What is Coinbase?
Coinbase is the world’s best-known cryptocurrency exchange. It was established all the way back in 2012 and is known for its robust security measures as well as its low fees.
Along with Kraken it is often touted as being the most secure exchange in the world. Most funds are kept in cold storage which makes the exchange practically immune to online hacking.
It is also one of the most closely watched exchanges in the world. Coinbase offers third-party insurance for cryptocurrency deposits and FDIC insurance for fiat deposits.
Your funds are as safe in Coinbase as they are in a typical bank. Even if they do get hacked you will most definitely be reimbursed.
Coinbase is often referred to as the “Goldman Sachs of the cryptocurrency world”. It operates much like an actual bank.
Many cryptocurrency purists are against Coinbase for this very reason, saying it defeats the initial purpose as to why cryptocurrency was created.
Coinbase has very low fees and an amazing interface. The combination of low fees, high security, an intuitive interface and a long history means that Coinbase is one of the most trusted and popular exchanges in the world.
The downside of this is that the customer service is generally awful as it has too many customers and not enough support and capacity.
Coinbase currently supports 32 countries, which is less than the number of countries supported by its main competitors. Other exchanges operate worldwide with few restrictions as to which countries are supported.
However, these exchanges generally have lower security protocols and may accept only cryptocurrency as opposed to fiat deposits and withdrawals.
Currently, Coinbase has over 7.4 million active users and is often described as a one-stop shop for all things cryptocurrency. It has its own exchange called the Global Digital Asset Exchange (GDAX). Traders and regular users can avail of lower fees and larger volumes through this interface.
Coinbase also offers an online wallet for the storage of funds. There are many advantages of Coinbase and it is regarded as a premium cryptocurrency service with good reason. It also offers high liquidity for traders.
Canada is commonly listed as one of the top ten most Bitcoin-friendly nations in the world. It is home to many cryptocurrency startups and Bitcoin ATMs. According to Coin Radar there were a staggering 321 Bitcoin ATMs in Canada in 2017.
Many of these ATMs are Litecoin-compatible, with some offering Ethereum. Bitcoin is legal in Canada and tax rules apply to digital currency transactions. Therefore, cryptocurrencies come under the Income Tax Act.
Canada is one of the countries that Coinbase supports, and Canadian customers can use Coinbase to purchase Bitcoin, Litecoin, Ethereum and Bitcoin Cash. Canadian customers can purchase cryptocurrency directly using a credit or debit card.
The fees for this are 3.99% but the buying experience is smooth and user friendly. This credit card fee is lower than on most other Bitcoin exchanges. You can receive your cryptocurrency instantly when using this channel.
Many customers can avoid fees by transferring funds to the Coinbase account and then transferring the deposit to the GDAX account. Trading fees on GDAX are .25% for taker and 0% for maker orders. Unfortunately for Canadian customers, this is not an option.
The only acceptable payment method for Canadian customers is via credit or debit card, which incurs a 3.99% fee. The cryptocurrency will be available instantly but this is a serious drawback for Canadian customers wishing to avail of lower fees.
Fees to withdraw from your Coinbase wallet are determined by the network mining fees which have nothing to do with Coinbase. This will depend on the particular cryptocurrency and how difficult it is at that time for miners to verify a transfer. Generally, these fees are minimal but there have been periods when Bitcoin fees were astronomical.
As secure as Coinbase is, it is still considered good practice to keep funds out of exchanges as they have a history of being hacked. For maximum security it is considered good practice to only keep what you need on an exchange and to have the majority of your funds stored on a local wallet.
There are multiple wallets available for all the major cryptocurrencies. The best Bitcoin wallets include Electrum and Exodus.
The verification procedures for Canadian customers are the same as for everywhere else. Coinbase has to comply with legal procedures and is tightly watched by regulatory authorities. It therefore has quite a strict policy which can be very frustrating to many customers.
If you want to increase your weekly limit of purchases and withdrawals, you will have to submit photographic identification. This is also required for those wishing to purchase via credit card.
This is standard practice for all those wishing to buy with credit cards on all platforms, including Changelly and Shapeshift.
Up to $150 of Bitcoin can be purchased on CoinMama without any form of verification. You can also buy Bitcoins without verification via Local Bitcoins as well as by going to the nearest Bitcoin ATM if there is one near you.
Whether you live in Afghanistan, Cambodia or Canada, the customer service is the same – awful. There is really no way around this. You just have to hope that you don’t run into any issues because if you do, chances are it will take weeks to get resolved. This is because all exchanges are overloaded with new users right now.
But Coinbase’s customer service is actually said to be a little worse than the industry standard, and verification can take months. Or it can be done within a week—it all depends.
One of the possible criticisms of Coinbase aside from its high regulatory underpinnings is that it does not offer a large selection of cryptocurrencies. The GDAX exchange offers a mere 12 trading pairs at the time of writing.
