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One of the issues for anyone new to cryptocurrency investing is, “Where do I invest?.” Most other investments — stocks, bonds, funds, etc. — can be traded with popular investment brokers, But relatively few brokers embrace cryptos. That’s where cryptocurrency exchanges enter the picture. One of the most popular is Coinbase, and there are plenty of reasons why. This is our Coinbase review.
What Is Coinbase?
Coinbase is a San Francisco-based cryptocurrency exchange. Launched in 2012, it’s grown to become one of the largest cryptocurrency exchanges in the world. The company has over 73 million users, with billions of dollars in quarterly trading volume.
Cryptocurrency trading has been around for only a little over a decade, and the platforms where it can be bought, held, and sold are still evolving. Numbers like these show that cryptocurrency investors have confidence in Coinbase.
As one of the largest cryptocurrency exchanges, you can trade over 100 different cryptocurrencies, with more being added all the time. Coinbase also has other digital assets, like non-fungible tokens (NFTs), which we discuss later in this review.
What Does Coinbase Offer?
Coinbase is a comprehensive cryptocurrency exchange. It lets you buy, sell, exchange, store and spend cryptocurrency. The platform is a good choice for anyone interested in investing in bitcoin, for example, whether you are a beginner or an active trader.
- For Beginners — Coinbase offers a small minimum initial investment, as well as plenty of educational resources to help you learn the ropes.
- For active traders — Coinbase offers a plan that has some of the lowest commissions in the industry. Plus you can trade over 100 cryptocurrencies, including all the most popular ones.
And as we’ll see shortly, Coinbase even gives you an opportunity to earn more crypto on the balance that you already have in your account.
US Dollar Coin (USDC)
This is a Circle-issued crypto in collaboration with Coinbase that’s tied to the value of the US dollar. For that reason, it’s referred to as a stablecoin. The value remains constant at $1 per coin, and it can be redeemed in dollars at any time.
Since USDC is an ethereum token, it can be stored in any ethereum-compatible digital wallet.
Similar to a bank, Coinbase provides a Visa debit card with your account. It’s funded by the cryptocurrency balance in your account. With the card, you can spend your accumulated cryptocurrency balance on everyday purchases, similar to any other debit card. Or use the card to make withdrawals from ATMs.
And you get rewards when you make purchases with your Coinbase Card. Right now you get either 4% back in lumen (XLM) or 1% in bitcoin (BTC).
|Trading and transaction fees||0.5% spread fee + for $10 or less: $0.99
More than $10 but less than $25: $1.49
Between $25 and $50: $1.99
More than $50 but less than $200: $2.99
|Supported Countries||100+, including U.S., UK, CA|
|Minimum Purchase||2.00 of digital currency denominated in your local currency|
|Payment Methods||Bank Account (ACH), Debit Card, Wire Transfer, PayPal|
|Mobile app||iOS and Android|
|Customer service||Twitter, Email Support|
Coinbase Pro Features
Coinbase offers its basic account for investors who are looking to buy and accumulate smaller amounts of crypto while also learning as they invest. But for active traders looking to make larger trades and benefit from lower fees, there’s Coinbase Pro.
Coinbase Pro allows you to trade a few more cryptocurrencies than you can with the basic plan. But you can also trade dozens of trading pairs of crypto and fiat. This way you exchange one crypto for another rather than converting to US dollars or other fiat first. Fiat currencies include the US dollar, euros and British pounds.
Coinbase Pro is available to anyone who qualifies for a Coinbase account. It’s available in the US, U.K., parts of Europe and a few other countries. It offers an intuitive interface with a simple order process, charting tools, trade histories and real-time order books.
The first order of business when investing in cryptocurrency is to have a digital wallet. Since cryptos can’t be stored in a typical bank or brokerage account, they must be stored digitally. That’s where the digital wallet comes into the picture.
- With Coinbase, you have two choices:
- Hold your cryptos in a Coinbase digital wallet
- Purchase cryptos and store them in your own wallet.
A small percentage of cryptos held on Coinbase are held online. Coinbase states that about 2% of cryptos are stored this way. However, 98% are stored in offline cold storage to protect them from thieves and hacking. Coinbase maintains insurance coverage for the digital assets stored through its wallets.
In addition to cryptocurrency, you can also store non-fungible tokens (known as NFTs) in a Coinbase wallet. These are digital collectibles, most commonly digital artwork.
