This Coinbase review will help you learn everything there is to know about one of the household names in the crypto sphere. It’s one of the biggest cryptocurrency exchanges in the world and was the first crypto-related company to be publicly listed on NASDAQ, a regulated US stock exchange.
Consequently, updating our Coinbase review has been some time in the works now. And while there are dozens of such reviews that can be found online, ours is a bit different. We decided that we needed to give more attention to an important aspect of Coinbase that other websites often overlook – the ethics behind its offering.
We will give you a full overview of the Coinbase company and an in-depth look at the products they offer. You will find the usual aspects, such as the features, fees, methods of payment accepted, and the pros and cons of its products. That said, we will also look into whether Coinbase follows the general ethics of blockchain technology.
In the end, you should have a good idea on whether you should consider Coinbase as your go-to provider for crypto dealings or look elsewhere. Let’s start with a short introduction to the company and its road to success.
A short introduction to Coinbase
Brian Armstrong and Fred Ersham founded Coinbase in 2011, in the very early days of blockchain technology. The company launched its services in 2012 and has been offering cryptocurrency brokerage services ever since.
In 2015, it received a $75 million funding led by several financial institutions, including the New York Stock Exchange. This helped its growth considerably over the following years. Quickly enough, Coinbase became one of the most popular digital currency exchanges in the world. It dwarfed the competition in trading volume and number of users, or at least until the coming of Binance.
More recently, it set an important milestone in the blockchain industry. It became the first crypto-related company to be officially listed on NASDAQ under the “COIN” ticker.
This event has contributed to legitimizing the blockchain and cryptocurrency sector as a whole. After the listing, a large number of institutional investors started actively buying crypto-assets such as Bitcoin. Many experts consider this as a major catalyst in the crypto bull run of 2020.
Today, Coinbase remains the largest US-based cryptocurrency exchange, with more than 70 million verified users and over $300 billion of quarterly traded volume. All in all, it’s as legit as crypto companies can get.
Coinbase main products
Over the years, Coinbase’s line of investment products has considerably grown, as well as the diversity of digital assets offered on its platform. Let’s have a detailed look at what you will be encountering once you dig deeper into their offering.
Coinbase Cryptocurrency exchange
We consider the Coinbase trading platform on Coinbase.com as the main product of the company. This simplified cryptocurrency exchange has been specifically designed for beginners in the crypto sphere to buy and sell cryptocurrency. It pairs ease of use with a large number of payment methods, including PayPal, which is a rare sight on crypto exchanges.
You can access the Coinbase platform through a web application as well as a mobile app for both Android and iOS users. You can use the app as a hot wallet for your funds as well as for buying and selling more than 100 different cryptocurrencies. Your Coinbase app wallet funds are also FDIC insured, meaning that users’ deposits in the Coinbase USD wallet are safe up to $250.000 per individual.
Coinbase is also behind the very popular stablecoin USD Coin. As such, eligible users that hold USDC in their wallets can gain passive income rewards and enjoy lower fees when trading.
That said, all of this comes with one huge caveat. It’s important to note that if you are using the Coinbase app, the company holds the private keys to your funds. This means that you have no control over what happens with your cryptocurrencies. Coinbase can revoke access to your crypto if you transgress any of their terms of service. Moreover, you will need to submit a withdrawal request every time you wish to transfer cryptocurrencies.
Coinbase Account vs Coinbase Wallet
Another product offered by Coinbase is the Coinbase blockchain wallet. Don’t confuse this with your Coinbase app, as it’s third-party software that doesn’t directly connect to your Coinbase user account.
The Coinbase wallet is a non-custodial crypto wallet that can hold Bitcoin (BTC), Bitcoin Cash (BCH), Litecoin (LTC), Ethereum (ETH), Ripple (XRP) as well as hundreds of Ethereum-based ERC-20 tokens. This is to say that, with the Coinbase wallet, you have full control of your funds at all times. You can even use it as a blockchain explorer, and even store your favorite NFTs created on Ethereum.
That said, you will not be able to deposit fiat currencies on this wallet, as you can do this only through the official Coinbase app.