This can be contrasted to marketplaces such as Cryptopia which offer nearly 600 trading pairs. However, Cryptopia is a P2P exchange and does not offer the level of security that Coinbase does.
Other competitors such as Binance, Kucoin, Kraken and Poloniex offer far more trading pairs that Coinbase. For those looking for alternative coins that are new to the market, Coinbase is not the best option despite its many advantages.
Another thing to be aware of for all customers, not just Canadians, is that Coinbase most certainly tracks how you spend your cryptocurrency, more than any other exchange. If you make profits on this platform be sure to disclose them to the appropriate authorities.
Coinbase has ties with many regulatory departments and the IRS have been pushing Coinbase to disclose customer information for some time, which it most likely has already done.
To put the nail in the Canadian Coinbase coffin, due to a security glitch Coinbase is not currently accepting new credit cards. This means that Canadian customers no longer have the option to buy any form of cryptocurrency on Coinbase until the issue gets resolved, unless their card was already linked prior to the glitch.
An update to the card networks’ MCC codes resulted in many Coinbase customers being overcharged. One customer reported being charged $67,000 for a transaction under $1000. Coinbase is refunding those affected but Canadians must look to alternative exchanges.
There are a number of Coinbase alternatives for those who wish to use a service that allows bank deposits and has lower verification procedures.
Binance is an Asian exchange that has exploded in popularity in recent months. It was created in 2017 and underwent rapid growth due to its unique business model.
It offers its own coin called the BNB and fees for traders are as low as .05% when using this token. You can withdraw up to 2 bitcoins per day on Binance without the need to get verified.
The disadvantages of Binance are that the platform is not as secure as an established exchange such as Coinbase and it is also a cryptocurrency exchange only. It does not accept fiat deposits so you need to exchange fiat for cryptocurrency on another platform and then transfer it over.
Kucoin is in many ways a replica of Binance. It is an Asian exchange with its own coin called the Kucoin Share (KCS). The key differences between Kucoin and Binance are that Kucoin has a superb customer service team via Telegram Chat. Its interface is also a little nicer than Binance and the majority of its other competitors, being very beginner friendly.
Another difference is that the KCS pays dividends to shareholders in the form of alternative cryptocurrencies. Fiat currency is not accepted and security is not as robust as Coinbase.
On the flipside this is a new exchange with huge upside potential given how well Binance has done. Fees are tiny and both Kucoin and Binance offer over 100 trading pairs compared to the 12 offered by Coinbase.
Local Bitcoins is an exchange for the buying and selling of Bitcoins only. It is a P2P platform meaning it connects buyers and sellers. It offers a massive choice of payment methods to suit people from all over the world.
Canadians can select their seller and payment method and take their first steps into the cryptocurrency world with limited or no verification and minimal hassle. It is 100% safe. The only possible issue is that fees tend to be a little higher than on other platforms, but there are still deals available.
A bank transfer will cost around 2-4% factoring in the platform fee along with the profit the seller will need to make. But this is still cheaper than credit card purchases and is much easier from a verification standpoint.
The easiest and most obvious way for Canadians to attain some Bitcoin is through Canadian Bitcoins. Users can buy and sell Ether, Bitcoin and Litecoin with their Canadian dollars.
The user interface is incredibly easy to use even if it is not exactly the best looking. Canadian residents have a variety of payment options and each option will have its own fee.
Unfortunately, this is a new service and many users report errors and glitches. These errors and glitches include having to wait 2 weeks for purchases to go through, by which time the price of your cryptocurrency could have gone far upwards and you would be paying more than the initial price. Once it gets up and running it could be an effective exchange.
This is the biggest Canadian Bitcoin exchange. It was launched in 2013 and allows users to purchase Bitcoin and Ethereum with CAD. Based in Vancouver, the exchange aims to make buying and selling Bitcoin quick and easy via a user-friendly platform.
There are a number of payment options but the cryptocurrency pairs are minimal. Quadriga CX offers good security features. Trading fees are reasonable at .5%, though many newer exchanges crush this number, with Binance offering .05% when using their token.
If you are a Canadian wanting to use Coinbase, be aware that there are other options available. Coinbase offers limited cryptocurrency trading pairs, only supports credit and debit card and has a terrible customer support team as well as a strict verification policy that is hit or miss in terms of the completion time.
Once you do get verified, buying and selling is quite smooth, and you can rest assured knowing that your funds are safe. What you could do is initiate the verification procedure on Coinbase and another well-regarded platform to see which one verifies your data first.
Because you can only buy with a credit card, a lot of the benefits of Coinbase have been wiped out for Canadian customers, as you cannot avail of lower fees using bank transfers.
Canadians are better off going to a different exchange and transferring funds via bank transfer, where fees are closer to 1% than the 4% associated with credit card purchases. Canadian customers can also use Poloniex, Kraken and CoinMama. Of these 3 Kraken is probably the best option, at least in terms of the price.