Coinbase wallets can hold more than 500 different cryptocurrency tokens, as well as NFTs. Though Coinbase doesn’t provide a market in NFTs, you can purchase them elsewhere and store them in a Coinbase wallet. You don’t need to have a Coinbase account to use a Coinbase wallet, as it’s a separate product offered by Coinbase.
Alternatively, purchase cryptos on Coinbase and use your own digital wallet to hold them. While Coinbase wallets are as safe as cryptocurrency exchange wallets can be, having your own digital wallet is an even more secure storage method.
Further Reading: Best Crypto Exchanges for 2021
How Does Coinbase Work?
Once you sign up for the Coinbase exchange, you can take advantage of all the services and features above. And you also have an opportunity to earn additional cryptocurrency by engaging in specific activities designed for that purpose.
Coinbase provides a library of courses to help you learn about specific cryptocurrencies. Many of those courses allow you to earn the specific crypto as you learn about it.
For example, by taking the Polygon MATIC course on solving Ethereum’s scaling issues by building an internet of block chains, you earn up to $3 in MATIC tokens.
If you’re familiar with crypto “mining,” you already have a rough idea what staking is all about. However, staking is not as complex as mining, nor does it require the large amounts of computing power required for mining.
Staking is a way to earn additional crypto by monitoring the network for a specific cryptocurrency. Staking involves validating transactions within the network, and as you do, you earn crypto.
What Cryptocurrencies Does Coinbase Support?
Coinbase supports over 100 cryptocurrencies, including bitcoin and ethereum, as well as other popular cryptos.
How to Buy Cryptocurrency Using Coinbase
You buy cryptocurrencies on the web version using a seven-step process:
- Sign in to your account.
- Tap “Buy/Sell” in the upper right-hand corner of the screen.
- Click “Buy” to choose the asset you want to purchase.
- Enter the amount of the purchase in your home country’s currency.
- Select your payment method.
- Click “Preview Buy” and confirm your purchase or click the back arrow to modify your order.
- Click “Buy” to complete the purchase.
The steps above are for a one-time purchase. Or set recurring purchases by clicking “One time purchase” and then choosing how often you’d like to repeat the purchase.
Coinbase is currently available in the US, Canada, the U.K., and most countries in Europe.
Coinbase’s Mobile Trading App Overview
The Coinbase mobile app has all the functionality of the web-based version. Use it to buy, sell, earn and spend cryptocurrency. But there’s one important feature that doesn’t come with the mobile app: It doesn’t accommodate security keys at this time.
Download the app from the App Store for iOS devices or Google Play for Android devices.
Coinbase Fees & Limits
As is typical with cryptocurrency exchanges, Coinbase has several fees based on the plan you use, the amount of crypto you trade, and the specific type of financial transaction you use.
Coinbase charges flat fees based on the dollar amount of each transaction, as follows:
- $10 or less: $0.99
- More than $10 but less than $25: $1.49
- Between $25 and $50: $1.99
- More than $50 but less than $200: $2.99
Coinbase charges the higher of either the Coinbase fee above or the variable fee. Variable fees for U.S. residents are as follows:
At the top of the screenshot it says, “Base rate of 4% for all transactions.” That’s the rate that applies to transactions for U.S. residents. However, Coinbase waives a portion of the fee based on the method of payment you use. The fees shown in the screenshot above represent the base fee.
Another common fee structure used by cryptocurrency exchanges — and even investment brokers — is spreads. This is the difference between what you pay for a cryptocurrency and the price Coinbase provides the crypto at.
Coinbase uses a spread of one-half of one percent (0.50%) of the transaction amount for both buying and selling cryptocurrency.
Coinbase Pro Fees
The Pro version of Coinbase uses a maker-taker fee model. In general, it results in lower fees than you would pay using the basic trading program. Coinbase Pro bases these fees on the trade volume, as follows:
Coinbase charges a spread margin of up to 2% for converting one cryptocurrency to another. This is a standalone fee, as the other fees listed above don’t apply to conversions.
Staking Service Commissions
If you participate in staking to earn cryptocurrency, Coinbase takes a 25% commission out of the amount you earn.
Coinbase Card Fees
When you spend using your Coinbase Visa debit card, a fee of 2.49% applies to all purchases and ATM withdrawals. But purchases made with USDC have no fee.
Coinbase is currently offering $5 in bitcoin when you open a new account. The promotion applies only to those who have never had a Coinbase account before. There is no holding period on the bitcoin promotion. It’s yours as soon as it’s deposited into your account.
How Do I Open an Account?
Sign up for a Coinbase account from either the web platform or the mobile app.
