Coinbase is the world’s largest Bitcoin broker around. It is available to users in over 30 countries especially in the United States, the United Kingdom, and Brazil, which represent their largest customer base – and has more than 4 million customers around the world. It was founded in 2012 as part of Ycombinator, which means that Coinbase is also one of the oldest exchanges around.
Customers can purchase and sell Bitcoin with a connected bank account, SEPA transfer, Paypal account (selling only), Interac Online, and many more payment methods. This exchange has started out only as a broker (selling Bitcoins directly to customers). However, in May 2016 Coinbase started operating GDAX – A Bitcoin exchange, where Bitcoiners can trade Bitcoins with one another.
Coinbase currently allows its customers to purchase and sell three of the most popular cryptocurrencies – Bitcoin, Litecoin, and Ethereum. In the future, they plan to add more cryptocurrencies. However, if you want to buy other altcoins, you’ll currently have to look elsewhere.
Did you know: Coinbase asked Vitalik Buterin to come in for a chat in 2013 and they nearly offered him a job on their team. However, this didn’t happen because early the following year, Vitalik went on to create Ethereum.
Is Coinbase a Scam?
Anyone reading this Coinbase review is probably asking this question and straight answer is: Coinbase is definitely not a scam, but definitely has technical difficulties at times and a poor customer support. They’re a bit clunky and still a work in progress but the most convenient way to buy and sell Bitcoin we’ve found.
Is Coinbase Safe?
The short answer is yes.
Coinbase is very safe. The company has invested heavily in insuring their vaults to minimize their losses. Also is the fact that the company is integrated with the major banking industries that also protect their investments.
Having received funds to the tune of US $ 75 million and above over the years since its conception, San Francisco based exchange goes, without doubt, one of the most secure virtual currency brokers in the world.
Coinbase is a Bitcoin company based in San Francisco, which means that is required to comply with US laws and regulations, at both a federal and state level. Here are some of the regulatory bodies, laws, and regulations that Coinbase complies with:
- It complies with state money transmission laws and regulations.
- It complies with the USA Patriot Act.
- It complies with the Bank Secrecy Act.
- It is registered with FinCEN as a Money Services Business.
These laws and regulations force accountability onto Coinbase. This is something that may be lacking from some of their offshore competitors in other countries with less strict regulations.
Aside from the United States, none of the other 31 countries, where Coinbase operates, require licenses to operate a cryptocurrency business.
It’s also worth noting that Coinbase is backed by trusted investors. These investors include Digital Currency Group, Blockchain Capital, Bank of Tokyo, and Alexis Ohanian (Reddit Co-Founder).
Coinbase is the world’s largest Bitcoin broker. It also offers an exchange, wallet, and developer API.
In this article we’ll review Coinbase and its brokerage, wallet and exchange.
Read our updated guide on cryptocurrency trading bots.
Safe Keeping of Funds
This crypto exchange segregates customer funds from company operational funds. These customer funds are held in custodial bank accounts. This means they will not use funds of yours to operate their business. They also claim, “Even if Coinbase were to becomes insolvent, the funds held in the custodial bank accounts could not be claimed by Coinbase or its creditors. The Funds held in those accounts would be returnable to Coinbase’s customers.”
98% of customers’ cryptocurrency funds are stored in secure offline cold storage. These cryptocurrencies are held on multiple hardware wallets and paper wallets. The physical cryptocurrency wallets are then stored in vaults and safety deposit boxes around the world. These measures protect customers’ funds from being lost or stolen by hackers.
The remaining portion of cryptocurrency, that is stored online, is fully insured by a syndicate of Lloyd’s of London.
Coinbase Rapid Growth
Now that we answered the important “is Coinbase safe” question, it is time to move on and write a bit on history of this exchange. Coinbase popularity surged in 2017 – to give you an idea of the popularity behind this exchange let’s take a look into visitor statistics for Coinbase in 2017.
Monthly visits have been skyrocketing with a 70% jump in traffic between the month of October and November 2017. This figure currently stands at 65 million monthly visits. You may be saying: “yeah but this is because of the current bull market” – well get this: no other bitcoin exchange has been growing so fast in recent times. Furthermore, 45% of visits to Coinbase are from the USA, with Brazil second at 9% of total traffic, and the UK at 4%. Finally, at the time of writing this (March 2017) GDAX daily volume represents 15% of the whole bitcoin market volume.
