An Introduction to Coinbase
Coinbase has its headquarters in San Francisco and currently exchanges Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. It was founded in 2011 and grew to one million users in 2014. It formed a number of partnerships and made a series of acquisitions in 2014.
The Coinbase exchange is known as the Global Digital Asset Exchange (GDAX). Over $50 billion has been exchanged on the Coinbase platform, with 10 million customers served and over 33 countries supported.
It is certainly not new to the cryptocurrency game and is usually the first point of entry for new cryptocurrency investors. Coinbase is the world’s largest Bitcoin exchange though these figures are often disputed.
Like all cryptocurrency platforms, registration and identity verification is a requirement. And this is not a pleasant or quick process.
Customer support leaves much to be desired with Coinbase, as they are slow even by cryptocurrency support standards, which is generally awful. Aside from these two necessary evils, Coinbase has a lot going for it.
Coinbase has three main advantages compared to the majority of other exchanges. First, Coinbase is one of precious few exchanges where you can purchase your Ethereum, Bitcoin, Bitcoin Cash and Litecoin with a credit or debit card.
It is quite easy and straightforward to do so, and the platform is user friendly and suitable for beginners. In terms of payment methods, it stands out above the rest.
Secondly, Coinbase fees are very competitive. They charge a flat 3.99% on purchases made with a debit or credit card. Depositing money into your Coinbase account is free. Withdrawing will also be subject to a 1.5% charge or a miner fee for cryptocurrencies.
All in all, Coinbase is one of the cheapest exchanges around. Credit card purchases are instant and bank transfers take five business days for US customers.
If you deposit funds into your Coinbase account and transfer them to the GDAX exchange you might be able to get the fees close to zero, though the GDAX exchange can be a little intimidating. The fee structure can get quite complex depending on what method you use.
And the fees vary from country to country, so it is very difficult to give an exact fee structure for any exchange. Other large exchanges such as CEX.io can charge users up to 10% when all is said and done, which is a gigantic premium.
And this is on top of a pretty humiliating and dreadfully slow verification process for the privilege of buying cryptocurrency at a 10% premium.
The third selling point of Coinbase is that it is as secure as an exchange can possibly be. If you are keeping your money on an exchange, there is no safer place than Coinbase. This is because Coinbase is tightly regulated and watched due to its prominence as a large cryptocurrency platform.
It also has a team of Silicon Valley experts securing the network. If funds go missing on Coinbase, people will go to jail, as they are very much intertwined with US regulatory authorities.
And even if somehow Coinbase does get hacked, it offers FDIC insurance on all dollar deposits. The dollars you store in Coinbase are as secure as the dollars you store in your bank.
Even your cryptocurrency deposits are insured with third party insurance, which is not seen on any other exchange. Coinbase uses Two Factor Authentication (2FA) to add another layer of protection.
To make the most of your Bitcoin, Litecoin, Bitcoin Cash or Ethereum purchase, simply deposit USD via bank transfer to your Coinbase account. Then sign up for GDAX, which shares the same backend as Coinbase. Then enjoy paying .3% on your purchases, or 0% if you place a limit order.
The interface is not as appealing as Coinbase, which is designed to entice new people to the market where they pay higher fees for ease of use. But with a little bit of hassle you can legitimately avoid paying fees for your coins.
However, this only works for people with American bank accounts, and foreign banks accounts will not save much with this method.
In other words, Coinbase ticks many boxes. It is cheap, beginner friendly, offers a huge variety of payment options and is extremely secure.
There are few downsides and this remains one of the most popular worldwide exchanges for a reason. Its customer service team is even worse than other exchanges but not by all that much.
Taking all the selling points at face value, it would seem that Coinbase is foolproof and the way to go. But it recently suffered from a glitch which has severely damaged its credibility.
Card networks (mainly Visa and Mastercard) made an update to their credit card system involving an MCC code change. For some reason this caused people who bought through Coinbase with a credit card to be charged multiple times for a single transaction.
Many had their whole bank account drained. Coinbase has promised to rectify the issue but it may take some time. Another potential disadvantage for certain individuals is that Coinbase is quite possibly the most tightly regulated exchange in the world.
If you make an accounting mistake and fail to declare profits made on cryptocurrency, then you are far more likely to find yourself face to face with an IRS representative.
Coinbase is a large, cheap and secure exchange. It is one of the best there is, but the cryptocurrency exchange industry is not exactly competitive. Exchanges can easily get away with sloppy service and huge fees.
Make sure to deposit with a bank account to avoid costly credit card fees and the price can be quite reasonable on Coinbase. It is more suitable for US residents, but it does currently support 33 countries.
Coinbase is also adding a PayPal-like financial platform built for cryptocurrency, which could well make for an integrated payment experience. It could be a bridge between cryptocurrency and the real world of everyday purchases.