A signup box appears that asks for your name and email address and to create a password. You also need to indicate your state of residence and check the box that certifies you’re at least 18 years old and confirms you’ve read the required disclosures.
- Once you complete the signup box, you provide your phone number. Coinbase uses this to send you a security code by text.
- Be prepared to provide your Social Security number, as well as your driver license or other government-issued identification.
- Once you’ve provided the above information, you’ll be able to sign into your account. From there, you link a bank account, credit card or debit card for funding purposes. The linked account also lets you to withdraw funds from Coinbase.
- Once you’ve linked a bank account or card, you can start trading.
How to Fund Your Coinbase Account
Fund your Coinbase account with US dollars or digital assets. Dollar funding comes from your linked bank account, credit card or debit card.
Or fund your account by transferring cryptocurrency to the Coinbase exchange from other exchanges or your own wallet. However, the crypto transferred must be in a currency supported on the Coinbase platform.
How’s the Customer Service?
Customer service with Coinbase is limited to in-app email. Phone contact is available only if you need to lock your account for security purposes or if you need support for the Coinbase Card.
Is Coinbase Regulated and Safe?
As a cryptocurrency exchange, Coinbase is regulated by the New York State Department of Financial Services. And the exchange takes steps to protect your assets and your information.
Basic security procedures include using SQL injection filters and placing limits on the type of actions that can be performed on the site. That includes limiting the number of login attempts. Your passwords are securely stored in the database, and application credentials are kept separate from the database and the code base.
When working with a cryptocurrency exchange, you need to make use of security keys. Security keys add an additional level of account access verification in addition to your password. However, as previously noted, these are not available for the mobile app.
For safety, set up your account using a security key that supports the WebAuthN/Fido2 standard. The company plans to add more keys in the future.
However, Coinbase maintains insurance coverage on digital assets held on the Coinbase digital wallet.
Coinbase Pros & Cons
- Lots of cryptos offered — Trade in over 100 cryptocurrencies, with more being added all the time.
- Easy to use — Begin investing with as little as $2.
- Save on high-volume trades — There are lower fees for high-volume trades.
- Can store your crypto with Coinbase — Store your digital assets in a Coinbase wallet or use your own digital wallet.
- Spend your crypto with a Coinbase debit card — The Visa debit card lets you spend your cryptocurrency holdings the same way you would with the money you have sitting in the bank. Or use the card to make withdrawals from ATMs.
- High fees — The fee structure for the basic account isn’t the lowest in the industry. But if you use Coinbase Pro, it is more competitive with the industry.
- Fee structure is confusing — As is typical with cryptocurrency exchanges, Coinbase’s fee structure is somewhat confusing.
- Mobile app doesn’t have security keys — Security keys are not available for the mobile app, which makes transactions less secure.
- Limited customer service — You can contact Coinbase only via email.
Best Alternatives to Coinbase
Gemini offers trading in more than 40 cryptocurrencies on one of the best trading platforms in the industry. And you earn 7.4% interest on your crypto balance through Gemini Earn. Like Coinbase, it offers a stablecoin, known as the Gemini dollar. Gemini has the distinction of being the only fully regulated cryptocurrency exchange. It also offers captive insurance coverage for cryptocurrency stored on the platform.
eToro is both an investment brokerage and a cryptocurrency exchange. It offers crypto only in the US. eToro accommodates more than 20 cryptos, including bitcoin, XRP, ethereum and others. Fees are no more than 5%, depending on the crypto. It also provides a virtual trading account of up to $100,000 to help you either learn to trade or become a better trader. And if that’s not enough, it also offers “copy trading,” which lets you copy the trading patterns of more successful investors.
Disclaimer: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.
You can of course trade digital currencies on BlockFi. And you can also earn interest on your crypto balances. In fact, you earn up to 8.6%, which makes it an excellent choice for passive investing. Or borrow against your account at interest rates as low as 4.5%.
Though it’s best known as an investment app where you can trade stocks, options and exchange-traded funds (ETFs) commission-free, Robinhood also offers trading in several cryptocurrencies including bitcoin, ethereum, and dogecoin. And as is the case with other securities, cryptos can be traded commission-free.
Bottom Line — Is Coinbase Worth It?
Cryptocurrencies become more popular every year and even make regular appearances in the mainstream financial media. If you want to trade or invest in cryptos or just get in on the ground floor of what may be the biggest financial revolution in more than 100 years, you need to open an account with a good cryptocurrency exchange.
Coinbase is one of the best in the business and offers a higher level of liquidity than most other exchanges, with the combination of the USDC stablecoin and the Visa debit card.