How Does Coinbase Work?
To start off this Coinbase review, let’s do a short guide on Coinbase’s inner workings. Coinbase operates more like a bank than a broker. This is so as the company was the first to receive the virtual currency operation license. This is also because of major integration with the major Banks it is operating with has resulted in the adoption of most Banking laws. For this reason, Coinbase requires one to fill out an extensive personal information and monitor the accounts to prevent money laundering. This should not water down your spirit as their services are secure and guaranteed which is hard to come by in virtual currency.
Thanks to Coinbase’s simple interface, it is very easy for first-time buyers to buy Bitcoins.
The most popular payment methods for Coinbase customers are purchasing with a credit card or debit card. You can also use a bank transfer as a payment method.
At the bottom of this post you can find a full guide that shows you how to purchase on Coinbase using a credit card.
What Type of Payment Methods Can You Use on Coinbase? What about Coinbase Fees?
Coinbase offers its services in 32 countries and the payment methods available depend on your country.
|Countries||Payment Method||Currency||Funds Available||Fees*|
|USA||Bank Transfer||USD||5-7 days**||1.49%|
|USA||Credit / Debit Card||EUR||instant||3.99%|
|Canada||Credit / Debit Card||CAD||instant||3.99%|
|Europe||SEPA Transfer||EUR||1-3 days||1.49%|
|Europe||Credit / Debit Card||EUR||instant||3.99%|
|UK||Credit / Debit Card||GBP||instant||3.99%|
|Australia||Credit / Debit Card||AUD||instant||3.99%|
*Actual deposit of currencies into your Coinbase account is free and Coinbase then charges a 1.49% fee per buy.
**US users may add a MasterCard or Visa credit card as a backup payment method. Coinbase “instant buy” will be enabled for up to $1,000 worth of Bitcoin per week if a backup credit card is available.Buy BTC on Coinbase
The most popular payment method on Coinbase is credit card. The table below compares Coinbase to other popular credit card exchanges – CEX.io, BitPanda, and Coinmama.
|Coinbase||USA, Canada, Europe||3.75%||Buy|
It’s important to note that fees are approximate. They may vary based on your country or purchase size.
Take a look at detailed comparisons of Coinbase to other exchanges:
Coinbase serves customers in the United States, Singapore and Canada.
Coinbase also offers its services in the following European countries: the United Kingdom, France, Greece, Norway, Poland, Sweden, Switzerland, Denmark, Finland, Monaco, Netherlands, Slovenia, Spain, Cyprus, Czech Republic, Liechtenstein, Malta, San Marino, Slovakia, Bulgaria, Croatia, Italy, Latvia, Portugal, Romania, Austria, Belgium, Hungary, and Ireland.
Is Your Privacy Kept When Using Coinbase?
Users have to provide full identity verification and a lot of personal information.
If you are buying with a credit card, you will be required to take a picture of your driver’s license or passport.
Coinbase Buying / Selling Limits and Liquidity
Once your Coinbase account is set up, you are able to purchase a small amount of Bitcoins until you raise your limit. Buy and sell limits can vary by payment method, user location, and verification status. For example, fully verified US customers may get these weekly limits fairly easily:
- $50 Buy through Credit/Debit Card
- $5,000 Buy through Bank Account
- $50,000 Sell
If these limits don’t meet your needs, you can apply for higher limits. It’s important to note that your limits for instant buys, such as credit card buys, may not be able to be increased.
European customers may at any time have a maximum of €30,000 in their account.
Coinbase transaction times depend on your country and the payment method you will use. For example, a credit card purchase will be instant whereas a wire transfer can take up to 5 days to be approved.Buy BTC on Coinbase
Bank Transfer: When using bank transfer, US customers will receive their Bitcoins 5 business days from placing an order. If a credit card is added to the account as a backup payment method, then instant buy becomes possible.
Instant buy will allow fully verified users to purchase up to $1,000 worth of Bitcoin per week, while level 2 users are able to instantly purchase up to $100 worth of Bitcoin per week.
Credit/Debit Card: If you use a debit or credit card, delivery of Bitcoins is immediate once you complete your ID verification.
European customers who are paying with SEPA transfer will receive their Bitcoins within 1-3 days after placing their order.
