Coinbase is a cryptocurrency exchange platform where users can buy and sell cryptocurrencies like Bitcoin, Ethereum, and Dogecoin. It is a publicly-traded company and is therefore obligated to publish quarterly financial statements and get annual audits done by an independent third party. This ensures a certain level of financial transparency in the working of the exchange.
In the words of Coinbase, its mission is to “increase economic freedom in the world.” It is an easy-to-use crypto trading platform that is committed to helping everyone access financial services. For this, it aims to build the crypto-economy- a crypto-enabled efficient, and transparent financial system.
With more than 108 million verified users and a quarterly trade volume of $159 billion, Coinbase is today one of the largest cryptocurrency exchanges.
Coinbase Overview
Brian Armstrong, an ex-Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader founded Coinbase in 2012. Initially meant as a platform to buy and sell Bitcoin, Coinbase today hosts more than 100 cryptocurrencies.
The Coinbase user base grew to one million in 2014 when it also launched the vault system for secure Bitcoin storage. Four years later in 2018, it added support for ERC-20 tokens. It also established Coinbase Ventures to provide support and financing to promising early-stage companies in the blockchain and cryptocurrency space.
Coinbase shifted to full-time remote work in 2020 during the COVID-19 pandemic. This means that the company no longer has a physical headquarters. The next year in 2021, Coinbase made history as it became the first major crypto business to go for public listing. It made its debut on NASDAQ with a direct public offering and saw a closing rate of $328 per share on its first day.
Features and Services
To achieve its goal of building the crypto-economy, Coinbase offers a wide range of products and services.
Coinbase Exchange
The most popular is, of course, Coinbase Exchange where users can buy, sell, trade, and exchange cryptocurrencies. The Exchange has more than 108 million verified users and is supported in 100+ countries. With a quarterly trade volume of $159 billion, it is one of the largest cryptocurrency exchanges.
Coinbase Pro
This is an advanced version of the basic Coinbase exchange. Coinbase Pro is primarily meant for seasoned traders who want more from a platform than simple crypto buying and selling. With it, traders can access advanced charting features and track the market, view trading history, and manage multiple portfolios. As a bonus, Coinbase Pro also has a lower transaction fee than Coinbase.
Coinbase Wallet
The Coinbase Wallet is an in-built wallet where the users can store all their crypto and NFTs. It is a safe and secure self-custody wallet where the user controls his crypto. The wallet supports a number of coins and decentralized apps.
Coinbase Prime
This is an integrated brokerage platform for digital assets. It is meant for institutional customers and provides safe crypto custody and an advanced trading platform among other features.
Coinbase Ventures
Coinbase Ventures invests in early-stage startups in the cryptocurrency and Web3 ecosystem. It seeks to create more economic freedom in the world by providing strategic support to exceptional startups. Alchemy, Uniswap, and Arbitrum are a prominent part of Coinbase Venture’s portfolio.
Coinbase Cloud
A product for developers, Coinbase Cloud makes it easy to create Web3 apps with its APIs, SDKs, and infrastructure.
Coinbase Commerce
Coinbase Commerce helps businesses accept payments in cryptocurrency. Signing up is easy and businesses can easily convert the cryptocurrency into cash or stablecoins. A flat 1% transaction fee is charged on Coinbase Commerce Accounts.
Creating an Account
You need to be at least 18 years old and have a valid government ID to create a Coinbase account. Signing up for Coinbase is mandatory if you want to trade on the platform.
Step 1
Go to the Coinbase website or download their app. Click on the blue Get Started button. Fill in the required information and then click on Create Account. A verification email will be then sent to your registered email id. You need to sign back into your Coinbase account to verify your email.
Step 2
Next, verify your phone number and fill in information such as Full Name, Date of Birth, and Address. This information should be the same as your government-issued ID. Then click on continue to complete the application process.
Step 3
Since Coinbase is KYC-compliant, it needs to verify your identity before you are allowed to trade. When you sign in after completing the application process, a Document Verification prompt will appear. You need to select your ID document type and upload method. Upload your ID as per the instructions on the screen.
Step 4
The last step is to link a payment method to your account. Do check which payment methods are available in your country and the fees associated with them before linking them. You can visit Coinbase’s website for more information about the same.
Coins Available
More than 100 different cryptocurrencies are available on Coinbase. From popular coins like Bitcoin and Ether to Stablecoins like Tether, Coinbase users are spoilt for choice. It lists only those assets that are compliant with local laws to give users a secure trading experience.
Some of the most popular cryptocurrencies on Coinbase are:
- Bitcoin(BTC)
- Ethereum(ETH)
- USD Coin(USDC)
- Binance Coin(BNB)
- Tether(USDT)
- Dogecoin(DOGE)
- Binance USD(BUSD)
- Cardano(ADA)
- Polkadot(DOT)
- Litecoin(LTC)
It has also added new coins like Aragon(ANT), MAGIC(MAGIC), and MultiversX(EGLD) in December 2022.
