Program Name: Coinbase
Sign-Up Website: Coinbase.com/sign-up
Type of business: Cryptocurrency Exchange
Price: $0 – You get free Crypto
Owner: Fred Ehrsam & Brian Armstrong
Overall Rank: 3.5 stars
There are many exchanges out there where you can purchase cryptocurrency with regular currency. Among them, Coinbase is one of the biggest cryptocurrency exchanges around. In this 2021 Coinbase Review, I’ll be going over everything you need to know about Coinbase and its updates.
What Is Coinbase?
Founded in 2012 and starting as a Bitcoin storage service, Coinbase is a fully regulated, licensed, and insured cryptocurrency brokerage. Here, you can buy, sell, convert, send, and receive various cryptocurrencies.
It supports multiple payment methods including the following:
- Wire transfer
- Debit card
- Credit card
- Crypto deposits
- Paypal (withdrawal or sell only)
Coinbase is a cryptocurrency company and has gained a lot of trust over the years. Coinbase gained a lot of this trust after being one of the first cryptocurrency companies to be legally regulated and insured.
Based on transaction volume, Coinbase sits at #2 out of over 300 cryptocurrency exchanges, worldwide. This means that Coinbase is the number 2 exchange where all exchange transactions take place.
Coinbase received more than $540 million in funding from leading investors, such as Andreessen Horowitz, USV, and USAA. It has over 35 million verified users, supports 102 countries, and more than $320 billion are traded on it.
For any brokerage though, always keep in mind that although it may gain a lot of attention and traction, bigger isn’t necessarily always better.
Coinbase Services & Features
Coinbase offers many services which include the following:
- Coinbase Brokerage Service: This is the traditional brokerage service that Coinbase offers where you can exchange fiat currency for cryptocurrency, or cryptocurrency for other cryptocurrencies. New cryptocurrency users usually find themselves buying their first cryptocurrency through Coinbase. This is thanks to their big reputation and user-friendly interface.
Keep in mind, however, Coinbase is not a wallet. You can keep your funds in the Coinbase brokerage, but keeping them in there is the equivalent of keeping them at a bank. When you have money in Coinbase, you don’t have direct access to your cryptocurrency. You don’t get a private key or a seed phrase.
If you want direct access to your cryptocurrency, you can move it out of the Coinbase brokerage account and into a wallet like the Coinbase Wallet, for example. Or you could move it to any other wallet you’d like after you buy them on Coinbase.
- Getting Paid To Learn: Coinbase provides educational videos that pay you to watch their lessons on specific cryptocurrencies and take their small quizzes. Coinbase always pays you in the form of the cryptocurrency you’re learning about. Of course, if you don’t want to keep that specific cryptocurrency, you can always convert it or sell it to use it on something else.
Currently, Coinbase is giving out $167+ worth of cryptocurrency for taking their mini-lessons. Two benefits from this are 1. earning free money, and 2. learning more about cryptocurrency!
- Coinbase Commerce: This is a service that allows online merchants to accept cryptocurrency as a payment method on their website. This is done using a plugin that is supported by big Content Management Systems (CMS) such as Shopify, Magento, and WooCommerce.
- Coinbase Wallet: This is an independent mobile wallet for Android and iOS where you can keep your cryptocurrencies. The user’s private key is stored in the user’s device so that only they have access to the funds in the wallet.
- Coinbase Pro: (Also available on Android and iOS) This is a separate service offered by Coinbase where you can trade cryptocurrencies. Unlike the traditional Coinbase brokerage service, Coinbase pro is aimed at more experienced traders, while the regular brokerage service from Coinbase simplifies buying cryptocurrencies at a premium. This is why Coinbase Pro has lower fees than the regular Coinbase brokerage service. Easier interface -> costlier fees.
- Coinbase Index Fund: This is an index fund that gives investors exposure to all digital assets listed on Coinbase’s exchange, weighted by market capitalization. Basically, it tracks the financial performance of all Coinbase-listed assets.
- Coinbase Ventures: Investing in companies that use cryptocurrency like stablecoins to build an open financial system.
- Custodial Services: A service for institutional investors that safeguards their cryptocurrency. All digital assets are segregated and held in trust for the benefit of Coinbase Custody clients.
How Safe Is Coinbase?
Aside from providing you with secure account login methods like 2-step verification (two options for 2-step verification: SMS verification, or Google authenticator), Coinbase provides a cold storage policy where 98% of their customer’s funds are stored in offline wallets. Basically, wallets that aren’t connected to the internet.
