Coinbase is one of the most popular cryptocurrency exchanges out there but is it really an exchange worth using or would you be better off going elsewhere? Is Coinbase a scam? Is it safe? Who is it good for? What are some common complaints? There are all great questions that I get all the time about this exchange and I’ll be addressing all and more in this review.
In this Coinbase review I’ll be making it as unbiased as possible. You will get it all here… the positives and the negatives to this exchange.
Coinbase In a Nutshell
Ok so first off… what is Coinbase anyhow?
Well, Coinbase is a cryptocurrency exchange that easily allows users to buy cryptocurrency with fiat money (USD, EUR). It is a popular exchange for “onboarding” into the realm of cryptocurrency. Many people use this place as to buy their very first Bitcoin, Ethereum, Litecoin, etc. The reason for this is because for one) its possible to do this, and 2) they make things very simple. On the flip-side Coinbase is also an easy and popular way to cash out of cryptocurrency. It can be used to sell Bitcoin, etc back into “real” money and transferred to your bank account.
Coinbase is one of the most beginner friendly exchanges that I know of which is nice because so many people that are new to it all use their service. They provide easy ways to buy/sell, a very user-friendly interface, and all-in-all are very simple to use. However, with this beginner friendliness comes a downside that I’ll go over.
What It Has to Offer
1) Multiple Cryptocurrencies
At Coinbase they deal with the biggest cryptocurrencies out there. Right now you are able to purchase/sell Bitcoin, Ethereum, Litecoin and Bitcoin Cash. More cryptocurrencies will likely be added continuously in the future. You will be able to see basic price charts for each of these currencies in your dashboard so that you can monitor what is going on in the market.
2) Buying With Multiple Payment Methods
As stated, Coinbase is an easy way to buy cryptocurrency with government backed money such as USD or EUR. They give users the ability to pay with credit/debit cards, link their bank accounts to pay, or even do a wire transfer for larger amounts.
There really aren’t many exchanges out there that allow users to pay with fiat money due to the hassle that comes with it. Coinbase however has some deep ties to the banking industry and have been doing so since their inception in 2012.
3) Storing Cryptocurrency
With your account you will get a “wallet”. This virtual wallet is a free service provided by Coinbase where you will be able to store your cryptocurrencies. They also off what they call a “vault” which is basically a more secure version of the wallet and is mostly used for large amounts of funds that users are planning on storing for a long time.
You will also get a USD or EUR wallet that is connected to your account. This way you can store fiat money on the exchange to make faster transactions when its a good time to buy. but of course if you are using a credit/debit card the payment and receipt will be instant anyhow.
4) Selling Cryptocurrency Back Into Fiat Money (USD, EUR)
Just as you are able to buy cryptocurrency with fiat money you are also able to sell it back into fiat money. So maybe you bought some Bitcoin, it rose in value and now you are worried that it might drop. You can easily sell it back into fiat and profit.
You will be able to do this directly to your bank account or to your PayPal account. You will only be able to use a PayPal account for withdrawals and not for purchases. But either way its still nice that PayPal is offered at all.
5) Merchant Services
Coinbase also offers merchant services. They give online stores the ability to easily accept cryptocurrencies which is great but I’m not going to get into this here because most people reading this probably aren’t interested in such.
Ok, so I’m going to do a brief tutorial on how you would purchase cryptocurrency through Coinbase to show you exactly how simple it is.
Step 1: Create an Account (I would suggest reading the rest of the review first though!)
First you will need to create your account of course. This can be easily done and is pretty straightforward. You will be able to choose what type of account you want: an individual account or a business account. Most are going to be choosing individual.
To create your account you will need and email address, a name and a password.
Step 2: Add a Payment Method
Once signed in go over to Settings, click on Linked Accounts, and click the blue button to Link a New Account…
You will be able to add a credit/debit card, a bank account, or set up a wire transfer to deposit money.
Step 3: Go to Buy/Sell In Upper Menu and Purchase
You will then be able to go to Buy/Sell in the upper menu, click on the cryptocurrrency that you want to purchase, select the payment method you just added, enter the amount you want to buy or spend, and click Buy. That is it. Simple and straightforward.
The method you use to purchase will determine how long it takes you to get your cryptocurrency. If you use a credit/debit card it will be available in your wallet instantly. However, if you use a bank transfer or wire transfer this will take longer. For a bank transfer they tell you 3-5 days but it will vary. I have received my cryptocurrency almost instantly with bank transfers before but other times it has taken much longer.
What To Do Next
After you make your purchase and have your cryptocurrency available to you, you will be able to access it by clicking on Accounts in the upper menu. This will take you to all your cryptocurrency wallets.
Here you will be able to send crypto funds out of your wallet to somewhere else or you can choose to receive funds to the particular wallet by clicking on “Receive” which will give you the wallet public address. This is your cryptocurrency and you can do with it whatever you please.
You will also be able to see all transactions for each wallet.
How Safe Is Coinbase Really?
