Coinbase review: is this the best cryptocurrency exchange?
If you're looking for a cryptocurrency exchange to start investing with, you'll want to check out our Coinbase review.
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Cryptocurrency, and Bitcoin in particular, tend to be a controversial topic among the personal finance community. You've probably heard the chatter among analysts and experts who assert that cryptocurrency is a dangerous investment because it's volatile and based purely on speculation.
On the other hand, you've probably also heard a number of captivating success stories about people making thousands of dollars with their crypto trades. Additionally, Billionaire Elon Musk and his company Tesla recently purchased $1.5 billion in Bitcoin.
With that kind of hype, it's natural to be curious about whether or not cryptocurrency is a viable investment choice, or just another bubble that's about to burst. Whichever side of the fence you land on—we're not here to judge you.
What we are here to do however, is make sure that you have the facts so that you can make a well informed decision. If you're still fuzzy on what cryptocurrency even is, or how to buy it, you can check out our beginner's guide to bitcoin here.
If you're looking to learn more about where you can make an investment in cryptocurrency, that's where Coinbase comes in.
What Is Coinbase?
If you want to buy or trade crypto, the easiest way to do it is to use what's referred to as an exchange. In this Coinbase review we’ll take a look at all of the options and details so you can see why Coinbase is one of the most trusted exchanges in the industry.
Coinbase is both licensed and regulated, and users are able to buy and sell more than 30 different cryptocurrencies on the platform. The company was founded in 2012 and is based in San Francisco. Today, Coinbase serves more than 43 million customers in over 100 countries around the world.
Trading on Coinbase
One of the reasons that Coinbase is among the leading choices for trading cryptocurrency is the platform's ease of use. The user interface is simple and beginner-friendly, making it fast and easy to place trades. If you've done any type of banking online, you should be able to get the hang of Coinbase very quickly.
Users are able to manage their accounts and trade via an iOS app, Android app, or by logging in to the website. From the dashboard, users are able to place a market order for any of the supported cryptocurrencies, as well as to send or receive to or from their digital wallet.
The digital wallet is where your crypto is stored. You can add money to your account by wire transfer, credit card, debit card, or by depositing cryptocurrency.
While there is no cost to open a basic Coinbase brokerage account, they also offer Coinbase Pro, which is ideal for more advanced and experienced users who trade frequently. Pro users get access to additional cryptocurrencies, plus the trading fees are lower.
The fee structure for Coinbase can be a little challenging to understand. Because the fees can vary so much, it’s hard to compare Coinbase to competitors based on fees. In some cases, the fees from Coinbase are lower, and in other cases, they’re higher. In general, Coinbase’s fees could be considered moderate compared to others in the industry.
There are two parts to the fees you’ll pay:
- There is a 0.5% fee added to the market price.
- There is another fee based on the size of the transaction.
The second part of the fee uses the following buckets:
- For transactions $10 or less - $0.99 fee.
- For transactions $10 - $25 - $1.49 fee.
- For transactions $25 - $50 - $1.99 fee.
- For transactions $50 - $200 - $2.99 fee.
Fees can also vary depending on the payment type.
- US bank account or Coinbase wallet - 1.49%
- Debit card - 3.99%
- Instant card withdrawal - up to 1.5% (minium of $0.55)
- Wire transfer - $10 ($25 for outgoing wires)
- ACH - free
All of the details above apply to standard Coinbase accounts. The fee structure for Pro is different and thankfully more straightforward. The fees for Pro transactions will vary depending on your monthly trading volume and also depending on whether it is a “taker” fee (if immediately available) or a “maker” fee (your order needs to wait for a buyer). Fees start at 0.5% and go down based on higher monthly trade volume.
Liquidity is an important factor that should be considered when you’re choosing a cryptocurrency exchange. It impacts your ability to sell your crypto at the current fair market price. A high level of liquidity indicates the likelihood that buyers will be present when you want to sell—which means you’ll be able to get the fair market price.
