If you are looking to use GDAX to buy and/or sell cryptocurrency its important to know what you are dealing with first. Is GDAX safe? Can you trust this exchange? Do they protect their users? Are there safeguards in place?
What it all comes down to is whether or not you are going to risk losing your funds if you use this exchange. In this review I’ll be going over my experience with GDAX, having used them for a while now, why I use this exchange, how it is relatively safe, and more. So if you are worried about the safety you are going to want to read this.
But First… What is GDAX?
I know you probably already know the answer to this but for those who don’t it will help.
GDAX (stands for Global Digital Asset Exchange) is a cryptocurrency exchange that gives people the ability to buy different cryptocurrencies with fiat money as well as exchange between the offered cryptocurrencies. Most people use the platform as an “onboarding platform”, or as a way to first get started in crypto by buying with fiat money. Alternatively, GDAX also provides a great way to sell cryptocurrency back into fiat money.
Whats also important to mention is that GDAX is actually owned by Coinbase, which is another exchange. I wrote an article on GDAX vs Coinbase that you can read but basically the difference is that GDAX is designed for professional investors/traders. They charge much less fees, provide better tools for market analysis, have fully functional API, but are slightly more complicated to use.
Unless you are complete newbie and are looking for something super easy, GDAX is the way to go. Its still easy and all to use its just not quite as user friendly as Coinbase.
The Safety That GDAX Offers
I’m going to be breaking down this section into 2 parts: the safety of your digital holding and your fiat holdings. Why? Well because there are different safety measures in place for both.
If you live in the US I’m talking about US dollars. You see on GDAX there is no way to just pay for cryptocurrencies with a credit/debit card like you can with Coinbase. What you have to first do is transfer money to your USD wallet on GDAX. Then once it is in your account you can use it to buy cryptocurrency.
Since there is no way around this it is important to make sure that GDAX is a safe place to store your USD. And luckily it is. They are pretty much like a bank when you look at them from the aspect of safety. If you are a US customer your USD holdings are insured by the FDIC up to $250,000 which is the standard.
Now I’m not sure what type of insurance policies they have for users from other parts of the world but if you live in the US then you should feel safe. What they tell you on their site is that “all USD balances are FDIC insured up to $250,000”. There might be a way to deposit USD if you are outside of the US even but this is outside of the scope of this article.
The FDIC does absolutely nothing to secure or insure your crypto holdings. There are no government bodies that do so. This is entirely in the hands of GDAX. Luckily, they do a very good job.
GDAX stores 98% of customer cryptocurrency holdings in cold storage. What this means is that 98% of it is stored in secure crypto wallets offline. Why is this important? Well because when you store your crypto offline like this it is impossible for hackers to get a hold of. So even if GDAX was hacked and the hackers got away with funds… they would only be able to get about 2% maximum.
*Note: GDAX has a very competent team behind the scenes and they have never been hacked by the way.
Storing your crypto offline in cold storage is crypto 101. You never want to store crypto’s online or keep them in an exchange if you don’t have to. The reason GDAX keeps some online in their exchange accounts is because they have to. They need to have liquidity so that the exchange can operate properly.
When you create an account (which I’ll go over how to do this at the bottom) you will be able to create a password as well as set up 2 factor authentication (2FA) to secure your account more. What 2FA does is adds an extra layer of security so that no unauthorized person can access your account.
So when you go to sign in you will first enter your email & password, then you will be sent a verification code to your phone in order to get access. 2FA is pretty much a standard when it comes to crypto exchanges and very important.
As I said, GDAX is owned and operated by the Coinbase company. Coinbase has been around for quite a while and is one of the most reputable exchanges that is out there. I have been using Coinbase since I started in cryptocurrency but have switched to GDAX after I found they have much lower fees. On a side note: I do still use Coinbase from time to time if I am able to get a chance to buy crypto’s on a steep price drop with my debit card if I don’t have USD in my GDAX account.
Anyway… Coinbase was founded in 2011 by Brian Armstrong and Fred Ehrsam. The Coinbase team has many trustworthy and know names behind it, including Litecoin‘s founder Charlie Lee, and the investments they have received over the years show the trust that is there.
They have received notable investments backing their operations from Andreessen Horowitz, Union Square Ventures, and even the New York Stock Exchange just to name a few.
Its always important to take a look into the team behind exchanges like this so that one day they don’t just run off with your funds. In this case the team is about as good as it can get.
Whats The Support Like?
I’ll be honest, they are lacking a bit when it comes to the support that they provide. But they do offer support. When I say they are lacking I’m saying so because you can’t expect an answer back from them right away if you are having problems with your account. It might take a while but at least they do get back to you.
I’ve contacted only a couple of times that I can think of and every time things worked out. So I can’t complain here really. However, you will find a fair number of complaints online about this. Compared to other exchanges I would say they do well though.
Conclusion on GDAX
In the world of cryptocurrency GDAX is about as good as it gets. They provide an easy way for on-boarding with negligible fees and security. Both crypto holdings and fiat holdings have insurance in one way or another and your account with GDAX itself is also safe with 2FA.
I’m definitely not saying that GDAX is perfect. They could no doubt improve their support, but overall they do a very good job and I will continue to use their platform. I’ve been using them for a while and the most I can complain about is that I wish depositing money would work faster… but of course this is the problem with fiat money.
If you are interested in getting started with GDAX, which by the way would be my number 1 recommendation for getting started in crypto, then I’ll go over how to below.
1) Create Your Account
Since GDAX is owned by Coinbase you will have to first create a Coinbase account. You can go to Coinbase.com/join to do this (if you use my referral link here you will be able to get free $10 worth of bitcoin in your account).
Even if you go to the gdax.com website and go to create an account you will be directed to Coinbase to continue the process. After clicking the link above just follow along with the process which shouldn’t take long.
2) Deposit Funds
The next step, whether you are looking to buy cryptocurrency or sell cryptocurreny is to deposit funds.
If you are looking to buy with fiat money then you will first have to add payment methods inside of your Coinbase account. Again, even if you go inside of GDAX and click to add a bank account you will be directed over to your Coinbase account.
Inside Coinbase you will have to go to Settings > Linked Accounts > Link a New Account..
And then you are going to either want to link a bank account or you can do a wire transfer. You can link a credit/debit card but you will not be able to buy with this on GDAX, only on Coinbase you can.
There will be a verification process to add a payment method that you will have to go through.
After that is all said and done you can then deposit fiat funds into your GDAX account.
If you are looking to deposit crypto to sell it on GDAX then its much simpler. All you have to do is send bitcoin to the address they give you inside your account. And they only allow for the depositing of bitcoin by the way.
3) Buy or Sell Crypto
After your account is funded you can use the exchange as you wish. You can buy different cryptocurrencies with fiat money, you can trade in between the different cryptocurrencies that they have listed, or you can sell cryptocurrencies back into fiat money which you can then transfer back to your bank account.
If you have any comments or questions about any of this please leave them below in the comment section and I’ll get back to you 🙂