Coinbase General Overview
Coinbases started out as a brokerage service that only offered Bitcoin purchases when it was founded in 2012. During the evolution process of this exchange, their services have expanded greatly as Coinbase grew to become one of the biggest cryptocurrency exchanges in the world servicing over 100 countries and over 30 million customers worldwide.
Coinbase was founded by Brian Armstrong and Fred Ehrsam as part of Ycombinator in 2012. Even though it has raised over $500 million in funding from various reputable investors it still has a bad reputation when it comes to customer support and uptime. It seems that this exchange is struggling to keep its services up and running every time Bitcoin interest spikes among retail investors.
To be fair, it is one of the few places where US-based customers can execute trades and purchase digital assets so their spikes in traffic can be a bit more dramatic than those of their competitors.
What is Coinbase?
Coinbase advertises itself as a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Ethereum, and more. By definition, they are a digital currency wallet service that allows traders to buy and sell bitcoin but they are still labeled as an exchange as far as their users are concerned. Coinbase is heavily regulated and will soon (early 2021) be having an IPO and potential shareholders will be able to trade with their shares.
Coinbase is one of the few exchanges that is fully regulated and licensed. That is one of the main reasons they are one of few that can operate within the U.S. and if it wasn’t for Coinbase, a lot of cryptocurrency investors in the United States wouldn’t have a brokerage service for Bitcoin.
Why Choose Coinbase?
Regulation is a big issue for the whole cryptocurrency industry because a lot of exchanges have invented creative ways to avoid it. This leaves their customers unprotected by regulators and potentially vulnerable to fraud. Coinbase may be notorious for providing clucky service and having a bad customer support section, but they did their homework as far as regulatory bodies are concerned.
Users can also rest assured that their funds are safe on Coinbase because they are insured if the exchange gets compromised. Those that want to start small can deposit as little as $2 while others that have a bigger appetite can enjoy the variety of services provided by Coinbase Pro. Fiat deposits are an option but lower deposits will have higher fees and vice versa.
The customer service on Coinbase is painstakingly slow and inefficient. Those that don’t need assistance will love the environment but if you end up with an issue that you can’t solve on your own, the support probably won’t be that helpful.
If nothing is done in that department and crypto keeps rising in popularity, this may become the biggest issue Coinbase has. Other notable disadvantages come down to some limitations within the US itself. Coinbase is a licensed US-based exchange but it can only provide services to 42 US states. Trading fees for smaller amounts can be a turndown as well.
- $10 or less – $0.99
- More than $10 and up to $25 – $1.49
- Above $25 and up to $50 – $1.99
- More than $50 and up to $200 – $2.99
Coinbase Pros and Cons
- Offers access to more than 30 cryptocurrencies for basic users
- Low minimum deposits
- Cryptocurrency is insured in the event the website is hacked
- Fully regulated and licensed
- Available for US-based customers
Coinbase’s long history and clean track record certainly play a big role in the trustworthiness levels among their customers. Coinbase, like many top exchanges, focuses on simplicity. The platform will be easy to navigate for complete beginners and experts alike. The fact that a service such as Coinbase Pro is available for their customers makes this exchange even more attractive for professional traders. Especially due to a very well design that represents the front end for Coinbase Pro.
There are many cons that can be mentioned in this review but here are the main ones:
- Higher average fees than their competitors
- Not available in all US states
- Frequent downtime when traffic surges
- Not reliable for day trading
As mentioned, the trading fees on Coinbase are a bit less attractive than on other exchanges. The fee structure is a rather confusing combination of elements that depend on two factors:
These are the guidelines given by Coinbase:
|Total Trade Amount||Fee|
|$10 or less||$0.99|
|More than $10 and up to $25||$1.49|
|More than $25 and up to $50||$1.99|
|More than $50 and up to $200||$2.99|
And here are the fee guidelines for different payment options in the US:
|U.S. bank account or Coinbase wallet||1.49%|
|Instant card withdrawal||Up to 1.5% (minimum fee of $0.55)|
|Wire transfer||$10 ($25 outgoing)|
With such a fee structure, for users that bought $100 worth of Bitcoin from a U.S. bank account, the flat fee would be calculated as $2.99 (rather than 1.49%, as $2.99 is higher), along with the spread which is calculated by the difference between the bid and ask prices.
Coinbase Pro offers a lot more flexibility as the pricing models are more straightforward. Fees are calculated based on the monthly activity of the user and the more volume there is the lower the fees are. They start at 0.50% for volumes lower than $10 and go down as volume increases.
How Coinbase Compares to Other Exchanges?
The fees on Coinbase obviously aren’t very competitive but the fact that they are licensed and operate in the U.S. increases their trust level significantly. Due to the high regulation that they fall under they can only offer a handful of cryptocurrencies right now.
