Coinbase Exchange Review
Investors keen on digital currencies need a platform on which to trade them. This Coinbase exchange review will give newcomers a few important pointers on how to interact with blockchain and store digital currency, as well as serve as a basic Coinbase buying guide.
Coinbase is a global digital asset exchange company (GDAX) that serves as a platform to trade (buy and sell) and store digital currencies. Headquartered in San Francisco, California, Coinbase is the official exchange for Bitcoin, Bitcoin cash, Litecoin, Ethereum, and other cryptocurrencies. It accepts fiat currencies in 32 countries for trading and caters to bitcoin transactions and storage (cryptocurrency wallet) in 190 countries across the globe. Please note that these numbers are specific for this Coinbase exchange review (2017/2018), and could change as the business expands.
Frequently Asked Questions (FAQs) About Coinbase
Q: What payment methods does the Coinbase exchange support?
A: Thanks largely to the various Coinbase payment methods, Coinbase is currently one of the world’s largest cryptocurrency brokers. Customers can buy bitcoin and other cryptocurrencies through a connected bank account, Interac Online, a SEPA transfer, and other payment methods, depending on the country, as can be seen in the list below:
|Credit/Debit Card||Australia, Canada, Europe, Singapore, U.K., U.S.|
Source: “Coinbase Review,” Buy Bitcoin Worldwide, last accessed January 8, 2018.
Q: How does Coinbase work?
A: Coinbase has a simple interface which makes it easy for first-time buyers to purchase bitcoins and other cryptocurrencies via a bank transfer or with a credit/debit card. To purchase cryptocurrencies, one needs to link a bank account or credit or debit card to a Coinbase account.
Though a bank account allows for higher limits ($100.00/transaction, $2,500/week), it also takes longer to verify transactions. And when selling cryptocurrency, once the sale is confirmed, it takes two to four days for the proceeds of that sale to show up in your bank account.
However, with a credit or debit card, limits are lower ($200.00/week), but you can purchase digital currencies very quickly. For these transactions, the cryptocurrency shows up in your Coinbase wallet almost instantaneously.
You can also sell cryptocurrencies to your PayPal account, effectively cashing out, as your Bitcoin will be exchanged for local currency instantaneously.
For a more detailed answer to the question, “how does Coinbase work?” see our section on how to buy on Coinbase using a credit card.
Q: Which countries support Coinbase?
A: Coinbase accepts fiat currencies in 32 countries for trading and caters to bitcoin transactions and storage (cryptocurrency wallet) in 190 countries across the globe. The 32 countries and their currencies that support Coinbase are:
North America – U.S., Canada,
Asia – Singapore,
Australia – Australia
Europe – Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, Greece, Hungary, Ireland, Italy, Jersey, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Portland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, U.K. (Source: “Global,” Coinbase, last accessed January 8, 2018.)
But in spite of its growing popularity and wide acceptance, it baffles me that people still ask the question, “is Coinbase safe?”
Q: How safe is the Coinbase exchange?
A: Coinbase is one of the safest exchanges for cryptocurrencies. The three factors that back this claim are:
- Legit company: As Coinbase operates in the U.S., it is required to comply with both federal and state laws and regulations.
- Funds kept in custodial accounts: Coinbase keeps customer funds in custodial bank accounts separate from company operational funds, so your funds will not be used to operate the business. Ninety-eight percent of customers’ cryptocurrency funds are safely stored in physical offline hardware wallets and paper wallets, which are in turn stored in safety deposit boxes and vaults across the globe. The remaining two percent that’s stored online is fully insured.
- Security for personal accounts: Coinbase offers users various features like multiple two-factor authentication (2FA) to boost the security of their personal accounts. It also allows you to track the activity of your account and get notified if a new device or IP address attempts to access your account. (Source: “Coinbase Review,” Buy Bitcoin Worldwide, last accessed January 8, 2018.)
Q: How fast can you send and receive cryptocurrencies (Coinbase transactions speed)?
A: In general, funds are made available in your account as soon as payment is received. But as it partners with payment service providers in different geographic regions, the Coinbase transaction speeds vary according to the location and payment method used.
Cryptocurrencies purchased with a credit or debit card or the USD wallet are made available instantly. However, purchases made using bank transfers could take anywhere between three and 10 days. However, the delivery time will be displayed before you confirm your order.
Q: What is the Coinbase exchange rate?
A: The rate for buying or selling digital currency is calculated as the market rate of the digital currency on Coinbase’s GDAX platform. There will be an additional spread between 25 to 100 basis points based on the size of your transaction, market volatility, and length of time using Coinbase. To avoid nasty surprises, the final Coinbase exchange rate will be quoted before the transaction.
In addition to the exchange rate, there will be a conversion fee which varies (1.49% to 3.99%) depending on payment method(s) and geographic location. However, actual deposits of currencies into Coinbase are free.
Q: Are there any Coinbase pros and cons investors need to be aware of?
A: As with any cryptocurrency, Coinbase has its pros and cons. But the advantages far outweigh the disadvantages of Coinbase’s problems.
- High liquidity and buying limits
- Easy way for new users to buy Cryptocurrencies
- Instant buy available, with credit card as a backup
- Limited payment methods
- May track how its users spend the coins
Step-By-Step Guide to Buying on Coinbase
Buying through Credit/Debit Cards
Investors can buy cryptocurrencies on Coinbase instantly with a credit card or debit card. The whole process takes six simple steps from start to finish:
- Log in to your Coinbase account.
- Navigate to account settings; take your cursor to top right corner and click on your name. Click on “settings” in the drop-down menu, then click on “Payment Methods.”
- Click on Credit/Debit Card.
- Enter your credit/debit card information (only Visa and MasterCard).
- If your credit/debit card has been successfully added you will get a confirmation (a green check mark with a green circle around it). Below the circle you’ll read “credit/debit card added.” Below this will be a buy button.
- Click on the buy button, go to the buy page, enter the amount you want to buy, and click “Buy Bitcoin Instantly” (if you are buying bitcoins). Your coins will then be delivered to your Coinbase wallet.
Buying With PayPal
Buying with PayPal is similar to buying with a credit card, except that when you chose a method of payment, you select PayPal. You will be redirected to PayPal, where you’ll need to authorize Coinbase to use your PayPal account. Once you get a hold of cryptocurrencies, you need to find a place to store them. Coinbase itself has different wallet option where you could store them.
Coinbase Wallet Review
Your Coinbase “wallet” can be accessed directly from the web or with the Coinbase app for Android and iOS. Users may create three types of wallets with Coinbase: Coinbase wallet, Coinbase vault, and Coinbase multisig vault.
With the Coinbase wallet, the company controls your cryptocurrency and you must trust that they keep your coins secure. Coinbase controls all private keys, and in effect acts more like a bank than a true wallet.
The Coinbase vault is protected by multiple approvers. A user can add up to 5 approvers to his/her vault and all approvers must authenticate a withdrawal. For even more safety, all withdrawals from Vaults take 48 hours to process.
The Coinbase multi-sig vault is the most secure of the three. With this wallet, Coinbase has one key, another is held by the account holder, and a third (which is encrypted with the account holder’s password) is shared. Spending of the funds can only be accomplished with at least two keys. If Coinbase goes down, you still can withdraw funds with the shared key and your own.
While the above three Coinbase wallets offer you three different levels of security, ideally Coinbase should only be used to buy or sell cryptocurrencies, and not for storing. For the highest security, store your coins in cold storage (a hardware wallet, or a paper wallet). The rule of thumb as far as storage goes is that however good an exchange, it’s not good enough to store your cryptocurrency.