Cryptocurrency exchanges are an essential part of the crypto ecosystem. Through them, individuals are eligible to trade cryptocurrency assets and participate in this emerging industry without the need for a third party to act as an intermediary between the buyer and the seller. A cryptocurrency exchange can be either a Centralized Exchange (CEX) or Decentralized Exchange (DEX). Some examples of Centralized Exchanges are Binance, Coinbase, and Kraken. On the other hand, exchanges like Uniswap, Pancakeswap, and THORChain are Decentralized Exchanges.
In today’s article, we will elaborate on the above-mentioned CEX, Coinbase, and how this cryptocurrency exchange is used. Furthermore, we will touch upon the unique features that Coinbase provides for its users.
What is Coinbase?
To begin with, let us introduce you to the basics of Coinbase. This cryptocurrency exchange was founded in June 2012 by Brian Armstrong. However, it did not launch services to buy and sell Bitcoin until late October 2012. Coinbase is a Centralized Exchange, meaning that it has a central authority. This CEX claims to be the easiest place to trade crypto.
Coinbase is the leading cryptocurrency exchange in the United States. Coinbase includes individual/business accounts, crypto wallets, and a trading platform – obviously. That being said, Coinbase is a licensed and fully regulated crypto exchange available throughout all of the United States – except Hawaii. We must mention that Coinbase also has its own U.S. dollar stable-coin that holds the ticker USDC.
Even though Coinbase was founded 9 years ago, the platform got the attention of the media earlier this year. This mainstream attention came following its achievement of becoming the first cryptocurrency exchange to become public on the Nasdaq. At the time of writing, Coinbase is the third biggest centralized cryptocurrency exchange regarding trading volume – with Binance and Huobi Global holding the first two spots.
Read more: Top 9 Cryptocurrency Exchanges in 2021
Additionally, Coinbase provides a friendly environment for rookie investors who are just starting out.
Coinbase Pro is a version of Coinbase that was built for more experienced traders. Using Coinbase Pro, users are free to place, limit, and stop any order with a very low commission fee – when compared to traditional Coinbase. Moreover, the Pro version provides its users with the option of margin trading and has way fancier charting capacities. Coinbase Pro is a better platform for anyone who wishes to trade continuously – having lower fees and way more features. We must mention that Coinbase Pro is completely free.
Coinbase Earn is a learning program that allows customers to get educated about cryptocurrencies. Coinbase users continuously unlock new lessons and become eligible to earn to crypto, so they get paid in cryptocurrency while learning.
The concept behind Coinbase Earn is quite simple, you get rewarded in return for getting educated. You will be required to watch videos and take short quizzes about a specific cryptocurrency, and when all of that is done, a small amount of that crypto will be gifted to you. However, not all cryptocurrencies that are listed on the Coinbase exchange are supported by Coinbase Earn. Simply go to coinbase.com/earn to check the available cryptocurrencies for the Earn program.
In order to be eligible for Coinbase Earn, you must verify your personal information. Then, you should complete your identity and photo verification. Lastly, you must meet criteria related to account uniqueness and have only one Coinbase account.
The USD Coin (USDC)
The USD Coin is a stablecoin whose price is pegged to that of the US dollar. According to Coinmarketcap, USDC is the 7th biggest cryptocurrency, with a market capitalization of $27.5 billion and a trading volume of $2.85 billion.
Coinbase provides its users with its own cryptocurrency wallet, claiming to be the easiest to use and most secure crypto wallet out there. Their wallet supports more than 500 assets – including NFTs. Like Metamask and TrustWallet, the Coinbase wallet supports digital collectibles too, making it one of a few wallets to do so. At the moment, the Coinbase wallet is available in 100+ countries. You can get it on Google Play, the App Store, or the Chrome Web Store as a Chrome extension.
Related: Top 9 Cryptocurrency Wallets in 2021
Coinbase Pros and Cons
Each exchange has its pros and cons. Here at Crypto Academy, we have elaborated on the pros and cons of Coinbase below.
There is no doubt that Coinbase provides its users with one of the best user interfaces out there. Moreover, their platform is extremely easy to use, making it one of the easiest ways to buy crypto. To wrap this up, Coinbase offers a learning program that literally pays its users in cryptocurrency to learn more about the emerging world of cryptocurrencies.
At the time of writing, there are more than 75 cryptocurrencies available for trading and staking on Coinbase. This list includes:
- Aave (AAVE)
- Basic Attention Token (BAT)
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Cardano (ADA)
- Dogecoin (DOGE)
- Enjin Coin (ENJ)
- Ethereum (ETH)
- Uniswap (UNI)
This availability is a true advantage for Coinbase compared to some other exchanges. For example, Robinhood only supports 7 cryptocurrencies while Coinbase supports more than 75 different cryptos.
Because it is one of the most used cryptocurrency exchanges in the United States, Coinbase provides its users with high liquidity. This means that investors are protected from high price slippage.
Low Variety of Altcoins
There are more than 75 cryptocurrencies available for trading and staking on Coinbase, however, this does not mean that there are enough altcoins provided through Coinbase. According to Coinmarketcap, there are more than 11,000 cryptocurrencies available on the open market. Even though Coinbase has listed most of the major cryptocurrencies, many investors are interested in altcoin trading, and Coinbase fails to provide them with many options.