A low level of liquidity might mean that not enough buyers exist when you want to sell, and you might be forced to sell for less. Coinbase has a very high level of liquidity, which is great for investors and traders.
Is Coinbase Safe?
While any type of investing comes with some level of risk, investing in cryptocurrency involves higher risk than many other types of investment. When it comes to safety and risk, there are two different types of concerns: the risk of losing your money through a poor investment, and the risk of a hack.
In terms of investment risk, Coinbase users should familiarize themselves with cryptocurrency as much as possible before making any significant investment. Investing in crypto is much different than more traditional investments and it’s unfamiliar territory to many people. Investing in something you don’t understand always brings additional risk, regardless of what type of investment it is. Coinbase does provide some content in the "Learn" section of their site that will be helpful for beginners.
As far as security against hackers is concerned, Coinbase has done everything possible to protect users. For starters, they have a clean hack-free history that shows they take security seriously. They also provide insurance for any losses due to theft or hacks, which is not something offered by most of Coinbase’s competitors. Also, being based in the US and having "Anti-Money Laundering" and "Know Your Customer" policies that are similar to banks will provide additional peace of mind to many users.
- One of the most established cryptocurrency exchanges. Coinbase is currently listed as the 3rd largest exchange by CoinMarketCap.com (based on volume). With a top 3 ranking and a history that dates back to 2012, which is a long time in the world of crypto, Coinbase is more established than most of its competitors.
- Large selection for more than 30 cryptocurrencies that can be traded. Most other exchanges offer significantly fewer options. For example, Robinhood supports 17.
- Low minimums to get started. You can get started by purchasing as little as $2 in digital currency (or €2 for those in EU countries). This is one of the reasons why Coinbase is so popular, especially with beginners who don’t want to start by investing a lot of money.
- Cryptocurrency is insured by Coinbase. The insurance against theft or hacking is a major perk of using Coinbase.
- High liquidity. The volume of trading at Coinbase should offer confidence that you’ll be able to sell for market value, and it also makes large trades possible.
- Confusing fee structure. Coinbase’s fee structure can be a little confusing (unless you’re a Pro user), but in general, some competitors offer lower fees. Of course, higher fees can eat away at your investment, especially if you’re trading frequently.
- Lackluster customer service and support. Unfortunately, Coinbase has developed a reputation for subpar customer service. If you read reviews, you’ll see a lot of complaints both in terms of slow response and a lack of helpfulness.
Although Coinbase is one of the largest and most-established cryptocurrency exchanges in the world, the reviews that you’ll find from users are very mixed. There are more than 3,700 reviews of Coinbase on Trustpilot with an average score of 1.6 out of 5. Common topics of complaints involve customer service and unexpected closure or freezing of accounts.
In regards to frozen or closed accounts, it’s important to remember that Coinbase is based in the United States and subject to more regulations than many of its competitors. In general, that’s a good thing for customers because it provides you with more protection, but it can also lead to higher scrutiny and more precautions, which can be frustrating when it impacts you.
At the Better Business Bureau, Coinbase has a 1.22 out of 5 rating based on customer reviews, and a D- rating by the BBB. Poor BBB ratings typically indicate a lack of responsiveness on the company’s part when there are customer issues or disputes. In this case, a lack of response matches up with the reputation that Coinbase has developed for poor customer service.
Who Is It For?
Because Coinbase’s interface is simple and easy to use and because it’s one of the largest and most established cryptocurrency exchanges, Coinbase could be a solid choice for those who are new to crypto. Coinbase could also be a good choice for advanced traders who make more frequent trades due to the lower fees and more straightforward pricing for Pro users.
However, it’s important to understand that trading cryptocurrency on any platform involves risk and you should not invest money that you can’t afford to lose. It’s highly recommended that you educate yourself before investing.
Please see How to Invest in Bitcoin if you’d like to learn more.