, at least in the case of Shiba Inu and Dogecoin, they have enough of a history that it is very unlikely for their prices to collapse to zero.
Most of all, don't take risks with money that you can't afford to lose. Play the long game, and play it cautiously. If you haven't yet diversified your portfolio sufficiently, the best move is to do that before approaching the idea of buying Solana or meme coins, as responsible financial stewardship of your portfolio is a bigger priority.