Fees- How much does Coinbase Charge?
The exact details about the fee Coinbase charges for transactions are not available on its website. The fee charged depends on multiple factors such as payment methods, order size, market conditions, liquidity, and geographical location of the trader. Hence, even the final fee charged may differ from the estimated fee.
When using Simple Trade, it also includes a spread in the price of the trade as well as in the exchange rate when converting cryptocurrencies. This is no spread for Advanced Trade because the trader is directly interacting with the order book.
However, Coinbase FAQ states that the platform charges a flat 1% transaction fee on all crypto transactions for Coinbase Commerce accounts.
Staking Commission
There are no fees to stake or unstack crypto on Coinbase. However, when staking on its users’ behalf, Coinbase charges a commission on the reward earned. As of December 2022, there is a standard commission of 25% applicable for ADA, SOL, ETH, ALGO, ATOM, and XTZ.
Coinbase Pro Fees
Coinbase Pro uses the taker-maker model for calculating trading fees. There are different pricing tiers with varying levels of taker-maker fees. Generally, low-volume trades attract higher taker-maker fees as compared to high-volume trades. For example, as per Coinbase, transactions in the pricing tier $0-$10K attract taker/maker fees of 0.60%/0.40%. The same is 0.08%/0.00% for the $250M-$400M tiers.
Security- Can Coinbase be Trusted?
Coinbase has always maintained that it is committed to providing its customers with a seamless, safe, and secure trading experience. To that end, it implements a multifaceted and state-of-the-art risk management system.
Users are auto-enrolled for 2-factor authentication when they sign up. Coinbase uses the bcrypt algorithm to irreversibly hash user passwords. This means that nobody including Coinbase itself can decrypt and read the passwords.
Coinbase Vault
The Coinbase Vault is an additional feature available to all Coinbase account holders. It is like a regular crypto wallet but users can prevent immediate withdrawals if they wish to. They can add some extra security steps for this.
Trusted individuals can be invited to become co-signer with the user. This would require them to approve transactions before they can be completed.
Immediately after creation, Vaults go through a secure approval withdrawal process. Withdrawals can be canceled within 24 hours in case they were unapproved.
Has Coinbase Ever been Hacked?
In October 2021, it was reported that hackers stole cryptocurrency from the accounts of around 6,000 customers. Vulnerabilities in the exchange’s SMS account recovery process were exploited by the hacker to gain access to the accounts.
Before that, in 2019, there had been an attempted attack on the Coinbase network. The malicious actors employed phishing and used the “zero-day” vulnerabilities in the Mozilla Firefox browser for this. Had they been successful, they would’ve gained access to Coinbase’s back-end network and stolen crypto worth billions. But Coinbase timely discovered the attack and protected its customers’ cryptocurrencies from being stolen.
There had also been an attempt to extort Coinbase in November 2022. The malicious actor threatened to make public sensitive data of more than 300 million user accounts if $450,000 were not paid to them. Coinbase confirmed that it is mathematically impossible to decrypt data like that and no breach had taken place.
Coinbase has been a relatively stable and secure platform because, unlike rival Binance, it has never faced a large-scale hack and has always been receptive to suggested improvements in its security infrastructure.
Coinbase Pros
User-friendly
Coinbase has a simple and intuitive user-friendly design. Signing up on the platform is a matter of a few minutes. New traders would find it easier to complete trades on Coinbase than anywhere else. For experienced traders, Coinbase Pro is available with more advanced features and lower fees.
Large Number of Cryptocurrencies Available
Over 150 cryptocurrencies are available on Coinbase for users to buy, sell and trade. Users can choose anything from popular coins like Bitcoin(BTC), Ether(ETH), and Dogecoin(DOGE) to Stablecoins like Tether(USDT) and gaming tokens like AXS as per their investment goals.
Comprehensive Educational Content
Coinbase has an extensive library of educational material about blockchain and cryptocurrencies. Novices can learn about the basics of blockchain, cryptocurrencies, and Bitcoin here. There are tips and tutorials to help users have a secure trading experience.
Further, there are “Learn to Earn” opportunities where users can earn crypto by completing the educational modules and taking quizzes.
Earning Opportunities
With Coinbase Earn, users can put their crypto to work and earn up to 5.75% APY on their crypto. They can do so by either staking their crypto or by lending it to DeFi protocols. In the case of staking, the users(or validators) verify transactions on the blockchain network and are rewarded for it in return.
Whereas in DeFi yield, users lend their crypto to third-party DeFi protocols and then earn a yield on them.
Coinbase Cons
High Fees
Though the final transaction fee depends on multiple factors such as order size, market conditions, and payment method, it is still on the higher end. It is illustrated by the fact that Coinbase charges a flat 1% transaction fee on all crypto transactions on Coinbase commerce accounts. The fee is lower on Coinbase Pro but navigating it can be a challenge for several users.