That’s not all, all the private keys to these offline wallets have been split with redundancy, AES-256 encrypted, and copied to secured FIPS-140 USB drives and paper backups. These are then stored in safe deposit boxes scattered across the world.
Coinbase will need to collect personal information, such as personal and financial info, in order to provide you with their services. This primarily includes data that is mandated by law — such as compliance with anti-money laundering laws — or to verify your identity and protect you from potential fraudulent activity. Coinbase does not sell this information to third parties without the user’s consent. It keeps your personal information as safe as your funds.
Coinbase also hashes the passwords stored in its database by using bcrypt. They check for strong passwords on account creation and password reset. Your application credentials and personal information are kept separate from the Coinbase database and codebase.
This means that any hacker is going to find it painfully impossible to get ahold of private keys, funds, personal information, and individual accounts.
On top of all of this, Coinbase is one of the first cryptocurrency brokerages that is fully insured. As for US-resident crypto holders, this also includes FDIC insurance. Let’s also not forget that Coinbase has entered the crypto-asset custody game for institutions. So if Coinbase is being entrusted by institutional clients who hold hundreds of millions in cryptocurrency, it’s probably going to be safe for someone like you.
Note that Coinbase’s insurance only covers funds if Coinbase itself were to be compromised, not individual compromised accounts. So remember to always keep your password safe and turn on 2-step verification for your account. An account holder’s negligence to keep their account safe is not covered by Coinbase’s insurance.
Although Coinbase has great features, security, and a simple interface, it is not perfect. Just like any other brokerage, it can still make improvements. The following drawbacks are the reasons for why Coinbase has received a 3.5-star rating rather than a 5-star rating from The Nerd Finance.
- Fees: Coinbase’s infamous fees may vary from country to country, so depending on where you’re from, the fees may be different for you than for me. I’d recommend looking at their pricing and fee disclosures to find the fees for your designated place of residence.
Coinbase is known for having high fees, however, these fees are the expense for the simple interface that Coinbase provides for its users. It’s worth noting that Coinbase Pro provides lower fees for purchasing cryptocurrency on that platform.
Again, the only reason Coinbase does this is that the regular Coinbase brokerage service is simplified for anyone to be able to purchase cryptocurrency without prior experience. The reason fees are lower on Coinbase Pro is simply because it is designated for more advanced users and traders, thus, the interface is more complex.
- Acts as a Bank (in a way): One of the many benefits of cryptocurrency is the elimination of a third party or middleman (like a bank) that has to verify all transactions before they are processed. Coinbase, however, acts as a bank if you use it as a storage for your cryptocurrency.
You have no direct access to your funds unless you transfer them to a digital or hard-wallet. Coinbase, in a way, is acting like a bank by not providing you with your own private key when you store your funds in it. This, in turn, takes away the benefit of a P2P system.
- Slow Customer Support: Coinbase provides an extensive help section, you can find answers to commonly asked questions and other standard requests.
When it comes to immediate issues, Coinbase provides a support number where you can call to disable your account immediately if you suspect it has been compromised. However, Coinbase does not provide any phone support with a live agent.
If you would like to reach a live agent, you will need to contact them via email. Typically, email requests receive a response within 24-48 hours. Unfortunately, Coinbase usually provides its first response to your email request without digging deep into the issue at hand.
Who Is Coinbase Best For?
If you are new to cryptocurrency and want a simple way to start buying into it with multi-level security, Coinbase is a great place to start. More often than not, newcomers to crypto have bought their first cryptocurrency with Coinbase.
Since the funds within Coinbase are transferable to other platforms or wallets without converting them to fiat, Coinbase is a great tool to start with if you’re just looking to buy and hold for the long run.
If your plan is to start trading with crypto, then Coinbase Pro is a great option. There have been some reports of Coinbase having a few minor lags and crashes when huge movements are made by crypto volatility. Nonetheless, it’s a good platform to start with.
It would not be advisable to use the regular Coinbase brokerage service to trade crypto, as it does not include the same tools as Coinbase Pro and the fees are higher.
In the past year and a half that I have used Coinbase, I have personally not had any issues with it. I have only used it to buy and hold on to my crypto, it’s worth noting that I have moved my crypto to a personal wallet so that I can have direct access to it
Feel free to leave any feedback on personal experiences you’ve had with Coinbase. Leave any thoughts or questions you still have after reading this article. I’ll be more than happy to hear and respond to them!