Coinbase Review – My Personal Experience and Thoughts
Coinbase is a cryptocurrency platform based in San Francisco, California. They currently allow customers to buy and sell 4 of the largest cryptocurrencies in the market. If you are new to cryptocurrency exchanges, you should be aware that there are three main types of exchange.
- Trading platforms: Trading platforms allow buyers and sellers to conduct instant trades with one another on the exchange and collect a fee for doing so. These platforms are usually highly liquid and the prices are constantly changing. Trading platforms typically offer advanced order options (like limit and stop orders) as well as advanced charting.
- Cryptocurrency marketplace: In a cryptocurrency marketplace, the sellers set their own prices (sometimes called “advertisements”) and trade directly with buyers. Typically, the exchange acts as an intermediary or escrow service that verifies deposits and ensures each party gets what they are due. These types of trades are not typically instant and can take hours to days to complete.
- Brokers: Cryptocurrency brokers set their own prices and charge a fee for their service.
Coinbase is a broker that lets anyone register and start using fiat currencies to buy cryptocurrencies. There are several different types of broker exchanges:
- Fiat-only exchanges: Fiat exchanges only accept fiat currencies, such as US dollars or Euros, and allow you buy cryptocurrencies.
- Fiat and Wallet Exchanges: This type of exchange are the same as the first type but also provide cryptocurrency wallets where you can deposit and store cryptocurrencies. They also let you sell cryptocurrency for fiat currency.
- Crypto-only exchanges: This type of exchange only accepts deposits in the form of cryptocurrencies. Users can then use their deposits to trade for other crypto coins.
- Hybrid exchanges: These are the full service, do it all exchanges. They offer a combination of fiat and crypto deposits and also provide wallet services.
Coinbase is a hybrid exchange. In this article we will cover everything you need to know about this exchange.
At a glance
|Exchange Location||San Francisco, California|
|Serving Customers In||32 countries, listed here|
|Purchase Options||Fiat to crypto - Can use a bank account or credit card to purchase cryptocurrencies|
|Trading Commission Fees||Moderate - 1.49% to 3.99% charge plus additional fees|
|Withdrawal Fees||Varies by county. The US is 1.49%|
|KYC or ID Verification Need to Trade?||Yes|
|Social Security Number Required?||No|
|Volume & Liquidity|
|Overall Reputation & Trust|
|FDIC Insured?||Yes. Up to $250,000 for US customers|
|Security||High. To date, Coinbase has never suffered from a major security breach|
|Trading Platform Features||Offers ability to manage digital funds and place recurring buys. The exchange element of Coinbase is Coinbase Pro.|
|Mobile App||Yes. Very good.|
What is Coinbase?
They are one of the easiest and most trusted places to buy, sell, and manage digital currencies. To date, they have exchanged over $150B worth of digital currency and has served over 20 million customers in 32 countries around the world.
Coinbase is a broker exchange meaning that it sets its own prices for cryptocurrencies and charges its users a fee for exchanging fiat currencies with cryptocurrencies. It also provides a hosted digital currency wallet service for customers to deposit and manage funds.
What we like & dislike
Commissions & Fees
Coinbase has a very clear and transparent Pricing and Fees Disclosure page. The fees vary considerably by country and the payment type or action.
- Virtual Currency Transfer FeesThey offer a hosted digital currency wallet service. When you create an account, you get one wallet for Bitcoin (BTC), one for Bitcoin Cash (BCH), one for Ethereum (ETH) and one for Litecoin (LTC).
When you transfer virtual currencies to an address off the Coinbase platform, this will incur a network transaction fee. They will pass this fee onto you and disclose this when you make the transaction.
- Exchange RateCoinbase uses its GDAX platform (currently known as Coinbase Pro) to calculate the market rate of the digital currency you want to buy or sell. This is referred to as its ‘Conversion Service’ and includes a spread of between 0 and 200 basis points, depending on the size of your transaction, market volatility and the length of time you have used their service.
The exchange rate is always quoted to you before you complete a transaction.
- Conversion FeesCoinbase may charge additional fees, referred to as ‘Conversion Fees’ when you use their Conversion Service. These fees depend on your payment method, location and other factors.
They may also charge an additional fee on transfers to and from your bank account.
The conversion fee is always quoted to you when you make a transaction and is calculated by one of two methods:
Method 1: The greater of either a minimum flat fee that applies to transactions under $200, or a percentage fee determined by your payment type and location.
Method 2: A percentage fee of 1% based on the amount of your transaction, a 2.49% fixed fee and a variable fee of between $1.00 and $50. This depends on your payment type and location.
