After a terrible year in 2022, one in which the overall cryptocurrency market went from over $2.2 trillion in value to roughly $800 billion, investors are likely avoiding the entire asset class like the plague. The so-called “crypto winter” is already here, so the thought process of waiting for prices to rise again before buying is justified.

But there is a potentially lucrative investment opportunity out there for readers who still believe in block chain technology and cryptocurrencies. I think world coinbase (CURRENCY 15.06%) is one of them. it’s my top Web3 shares to buy and hold in 2023.

Standing out from the crowd

There is no doubt that public confidence in the crypto industry is at an all time low right now. Last year, we saw prominent firms, such as Celsius, FTX, and BlockFi, which apparently were thriving not too long ago, all ran into liquidity problems and eventually filed for bankruptcy. The worst result of these failures was the fact that customer funds were lost. These adverse events shed light on just how complex, opaque, and risky major industry players can be.

In my opinion, the trials and tribulations of 2022 could be of great help to Coinbase. Coinbase is a publicly traded company in the US, and with this, it must comply with onerous rules and regulations, such as providing audited financial statements every quarter. FTX, on the other hand, was based in the Bahamas, where the laws are much more relaxed. Those authorities seemed to be happy to have a multi-million dollar organization there. However, trying to understand the true financial situation of FTX was an impossible task.

Coinbase now seems like a safe and trustworthy company in the crypto space. As of September 30, the company had $5 billion in cash and cash equivalents on its balance sheet. And CEO Brian Armstrong pointed out on Twitter how his business actually holds client assets on a one-by-one basis, a fact that can be proven by looking at financial statements. Furthermore, as more regulations are inevitably introduced, Coinbase will have a huge advantage compared to rivals who have cut corners in their operations.

No one knows how long the current lasts crypto winter it will last. But when it’s over and asset prices start to rise again, I see no reason why Coinbase shouldn’t attract a slew of new users as it rapidly gains market share.

Betting on the growth of cryptocurrencies

Coinbase shareholders are all too familiar with the volatility inherent in the business model. This is because the company generates most of its revenue from unpredictable trading fees. When crypto asset prices rise, Coinbase thrives. But the opposite is also true, as we have seen recently.

In 2021, Coinbase generated total sales of $7.4 billion, up 573% from 2020. But in the first nine months of 2022, revenue was cut in half from the same period in 2021. These numbers closely track the crypto market performance.

And in the first three quarters of 2022, transaction revenue accounted for 79% of total business. Because a person’s first experience with digital assets is likely to be just investing in them, Coinbase ranks as a top platform for facilitating this type of activity, with 108 million verified users and 8.5 million users who make monthly transactions (as of September 30). However, investors certainly want a more stable and diversified business in the coming years.

Management understands this, which is why they are positioning Coinbase to benefit from the transition of cryptocurrency from a speculative tool to something that has higher utility. Obviously, most people only see cryptocurrencies as an investment vehicle. But over time, the hope is that actual use cases, whether they are non-fungible tokens or decentralized finance protocols, will increase in popularity.

A key product that Coinbase offers is something called the Coinbase Cloud, which is an infrastructure service that allows developers to build innovative applications using Coinbase resources. is similar to Amazon Web services, except the world of cryptocurrencies. The idea is that Coinbase can become a major provider of critical services to the industry, and will therefore find ways to monetize this competitive position.

With shares down 90% (as of Jan 6) since going public in April 2021, Coinbase is selling for a sale price multiple of 1.5, the cheapest its shares have been. For those who believe in the potential for cryptocurrencies to become a bigger part of our everyday lives in the years to come, it’s hard to see a future where Coinbase doesn’t play a major role in making that happen. As a result, it might warrant a closer look today.