Coinbase Review: MUST READ (2020)

0

Coinbase is one of the world’s most popular cryptocurrency exchange and is well known because unlike other exchanges, is based in and subject to US regulations. The Exchange is split into several categories, Coinbase– for retail users, Coinbase Pro– their professional trading platform for individuals, Coinbase Prime– for institutional clients. In this review we highlight each of their various features and controversies that you need to know.

Key Advantages of Coinbase

  • Regulated under US law.
  • One of the few exchanges available for US citizens.
  • Maintains an insurance policy against theft or hacks.

Key Features and Functions

Coinbase Pro
Coinbase Pro

One point to note is that Coinbase only offers spot trading, unlike other exchanges which offer other products such as derivatives, futures trading etc.

The Exchange is split into several categories catering for different types of users. Coinbase is for retail users, Coinbase Pro for individual professional traders and Coinbase Prime for institutional clients. This distinction is because they each have different functions to cater for the user. By way of example the main difference between Coinbase and Coinbase Pro are that Coinbase Pro offers charting tools, real-time order books, among other tools to help the advanced trader make most out of the Exchange. Coinbase Pro and Coinbase Prime both offer cheaper transaction fees and more supported cryptocurrencies. However they are still substantially fewer than other Exchanges out there.

Coinbase Pro interface
Coinbase Pro interface

Despite only offering spot trading, Coinbase does have its own suite of products to assist users in getting started. For example it has its own wallet, and allows users to earn cryptocurrencies by participating in their courses.

Coinbase products
Products offered by Coinbase

History of Coinbase

Coinbase was launched in October 2012 and is based in the United States. Their headquarters are located in San Francisco, California. It is also becoming widely used in Europe where it has an operating license. It currently has over 30 million users and over USD$150 billion being traded on the Exchange.

The Exchange has currently expanded to over 100 countries across the globe.

Name:
Binance
Fiat Options:
USD, EURO
Rating:
4.5 Star Rating
Name:
Coinbase
Fiat Options:
Generally accepts your local currency
Rating:
3.5 Star Rating
Name:
Bybit
Fiat Options:
-
Rating:
4.1 Star Rating
Name:
Phemex
Fiat Options:
USD
Rating:
4.3 Star Rating
Name:
FTX
Fiat Options:
USD, TRY, AUD, GBP, EUR & HKD
Rating:
4.5 Star Rating
Name:
OKEx
Fiat Options:
USD, EUR, GBP and more
Rating:
4.4 Star Rating
Name:
PIT Exchange
Fiat Options:
EUR, USD, GBP & TRY
Rating:
4.5 Star Rating

Supported Countries

Coinbase is available in over 100 countries. Most notably the US, which a lot of Exchanges cannot support due to regulatory issues. However whilst Coinbase says it is “available” in some countries, it may not offer the full set of services i.e. being able to “convert” between different cryptocurrencies, and to “buy and “sell” the same. Check here for the services available for your specific country.

Supported Cryptocurrencies and Payment Methods

Unfortunately, Coinbase has very few listed cryptocurrencies. Also, the availability to buy, sell, send and receive a particular cryptocurrency depends on (a) whether you are using Coinbase or Coinbase Pro; and (b) your location.

Here’s a chart of the cryptocurrencies supported by Coinbase depending on your location.

Coinbase provides a variety of payment methods and most importantly, allows traders to pay in their local currency. However there are regional restrictions for payment methods. Below is a helpful list of the accepted payment methods for various countries.

  • Bank deposit: Europe, US, UK
  • Credit/debit card: Available for most countries including Australia, Canada, Chile, Europe, Mexico, UK and US (debit card only).
  • Paypal: Canada, Europe (most countries), US and UK

You can check here to see the accepted payment methods for your specific country.

The Exchange also has its own Coinbase Card– a Visa-based debit card allowing customers to make purchases online and in-store using cryptocurrencies. However it is currently only available to UK and European customers.

Deposit and Withdrawal Fees

There are no fees for deposits onto Coinbase. As for withdrawals, Coinbase will only charge you the relevant bank transfer/wire or network fees required for sending your funds to you.

Trading Fees

Coinbase charges different fees depending on whether you are on Coinbase, Coinbase Pro or Coinbase Prime. Fees are cheaper for the latter 2 due to the larger volume by these traders.