High Fees (when not using Pro version)
If we compare it to most cryptocurrency exchanges, Coinbase has higher trading fees. These fees are way lower when using the Pro version, though.
Cryptocurrencies are all about decentralization, and Coinbase being centralized just beats the point. This stands for every centralized cryptocurrency exchange. When an individual uses a centralized cryptocurrency exchange, their transactions are tracked, they do not control their own private keys, and their account can be frozen. That being said, centralized exchanges are the opposite of what decentralized finance (DeFi) aims to be.
Coinbase Fees Explained
As we stated above, fees are a problem when it comes to trading on Coinbase. Not only does Coinbase have high fees, but it also has a very complicated fee system that differs from place to place. Since Coinbase is one of the most used cryptocurrency exchanges in the United States, we will elaborate on the fees there.
- When using a Debit/Credit Card, the fee will be 3.99%.
- When using a Bank Account, the fee will be 1.49%.
- When doing a Wire Transfer, the fee will be a fixed $10.
- When doing a crypto conversion, the fee will be 2.00%.
Moreover, there are additional fees one may experience on the Coinbase platform:
- For transactions worth less than or equal to $10, there is a $0.99 fee.
- For transactions worth more than $10 but less than or equal to $25, there is a $1.49 fee.
- For transactions worth more than $25 but less than or equal to $50, there is a $1.99 fee.
- For transactions worth more than $50 but less than or equal to $200, there is a $2.99 fee.
These fees are significantly lower when using Coinbase Pro. The only fee that is not lower on Coinbase Pro is that paid when a Wire transfer is done.
|Less than $10k
|$10k – $100k
|0.35% – 0.25%
|0.35% – 0.15%
|$100k – $1M
|$1M – $10M
|$10M – $50M
|$50M – $100M
When you choose your cryptocurrency exchange, one crucial element that you must consider is its security. When it comes to Coinbase, its security is nothing more significant than that of its competitors. Coinbase recommends its users to use a strong password and gives them the option of security features like 2-Step Verification. Additionally, if Coinbase itself is breached, your cryptocurrency will remain untouched. This does not mean that you will get your crypto back in the event that your account is breached because of your own lack of security measures.
To this day, Coinbase has never been hacked or compromised by anyone.
Considering everything we mentioned above, Coinbase provides an acceptable amount of security. This may be the reason why this cryptocurrency exchange is frequently the one that crypto newbies start with.
Last but not least, you should always check if your country is supported on the exchange that you choose. At the time of writing, Coinbase is available in about 100 countries. However, things are more complicated with Coinbase. Many of these countries do not support crypto-to-fiat conversions or vice versa; Coinbase has banking support in only 40 countries. As for the rest of the countries where Coinbase is available, it only provides wallet support where you can send and receive crypto.
Some major countries in which crypto-to-fiat conversion is available are the United States, the United Kingdom, Australia, Canada. Singapore, Belgium, Croatia, Sweden, and Switzerland.
How to Open a Coinbase Account?
Opening a Coinbase account is as simple as it gets. Just follow the steps below;
Go to Coinbase.com and tap on “Get started”
Write your legal full name, email, password, and tap on “Create Account”
Confirm your email and activate the 2-Step Verification using your phone number. You have successfully opened your account. Now you may verify it to decrease the withdrawal limit.
Is Coinbase good for beginners?
As mentioned above, Coinbase is one of the best cryptocurrency exchanges for beginners, and this is because of many reasons. Firstly, creating a Coinbase account is extremely easy. Secondly, Coinbase’s platform is very user-friendly, making it easy for anyone to trade crypto – it also provides users with a learning program for free. That being said, young crypto inventors might benefit from using Coinbase.
Can you get scammed on Coinbase?
Getting scammed is something that can happen on any platform, no matter how secure or sophisticated they are. You are in charge of your own security measures – your password in particular. So, if you get scammed, that’s on you.
Is Coinbase Safe?
Coinbase is very safe and provides insurance for its user’s crypto assets. If someone loses their cryptocurrency assets in case Coinbase gets breached, their funds will be reimbursed. However, if someone’s account gets compromised because they did not take any security measures, Coinbase holds no responsibility whatsoever.
- Coinbase is one of the biggest cryptocurrency exchanges in the United States.
- Unlike Uniswap and SushiSwap, Coinbase is a Centralized Exchange (CEX) that is regulated and has a central authority.
- Even though Coinbase was founded in June 2012, it didn’t get the attention of the mainstream media until 2021, when it got public on the Nasdaq.
- According to Coinmarketcap, Coinbase has an 8.9 exchange score, the second-best score after Binance.
- Coinbase has its own stable coin that is called USD Coin (USDC).
- The pros of using Coinbase are its high liquidity, user experience, and cryptocurrency availability. While the cons of using Coinbase are its high fees, low variety of altcoins, and regulations that come with being centralized.
- Coinbase is considered to be very safe and has never been hacked.
- Overall, Coinbase is one of the best cryptocurrency exchanges out there, especially if you are from a country like the US.