Coinbase review and test – Is it a scam or not?
(5 / 5)
Secure offline storage
Bitcoin was created in 2009, and it didn’t take long for the cryptocurrency to take the world by storm. In the decade it has existed, it has revolutionized the way we can transact, and many believe cryptocurrencies will eventually replace what we now consider fiat money.
Three years after Bitcoin’s wake, Coinbase was established, and in its nine years in the industry, it has proliferated to become the largest cryptocurrency exchange in the United States.
But how does it work? And what makes traders choose Coinbase over other exchanges? Here’s everything you need to know about the leading crypto exchange.
Introduction to Coinbase:
Coinbase is a digital currency exchange with a focus on cryptocurrencies. It was founded by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a Goldman Sachs trader, back in June 2012.
It didn’t take long for the company to grow – it received a $30 million investment from various sources, including venture capital firms, and by 2014, over a million users were using Coinbase. In the same year, Coinbase acquired Blockr and Kippt and partnered with companies like Dell, Expedia, and Time Inc., just to name a few, enabling them to accept Bitcoin payments.
While Coinbase initially only allowed users to buy and sell Bitcoin, after the company obtained the BitLicense from the DFS in 2017, support for trading Ethereum, Litecoin, and an array of other cryptocurrencies was added.
The company is fully regulated and licensed to operate in over 40 states in the U.S. In addition to enabling transactions and storage of Bitcoin in 190 countries worldwide, Coinbase also allows users from 32 countries to exchange cryptocurrencies such as Bitcoin Cash and Etherium Classic with fiat currencies.
(Risk Warning: Your capital can be at risk)
Who is Coinbase for?
Coinbase is considered the go-to platform by newbie crypto investors and seasoned traders alike.
This is because the company has positioned itself as a safe harbor – unlike many of its competitors, it has never been hacked. It’s also worth noting that the company pursues compliance with existing regulations uncompromisingly, putting it on the right side of the law in a time when the industry desperately needs tighter regulations.
Other than cryptocurrency investing, the company enables:
- Crypto trading via its advanced trading platform
- Creation of custodial accounts for institutions
- Storage via an easy-to-use wallet for retail investors
- Investment in USDC; a stablecoin backed by the U.S. government
But, for most, having access to all of these avenues is a trivial matter. The simple interface, high liquidity, and safe access to numerous altcoins are what draws millions of traders from across the world to the platform.
Coinbase continues to lower the barrier to entry for crypto investment, which, to this day, is viewed as a convoluted sector by most. On the flip side, while the company operates like a traditional financial services provider, its ultimate mission is to help forge an open financial system – a vision that many crypto enthusiasts actively pursue.
It’s not hard to see why both newcomers and trading professionals prefer using Coinbase.
Coinbase: Regulation and safety for customers
Coinbase is one of the leading crypto exchanges with 10+ million users worldwide and takes several security measures to ensures that every user’s data is safe.
The risk of collapsing makes security critical from the company’s standpoint – Coinbase learned a lesson from bitcoin exchange Mt. Gox’s mistakes. Mt. Gox collapsed in 2014 due to security breaches and database leaks that caused the company to lose $500 million of its user’s funds from a single hack.
Coinbase takes pride in the fact that it has never been breached before, and that fact alone drives millions of new traders to choose Coinbase over other companies. But it’s important to note that while Coinbase itself has never been hacked, Coinbase users have had their accounts hacked before.
These incidents only recapitulate the importance of storing cryptocurrencies in private wallets rather than leaving them on a platform.
Coinbase stores 98% of customer funds offline using hard drives. Paper backups are also made, making Coinbase one of the most secure exchanges you can use. Cold storage is virtually impossible for hackers to access since the hard drives the funds are stored on are disconnected from the internet.
What’s more, the cold storage is then dispersed to secure vaults all across the world. This leaves you no reason to hesitate to use the platform to invest and trade crypto.
Coinbase also enforces the use of two-step verification, and every user on the platform must have it set up. Only after you enter the code that you receive on your phone will you be able to access your account or make a transaction.
The company’s website follows industry practices, too. All the traffic is encrypted, and wallets and keys on the site are also encrypted. One of the biggest things that drive new crypto traders to Coinbase is their insurance. While most of the cryptocurrency is stored in cold storage vaults, the remainder is insured by Lloyd’s of London.
If you’re in the U.S., the funds in your wallet are insured by the FDIC. However, the maximum amount that the FDIC insures per wallet is $250,000.