Coinbase charges 2 sets of fees for trades: a Spread Fee (around 0.5%) for each trade and a Coinbase Fee which is the greater of (a) a flat fee, the amount of which depends on the amount of the transaction; and (b) a variable percentage fee depending on your region, product feature and payment method.

For conversions from one type of cryptocurrency to another, Coinbase charges a spread margin of up to 2%. No separate Coinbase Fees are chargeable for this.

Controversies

The Exchange has been the subject of controversy in the past for making statements that it had sold client data to outside sources. Specifically, Christine Sandler in an interview with Cheddar on 2nd March 2019 justified their acquisition of Neutrino by saying that, “It was important for us to migrate away from out current providers…They were selling client data to outside sources and it was compelling for us to get control over that…” The target company- Neutrino themselves are also controversial, having links to Hacking Team- a company which had been selling to governments with dubious human rights records. In relation to Sandler’s statement, Coinbase says that she misspoke and in an interview with Coinbase said that it never shared customers’ personal information with third-party blockchain analysis vendors. These actions clearly upset the cryptocurrency community, and the hashtag #DeleteCoinbase was circulating on social media where users were encouraging others to delete their accounts.

In late February 2020, Coinbase was identified as one of the entities working with Clearview AI, a controversial facial recognition technology provider who was facing legal threats from Apple and Google for lack of scrutiny into its practices. Coinbase admits to testing Clearview’s software but denies that customer’s data was used in any of such tests.

The Exchange has come under fire from users during the Bitcoin price dump on 10th May 2020. On 10th May 2020 at 17:26 Pacific Time, the Exchange’s website and mobile app both experienced outages. 10 minutes later Coinbase came out with a notice saying that it was still investigating this outage, by 18:14, service had been restored. However during this time the price of Bitcoin tumbled from USD $9,500 to $8,100, leaving users only able to helplessly watch the crash and unable to trade.

This isn’t the only time this has happened on Coinbase. As recently as 29th April 2020, the Exchange suffered ANOTHER outage whilst Bitcoin prices shot up to just under USD $9,000. And AGAIN back in March 2020 whilst Bitcoin lost 20% of its value in under 30 minutes.

Needless to say, users are not happy with the situation, with some noting that Coinbase “crashes” when there is a huge change in Bitcoin prices. And whilst some attribute this to the Exchange being overloaded with users, others are not satisfied with how Coinbase has not fixed this over the years considering the high fees charged from users.

As to the latest crash on 10th May 2020, Coinbase has so far declined to comment.

Is Coinbase safe in 2020?

Coinbase

The Exchange has top of the range security features. Additionally, being licensed in the United States, security is not a compromise since Federal laws apply.

In terms of the Exchange’s method for fund storage, only 2% of customer funds are held in hot wallets. The other 98% is kept in secure cold wallets in different parts of the world. So far, it has not been hacked…yet. Also, Coinbase has an insurance policy which insures against theft of cryptocurrencies resulting from security breaches, hacks, employee theft or fraudulent transfer.

On account security, Coinbase advises its users to use two-factor authentication. The system supports either short messages sent to the registered mobile phone number, Google Authenticator, among other reliable ways to prevent malicious account login.

HOWEVER, storing substantial assets in exchanges is not recommended as exchanges are prone to hacks. The best practice is to only leave enough assets for day to day trading on exchanges, the remainder should be stored offline on hardware wallets for.

To learn more about hardware wallets, check out our reviews on the Ledger Nano X and Trezor Model T.

Conclusion: Coinbase exchange pros and cons

Pros

  • Coinbase has remained one of the most secure and reliable cryptocurrency exchanges.
  • The Exchange maintains an insurance policy against hacks and theft, which is reassuring for users.
  • Generally available in many countries, including the US with many payment options.

Cons

  • Fee structure is highly confusing and not the cheapest out there.
  • Lack of trading features.
  • Not many available cryptocurrencies compared to other exchanges out there.
  • Seems to be unable to handle sudden surges of users and has a history of crashing during periods of high price volatility.

Final Score

Services offered: 3/5
Cryptocurrency support: 3.5/5
Fees: 3/5
Security: 4.5/5
Final Score: 3.5

To learn more, check out our review of the top cryptocurrency exchanges.

Updated on 11th May 2020 as to Coinbase’s latest controversies.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.