If you’re considering entering the world of cryptocurrencies for the first time, there are now numerous third-party exchanges available on the internet that allow you to buy and sell digital tokens with just a few clicks.
While some exchanges focus on low trading fees or offer support for a wide range of coins, Coinbase stands out for its simplicity. If you’re new to using exchanges and want to buy cryptocurrencies like Bitcoin or Ethereum, Coinbase may be a suitable option for you, even though it may come with slightly higher fees.
To help you determine if Coinbase is the right platform for you, we have created the ultimate Coinbase review. We cover everything from how Coinbase works, its functionalities, supported coins, fees, payment methods, and more, providing you with a comprehensive overview of the platform.
Let’s start by finding out what Coinbase actually is.
What is Coinbase?
Coinbase, launched in 2012 and headquartered in San Francisco, California, is an exchange broker that facilitates the buying and selling of cryptocurrencies. With Brian Armstrong as its CEO, Coinbase is often preferred by inexperienced investors who are looking to purchase cryptocurrencies for the first time due to its support for everyday payment methods such as debit/credit cards, bank transfers, and even PayPal.
Coinbase has achieved significant growth, boasting over 30 million customers since its inception in 2012, with over $150 billion worth of cryptocurrency assets traded on the platform. Its international expansion has further amplified its reach, with support for more than 103 countries worldwide.
There is often confusion regarding whether Coinbase is a broker or an exchange, as these terms are sometimes used interchangeably. In reality, Coinbase serves as both. On one hand, its core brokerage services allow customers to buy and sell cryptocurrencies directly from Coinbase. On the other hand, Coinbase also offers a more traditional exchange platform known as Coinbase Pro, effectively operating as both a broker and an exchange.
Coinbase is not only gaining traction in its consumer-based services but also making strides in the institutional space, particularly with its custodianship services that offer institutional-grade security for cryptocurrency holdings.
In fact, recent reports suggest that Coinbase is experiencing institutional demand of between $200 million and $400 million per week, and this number is expected to grow as cryptocurrencies are still considered in their early stages.
In terms of regulatory compliance, Coinbase is registered as a Money Service Business with FinCEN and adheres to all relevant anti-money laundering and terrorist financing regulations. This is why all Coinbase customers must go through an identification process. Additionally, outside of its operations in the US, Coinbase is authorized by the UK’s Financial Conduct Authority (FCA) to operate as a Money Service Business.
With the basics of Coinbase covered, the next section will delve into the details of how the buying and selling process works.
How do you buy and sell Cryptocurrencies at Coinbase?
The core functionality of Coinbase revolves around the effortless buying and selling of cryptocurrencies, making it incredibly user-friendly. This has been a major factor in its widespread adoption by users of all experience levels over the past seven years.
Furthermore, while the number of cryptocurrencies supported by Coinbase may be limited compared to other exchanges, it serves as a straightforward entry point for purchasing small and micro-cap digital tokens on other platforms.
To illustrate how it works, we have broken down the main setup process below for your understanding.
Step 1: Open an Account
To begin, you should visit the official Coinbase homepage. On the top right-hand side of the page, locate and click on the “Get Started” button to initiate the account creation process.
You will be prompted to provide your first and last name, as well as your email address. Coinbase will then send you an email that you need to verify.
Next, you will need to choose between opening an “Individual” account or a “Business” account. Unless you plan on conducting large volumes of transactions, it is recommended to select the former option.
Step 2: Confirm Your Mobile Number
Step 2: Confirm Your Mobile Number
After verifying your mobile number, Coinbase will send you an SMS message containing a unique code. You must enter this code on-screen to confirm that you are the rightful owner of the mobile device. This step is crucial, as your mobile device will be required to access important account features, such as logging in or withdrawing funds.
Step 3: Setting Up Your Preferred Payment Method
Since you will need to deposit funds, you must set up a payment method. The options available to you will depend on your location, but typically include debit/credit cards and bank accounts.
You will also need to enter the billing address associated with your preferred payment method.
Step 4: Verify Your Identity
As a regulated platform authorized by FinCEN and the FCA, Coinbase takes its anti-money laundering responsibilities seriously. To verify your identity, you will need to go through a basic KYC (Know Your Customer) process.
You will be required to upload a copy of your government-issued ID, such as a passport, driver’s license, or national ID card. Coinbase uses advanced verification tools to analyze the uploaded document, and the process is usually completed in less than a minute.
