To buy and sell cryptocurrency, most traders and investors use cryptocurrency exchanges like Coinbase. Choosing an exchange is the important first step for anyone wanting to trade or invest in cryptocurrencies.
In this Coinbase review we will cover the various services offered by the company and the digital currencies you can trade. We will also look at the methods you can use to withdraw and deposit cash, and the all-important issue of safety. If you are wondering whether Coinbase is the best place to buy cryptocurrency, read on.
- What is Coinbase?
- Which cryptocurrencies are available on Coinbase?
- How to buy Bitcoin and other cryptocurrencies on Coinbase
- Coinbase vs. Coinbase Pro
- Coinbase Wallet
- Coinbase Vault
- Access to private keys on Coinbase
- Other Coinbase products
- Coinbase fees & transfer limits
- Deposits and withdrawals on Coinbase
- Is Coinbase safe?
What is Coinbase?
Coinbase is a digital currency exchange, more commonly known as a cryptocurrency exchange or crypto exchange, based in San Francisco. Since being founded in 2012 the exchange has been at the forefront of creating consumer facing technology for crypto investors.
The main product of the company is Coinbase.com, also known as Coinbase Consumer, a website that offers the retail market a very easy platform to buy and sell cryptocurrencies. Coinbase Consumer currently offers trading in 5 digital currencies to customers in 32 countries. Over $150 billion has so far been traded on the Coinbase platforms.
Besides accommodating people who want to use fiat currency to buy Bitcoin online, Coinbase offers several other services to those wanting to trade, invest in, or store cryptocurrencies. They are a leader in the provision of crypto services to funds that invest in crypto assets and blockchain technology. In the remainder of this Coinbase review we will cover the various aspects of Coinbase and how you can use it to buy cryptocurrency safely.
Which cryptocurrencies are available on Coinbase?
Coinbase allows its clients to buy cryptocurrency from a very select list, at this stage including only Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Ethereum Classic.
Coinbase reviews the coins that are in demand amongst clients to decide on new coins to add. They recently announced they would be changing the selection process to increase the rate at which they add new coins to the platform, saying, “Our goal is to rapidly list all assets that meet our standards and are compliant with local law, while providing our customers with the tools to discover, evaluate, trade, and use digital assets.”
They recently begun the process of adding 0X (ZRX) to the Coinbase Pro platform. Until now Coinbase has been viewed very much as a BTC exchange. Most of the enthusiasts involved in active crypto trading have preferred to trade on an altcoin exchange that offers more coins. That may change as new coins are added.
How to buy Bitcoin and other cryptocurrencies on Coinbase
Creating an account with Coinbase is easy – all you need is your name and email address. However, before you can buy cryptocurrency with Coinbase, you will need to fund your account – more on that later in this Coinbase review. Once you have added your funding details, Coinbase will send two small deposits to your bank account. You will need to confirm these amounts on the site to prove the account is yours.
You will also need to provide certain information to prove your identity. Once your account is fully verified and your funding method is set up, you will be able to buy cryptocurrency. You simply click on the Buy/Sell tab on the menu, and then select the cryptocurrency you want to buy.
The amount you can buy will be limited according to the payment method you are using to fund your account. You can buy any amount up to that limit. The Coinbase fee will be added to the amount you buy for purchases or subtracted from the amount you receive for sales. All trades are executed immediately at the current market price.
The platform also offers users the “Coinbase Bundle” which is an easy, cost effective way to buy all five cryptocurrencies offered on Coinbase in one go. You choose the amount you want to spend, and the platform will split the money according to the market capitalization of each coin.
Coinbase vs. Coinbase Pro
While this Coinbase review so far was primarily aimed at consumers, it is worth also looking at the platform aimed at professional traders. Coinbase Pro, formerly known as GDAX, is a crypto trading platform for active traders. The main difference between the two platforms is the prices that you can trade at. Coinbase acts as a market maker and offers you a fixed price that you can trade at any time. You cannot enter an order to buy cryptocurrency at a lower price if the market moves lower. You can only trade at the current price.
Coinbase Pro on the other hand allows you to enter limit orders which are only executed at a specific price. It also allows stop orders which are only executed if the price moves through a particular level. Coinbase is ideal for novice investors and those with a longer time horizon. Coinbase Pro is ideal for active and professional traders who want more control over the way their trades are executed.
Coinbase Pro also offers API support which allows sophisticated traders to run automated trading programs that execute trades on the platform. In the next part of this Coinbase review we will look at storage options for users.
Coinbase.com offers storage for all the cryptocurrencies you can buy on the site. Coinbase Wallet is a slightly different product, available for iOS and Android devices. Coinbase Wallet can only be used to store Ethereum and ERC-20 tokens. However, there are plans to add Bitcoin, Bitcoin Cash and Litecoin in the future. The Coinbase Wallet is a decentralised application which gives you full control of your tokens.
This also means that using the wallet means you take full responsibility and will have to look after your private keys (passwords). Coinbase.com will not be able to retrieve your private keys if you lose them. Coinbase Wallet was formerly called Toshi, and the name was recently changed as part of the move to add new coins and expand the wallets capabilities. In general, storing cryptocurrency in a wallet is considered significantly more secure.
When you buy cryptocurrency, the easiest way to store them is on the Coinbase Consumer site. Your account comes with a USD wallet (or whatever your local currency is). If you deposit cash in your local currency wallet it allows you to buy cryptocurrency instantly without having to wait for a bank transfer to clear, and without having to pay the higher fees associated with credit and debit card purchases.