While there is definitely risk while using any exchange, Coinbase is one of the more safe ones out there. One of the big reasons is that they are US based. They are based in San Francisco California which means they are subject to the regulatory bodies that come with the territory. They are required to abide by all the consumer protection laws that come with operating in the US and are audited regularly by 3rd parties.
For me the fact that they are regulated in the US is a big deal. Some exchanges out there that are based in countries with very lenient laws are not very transparent at all and its hard to trust them.
But other than the fact they are regulated, they also provide security for your funds.
They say that only about 2% of all funds they hold are actually held online. The other 98% are held offline in cold storage, which means they are un-hackable. So this means that if someone were to hack the exchange platform only about 2% of the funds would be vulnerable to theft.
The reason they have to keep some funds online are for liquidity reasons.
Also you are protected from hacking as I will go over in the insurance policy.
Personal Account Security
To protect your personal account so that someone else doesn’t get unauthorized access to it Coinbase gives the ability to set up 2 factor authentication (2FA). This is an added layer of security when it comes to logging into your account and such.
How this works is you will download the Google Authenticator app on your phone which you will then be able to synchronize with Coinbase. Then when you go to login you will enter your password and everything plus you will have to enter the code displayed on the app. The code is time sensitive and will time out after 30 seconds. Then a new one will appear.
This makes things much more safe and a whole heck of a lot harder for a hacker trying to break in.
Coinbase also has an insurance policy in place and states clearly on their website that your funds are insured. So if their security is breached and they lose the 2% of funds that are left online, they will pay out of their own pocket to refund the users who were affected. On top of this they are also FDIC insured which means any USD funds you have on the exchange are insured up to $250,000.
Its important to know that if your personal account gets hacked this is not Coinbases fault. They only insure you if your funds were lost due to an error on their part. So make sure to enable 2FA and make a really long password for your account.
Lack of Support
Lack of support used to be a major problem for Coinbase and was probably the most common compliant out there. But they have come a long way with this.
Coinbase has made big improvements in their support service. They now have a phone number you can call to talk to a live person and everything. This is no longer the big problem it once was. So while you can still see complaints about the support being horrible online, they are not as relevant as they once were.
You can read more about contacting Coinbase support here.
I’ve read many complaints about people’s accounts being hacked. This can be an absolute disaster and is horrible and all, but I hate to say it… its not Coinbase’s fault.
As I just went over above, Coinbase provides all the security you need. If you don’t created a long and complicated password, or if you don’t enable 2FA, or if you share your password with someone, or if your computer is infected with malware when you login… its NOT Coinbase’s fault. They can’t do anything about this.
All Coinbase can do is keep the platform secure and give you the tools to be able to secure your own account, which they do. So far Coinbase has never been hacked.
Now this is a legitimate complaint but you have to look at the reason behind the high fees.
The fees at Coinbase are high without a doubt. They charge 3.99% if you are using your credit/debit card to buy crytocurrency and 1.49% to buy with a bank transfer. When withdrawing they also charge a 1.49% fee if you are transferring the money to your bank and a higher fee if you use PayPal.
These fees are high but you have to consider the reason behind it.
The reason is because Coinbase goes to great lengths to make the platform very easy to use. They make it easy and you pay for this in fees. Additionally it is a pain for exchanges to even deal with fiat money, which is why most exchanges don’t. Coinbase has to jump through all the hoops to make buying cryptocurrency with fiat money and selling it possible.
I wish they would lower the fees some because I think they are making plenty of money to be able to do so but who knows..
Who Coinbase Is Best For
Coinbase is without a doubt best suited for beginners in cryptocurrency or those who are looking to buy cryptocurrency for the first time. Everything is very simple and you can trust them.
As you gain more experience and become more comfortable with things I would suggest using GDAX. GDAX is actually owned by Coinbase but is a different exchange and is geared more for professional traders/investors. The fees are minimal there. If interested you can read my post I wrote on GDAX vs Coinbase.
Its also important to note that Coinbase isn’t good for daytrading, or trading frequently. The fees are too high. GDAX can be used for this because fees are pretty much non-existant or you can look into crypto-only exchanges like Binance, COSS, Bittrex, etc that have tons of cryptocurrencies you can trade in between. However, if you do use these exchanges you will first have to use and exchange like Coinbase or GDAX first to actually be able to buy cryptocurrency with fiat money.
Pros & Cons
- Easy to use
- Safe & trusted
- Credit/debit accepted
- Can sell back into bank account
- High fees
- Not many cryptocurrencies offered
Coinbase is a good exchange but its not the right choice for everyone out there. It all depends on what you are looking for. If you are new to it all and just want to buy cryptocurrency like Bitcoin the easiest way possible, then Coinbase is your best bet.
If you do sign up you can use my referral link to do so to help support Hodler’s Digest. You will also get a $10 in free Bitcoin when you purchase $100+ for doing so.
Coinbase Referral Link: Coinbase.com/Join
And as always, leave any comments, questions or concerns below and I’ll get back to you soon 🙂