Coinbase vs Coinbase Pro – main differences
To continue the Coinbase review, we need to directly compare Coinbase and Coinbase Pro. Make no mistake, these are two (very) different cryptocurrency exchanges. The first one, which is the subject of our review, is a beginner-friendly and barebones cryptocurrency trading platform. Coinbase Pro, on the other hand, is an advanced cryptocurrency exchange with all the bells and whistles included. Consequently, the funds of your Coinbase app are separate from your Coinbase Pro account.
On Coinbase Pro, you will be able to access advanced charting features as well as a wide number of crypto-to-crypto trading pairs that are otherwise unavailable on Coinbase itself. If we had to compare it to the competition, we could say that Coinbase Pro closely resembles Binance in its interface and features. The main difference is that US residents have their funds insured by the FDIC, the same as with the basic version of the exchange.
Users can employ more advanced trading strategies on Coinbase Pro by using limit orders and stop losses. Conversely, there are no such options on Coinbase, as the basic platform executes trades immediately.
Finally, it’s worth noting that Coinbase has much higher fees than the Pro version. This makes the latter ideal for frequent trading, as these fees can quickly pile up when making multiple trades in a single day.
To conclude, you should use Coinbase when sporadically investing in crypto, while Coinbase Pro should be your #1 choice for day trading.
Coinbase Card
Coinbase has recently announced that it’s launching a branded Visa debit card that can be linked to your Coinbase account. This card that will be available in the near future will allow users to spend their crypto holdings from their Coinbase portfolio (including their deposited USD) to every merchant that accepts Visa as a method of payment.
Additionally, users will be able to earn cashback rewards for using their Coinbase Card, adding another dimension to their crypto portfolio. For the time being, the card will be only available to US residents.
Coinbase Earn
The final feature in this Coinbase review is Coinbase earn. This is a mechanism where users receive free crypto assets while learning about blockchain tech. Here, you will find tutorials on some of the top blockchain projects featured on Coinbase. The process is simple; as a Coinbase user, you just have to watch a couple of videos on the project and claim your reward directly in your wallet.
It’s a great way to educate yourself about crypto technology and to make some “beer money” out of it.
Coinbase fees and payment methods
So, to proceed with our Coinbase review, we need to go over some of the nitty-gritty of the platform, meaning the payment methods and fee structure.
Coinbase payment metods
Coinbase really shines when it comes to the amount of choice it gives you regarding its payment methods. You can link a US bank account so that you can seamlessly purchase and sell crypto through the app.
You can instantly cash out using a wide variety of methods, including PayPal, debit cards, and bank accounts. Bank transfer ACH and wire transfers on the other hand can take a couple of business days to process. But that’s almost always the case, no matter the platform you are using; it’s just a side-effect of using banks.
Finally, US residents can also use Apple Pay to top up their accounts, but cannot use it for withdrawals.
Coinbase fee structure
Coinbase’s fees mostly depend on the method of payment that you will choose. The list below should give you a good idea of how this functions:
- Bank account and digital wallet: 1.49%
- Wire transfer: flat fee of $10 for deposits, and $25 for withdrawals
- Debit/credit cards: 2%
- ACH transfer: free.
- Crypto conversion: 0.5% to 2%
- Crypto purchases: 0% to 0.5%
- Trades $0.50 flat fee.
- BTC-backed loans: 2%
- Coinbase card: 0% for USDC, 2.49% for other cryptocurrencies.
Additionally, in case you are withdrawing cryptocurrencies onto your personal wallet, you will need to take into account the transaction fees of their respective blockchains. Interestingly enough, spending USDC with your Coinbase Card is free of charge. At the same time, spending any other crypto or US dollars will result in a whopping 2.49% surcharge on the transaction.
All in all, Coinbase has high fees compared to the competition, especially other centralized crypto exchanges. Coinbase Pro, on the other hand, has a regressive fee structure, starting at 0.5% and going as low as 0%.
Coinbase security and safety – Is Coinbase safe?
Next in this Coinbase review, let’s talk about the safety features offered by the company.
Rest assured, your funds are very safe when you deposit them on Coinbase. That is if you don’t mind the fact that the company keeps ahold of your private keys. The Coinbase app will demand a short, but effective KYC procedure, which requires a phone number for SMS verification. Additionally, you will need to provide an ID document before you can use any of the trading features of the app.