Step 5: Confirm Your Payment Method
To complete the account set-up process, you will need to verify your chosen payment method to confirm that you are the rightful owner. If you choose a debit card, Coinbase will process two small charges to your card. You will need to log in to your online bank and confirm the last two digits of these charges.
Alternatively, if you choose a bank account, you will need to make a small transfer to the account details specified by Coinbase. Once you have completed the above steps, you are now ready to make your first cryptocurrency purchase.
Step 6: Make a Purchase
Now that your account is set up, you can click on the cryptocurrency you want to buy, enter the total USD (or local currency equivalent) amount you want to purchase, and pay for the transaction with your verified payment method.
The purchase will be executed immediately, and the digital coins will be stored securely in your Coinbase account. You can then choose to withdraw them to a private wallet, send them to another cryptocurrency exchange, or keep them in your Coinbase account to sell at a later date.
Now that we have explained the process of buying on Coinbase, let’s take a look at the cryptocurrencies that are supported on the platform.
Coinbase was known for being selective in the cryptocurrencies it listed on its site until last year. However, the platform has since expanded its reach and become less conservative in its coin listings. As a result, Coinbase now supports buying and selling of 17 different cryptocurrencies.
Check out the list of supported coins below.
Coinbase Pro, a separate trading platform offered by Coinbase, supports several additional coins that are not available for trading on the main Coinbase platform. These coins can be traded against other digital assets such as Bitcoin or Ethereum. Here is a list of some of the additional coins supported on Coinbase Pro.
Understanding the Cost of Trading at Coinbase
How Much Does it Cost to Trade at Coinbase?
When it comes to using a cryptocurrency broker, one of the crucial factors to consider is the fees involved in buying and selling coins. Coinbase, as we will discuss in detail below, is often considered to be one of the more expensive cryptocurrency brokers in the industry, not only in terms of trading fees but also certain deposit methods.
Coinbase has a somewhat complex pricing structure for buying and selling cryptocurrencies, as it uses either a fixed fee or a variable percentage fee.
For orders under $200, regardless of your location, a fixed fee applies. This starts at $0.99 for orders under $10 and goes up to a maximum of $2.99 for orders between $50 and $200. For orders above $200, a fixed percentage fee applies, which depends on your chosen payment method.
For instance, if you have sufficient funds in your Coinbase account to cover the amount you want to buy, you will be charged a fee of 1.49%. This fee is deducted from the cryptocurrency you receive. For example, if you purchase $1,000 worth of Bitcoin, a 1.49% fee of $14.90 would leave you with $985.10 worth of cryptocurrency.
This fee is relatively high compared to fees charged by other leading cryptocurrency exchanges. For example, exchanges like Binance charge only 0.1% for buying or selling a coin, which is considerably cheaper. However, it’s important to note that Binance has more limited options for deposits and withdrawals in fiat currency compared to Coinbase, so this should be taken into consideration.
On the other hand, if you choose to make an instant cryptocurrency purchase using your debit or credit card, the fees are even higher. Coinbase charges 4.99% of the total transaction amount for this service. For example, a $500 debit card purchase would incur $24.95 in fees. This fee is imposed to counter the potential risks of debit/credit chargebacks and to cover the processing fees imposed by the card issuer.
Deposit and Withdrawal Fees
If you prefer to use your debit or credit card, you can only make an instant cryptocurrency purchase, meaning you can’t leave the funds in your account for later use. However, if you choose to deposit funds using a bank account, you have the option to do so.
The fees for deposits and withdrawals vary depending on your location. In Europe, if you use the SEPA network, deposits are free, and withdrawals cost a mere €0.15. In the UK, bank wire deposits are also free, and withdrawals cost just £1. For users in the US, ACH deposits and withdrawals are free, while traditional wire transfers incur a fee of $10 for deposits and $25 for withdrawals.
Alternatively, if you are from the UK, Eurozone, Iceland, Liechtenstein, Norway, Switzerland, or the US, you can also make deposits and withdrawals using Paypal for free.
If you choose to use Coinbase Pro for exchanging digital currencies, they follow a maker-taker fee model.
Note: A market “maker” is someone who provides liquidity to Coinbase Pro, while a market “taker” is a regular trader who uses the existing liquidity on the exchange.