Canadian EFT buys take 4 days to complete, while Interac Online buys are instant!
Unfortunately, Coinbase provides miserable customer support services. Not much to comment on that, tickets go unanswered for weeks.
Coinbase “Community” can be used to ask questions and get support help, and you will probably receive responses from support within 24-72 hours.
There have been reports that Coinbase tracks how their users spend their Bitcoins. – Coinbase can and will track how their users spend their Bitcoins. They may also freeze or close your account if you deal with selling stuff on the darknet, gambling, adult services and other shady business.
Coinbase Bitcoin Wallet Review
Coinbase acts more like a bank than a true Bitcoin wallet.
Coinbase should only be used to purchase or sell Bitcoin. However, it should not be used to store funds (unless you use the Multisignature Vault).
Read our comprehensive guide on best cryptocurrency exchanges.
If you want to find a wallet that truly gives you full control over your Bitcoins, read our guide on Bitcoin wallets.Buy BTC on Coinbase
Coinbase Bitcoin Wallet Security
Three types of wallets may be created with Coinbase:
- Coinbase Bitcoin wallet
- Coinbase vault
- Multisig vault
Coinbase Bitcoin Wallet
With the Coinbase wallet, your Bitcoins are controlled by the company. You have to trust that they keep your coins secure, and you also have to keep your Coinbase login and account password safe.
Coinbase is a VC backed company with over $100 million in funding. That’s why it’s likely they have a very strong security setup. However, the point of Bitcoin is that customers have the ability to control their own money, so it’s highly recommended to move your Bitcoins into a wallet you control after you buy.
It’s important to note that Coinbase has been known to track where their users send their cryptocurrency, and they can shut down your account and block access to your funds at any time.
Coinbase recently introduced the Vault feature. This feature allows you to “share an account” with 2 or more users, which means that if a user adds two approvers to his vault, both must confirm that the withdrawal is valid before it processes.
Also transactions have a 48 hour delay for added protection. This allows you to catch an unauthorized transaction in time.
However, the vault account is just an added security layer in case someone hacks your password, so using it doesn’t mean you personally control your Bitcoin wallet. It’s still hosted on Coinbase and it can be shut down by Coinbase at anytime.
Coinbase understands that many users want complete control over their funds, so if you want total control of your wallet you can use a multisig vault.
Its multi-sig vault is a 2 of 3 wallet, where one key is held by the account holder, Coinbase has one key, and the third key is shared. You’ll need 2 out of 3 keys in order to conduct an action on the wallet. So even if Coinbase goes down, you should still be able to move funds from your wallet because you still have both the shared key and your own key.
The shared key is encrypted with your password, which means that funds cannot be held.Buy BTC on Coinbase
Your name, email, phone number and many other personal information are required. Coinbase knows your balance and addresses at all times. The interesting thing is that they can connect this with your identity and IP address. That’s why you have to trust Coinbase’s nodes to verify transaction data.
Also, Coinbase must follow all KYC laws because it has buy/sell features. It’s important to note that there have been reports that Coinbase tracks how its customers spend their Bitcoin.
Each payment request uses a new address. This helps prevent other users from connecting Bitcoin addresses together.
It may also interest you that the Coinbase received a score of 11 out of 100 from the Open Bitcoin Privacy Project’s Spring 2015 report.
Coinbase USD Wallets
These wallets allow you to store USD on your account. There are a couple of advantages to using these wallets:
- You can store USD in your account so that when you do want to buy Bitcoins later on you don’t need to wait for a bank transfer.
- It allows you to spend your Bitcoins online without exposing yourself to Bitcoin’s volatility.
Coinbase Debit Card
Shift Payments released a debit card. This card connects to your Coinbase account and uses your Coinbase balance as the debit card’s source of funds. This allows you to spend your Bitcoins at any merchant accepting Visa.
Coinbase custody and staking
Coinbase Purchasing Tutorial (Debit Card / Credit Card)
Coinbase allows you to purchase Bitcoins instantly using a debit card or a credit card. Check our step-by-step guide to help make the purchasing process easier for you.
Create an account on Coinbase, confirm your personal details and login. It’s important to note that you may be asked to upload a scan of ID
- Go to account settings
Go to the top right corner, click on your name and you should see a drop-down menu where you can click “Settings”. Then click “Payment Methods” on the menu at the top. There should be something that looks like this:
Navigate to the right corner and click on “Add Payment Method”.