It is important to remember that protecting your Coinbase wallet is your responsibility. If you lose access to your wallet because your login credentials are compromised, the company will not replace the funds. This is why the company makes two-step verification mandatory for all users.
- Cold storage
- Two-step verification
- High insurance
- Encrypted website
Cryptocurrency exchanges handle fiat-cryptocurrency trading pairs (for instance, BTC/USD), making it possible for users to trade one for the other. While that sounds both intriguing and convenient, what scares customers from trading cryptocurrencies the most is its history of use in the black market.
The lack of established regulatory bodies and the legislature has driven customers away from unlocking cryptocurrencies’ potential for a long time.
However, Coinbase broke through those barriers by differentiating itself from the competition in a unique way. As mentioned earlier, the company spends a substantial amount on acquiring licenses and complying with rules set by regulatory bodies.
It’s important to note that money transmission laws vary from state to state, but Coinbase leaves no stone unturned to make customers feel at ease trading crypto.
Coinbase is one of the handful of companies that have acquired the New York Virtual Currency License, which is also called the “BitLicense.”
As you can tell, Coinbase asks for a lot of personal information to allow you to trade and store crypto assets on the platform. This is because Coinbase is a regulated financial services company registered in the United States, and it is required to collect those details by law.
Unlike some other exchanges, it does not allow users to trade crypto assets anonymously. In addition to a government-issued ID (like a copy of your driver’s license), you must also submit your banking information to use the platform.
But the good news is, Coinbase stores the information securely, and none of it is shared with third-parties.
It is also appeasing to note that all the data held by the company is held in accordance with the law — specifically, the Data Protection Act 2018 and the General Data Protection Regulation. You can use Coinbase knowing that all of your data is completely safe.
(Risk Warning: Your capital can be at risk)
Trading conditions for Coinbase traders
There isn’t much you need to trade using Coinbase:
- You must be at least 18 years old. The company will ask you for proof.
- You must have a government-issued ID. Coinbase does not accept passport cards.
- You must have an internet-connected computer or smartphone.
- You must have a phone number to receive SMS messages.
It’s important to note that not all Coinbase services are available in every country. So, in addition to meeting the above requirements, you must be in a country where the company allows crypto trading.
Coinbase limits and liquidation
There is a limit to how much you can deposit in an account, and Coinbase displays these limits to every customer. Coinbase offers two accounts: Level 1 and Level 2. When you verify your email address and name and accept the company’s terms and conditions, you will get access to a Level 1 account.
A Level 2 account is a simple Coinbase trading account, to which you get upgraded to after providing and verifying your personal information. You must submit a photo ID to get access to a Level 2 account.
It’s a little odd that the company does not give you any information about your account’s limit unless you’re making a deposit. Nonetheless, once you verify your identity with Coinbase, if you’re in the U.S., Coinbase will allow you to purchase up to $50,000 worth of cryptocurrency per day.
On the other hand, if you’re in the EU, you can buy up to €30,000 worth of crypto in a day.
But the buying limits aren’t standard across all payment methods. Coinbase will limit you to withdrawing only $7,500 in a day if you use a debit card. In contrast, if you use ACH, you can only transfer $25,000 in a day.
It’s important to note that your transactions aren’t subject to any withdrawal limits if you use wire transfers to withdraw funds.
Coinbase pricing and fees
Another important point of the trading conditions is the fees for traders. Coindbase is a very competitive platform and offers a 0.5% flat fee for every cryptocurrency transaction. Also, there are fees for credit transactions around 2%. See the table below for more information:
|Buy crypto:||A flat fee of 0.50%, transaction amount less or equal $ 10 the fee is $0.99, transaction amount more than $10 and less than $25 the fee is $1.49, transaction amount more than $25 and less than $50 the fee is $1.99, the transaction amount is more than $50 and less than $200 the fee is $2.99|
|Sell crypto:||A flat fee of 0.50%, transaction amount less or equal $ 10 the fee is $0.99, transaction amount more than $10 and less than $25 the fee is $1.49, transaction amount more than $25 and less than $50 the fee is $1.99, the transaction amount is more than $50 and less than $200 the fee is $2.99|
|Credit transactions:||A flat fee of 2%|
|Cryptocurrency conversions:||Spread up to %2.00|
(Risk Warning: Your capital can be at risk)
Test of the Coinbase trading platform
While you can buy and sell cryptocurrencies using Coinbase, the platform is tailored for use by beginners, and since it does not have any trading charts, it won’t serve experienced traders well.