Currently, the following currencies are available for Coinbase users: Cosmos, Algorand, Band Protocol, Basic Attention Token, Bitcoin, Bitcoin Cash, Bitcoin Satoshi Vision, Celo, Compound, Dai, Dash, EOS, Ethereum, Ethereum Classic, Kyber Network, Chainlink, Loopring, Litecoin, Maker, Numeraire, OMG Network, Orchid, Augur, Stablecoin, UMA, Uniswap, Stellar Lumens, Ripple, Tezos, yearn.finance, Zcash and 0x.
With Coinbase Pro, users get access to: Civic, district0x, Golem, Loom and Decentraland, but not Bitcoin Satoshi Vision.
The lack of diversity probably puts Coinbase behind other big exchanges in the crypto markets but they do offer a reliable service nonetheless. By volume, Coinbase is constantly competing for the top 3 spots but the unreliable customer service they provide may be holding them back a bit.
Coinbase UX Overview
Things are kept simple on Coinbase. Navigating the front page couldn’t be more straightforward.
There are a lot of resources and products to look into but access to those is very easy and simple. Note that you can only purchase cryptocurrency on the main page. If you are looking for trading options they are located over at Coinbase Pro.
The exchange itself is well-above industry standards while also being very convenient for everyday use.
Coinbase also offers a trading app where their users can trade and earn crypto on the go. The design quality is on-par with the best trading apps in the market.
Registering and using the app is very user-friendly and even those unfamiliar with crypto will easily find their way around.
With all the good and bad sides of Coinbase, it is easy to overlook the levels of reputation this exchange is actually enjoying. Obtaining a license for digital asset trading is a hard thing to do so that would be one of many reasons users chose Coinbase over their competitors. They also offer beginners to learn about new crypto projects that are listed on their exchange and reward them with cryptocurrency.
The goal of this is to make sure their investors are educated and well-informed before they put money in a currency of their choice. On top of all that, Coinbase offers high-levels of security and insurance for customers.
No hacks or breaches have been reported. There are a few complaints from Coinbase users that their accounts were compromised but it is hard to put a finger on who is to blame. Most of the time leaked information comes from a completely different source and not the exchange itself.
Important things to know about Coinbase?
Security and insurance: Cryptocurrency exchanges are not protected by the Federal Deposit Insurance Corporation or the SIPC but Coinbase claims that all of the digital currency it holds online is insured. The company explained that they only hold about 2% of user funds online while the rest is stored in cold wallets. Even if a breach was to happen the funds would be refunded as they are insured.
This insurance covers security breaches or employee theft but not lost funds due to user error. USD balances are held in U.S. custodial accounts, money market funds, or the U.S. Treasury.
Coinbase Earn: An innovative way to “earn while you learn,” is oriented around a series of videos and quizzes that reward users for getting educated on the cryptocurrencies Coinbase offers. On average, users can earn up to $115 from this feature.
Cryptocurrency trading available in 42 states: Restricted states include: California, Hawaii, Indiana, Massachusetts, Missouri, Montana, Utah, and Wisconsin.
Coinbase: Supported countries
Coinbase supports 100+ countries worldwide.
As stated on their website, cryptocurrency conversion services are currently available to customers in Australia, Canada, Singapore, the United States, the United Kingdom, and the following European countries:
How to register on Coinbase?
Once you get to the homepage just enter your email and follow the instructions that will be sent. The registration process is simple and takes less than a few minutes.
For Coinbase Pro visit the homepage and click “register” on the top right.
What additional services are available on Coinbase?
USDC – a stablecoin created by Coinbase
Coinbase Custody – Safeguarding cryptocurrency for institutional investors
Coinbase Ventures – A place where you can invest in the companies that are building the open financial system.
Does Coinbase require KYC?
Coinbase uses Identity Verification in order to comply with KYC (Know Your Customer) regulations. Those that want to purchase and trade cryptocurrency on this exchange will need to undergo a verification process. The specific details can be found here.
Is Coinbase good for beginners?
It really depends on the needs of the user. Since KYC is required on Coinbase, those that want to purchase smaller amounts will find it a bit demanding. On the other hand, those that complete KYC can enjoy a simplistic trading experience on Coinbase Pro. It is well-equipped for both beginners and advanced users alike.
Coinbase certainly has a good and bad side to its name. This U.S. based exchange is probably the most reliable option when it comes to cryptocurrency trading and investing simply because it is regulated and licensed. Serious investors and traders value transparency and safety so Coinbase may be a great choice for them.
On the ugly side, Coinabse is very unreliable during busy hours. The exchange goes down, almost like clockwork, every time interest in Bitcoin reaches new highs. This can cause a problem for traders, especially those that are looking to sell at high prices. A good example was a price spike that XRP had in late December 2020. Coinbase went offline due to a surge in traffic and those that wanted to sell were unable to do so.
The conclusion of the story would be that Coinbase is reliable when it comes to security but you can’t really count of 100% uptime. Hopefully, over time and once the IPO is over these issues will be resolved. Until then, constant outages and bad customer service will stay almost synonymous with Coinbase.