You can also send and receive cryptocurrencies from your Coinbase Consumer account, even if you are not buying or selling them on the site. That means you can send the coins to your own wallet on a computer or mobile device. In the next part of our Coinbase review we will look at another storage option for Coinbase users.
If you are buying cryptocurrency in large quantities, you’ll need to take security more seriously. Coinbase Vault is a crypto storage solution for those wanting an extra level of security. As much as 98% of your digital assets will be stored in offline vaults and safety deposit boxes.
Accounts can also be set up that require approval from multiple parties before a withdrawal can be made. In addition, a withdrawal takes 48 hours, during which time it can be cancelled. All of the above features reduce the risk of crypto holdings being stolen by hackers. They eliminate the need to use hardware wallets to safely secure cryptocurrencies.
Access to private keys on Coinbase
Because Coinbase offers users the vault solution it does not provide private keys to a user’s wallet. The normal Coinbase.com wallets are hosted wallets which means private keys cannot be given out. If users did have the private keys, Coinbase would not be able to store assets offline. Users of the Coinbase Wallet available for mobile devices do however have access to their private keys, which they are responsible for.
Other Coinbase products
In this section of our Coinbase review we will briefly cover some of the other products offered by Coinbase.
The Shift Card is a VISA debit card available to Coinbase customers. A Shift Card allows users to pay with Bitcoin wherever VISA cards are accepted. Each time you make a purchase, the equivalent amount of Bitcoin is debited from your Coinbase Bitcoin account and sold.
Earn.com is a product that allows users to earn Bitcoin in return for reading and replying to emails. Advertisers pay you for the privilege of being able to send promotional emails. You can keep the Bitcoin you earn or have them automatically donated to a charity of your choice.
Prime is a cryptocurrency trading platform for institutional clients. It is similar to Coinbase Pro but geared towards companies managing funds on behalf of others. This platform offers institutions sophisticated trading tools to enable them to execute large trades.
Coinbase Asset Management
Coinbase Asset Management allows customers to invest in an index fund which is invested in the five cryptocurrencies available on Coinbase. The funds are split according to the market capitalizations of each coin. This allows investors to invest in cryptocurrencies without actually having to buy cryptocurrency.
Coinbase fees & transfer limits
A comprehensive Coinbase review needs to cover fees. Coinbase charges fees based on the payment method being used. Coinbase fees range from 1.49% for accounts funded by wire transfer, up to 3.99% for transactions funded by credit card. In some countries a small fee is also charged for cash withdrawals.
There are no charges for using the wallet to store, send and receive cryptocurrencies. Some network fees may however apply when transferring digital currencies to or from Coinbase. There are also various limits to the amount you can buy, based on the chosen method of payment, the location and the level of verification for the account. Credit card purchases are limited to small amounts.
You can check your verification level and limit on the “Settings” page. If you would like to buy cryptocurrency in larger quantities, you can apply to have the limit increased. Coinbase Pro also offers higher limits and lower fees. The fees are based on the total value you trade over a 30-day period. There are no fees for limit orders, as these orders create liquidity, while market order fees start at 0.3%.
Deposits and withdrawals on Coinbase
Coinbase is one of the few exchanges that allows customers to use credit cards and debit cards to fund purchases – though this does vary from country to country. These cards cannot be used to fund an account, but rather to pay when you buy Bitcoin and other cryptocurrencies.
You can also link your bank account to your Coinbase account to automatically fund purchases. The website will use your IP address to determine your location and this will determine which payment methods you can use. Withdrawals to your bank account will take 1 to 2 days to process.
Is Coinbase safe?
Many traders and investors believe that as far as safety is concerned, the best Bitcoin exchange will be one of the decentralized cryptocurrency exchanges. These exchanges do not store digital currencies on behalf of clients. Trades are purely peer to peer, and users store their own crypto assets in their own wallets. Decentralized exchanges have several drawbacks however. They offer little in the way of customer service, and they are not able to offer the liquidity of centralized exchanges like Coinbase. The latter are therefore preferred by most investors, especially beginners.
Because centralized exchanges store Bitcoin and other cryptocurrencies on behalf of millions of people, they are targeted by hackers. In the past several exchanges have been hacked, with crypto and customer’s personal information being stolen. In nearly every case the exchanges refunded their customers. However, when choosing an exchange, it is important to consider safety. Coinbase protects customer accounts by keeping most (as much as 98%) of their customer holdings offline in hardware wallets stored in a vault. The remainder is guaranteed.
The cryptocurrency exchange also keeps customer cash balances segregated and separate from company funds. In the event of the company becoming insolvent, Coinbase has no claim on customer funds. Coinbase also offers users two factor authentications to provide an additional layer of security.
Conclusion: Coinbase review – Easy and secure way to buy cryptocurrency
This Coinbase review was written to give you an overview of the various services offered by Coinbase. As you can see, the product range is wide. If you are just getting started and want to buy cryptocurrency, the consumer platform Coinbase.com is a good place to start. Once you learn more about blockchain technology and cryptocurrency, you may wish to begin actively buying and selling Bitcoins and other cryptocurrencies.
In that case you may wish to consider Coinbase Pro, which will give you more control over your trading. As a trader or investor you could also look into cryptocurrency stocks that you can buy through your regular brokerage account. What are your thoughts on Coinbase, blockchain technology and cryptocurrency? Do you think cryptocurrencies are the future? Please share your thoughts and feedback on this Coinbase review in the comments below.