Coinbase remains one of the most well-known companies in the cryptocurrency world.
With more than 30 million global customers, the platform allows consumers to buy and sell a number of cryptocurrencies, including popular options like Bitcoin, Ethereum, Litecoin, EOS, and Tezos.
The exchange is valued at around $8 billion after a successful Series E funding round brought in $300 million.
Coinbase Overview: From A Humble Start To A World-Changer
Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. The platform first launched as a tool for people to store Bitcoin, but has evolved into a cryptocurrency broker with a variety of other tools and attributes.
Coinbase has raised $217 million in financing from a number of top VCs and investors, including Andreessen Horowitz, USV, USAA, Y Combinator, Ribbit Capital and IDG Ventures.
Much of the exchange’s success comes from a carefully cultivated reputation and desire to serve as an ‘on-ramp’ for budding crypto investors.
Coinbase has worked to posture itself as a safe and easy-to-use cryptocurrency brokerage and storage platform. The San Francisco-based company has also taken large steps to ensure compliance with existing financial regulation in the United States.
Coinbase’s Robust Offering Of Services
Coinbase is best known as a cryptocurrency brokerage where users are able to purchase and sell digital currencies. The exchange platform of Coinbase is known as GDAX (Global Digital Asset Exchange). GDAX records every transaction and permits users to quickly execute multiple trades without having to initiate multi-day bank transfers.
Coinbase Pro, where USD balances are covered by FDIC insurance, is a trading platform optimized for experienced users who are interested in charting tools and real-time orderbooks.
In 2018, Coinbase launched an iOS and Android wallet. The company has engaged in a variety of other projects, including a plugin for merchants to accept crypto, the creation of USD Coin (stablecoin), and other custodial services.
The best advantage Coinbase holds over other exchanges is ease of use. The platform is simple for even those with elementary crypto knowledge to purchase different digital currencies.
However, users who choose to deal with Coinbase don’t have much control over funds. General Coinbase account owners do not receive a seed phrase or recovery key for their account, as Coinbase itself stores a person’s cryptocurrency.
The lack of control over funds is a sticking point for some concerned about the risk of hacks, general security, or who are wary of giving control of their money to an outside entity.
Buying And Selling On Coinbase: A Tricky Fee Structure
Fees for Coinbase transactions can be somewhat tough to understand.
The platform essentially charges a sliding scale of 1.49% to 3.99% for most transactions, depending on the payment method. Like many online transactions, using a credit card is going to incur higher fees.
Coinbase also charges a spread of roughly one-half of one percent for crypto purchases and sells. Yes, trying to determine the market price spread and the flat transaction fee can get tough, which is one of the main sticking points detractors of the exchange have.
Coinbase also says they maintain the ability to decline purchases in the instance of major price shifts. This has angered some investors who try to play the market and respond rapidly to price changes.
Buying and selling on Coinbase has also been somewhat tricky at times due to outages when the price of Bitcoin shifted in a major way. The latest outage occurred in May when Bitcoin suddenly dropped by 20%.
However, Coinbase’s fees, while somewhat confusing, are not the highest compared to other brokerages. Experienced traders should turn to Coinbase Pro to capitalize on lower fees.
Buying Limits & Support: Pros And Cons For Big Spenders
Users in more than 100 countries are able to take advantage of Coinbase.
Those interested in buying and selling larger amounts of crypto are required to verify personal information like a phone number and photo ID.
Fully vetted U.S. residents are able to reach a maximum limit of buying $25,000 worth of crypto each day. Limits also vary based on the method you use to buy crypto, as a bank account will open up a higher limit than a credit card.
Deposit times also vary based on the method used. A credit or debit card purchase will be instant, while those who choose to buy crypto through bank wires or ACH transfers will have to wait a few days for the money to clear.
This can be an issue if the price of your intended crypto changes dramatically while you’re waiting for funds to be deposited.
Coinbase’s account limits are set by the company, which has led to some criticism. Some are not comfortable providing personal information in order to buy crypto.
Coinbase’s Advantages: Easy To Use & Robust
Coinbase is a great choice for those with little prior experience in the crypto world. It’s very user-friendly and provides a wide range of cryptocurrencies to buy, along with a variety of payment options.
Coinbase also has an extensive knowledge base and resources to help people learn more about crypto, how to use the platform, considerations concerning taxes, and general insights on data privacy and security.
Its highly regulated nature is seen as a negative by some, but others welcome the strict adherence to existing laws and the required identity verification. Users concerned about these elements should use Coinbase.
Coinbase’s Drawbacks: Lack Of Security, Cumbersome Customer Service
Coinbase’s security is worrisome for many crypto users who do not want a company to have control over their digital cash. Customer service is notoriously bad. Many users have issues getting ahold of a representative on the phone or receiving a straight answer from the support team.
Coinbase received an F rating from the BBB for lack of response to many customer inquiries.
It’s also drawn controversy for shutting down accounts in accordance with its KYC (Know-Your-Customer) and AML (Anti-Money Laundering) practices. Coinbase keeps tabs on its users and has been known to close accounts of people who have used cryptocurrency on Bitcoin gambling, darknet market purchases, and transactions of adult services.
Coinbase will also share information with tax authorities as needed, which can be a major turn-off for those located in the United States.
The Bottom Line: Coinbase Certainly Has Its Place
Coinbase remains the simplest way to buy and sell cryptocurrency. It’s a great tool for beginners, those interested in purchasing crypto with fiat, and those with smaller amounts of money to invest.
It’s not a good choice for larger investors due to higher fees, and for those concerned about privacy and security.
Anyone who is buying crypto on Coinbase should invest in a hardware or more secure wallet to move virtual currency too.
Holding on Coinbase isn’t safe – or smart enough – considering the abundance of affordable and secure storage options on the market.