Coinbase is one of the largest cryptocurrency companies in the world. Their platform is available in over 100 countries and they have over 56 million users. The company offers a variety of services but its 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.
As we already mentioned, Coinbase provides several services to its customers. Let's go over those services below.
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 its successful marketing and friendly user interface. One of the biggest downsides of 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, 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.
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.
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.
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."
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.
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.
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.
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.
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.
Is Coinbase safe to use?
Coinbase has been around since 2012 and has 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 Cash (BCH)
Stellar Lumens (XLM)
Ethereum Classic (ETC)
USD Coin (USDC)
Basic Attention Token (BAT)
Kyber Network (KNC)
Loom Network (LOOM)
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)
Cryptocurrency deposit and withdrawal
PayPal (withdrawal only)
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.
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