However, you can access trading charts and an array of advanced trading features by getting Coinbase Pro. These two types are offered:
Normal Coinbase trading platform:
Coinbase Pro trading platform:
All the details you need to make a profitable trade are laid out for you right on the dashboard. Its clean design, coupled with its high responsiveness, make it an excellent all-around interface.
You can make trades quickly using the trading sidebar right from the dashboard. A trade can be made in a matter of seconds with a couple of mouse clicks.
Alternatively, if you’re on the move, you can use the Coinbase Pro app on your phone to make trades. It comes with all of the same features as the web interface, except the account verification feature. You can verify your account only using a web browser.
Coinbase Pro enables you to:
- Buy and sell 50 cryptocurrencies, including BTC, ETH, Litecoin, ATOM, ZEC, USDC, LOOM, and ZEC.
- Supports more than 4,000 different markets
- Place market orders, stop orders, limit orders, good ‘til canceled orders, and a lot more.
- Margin trade with up to 3x leverage – but this is not available for all jurisdictions.
- Carry out crypto-to-crypto trades in 57 markets.
- Make different portfolios. If you’re the kind of trader that employs several strategies to reduce risk and increase chances of success, you can segment your funds into different portfolios with Coinbase.
- You can use the Coinbase API to program all kinds of trading bots. While Coinbase doesn’t have this feature, Coinbase Pro comes with a WebSocket feed that fetches real-time market data.
If you invest on behalf of an institute, you can create a Coinbase Prime account. It works on the Coinbase Pro platform but adds features like margin finance, high-touch execution OTC trading, execution algorithms, and more.
You also get access to professional third-party platforms like TT and dedicated institutional coverage.
One of the best things about Coinbase Pro is that you don’t have to pay much to make deposits and withdrawals. It has the best fees in the industry. However, Coinbase Pro does charge a little more than other platforms for trading cryptocurrencies.
It’s also worth mentioning that Coinbase Pro has made a margin trading feature available to users in approved jurisdictions. The company will charge you an interest rate of 8% (per annum) regardless of your order type.
The interest is calculated on an hourly basis, and if you opt to use the feature, you will be charged daily for all the hours you used the leverage.
How to trade with Coinbase?
Coinbase makes trading cryptocurrency extremely easy – the entire process is tailored for a beginner. You can access the platform on your phone by downloading the app. However, it’s important to note that the company does not offer any downloadable trading software, and you can only make trades using the web-based application.
See the order mask on the normal trading platform below:
After you log into Coinbase, the dashboard will show your portfolio balance. You will also see its performance on adjustable timeframes like one hour, 24 hours, one week, and one year.
There will be a banner above your portfolio balance, where you will find the “Buy crypto” button. Using it to buy crypto assets is very straightforward – you simply enter the dollar value and place a market order to buy whichever cryptocurrency you want.
The same button also gives you access to an option to sell or convert your cryptocurrency. You can also choose to set up recurring orders every day, once every week, on the first and the 15th of every month, or a set date every month.
Sending and receiving cryptocurrency using Coinbase is just as easy as buying cryptocurrency. The send and receive options are visible on the top-right corner of the screen. Using these options, you can send cryptocurrency to other wallets from your own Coinbase wallet or receive cryptocurrency from other cryptocurrency holders.
It’s crucial to note Coinbase does not offer the ability to withdraw your funds into private accounts without incurring charges. However, cryptocurrency withdrawals from Coinbase are 100% free. So, if you wish to trade in high volumes, you may find yourself shelling out cash to ensure your holdings are safe in an offline wallet.
Trading with Coinbase Pro is the better option for advanced traders because you can use the following orders:
- Market order
- Limit order
- Stop order
- Algorithmic trading
See the order mask of Coinbase Pro below:
How to open an account with Coinbase?
Opening an account with Coinbase is free and straightforward. All you have to do is enter your name and email address and set a password you wish to use. You will then need to verify your email address before you are asked to enter your phone number.
A code will be sent to your number by SMS, which you must enter on the website. This will link your phone number to your Coinbase account, and the number will later be used for two-step verification. You must remember that with Coinbase, two-step verification is mandatory for all accounts and cannot be turned off.
