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Coinbase Review: What You Need to Know Before Using it

Coinbase is one of crypto's most popular broker sites, but does it live up to the hype? Find out in my comprehensive Coinbase review for 2020

  • Coinbase
  • Dean Fankhauser
    By
  • Posted
  • Bitcompare score
  • Go to siteCoinbase

Our take

3.5
Bitcompare score

Coinbase review

Coinbase is one of the largest cryptocurrency companies in the world. Their platform is available in over 100 countries and they have over 30 million users. The company offers a variety of services but their primary service is providing a platform for users to sell and buy Bitcoins. Users can do this through a debit card, credit card, or bank account. While you will probably be pleased with the rates they charge, you most likely won't be satisfied with the customer service. Still, that doesn't mean you should simply discount Coinbase. If you're looking for an in-depth Coinbase review, then continue reading and we'll walk you through everything you need to know about this crypto trading platform.

Overview of Coinbase

Coinbase was founded by Fred Ehrsam and Brian Armstrong in 2012 as part of Ycombinator. This makes Coinbase one of the oldest exchanges still around. Originally, Coinbase was strictly a Bitcoin brokerage service where they would sell Bitcoins straight to customers. Over time, however, additional services were added to the platform. Coinbase is both licensed and regulated.

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Coinbase Services

As we already mentioned, Coinbase provides several services to its customers. Let's go over those services below.

Brokerage Service

The primary service that Coinbase offers is a brokerage service for selling and purchasing cryptocurrencies. New crypto users usually find themselves purchasing their first Bitcoins through Coinbase. This is thanks to the reputation that Coinbase has garnered as well as their successful marketing and friendly user interface. One of the biggest downsides about Coinbase's brokerage service is that users tend to have a lack of control over their own funds. When a user opens a Coinbase account, they don't have direct access to their coins. And they also don't get any seed phrase or private key. Coinbase stores your coins for you. It's basically like storing your cash in a bank. You don't have ownership over that money, the bank does.

Coinbase Pro

Coinbase Pro, formerly known as GDAX, is a cryptocurrency trading platform. The standard Coinbase brokerage service simplifies purchasing cryptocurrencies at a premium. Coinbase Pro, on the other hand, is meant for more experienced members. With this service, users can trade a variety of cryptocurrencies, including:

Fees are much lower with this brokerage service. Users also have access to advanced trading options.

Coinbase Wallet

In 2018, Coinbase launched its independent mobile wallet for Android and iOS. The wallet keeps the private keys on the user's device and it only gives the user access to their funds.

This brings Coinbase full circle. The company began as a wallet, then transitioned to a brokerage service, and now offers a popular wallet service once again.

Merchant Solutions

Coinbase provides online merchants with the tools to accept cryptocurrencies on their websites through a dedicated plugin. The plugin is supported by some of the most popular content management systems (CMS) on the web. This includes WooCommerce, Magento, and Shopify.

Other Projects

Aside from the main services listed above, Coinbase also provides a variety of other helpful services. These include:

  • USD Coin (USDC) – A stablecoin developed by Coinbase
  • Paradex – A platform for trading directly from a member's wallet
  • Custodian services – Safeguarding cryptocurrencies for institutional investors
  • Coinbase Index – Tracks the financial performance of all listed assets on Coinbase
  • Earn.com – A service acquired by Coindesk that filters out spam emails

Coinbase even has a service known as Coinbase Ventures which has to do with investing in startups that are "building the open financial system."

Fees

The fee structure of Coinbase can get a little convoluted but we'll break it down for you. When you purchase BTC from Coinbase, the price that you pay consists of several components:

  • The market price on Coinbase Pro +0.5%
  • Transaction fee - A flat fee for transactions below $200 or a percentage of the transaction (the greater of the two)
  • For a standard buy, most of the transaction fees are 1.49%
  • For credit card buys, they are 3.99%

You can deposit money for free through ACH transfers. Other transfers will cost you $10.

If Coinbase wants, they can also decline your purchase in cases of extreme price shifts. Despite these various fees, Coinbase still has relatively low fees when compared to other brokerage services.

Buying Limits

After you set up your Coinbase account, you'll then be able to purchase a small number of Bitcoins until you raise your buying limit. If you want to raise your limits, you'll have to perform the following:

  • Provide and verify your photo ID
  • Provide and verify your personal information
  • Provide and verify your phone number

If you're a fully verified resident of the United States, then you can reach the highest limit, which is $25,000 per day. Limits can also be set depending on the kind of payment method that you choose to purchase your cryptocurrencies.

For example, credit card purchases have lower limits than ACH transfers.