- Click “Credit/Debit Card” tab
4.Enter your Credit/Debit Card Information
It’s important to note that Coinbase currently only accepts MasterCard and Visa credit/debit cards.
You should see a confirmation like the one on the image below, and if you do, your credit/debit card has been successfully added!
- Purchase Bitcoins!
Go to the buy page and there should be a widget that looks like the image below:
Enter the amount you want to purchase. Then click “Buy Bitcoin Instantly” and your coins will then be delivered to your Coinbase wallet!
Note: This process may have changed slightly by the time you’re signing up to Coinbase because they continuously make small adjustments to their design and sign up process.Buy BTC on Coinbase
Coinbase Pros and Cons
- Easy way for new users to purchase Bitcoin
- You can purchase cryptocurrency faster than most exchanges
- Has lower fees than “easy buy” competitors
- Cryptocurrency can be bought with Debit and Credit Cards (In addition to bank transfers)
- Regulated and trustworthy company
- High liquidity and purchasing limits
- May track how you spend your Bitcoins
- Has limited payment methods
- Wallets are less secure than a wallet that you control yourself
Frequently Asked Questions (FAQ)
Who is the CEO of Coinbase?
The CEO of Coinbase is Brian Armstrong.
Are There Cash Advance Fees for Purchasing Bitcoins on Coinbase with a Credit Card?
Purchasing Bitcoins on Coinbase with a credit card should not result in any cash advance fees. However, be sure to contact Coinbase support if this happens to you.
Is it Safe to Link My Bank Account to Coinbase?
Coinbase is a regulated company and is backed by major US investors. It holds licenses in all districts in which it operates, which means that is not a scam.
So, it’s safe to link your bank account to Coinbase. However, that does not mean you should ever store your Bitcoins with Coinbase.
Can You Purchase Bitcoins with PayPal on Coinbase?
Coinbase only accepts the payment methods listed above, which means that it does not accept PayPal.
Why does Coinbase have a bad rapport?
If you have been a regular in Reddit and facebook bitcoin-related forums; you will have seen a lot of negatives regarding Coinbase. Why is this? The answer lies in its operation.
First culprit – the banking laws. Banking laws of all countries are against money laundering. Coinbase requires one to fully disclose all personal information before opening an account – the KYC obligation all banks and financial institutions have. This does not sit well with most people. At least not the ones purchasing Bitcoins.
Does Coinbase hold my private keys?
Yes, they do. After purchasing the Bitcoins, Coinbase keeps the Private Keys while you get the public keys. This means that your purchases are monitored keenly by the company and any wrong move results in the freezing and closure of the account.
What about customer complaints about Coinbase I read on forums?
There have been customers whose accounts were erroneously debited and that took some time before the account was reconciled. This is after much complaining and waste of time. They take their time to reply your email.
There have also been customers whose accounts were frozen and written off for trading large sums of money. This was also after trying to exchange Bitcoins for Fiat after they gained value on LocalBitcoins (LBC). The reason for this is that they consider such individuals high risk.
How to transfer coins from Coinbase to other exchanges like Binance, Kucoin, Bittrex?
Log in to your account on of those exchanges, go to your respective coin wallet and generate an address. Then copy that address and go back to Coinbase, click on withdraw coins and paste the address from the other exchange.
Make sure to check out our guides on other cryptocurrency exchanges:
- If, for some reason, you are not satisfied with Coinbase, here is a list of Coinbase alternatives.
- Is Binance safe and how to use it?
- Read how to buy coins on Kucoin in our complete review of Kucoin exchange.
- Another popular exchange is Cex.io – learn more about it in our Cex.io review.
Make sure to also check comparisons we made between some of the most known exchanges:
- Coinbase vs Bitstamp
- Changelly vs Shapeshift
- Coinbase vs Coinmama
- Xapo vs Coinbase
- GDAX vs Gemini
- Changelly vs Coinbase
- Coinbase vs Bittrex
- Poloniex vs GDAX
- Poloniex vs Bittrex
- Coinbase vs Kraken
- GDAX vs Coinbase
- Gemini vs Coinbase
- Binance vs Kucoin
- Binance vs Bittrex
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com