After completing this stage, you will need to enter some identification information to finalize your account’s creation. You must prove your identity by supplying Coinbase with a state identification, just like you would create a bank account. If you’re in the U.S., you will need to enter your social security number.
After your identity is verified, your account will be created, and you will be able to add a bank account or card to your Coinbase account and start trading.
(Risk Warning: Your capital can be at risk)
Does Coinbase offer demo accounts?
Demo accounts are in increasing demand since they allow new users to protect the funds in their live accounts from risk and practice strategies. While exchanges like Bitfinex offer demo accounts, unfortunately, Coinbase does not offer a demo or paper trading account. Regardless of your experience as a trader, you will need to make a deposit to access all of the platform’s features.
Is there a negative balance protection on Coinbase?
Regardless of which broker you use, a negative balance will occur if you buy cryptocurrency or deposit money into your account, but the bank or card issuer fails to wire the amount to the company.
The good news is, with Coinbase, the negative balance is always equivalent to the cash value of the transaction. Even if the value of the cryptocurrency goes up (or down), you will need to pay the same amount.
However, your account will be restricted until you clear the negative balance.
Deposit and withdrawals
You can buy Bitcoin or any of the 43 cryptocurrencies available on Coinbase in seconds using a debit or credit card. However, if you choose to buy the crypto using your bank account or via a wire transfer, it will take up to three business days for you to clear the transaction.
Depositing cryptocurrency is free, but you will need to pay the network fees, and there are no guarantees to clearing speed – it depends on the busyness of the blockchain. Most transactions are cleared within one hour of initiation.
However, you will need to pay between €0.15 to $25, depending on where you live and your preferred payment method to withdraw funds. You can withdraw the funds directly into your bank account or your PayPal account.
The following payment methods are available:
- Credit Cards
- Bank transfer
Withdrawals are lightning-fast, this also applies to cryptocurrency withdrawals. From our, experiences the withdrawal system on Coinbase can be trusted. It is secure and fast.
Coinbase Pro deposit and withdrawal methods
You can transfer funds between your Coinbase and Coinbase Pro account almost instantly and for free.
If you want to deposit Euros, you will need to do it using a SEPA bank transfer at no charge. If you’re in the U.S., you can either do a standard wire transfer or by an ACH deposit (for free). You can deposit Great Britain Pounds via SWIFT transfer free of cost.
There are no fees for withdrawing fiat currencies for Coinbase Pro users, either. However, it’s important to note that Coinbase Pro has a daily withdrawal limit in place, which begins at $10,000.
Coinbase support, education and service
One of the best things about Coinbase is its extensive knowledge base – you will find solutions to most issues in it. It also has plenty of tutorials that can help you learn how to use the platform.
Users can use the contact form at the help center to get assistance with their issues, and in case your account gets compromised, you can call the mobile support line for instant support.
However, Coinbase Pro users also get a live support chat option, which has excellent response times.
Another interesting feature of Coinbase is the point “Get more crypto”. It is possible to earn free coins if you are watching learning videos on their platform. There are multiple options for it. You can earn more than hundreds of dollars in a few hours.
Accepted countries and forbidden countries
Coinbase operates in 190 countries on six continents and is functional in all key markets, including Australia, the United Kingdom, Singapore, Canada, Hong Kong, Switzerland, and Brazil.
However, it’s important to note that service availability varies across countries. The company allows buying and selling crypto in most European countries, but only the convert feature is available in most Asian and African countries.
You can take a look at Coinbase’s full list of supported countries here.
Conclusion on our Coinbase review: Beginner-friendly platform
Coinbase is one of the world’s leading crypto exchanges for good reason. Its ease of use and reasonable pricing makes it an excellent choice for beginners because the platform is very user-friendly. You can open an account in less than 10 minutes and start buying crypto directly with a few clicks.
If you’re more experienced, you could use Coinbase Pro and use the plethora of features it offers to pull in some serious profits. Professional chart analysis is possible and some more tools for deep liquidity trading.
All-in-all, it’s a platform you can trust to trade cryptocurrencies. We recommend its service to our readers.
Advantages of Coinbase:
- High security
- Low trading fees
- Fast account opening
- The easiest way to buy crypto for beginners
- Professional Coinbase Pro platform
- Mobile app
- Earn free cryptos
Coinbase offers an outstanding cryptocurrency trading experience. We can fully recommend this exchange. (5 / 5)
(Risk Warning: Your capital can be at risk)