Earning Interest

Instead of having cryptocurrencies sitting in your wallet and collecting digital dust, you can have them work for you. Coinbase promotes DeFi (decentralized finance) applications. These are apps that are based on "smart contracts."

Basically, you would deposit your cryptocurrency into the DeFi contract, and then your crypto would be loaned out to borrowers who pay interest. The contract actively manages the interest rates based on the supply and the demand for the loans.

As nice as these apps are, we prefer platforms like BlockFi.

With BlockFi, interest payments are distributed in the same asset that was deposited. So if your interest account is funded with USDC, then you will be paid interest in USDC. You also have the ability to change the asset that you're paid in if you want to.

A big difference between BlockFi and DeFi platforms is that BlockFi distributes interest payments on a monthly basis. This is different than the often-continuous interest stream from DeFi platforms. This gives BlockFi more of a familiar, traditional bank feeling than DeFi platforms.

Also, BlockFi supports deposits of Bitcoin, while the DeFi services promoted by Coinbase do not.

Coinbase Card

Coinbase has partnered with the digital payments solutions provider, Paysafe, to issue their own Visa debit cards. This is a prepaid Bitcoin card that can be managed from an app.

This is a contactless Visa card and can be used wherever Visa is accepted. With this card, you can pay both offline and online and withdraw cash from certain ATMs as well.

Currently, only customers in Europe can order a Coinbase Card.

Another crypto card worth considering is Wirex. Wirex works a lot like a bank account except that it gives you the ability to store cryptocurrencies. You also earn rewards in Bitcoin when you spend money on everyday items.

Ordering a Wirex card is free. After you order your card, they will assign you a wallet with the currency that's based on the country you live in. You can then top that wallet up with a credit or debit card or a wire transfer.

Coinbase Customer Support

Coinbase has an extremely extensive Help section. The answers to many standard questions can probably be found there. If you're submitting a request ticket by email, you can expect to wait several days to get a response.

The company also has a phone support line, although many users claim it's not that helpful for solving problems.

The quality of their customer support also isn't so great. Many users tend to get basic responses that don't come with specific instructions on how to fix issues with the service.

In fact, Coinbase actually has an F rating from the Better Business Bureau.

Insurance

According to Coinbase, all of the digital currency that Coinbase holds online is insured. However, most of the customer funds are not held online by Coinbase. Instead, they are held in cold storage.

This is basically how it works: if you bought BTC on Coinbase and then didn't do anything with it, you're giving Coinbase permission to be the custodian of your crypto. Your coins are now in a wallet that lives within the Coinbase platform. These coins are accessible instantly to you when you log in.

However, your coins are also vulnerable. If someone hacks into your Coinbase account, they can simply take your coins. This is why Coinbase keeps most coins in "cold storage."

This means that the access keys are kept somewhere offline, so an internet hacker can't get to them.

Coinbase's insurance policy only covers losses that come from a breach of Coinbase's security. The insurance doesn't cover losses that occur because your individual account was compromised. So if someone figures out your password and takes your coins, you're not covered by insurance.

And because digital currency isn't legal tender, and it's not backed by the US government, it can't be FDIC insured.

For American members, Coinbase stores all member fiat currency (money issued by the government) in custodial bank accounts. They also store some money in US treasuries. Another benefit of being an American customer is that your Coinbase USD Wallet is covered up to a maximum of $250,000 by FDIC insurance.

When you want to take your money out of Coinbase, you can transfer it to your bank account, PayPal account, or crypto wallet.

Coinbase Vs. Other Exchanges

In this section, we'll look at how Coinbase stacks up against its competitors. First, we'll pit Coinbase against Coinbase Pro.

Coinbase Vs. Coinbase Pro

If you're new to the world of cryptocurrency, then you'll probably have an easier time using the brokerage service from Coinbase as opposed to the one from Coinbase Pro. As the name implies, Coinbase Pro is for more experienced users who understand the intricacies of crypto trading.

With that said, if you are an experienced trader, then it's worth knowing that Coinbase Pro offers a significantly cheaper service with a 0.25% fee. This is significantly less than what you'd pay for the Coinbase service.

Coinbase Vs. Gemini

Interestingly enough, Gemini is a cryptocurrency exchange that was created by the Winklevoss twins. The fee structure for this platform is even more complicated than the one that Coinbase offers, and the overall fees are higher too. The starting point is 0.35% for Gemini while it's 0.25% for Coinbase Pro.

Still, it's important to know that you always should check the market exchange rate on both exchanges because there can be some differences. Although most of the time these prices are more or less consistent, price differences can sometimes occur and the price you pay could end up costing less on Gemini.