The base rate for all purchase and sale transactions is 4% in the US. However, Coinbase waves a portion of the conversion fee depending on the payment method. Credit card providers may charge additional fees, so they recommend using a debit card or a bank account.
U.S. Bank Accounts are charged a conversion fee (after waiver) of 1.49% with a $0.15 minimum while credit and debit cards incur a 3.99% fee. However, in some cases, banks may charge additional fees to transfer funds between your account and Coinbase.
To withdraw to a U.S. Bank account or Coinbase USD wallet, Coinbase charges 1.49% while withdrawing to Paypal incurs a 3.99% charge.
USD deposits and ACH transfers are free.
Coinbase is best for
Power Users (Advanced)
Sign up & Privacy
Signing up for an account is extremely fast and simple, making it perfect for beginners.
Step 1: Confirm your email address. To begin, you need to register a valid email address and then Coinbase will send you a verification link. Click on this link to confirm your email address.
Step 2: Add your phone number. This enables Two Factor Authentication (2FA). When you log in, Coinbase will text a short confirmation code to your phone. This will help to secure your account.
Step 3: Add a payment method. You need to add a bank account or card to make your first purchase on Coinbase. Simply fill in your card or bank details and your address.
Step 4: Depending on the payment method chosen and the region where you reside, you will probably have to verify your identity. Coinbase is required to identify most users on their platform, as they are a regulated financial service company operating in the US.
They require that you upload a scan of your photo ID such as a passport or driver’s license. This helps them comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
Coinbase protects your personal data by complying with the EU’s General Data Protection Regulation (GDPR).
Deposits & Withdrawals
Deposit and withdrawal times of fiat currency into your Coinbase wallet will depend upon the payment method you use. PayPal, credit or debit card payments will be faster than bank deposits, ACH transfers and wired deposits.
You can also purchase cryptocurrencies directly without making a deposit first. Like deposits, the transaction time varies depending on the payment method used.
If making a direct purchase using a bank account, you will typically have to wait up to 3 days before you can send or trade that cryptocurrency. The reason being that bank account transfers take time to process.
If making a direct purchase using a debit card, the transaction is instant. So you can send or trade that cryptocurrency right after you’ve purchased it.
If buying to trade or for short term holding, we highly recommend you make instant purchases with either a debit card or funds that have already been deposited into your fiat wallet (from your bank account).
Deposit and withdrawal times of digital currencies will fluctuate depending on the amount of network traffic.
Like many exchanges, Coinbase offers different levels of accounts depending on the certain criteria (ID verification, age of account, size of purchases, frequency of purchases). There are currently 3 account levels.
On the front-end, they offer excellent security and is one of the most trusted exchanges.
- Two Factor Authentication (2FA)
They require users to set up Two Factor Authentication before they can trade. This means that when you log in, Coinbase will text you a short confirmation code. This eliminates the possibility of someone being able to access your account if they don’t also have your mobile phone.
Cookies are used to recognize the device and IP address of the device you log in from. If you log in from a different device or use security precautions to prevent cookies and tracking, Coinbase will email you a confirmation link to authorize the device you are using.
- SSL-encrypted website traffic
All website traffic runs entirely over encrypted SSL (https).
On the back-end, Coinbase is one of the world’s most secure cryptocurrency exchanges.
- Offline Storage
Coinbase protects your deposits against theft or loss by keeping 98% of customer deposits in offline storage. According to their website, sensitive data is disconnected from the internet and then “split with redundancy, AES-256 encrypted, and copied to FIPS-140 USB drives and paper backups.” Coinbase distributes drives and paper backups “geographically in safe deposit boxes and vaults around the world.”
- Bug Bounty Program
Coinbase offers rewards to security researchers who identify software security vulnerabilities. There is no maximum reward, and rewards may exceed $50,000 depending “on the severity or creativity of the vulnerability found”.
- Insurance Policy
Coinbase only holds 2% of customer deposits online so the chances of a major hack are slim. However, if they were to suffer a breach, funds are covered under its insurance policy. This policy only covers a breach of Coinbase’s cybersecurity, physical security or employee theft and does not cover losses resulting from your personal account being compromised.
Coinbase has spent significant amounts to ensure that it has never been hacked. According to Fortune, “hackers have never breached Coinbase’s own virtual fortress,” and there have been no known major hacks to date.
However, users have been targeted and hacked, or have suffered from attempted hacks. Fortune estimates that Coinbase users were targeted at a rate “of one robbery every single day” during the first months of 2017.