Market taker fees start at 0.25% for trading volumes below $100,000 and gradually decrease to a minimum of 0.05% for volumes of $1 billion or more. On the other hand, makers pay a fee of 0.15% for volumes under $100,000, and fees are waived for trade volumes of $100 million or more.
Eligibility to Use Coinbase
As per the industry standard in the cryptocurrency exchange arena, your eligibility to use Coinbase will be determined solely based on the country you reside in. While currently Coinbase supports 103 countries, not all locations have the ability to place buy and sell orders. In contrast, most countries are only allowed to convert one cryptocurrency into another.
If you wish to have the option of using everyday payment methods such as a debit/credit card or bank account to buy and sell coins, you must be based in one of the following countries.
- Czech Republic
- Isle of Man
- San Marino
- United Kingdom
- United States
Is Coinbase Safe?
Even if you haven’t entered the cryptocurrency space yet, you may have heard about third-party exchanges being hacked. It is estimated that over $1.3 billion has been stolen from cryptocurrency exchanges in total, considering the phenomenon is just over 10 years old, this is a significant amount of money.
Therefore, the safety of your funds should be your top concern when choosing a cryptocurrency exchange for the first time. The good news is that Coinbase is considered one of the most secure cryptocurrency exchanges in the industry.
Here are the main security features that Coinbase offers to help keep your funds safe.
Coinbase employs a robust security measure by keeping the majority of its user funds in cold storage. This means that digital coins like Bitcoin are stored offline on a hardware device, making them highly resistant to external attacks as they are not connected to a server. With 98% of customer funds held in cold storage, this serves as a significant safeguard, while the remaining 2% is used for Coinbase’s core services.
Coinbase offers several notable security features to protect against unauthorized account access. Two-factor authentication (2FA) is mandatory, requiring users to enter a unique code from their mobile device every time they log in, adding an extra layer of security. Device and IP whitelisting are also in place, requiring additional security steps when logging in from a new device or IP address.
For larger balances, Coinbase Vault is recommended. It allows users to set up a 48-hour lock-up period on any future withdrawal requests. This gives account owners the ability to cancel a withdrawal if notified by email within the 48-hour period, which can be crucial in the event of a compromised account and unauthorized withdrawal attempt.
In a surprising move for a cryptocurrency exchange, Coinbase offers FDIC protections on its USD wallets. This means that if Coinbase were to cease operations, your balance in your Coinbase USD wallet would be protected up to the first $250,000. It’s important to note that this protection is only offered to US customers who store their real-world funds in their Coinbase USD wallet, and it does not cover funds stored outside of this wallet. For customers outside of the US, real-world funds are held in segregated custodial bank accounts.
Customer Support at Coinbase
Coinbase has invested in expanding its customer support team, providing customers with multiple options for assistance. For customers in the UK, the customer support number is 0808 168 4635. For customers in other countries, including the US, the customer support number is +1 888 908-7930. Alternatively, you can also contact Coinbase via email using the online contact form.
Customer Support at Coinbase
For general questions and concerns that are not related to potential account compromises, Coinbase offers an extensive help center on its platform. This includes an AI-bot that can quickly direct you to the appropriate assistance.
Coinbase Review: The Verdict?
In summary, Coinbase has garnered a significant customer base of over 30 million customers for good reason. Its main selling point is the seamless process it provides for first-time cryptocurrency buyers to enter the market.
With a quick and simple account registration and verification process, users can easily buy and sell popular coins like Bitcoin and Ethereum with just a few clicks. Moreover, Coinbase supports popular payment methods such as debit/credit cards, bank transfers, and even PayPal, making the buying process even more straightforward for beginners.
However, it’s worth noting that Coinbase’s trading fees are slightly higher compared to other players in the cryptocurrency exchange market. With an average fee of 1.49% for orders over $200, these fees can eat into profits quickly. Additionally, if using a debit or credit card, the fees are further increased to a significant 4.99% per buy order.
Despite the higher fees, Coinbase has a strong track record of keeping user funds safe. The platform employs stringent security safeguards and maintains a positive relationship with key US regulators such as the SEC and FinCEN.
Coinbase is recommended as an excellent starting point for anyone looking to purchase cryptocurrencies due to its user-friendly interface, strong security measures, and reputable reputation in the industry. While there may be cheaper options available, Coinbase offers a reliable and secure platform for beginners to enter the cryptocurrency market.