Coinbase Vs. Binance

Binance is pretty much exclusively a crypto exchange. The platform recently started accepting credit cards for crypto purchases. They also have a high fee that's over 5%.

For non-credit card purchases, however, the fees are much lower at Binance than at Coinbase.

Coinbase Vs. Robinhood

American investors can also use the Robinhood trading app to trade cryptocurrencies. However, unlike Coinbase, Robinhood investors won't have direct access to their coins.

This means that you can't withdraw Bitcoins from the app. Instead, you can only trade cryptocurrencies. On the bright side, Robinhood doesn't charge any commission fees.

Is Coinbase safe to use?

Coinbase has been around since 2012 and have never been successfully hacked. In our experience, Coinbase is a very safe platform to use, however, it's always up to you to make sure you use 2-factor authentication and other security measures.

How much are Coinbase fees?

Coinbase fees depend on the payment method. It charges a flat fee of 1.49% for most transactions, but the fee increases to 3.99% on trades made with a credit card. Transactions made with ACH Transfer are free. Wire transfers incur a charge of $10 ($25 for outgoing transactions). For crypto conversion, 2.00%.

What cryptocurrencies does Coinbase support?

Coinbase supports the following cryptocurrencies.

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Ripple (XRP)
  • Litecoin (LTC)
  • Bitcoin Cash (BCH)
  • EOS (EOS)
  • Stellar Lumens (XLM)
  • Ethereum Classic (ETC)
  • Zcash (ZEC)
  • Augur (REP)
  • Dai (DAI)
  • USD Coin (USDC)
  • 0x (ZRX)
  • Basic Attention Token (BAT)
  • Algorand (Algo)
  • Cosmos (Atom)
  • Civic (CVC)
  • Dash (DASH)
  • District0x (DNT)
  • Golem (GNT)
  • Kyber Network (KNC)
  • Chainlink (LINK)
  • Loom Network (LOOM)
  • Decentraland (MANA)
  • Maker (MKR)
  • Orchid (OXT)
  • Tezos (XTZ)

What payment methods are accepted on Coinbase?

  • Wire transfer (including ACH in the US and SEPA in the EU)
  • Credit cards (new cards aren’t currently accepted)                              
  • Debit cards
  • Cryptocurrency deposit and withdrawal
  • PayPal (withdrawal only)

Pros and cons of Coinbase

Pros

  • Most trusted brand in crypto
  • Top-tier team and investors
  • One of the pioneers of the industry
  • Never successfully hacked
  • Interoperable suite of crypto products
  • It offers a great user interface for beginners
  • It offers access to over 30 cryptocurrencies

Cons

  • Can be more expensive than other options
  • The site crashes at times of high volatility
  • There is a lack of timely support
  • Transactions can be delayed for up to 3 days
  • Most local payment methods are not supported
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Frequently asked questions about Coinbase

We’ve compiled some answers to questions we often get. Should you have any other questions, feel free to reach out below in the comments.

Where is Coinbase based?

Coinbase's headquarters is in San Francisco, California. They did recently announce, however, that a large percentage of their workforce will be going remote. Their mailing address is: Coinbase, Inc. 100 Pine Street Suite 1250 San Francisco, CA 94111

Who is the team behind Coinbase?

Coinbase was founded by Brian Armstrong and have a team of more than 500 employees. You can read more about their employees here.

Where can I use Coinbase?

Coinbase can be used in more than 30 countries including:

  • Austria
  • Belgium
  • Bulgaria
  • Croatia
  • Cyprus
  • The Czech Republic
  • Denmark
  • Finland
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Latvia
  • Liechtenstein
  • Malta
  • Monaco
  • The Netherlands
  • Norway
  • Poland
  • Portugal
  • San Marino
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
What's the difference between Coinbase App and Coinbase Wallet?

The Coinbase app is a great product for those looking to buy and sell cryptocurrency. While the Coinbase Wallet app is used for storing your cryptocurrencies.

Can I switch from my existing wallet app to the Coinbase Wallet app?

Yes, you can. Each wallet uses a private key for security that can be imported into the Coinbase Wallet. In the settings menu of your current wallet, just search for the 12-word recovery phrase or mnemonic and then use the same 12 word phrase to sign into the Coinbase Wallet.

Learning From this Coinbase Review

As we can see from this Coinbase review, Coinbase offers a lot of great services and tools to its customers. And while it may not be a perfect platform, it's certainly one worth considering, especially for people who are new to the world of cryptocurrency.

If you're someone who is active within the crypto community, then be sure to sign up for our alerts! We'll let you know when crypto platforms change their interest rates so you always get the best deals.

Our Coinbase score

3.5
Bitcompare score
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