When someone says ‘OG exchange,’ the first thing that comes to mind is Coinbase. Coinbase is an exchange that’s been here before the masses even knew what Bitcoin is. And like many other exchanges launched at the time, Coinbase has supported the industry’s growth and adoption when it needed it the most.
After ten years of operation, Coinbase remains one of the largest crypto exchanges. Many investors hold assets on Coinbase because it is regarded as one of the most regulatory-friendly exchanges in the west. And despite suffering from a lowered reputation due to recent executive decisions, the exchange still succeeds at what it does best: facilitating crypto investing and trading.
This review is meant to provide a fresh perspective at how Coinbase works, where it’s now, and where it might be headed in the future. And to make things fair, I’m going to give you the good, the bad, and the ugly sides of yours truly – Brian Armstrong’s – crypto exchange.
Coinbase: Early History
Ex-Airbnb software engineer Brian Armstrong launched Coinbase in June 2012, only three years after Bitcoin went live. Armstrong worked on cross-border payments during his time at Airbnb and realized that sending money around the world was difficult, if not impossible, in some places. And after coming into contact with the Bitcoin white paper a year earlier, Armstrong began writing code that stores and purchases cryptocurrencies.
Brain Armstrong then raised $150,000 in funds after joining the Y Combinator startup incubator program. The capital was used to fund Coinbase’s launch, whose headquarters were based in San Francisco.
Coinbase started out as a basic exchange for buying, selling, and storing Bitcoin. But as the years went by, Armstrong partnered with many companies and developers to advance the company’s offerings. This led to the creation of a robust crypto robust crypto exchange for professional traders.
The newly created US-based exchange, which was known for many years as Coinbase, launched in 2015. However, it no longer exists today as the company has decided to shut down Coinbase Pro and merge its features with the original Coinbase platform.
Features and Services
Coinbase has seen fantastic growth since its inception. Now that you know the exchange’s history, it’s time to take a better look at what it has to offer. The following section showcases a long list of features and explains everything you need to know about Coinbase.
Coinbase is exclusively a spot exchange. It does not offer futures, margin, nor any other kind of leveraged trading. Investors can purchase more than 500 unique cryptocurrencies on Coinbase. The large number of offered assets is made possible due to Coinbase’s new liberal listing policy, which became part of the exchange’s ethos following DeFi’s rise.
Coinbase allows users to choose between a simple and advanced trading mode. The simple trading mode lets users buy, sell or convert crypto assets in just a few clicks. Here you can buy using existing funds or pay for crypto directly via a credit/debit card. The interface only lets you buy and sell at current market prices.
Switching to the advanced menu brings you to the typical trading terminal that all traders love. This interface is technically what Coinbase users previously knew as Coinbase Pro. As previously mentioned, the exchange decided to merge the two platforms into one in order to simplify things for users.
Users are met with a fancy trading terminal after switching to the ‘Advanced’ menu and selecting an asset. You can place limit, market, and stop limit orders here so that you have a better control over how you manage your capital. You can also use the chart screen to draw over the asset’s price and perform technical analysis.
Whether you want to trade on the simple or advanced menu depends on your personal preference. Typically, investors should interact with the simple interface while traders do their magic on the advanced trading terminal. But if knowledge is a big factor, whichever one you’ll use depends on your experience.
Coinbase Pro…Is Now Just Coinbase
Like I mentioned previously, there is no Coinbase Pro anymore. Coinbase Pro was launched as a professional trading platform in 2018 that offers advanced crypto trading services. But in June 2022, Coinbase decided to shut down the platform after announcing that it will restructure the exchange.
All the services offered on Coinbase Pro have migrated to the regular Coinbase website. This also means that the Coinbase and Coinbase Pro accounts and wallets have merged into one.
The decision did not have any impact on trading fees. The advanced trading terminal shown below retains the ordinary Coinbase Pro fees which range from 0% to 0.6% depending on the asset.
Per the words of Brian Armstrong, the intentions of the merge were to simplify the user experience by allowing users to both use the basic and advanced features on one platform. Users were previously forced to switch funds back and forth.
Coinbase features a dynamic trading fee system. This means that the exchange charges users different fees depending on the type of order they place and asset. Fees range from 0% to 0.6% for maker and taker fees.
Trading volume determines the ‘pricing tier’ you’re placed in. Users who trade up to $10,000 on a monthly basis pay 0.6% fees when taking liquidity from the order book and 0.4% when providing it. I suggest reading the previously linked article to understand how trading fees work.
Coinbase charges one of the highest trading fees in the crypto market. However, this negative factor is offset by the fact that Coinbase also provides the best liquidity. Investors and traders can expect their orders to be filled no matter how big their position size is. And those who trade six figures and above can expect more normal fees at 0.2% and 0.1%.
At the time of writing, Coinbase has not pointed at lowering their trading fees. The exchange has, in fact, increased their fees the last time they’ve made changes.
Coinbase users pay fees when depositing and withdrawing money. ACH payments, a type of U.S. electronic bank-to-bank payment, charge zero fees when adding or removing cash from Coinbase. Normal wire transfer charges $10 and $25 respectively for deposits and withdrawals. SEPA transfers denominated in EUR charge the lowest fees, and then there’s SWIFT for UK users.
Coinbase does not charge any other fees. Users do not have to pay for opening, closing, or maintaining an exchange account.
Coinbase Wallet Extension
The Coinbase Wallet is a web-browser extension that enables users to store and use cryptocurrencies. The extension is a non-custodial software wallet that you can use on your Chrome browser.
You can use the wallet to interact with hundreds of dApps within the DeFi ecosystem. This allows you to safely access yield and lending products online. This is a healthy alternative to Metamask for users who are loyal to Coinbase.