According to Coinbase, it only keeps 2% of customer deposits online and backs these up with insurance, meaning that a hack is extremely unlikely. However, their insurance policy does not cover individual accounts being compromised.
The main threat to individual users is that the email account they link to their account is compromised. If criminals manage to switch a victim’s phone number to a different device, as happened to Sean Everett, they can bypass Two Factor Authentication (See 2FA in our crypto glossary) on the email account and then take control of the Coinbase account.
Despite the security offered by Coinbase, current best practice is not to store digital currencies in exchange wallet services. We recommend that you download a software wallet (or use a hardware wallet) and move your digital currency into this wallet, where you have complete control over it. For example, you can download a bitcoin wallet for free here or an ethereum wallet here.
Coinbase currently offers just four cryptocurrencies:
- Bitcoin Cash
They do not frequently add coins and there is no schedule for releasing new coins, but they did recently announce that they are exploring new cryptocurrencies to support.
They do not offer a trading platform on their main website. They give you the tools to you manage your portfolio, buy and sell BTC, BCH, ETH and LTC and keep track of them in one place. They also let you setup and manage recurring buys, allowing you to invest in digital currency slowly over time by scheduling daily, weekly, or monthly buys.
Coinbase Pro currently operates in the U.S., Canada, Europe, UK, Australia and Singapore. However, Australian, Singaporean and Canadian user accounts are crypto-only and do not have access to fiat currencies.
Coinbase Pro is designed for individual traders who wish to upgrade their Coinbase account. It offers an intuitive interface with real-time order books, trading history and charting tools. Coinbase Pro’s API lets you gain access to real-time market data and develop secure trading bots.
All digital assets held with Coinbase Pro are fully insured and USD balances are covered by FDIC insurance, up to a maximum of $250,000 per customer.
Coinbase Pro charges no fees on maker trades and offers volume-based discounts on all taker fees. Most taker orders are charged at 0.30%. However, these fees can drop as low as 0.1%.
Coinbase Pro provides direct access to Coinbase Markets, the company’s single source of liquidity. All orders placed on Coinbase Pro are placed directly on the market the same way they are on GDAX.
Ease of use
Coinbase.com is extremely easy to use, with a clean and clear user interface. As Coinbase offers a hosted digital wallet service, it is far easier for newcomers to digital currencies to understand, navigate and control. Complex trading features and functionality are separated from the main site and hosted on Coinbase Pro.
Coinbase’s customer support is exemplary. Their website features a fully resourced support page with answers to almost every conceivable question or issue. They also offer a telephone helpline service, (+1 (888) 908-7930), and an email address support.coinbase.com.
The app offers the most complete services for BTC, BCH and LTC on both web and mobile devices. Their latest app update was June 30, 2018, when a number of bug fixes were made.
- Is Coinbase safe?
Yes. They have never suffered from a major hack and only keeps 2% of its funds online. All digital deposits are fully insured and all USD funds are FDIC-insured up to a maximum of $250,000.
- Can I use a bank account or credit card on Coinbase?
Yes. However, your credit card provider may charge additional fees. Coinbase will pass these fees onto you and let you know in the quote before you finalize any transaction. Coinbase recommends that customers use bank accounts to deposit money to avoid credit card fees.
- Is Coinbase decentralized?
No. Coinbase is based in San Francisco, California. However, it keeps 98% of customer deposits offline and these are split with redundancy, AES-256 encrypted and copied to FIPS-140 USB drives and paper backups. These drives and backups are geographically decentralized in the fact that they are stored in safe deposit boxes and vaults around the world.
- Can I use Coinbase as a wallet?
Yes. You can and they are covered under Coinbase’s insurance policy. However, this policy does not cover incidences with your account being hacked or compromised, only with Coinbase itself being hacked. We never advise crypto holders to keep their cryptocurrency on exchanges long term and recommend using a private wallet. However, for short-term trading, holding funds in a Coinbase wallet is perfectly safe.
- Is Coinbase open to new registrations? Yes.
Due to their exemplary security history and industry-leading ease of use, we considered it a safe, insurance-backed broker exchange.
While their fees are high, you get what you pay for. And in the case of Coinbase, you are getting quite a bit. We recommend them for initially purchases of crypto coins but if you plan to do additional trading, you should transfer your coins to one of our recommended crypto trading exchanges like Coinbase Pro or Binance.
- Volume & Liquidity
- KYC & Privacy
- Ease of Use
- # of Coins Traded
- Commission & Fees
- Customer Service
Coinbase is a cryptocurrency exchange based in San Francisco, California. They are one the easiest and most trusted places to buy, sell, and manage digital currencies. They have served over 20 million customers.