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.
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.
Key Features and Functions
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.
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 is available in over 100 countries. Most notably the US, which a lot of Exchanges cannot support due to regulatory issues and most of Europe. However whilst Coinbase says it is “available” in these 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.
Coinbase provides a variety of payment methods and most importantly, it 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.
Coinbase charges different fees depending on whether you are on Coinbase, Coinbase Pro or Coinbase Prime. Fees are cheaper for the latter 2 as those traders would generally do more trades.
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.
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.
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 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.
Is Coinbase safe in 2020?
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.
Conclusion: Coinbase pros and cons
- 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 with many payment options.
- Fee structure is highly confusing and not very cheap.
- Lack of trading features.
- Not many available cryptocurrencies compared to other exchanges out there.
Services offered: 3.5/5
Cryptocurrency support: 3.5/5
Final Score: 3.6
To learn more, check out our review of the top cryptocurrency exchanges.