Coinbase’s wallet extension represents the exchange’s latest step in delivering NFTs to retail users. The wallet supports Ethereum-based NFTs. You can hold, buy, and sell them by interacting with NFT marketplaces such as OpenSea.
The Coinbase Card is a debit Visa payment card that allows users to pay vendors with cryptocurrency. Users earn free crypto rewards by paying for goods and services with the card. You can use the card at any vendor that accepts Visa.
Users can select from a range of assets to earn rewards, including alt coins. You can diversify your earnings and receive rewards that grow. You can also pay in stable coins or cash.
Coinbase charges no monthly or annual fee for holding the card. You’re not required to pass any credit check or any other requirement. Everyone is eligible for the debit card. And if anything happens, the exchange has a 24/7 phone and email support to resolve your problems.
The Coinbase Card is currently available to users based in the US, EU, and UK. The exchange plans to bring the card to users in other regions.
Each asset has its own APY (Annual Percentage Yield) rate that describes how much interest you’ll earn over the course of a year. Keep in mind that you can’t earn yield on all assets offered by Coinbase.
The amount you’ll earn depends on the asset you choose. The asset also determines your interest payout schedule. For example, DAI stakes earn daily interest while USDC stakers earn monthly interest. Some assets provide rewards on a quarterly basis while others do so on a weekly basis.
Keep in mind that the yields are only available for certain regions. The assets themselves might also be available in one region but not in another. You can find out more about yields at this link.
Above all else, it is vital for all cryptocurrency exchanges to place security at the forefront of their development. Coinbase embodies these ideas by leading the market in security measures and continuously pushing for improved security practices.
As a trading platform, Coinbase is considered a safe haven. One of its best practices in terms of security measures is that 98 percent of its customers' digital assets are locked in cold storage, thereby preventing loss of funds through theft, hacking or other means. The rest is privately insured.
With regards to data security, Coinbase has several measures in place to ensure protection. For instance, stored Bitcoins are distributed geographically around the world in safe deposit boxes and vaults. Rather than storing sensitive data on servers, the platform has all such data stored offline, away from the internet. This drastically reduces the risk of a security breach.
For additional security, the same data is split with redundancy and secured using AES-256 encryption before they are copied onto FIPS-140 hardware and paper backups. Just like the funds' security measures, those FIPS-140 hardware and paper backups are also distributed geographically around the world into vaults and safe deposit boxes.
Coinbase FDIC Insurance
Digital currency is not a legal tender, neither is it government-backed, and as such, it cannot be covered by protections from the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. Instead, as mentioned earlier, the digital assets not locked in cold storage (less than two percent) are privately insured. The insurance policy covers cybersecurity, employee theft, and physical security, but not individual account security breaches.
Although the cryptocurrency funds are insured privately, Coinbase users have FDIC-backed insurance coverage for their USD balances, up to $250,000 USD.
Encryptions and Passwords
Coinbase also implements best practices for the payment industry by running all site traffic over HTTPS. All wallets and private keys are AES-256 encrypted as well before being stored. Even as an organization, when hiring, Coinbase puts in additional precautions which pertain to employees. They have to pass background checks, and their hard drives have to be encrypted, screen lock enabled and use strong passwords.
How to register a Coinbase account
The registration process is quite straightforward; simply go to the Coinbase homepage and select Sign Up. Provide your details and verify your email address and phone number. Finally, you'll be asked to upload a government-issued ID for verification before you can link a bank account (you could skip this step if you want to).
After registration, you’ll be asked to verify your account. To be successfully verified, you need to upload relevant official documents. Users from the United States would be asked to provide a driver's license or state ID. You must complete address verification and also provide the last four digits of your Social Security number.
Users from the UK are required to upload a government-issued ID document (e.g., driver's license, or passport) and also answer some verification questions while users from every other country are required to provide two identity documents.
Coinbase supports a total of 100 countries from North America, South America, Europe, Asia, Oceania, and Africa. Some of the popular supported places include Australia, Canada, Singapore, UK, Europe, and the US (with the exception of those resident in Hawaii, Minnesota, and Wyoming, since they do not yet have an operating license there).
Once a user from any of the allowed countries is registered and has had their identity verified, they can start trading immediately. However, not all regions offer the same features. Some regions might only offer buying or converting.
Final Verdict: The Good, the Bad, and the Ugly
Coinbase represents one of the oldest and most popular cryptocurrency exchanges. The company managing the exchange has made many decisions, including loosening their listing policy to combat DeFi. We have also seen a keen interest in NFTs from Coinbase, which seeks to bring non-fungible tokens to retail users.
Security and liquidity are the main points that attract users to Coinbase. Users never have to fear losing their assets or paying too high slippage fees when trading large positions. However, Coinbase leaves a big hole in one area: retail investors. Their fee policy turns away many users who don’t want to pay high fees for small trades.
I recommend Coinbase to absolute beginners who have no idea what they’re doing. Coinbase’s highly intuitive user interface makes it easy for anyone to find their way around in the crypto space. Plus, now that they integrated Coinbase Pro into the original platform, it’s easier than ever to trade crypto and manage your portfolio.
Coinbase Rating ― 4.0
Total Rating - 4
Coinbase is an exceptional exchange, but the fees are simply way too high. Since retail investors have a wide selection of other exchanges to choose from like Binance, there is no reason to settle for paying a 0.5% trading fee.
About The Author:
Marko is a crypto enthusiast who has been involved in the blockchain industry since 2018. When not charting, tweeting on CT, or researching Solana NFTs, he likes to read about psychology, InfoSec, and geopolitics.