If you’ve been following our blockchain and cryptocurrency series, you know that there are several platforms where you can trade your cryptocurrency. Coinbase is one such exchange specifically used for Bitcoin, Ethereum and Litecoin. Serving over 32 countries, it’s the largest Bitcoin broker in the world.
Coinbase originally launched as only a broker which sold Bitcoins directly to customers. But as of May 2016, Coinbase launched GDAX, a Bitcoin exchange where people can trade Bitcoins with each other. GDAX is mainly for professionals who trade with high volumes.
Coinbase, while one of the most popular Bitcoin exchanges in the world, has its share of controversy. One of the main issues with Coinbase lie in their investors: big banks. Since cryptocurrency was invented to avoid bank fees and procedures, it’s highly concerning that BBVA, a large international bank, is highly invested in the exchange. CEO Fred Ehrsam himself is a former Goldman Sachs trader.
Ease of Use
One of Coinbase’s best features is its simple user interface. They even provide an Android and iOS app to trade with. The two apps provide the same functionality as the website. They also allow you to disable the app from afar if your phone is lost or stolen.
Coinbase controls all private keys with their multi-signature vault. This is more like a bank than a true Bitcoin wallet.
You are able to send and get digital currency, which immediately exchanges into your local currency. The trading is quick to execute, especially with the fast website speed.
Coinbase doesn’t allow margin trading, short-selling, or futures and derivatives trading. And the time it takes for bitcoins to get to your wallet and be spendable depends on their location and payment method.
There are four verification levels, the fourth level being the most intensive and timeliest level.
In the U.S., the Instant Buy feature allows fully verified traders (having reached the fourth level) to buy a maximum of $5,000 worth of cryptocurrency per week. Level 2 users with Instant Buy can instantly buy up to $500 worth of bitcoin per week. Use a credit card as your backup payment method to activate Instant Buy.
Users can set up their funding with a credit or debit card, bank transfer, and other cryptocurrencies. However, PayPal is currently not an option for funding.
Credit card users in the United States will receive bitcoins instantly. If you’re using bank transfer in the U.S., you’ll have to wait five business days after placing an order. Bank wires are accepted same business day, but make sure name on sender’s bank account is same as Coinbase account to avoid wire reversal.
For Canada and Europe, wait times range from 1-4 days, as seen below:
|Payment Method||Countries||Funds Available||Currency||Fees*|
|Bank Transfer||USA||5-7 days**||USD||1.49%|
|Bank Wire||USA||same day||USD||$10|
|Credit / Debit Card||USA||instant||EUR||3.99%|
|Credit / Debit Card||Canada||instant||CAD||3.99%|
|SEPA Transfer||Europe||1-3 days||EUR||1.49%|
|Credit / Debit Card||Europe||instant||EUR||3.99%|
|Credit / Debit Card||UK||instant||GBP||3.99%|
|Credit / Debit Card||Australia||instant||AUD||3.99%|
Cost and Fees
Most users use credit cards on Coinbase. The main payment method, however, is wire transfer. Traders can also buy Bitcoins with debit cards, but these, along with credit cards, will add on some extra fees. Although you can’t use PayPal to buy Bitcoins, you can receive funds in PayPal if you sell your Bitcoins through Coinbase.
Depositing money into your Coinbase account is free. And Coinbase charges a 1.49% fee per purchase.
With higher than average limits, Coinbase excels in this category. Although the limits ultimately depend on your account level, Level 4 U.S. customers can buy up to $50,000 worth of Bitcoin daily. European and UK Level 4 users can have a maximum of €30,000 in their account on any given day.
And Coinbase will schedule your buys weekly or monthly if you decide to take a longer-term strategy.
When you sign up for Coinbase, you’ll have to give quite a few identity verification details. If you want to use your credit card, you’ll have to send in a picture of your driver’s license or passport.
The exchange assures its customers that there’s an insurance policy covering the digital currency on their servers. They store a majority (more than 97%) of the digital assets in secure offline storage.
There have also been privacy concerns with reports that Coinbase tracks how its users spend Bitcoin.
Even so, the exchange is regulated and licensed in all of the places where it operates. And major U.S. investors and venture capitalists back this cryptocurrency exchange.
It’s important to remember not to store your bitcoins with Coinbase. Unless you’re using Coinbase’s Multi-Signature Vault, you shouldn’t store funds in Coinbase. You should only use Coinbase to buy and sell bitcoin.
Control your money by moving your bitcoins into a wallet that you have control over. Coinbase has a history of shutting down accounts and blocking access to funds across all levels of users.
It may also interest you that the exchange scored 11/100 in the Open Bitcoin Privacy Project’s Spring 2015 report.
The company has no history of getting hacked, though.
Coinbase’s FAQ is worth reading over once when you become a customer. Getting a response from the support team can take up to 72 hours. Often, when that response comes, it’s not very helpful and seems “canned” to many people.
The popular exchange is also known to not pay its affiliates what was originally promised in their referral program.
In addition, the company publicly participated in Bitcoin debates, which some dislike. Most companies generally remain neutral in these situations. This, coupled with Coinbase’s history and investment with banks, has some taking a hard second look at the company’s service.