Poor Customer Service
Coinbase has a rating of 1.6 out of 5 on Trustpilot with 7,864 reviews. Most of the reviews complain about less-than-stellar experiences with Coinbase’s customer service. The complaints range from nearly inaccessible customer service to little to no help regarding compromised accounts and scams. Some users have also complained of access being blocked to their accounts.
High Staking Commission
While users can earn by staking their crypto on Coinbase, the downside is that they have to pay a high commission for the same. Coinbase charges a standard commission of 25% for staking ADA, ETH, SOL, ALGO, XTZ and ATOM on behalf of its customers.
Many Altcoins Unavailable
Though Coinbase has a respectable collection of altcoins, many popular coins are still missing. In contrast, Binance has more than 350 coins available on its global platform.
Coinbase vs. Binance- Which is Better?
Both Coinbase and Binance are well-known cryptocurrency exchanges. They have been in the business for a long time and have established their positions as top exchanges in the crypto world. But which exchange is best for you? Should you put your money into Binance or Coinbase? Which is the better option? Most traders struggle with these questions. It is, therefore, important to be informed about the finer differences between Coinbase and Binance to choose the exchange that is best for you.
User-friendliness
Coinbase’s design is more intuitive and user-friendly. Completing a trade on Coinbase is a very easy process. More experienced traders can take advantage of Coinbase Pro for more advanced features. Binance though it has a lot of options and features can be overwhelming even for a seasoned crypto trader.
Availability of Cryptocurrencies
Though Coinbase has a respectable number of coins, Binance wins here hands down. It hosts more than 350 coins on its global platform while Coinbase only has around 150+ cryptocurrencies. For US users though, Coinbase is perhaps a better option because Binance’s US version Binance.US has limited cryptocurrencies available.
Transaction Fees
On average, the transaction fee on Binance is 0.10% or lower than that. The fee differs according to the transaction volume and the level of the account. While Coinbase does not disclose exact transaction fees on its website, it does state that it charges a flat 1% transaction fee on all crypto transactions for commerce accounts. The final fee paid though depends on several factors such as market conditions, order size and liquidity among others.
Security
Both Coinbase and Binance are committed to ensuring the security of user data and funds. They deploy a number of security features such as offline cold storage, two-factor authentication, and Federal Deposit Insurance Corporation(FDIC) insurance for USD balances(only for Binance.US in the case of Binance).
Coinbase has also insured its funds in the event of a breach of the company’s systems only. This means that if a user loses their funds due to negligence on their end, Coinbase would not be responsible for that.
While Binance has had some high-profile hacks in the past few years, Coinbase has not suffered from any major hacking incidents. Coinbase is, hence, considered more secure by a lot of people.
When it comes to reputation, Coinbase is perhaps better off. It is a publicly-traded company and is, therefore, more regulated and financially transparent. Binance meanwhile, has run into legal troubles in several countries. The main platform was banned in the US in 2019.
In 2021, the US Department of Justice and Internal Revenue Service launched an investigation against Binance for money laundering and tax offenses. It is also under the scanner in various other countries like the UK, Japan, Thailand, and Malaysia.
Overall, while both Coinbase and Binance have their merits, it is better to go with Coinbase if you are a beginner and based in the US.
Coinbase Frequently Asked Questions
Is Coinbase really safe?
Yes. Coinbase is a leading cryptocurrency exchange. It is a public company that publishes its financial statements quarterly and is audited by an independent third party annually. It encrypts user data for security and employs multiple other security measures such as multi-approval withdrawals for Coinbase Vault.
Should I link my bank account to Coinbase?
Coinbase is a relatively safe platform. It is registered as a Money Services Business with the Financial Crimes Enforcement Network(FinCEN) and must comply with consumer protection and financial services laws such as the Bank Secrecy Act.
Coinbase protects the banking information of its users by using AES-256 encryption. Data in transit is also encrypted and employee access to user data is restricted.
Will Coinbase refund if hacked?
Coinbase has insurance coverage in case of system-wide breaches or employee theft. This means that the insurance only protects assets if the loss is due to a cyber attack on the Coinbase servers. Any loss because your personal account was breached due to compromised credentials is not Coinbase’s responsibility.
Can Coinbase transactions be reversed?
Crypto transactions are peer-to-peer payments. They are direct payments between receivers and senders. Since transactions on the blockchain are irreversible, Coinbase cannot reverse your transaction after it has been confirmed. If you want a refund, you need to directly contact the receiver.
Conclusion
Coinbase is a simple and easy-to-use cryptocurrency exchange for users who want a hassle-free crypto trading experience. It offers a decent selection of cryptocurrencies and securely stores the majority of crypto in cold storage offline. Coinbase Pro is the answer for users looking for advanced features in their trading platform.
Poor customer support and a complicated fee system have been consistent complaints against Coinbase. Coinbase should be a fine option for you if you don’t mind paying a slightly higher transaction fee and can largely manage your account on your own.