We mentioned earlier that all deposits are covered by FDIC insurance, up to $250.000. This is a great feature which not many other exchanges offer. Note that the insurance comes into play in case the exchange gets hacked and funds are stolen. Not in the event your account is hacked due to personal negligence.
The Coinbase app offers 2-factor authentication options and you can use a third-party app such as Google authenticator. This greatly reduces the chance of getting your account hacked and makes you almost immune to phishing.
And finally, both Coinbase and Coinbase Pro’s wallets offer biometric authentication, ensuring you are the only one that can access their content if your device is stolen.
Reviewing Coinbase’s ethics and issues
To begin wrapping up our Coinbase review, we need to talk about the less brilliant aspects of the Coinbase exchange, especially in the ethics department.
Coinbase’s mission statement is quite appealing as it declares that they want to create: “An open financial system […] one that is not controlled by any one country or company (just like the internet did for distributing information). We think this is the highest leverage way to bring about more economic freedom, innovation, efficiency, and equality of opportunity in the world”.
Well, we can already conclude that they are partially failing at this mission by enforcing custodianship over their customer funds. Instead of an open financial system, they constrain their users to strict KYC and revoke access to wallets in case of non-compliance with their TOS.
But that’s just scratching the surface of their dubious ethics.
Tracking your Bitcoin and crypto spendings
Because your account is linked to your identity, Coinbase has a record of all of your crypto dealings that go through their wallet. Consequently, they share this information with governmental agencies like the IRS, at the end of each tax season.
Moreover, Coinbase can revoke access to your funds if you use your wallet to pay for goods and services on blacklisted websites (gambling, shady e-commerce, etc.) This straightaway goes against the permissionless nature of blockchain technology and decentralization.
Filing patents for open-source technology
Another issue with Coinbase is its rigorous filing for patents on traditionally open-source projects. Over the years, the company has applied for no less than 35 different patents in blockchain technology.
Needless to say, coining such “innovations” is in direct juxtaposition with the open-source nature of Bitcoin and the blockchain. Ethically, it shows poor taste and is in contrast to the general philosophy of the technology itself.
Non-US residents are treated like second-grade customers
Coinbase users out of the US have a much less advantageous position when using their services. Even though the app offers various payment methods for cross-border users (like SEPA), the FDIC insurance policy is out of the picture.
Additionally, many of the cryptocurrencies are region-restricted. Meaning that the coin you want to purchase may simply be unavailable depending on your country of residence.
Dismal customer support
The exponential growth of Coinbase has brought another issue to light, which is their sub-par customer support. For such a large company, you’d hope to see various methods of contact in case of an issue, like a live chat, a phone number, or an in-app ticket system.
Unfortunately, the only way to reliably contact Coinbase support is through email. And personal experience has shown that this is far from optimal. Wait times can often exceed a few days before an issue is addressed. This can be quite problematic in a volatile market such as cryptocurrencies.
The Trustpilot reviews reflect our own experiences. Recurrent comments include slow response times and frozen funds for days following a mysterious “review” of the account.
Conclusion
So, what can we conclude from all this? Is Coinbase the right fit for you? Well, it really depends on what type of user you are.
Beginners will be right at home with the simple interface, a huge choice of coins, and a wide variety of payment methods, including fiat. Moreover, some prefer to leave the security of their funds to a trusted party. After all, holding your private keys is a huge responsibility, and it’s not for everyone. It’s also the most trusted crypto exchange as its fully regulated and offers FDIC insurance.
Аdvanced traders can choose the Coinbase Pro exchange and enjoy a more rewarding trading experience with reduced trading fees. Liquidity is never a problem either, as there is always a large number of users and funds on the platform.
With that in mind, Coinbase has some considerable drawbacks. First, the fees are quite high generally speaking, and are far from homogenous. Second, if you aren’t a US resident, the offering just isn’t on par with the competition.
And finally, if you are looking for more control over your trading and funds, you might want to look elsewhere. Decentralized exchanges are a great alternative and are gaining a lot of traction in the past couple of years.
Hopefully, this Coinbase review helps form your own opinion on one of the most popular crypto exchanges in the world.