Coinbase – Exchange Review and User Guide

COINBASE – EXCHANGE REVIEW & USER GUIDE

With the most recognizable name in the industry, Coinbase is a highly trusted cryptocurrency exchange that is great for beginners. An easy-to-use platform and deposit insurance are enticing for any cryptocurrency investor, but a lack of coin selection and higher than expected fees are a reason for seasoned investors and traders to stay away.

FEATURES
  • Free GDAX account for all Coinbase users
  • Mobile application for both iOS and Android devices
  • Separate wallets for each currency
  • Vault wallets for increased security and long-term storage
  • High trading volumes
FUNDING METHODS
  • Bank account
  • Debit card
  • Wire transfer

Pros

  • Easy-to-use platform for newcomers
  • Great security and reputable brand name
  • Clean and simple platform

Cons

  • Only a few coins to choose from
  • Very little charting features
  • Personal data and trading information could be given to US government

EASE OF USE

Coinbase is known throughout the industry as the best exchange for new users, and its user interface is a big reason why. The homepage provides a clean, simple layout of account information and activity along with market prices and charts.

The navigation pane makes it easy to quickly buy or sell cryptocurrency and take a deeper look at the individual Coinbase wallets at your disposal.

The exchange’s ease of use would be much better if it weren’t for the arduous signup process. You will have to provide a great deal of personal information such as address, date of birth, and even social security info.

Additionally, ID verification is required by sending a valid photo of a government issued identification, and if your photo doesn’t match up to the quality or size standards imposed by Coinbase your application could be rejected, making it extremely difficult for you to ever get approved on the exchange.

If this process ever gets easier it would make their platform rank among the easiest to use in the industry, but instead, it can lead to a great deal of frustration.

COINS TRADED

For all the benefits of using Coinbase, it doesn’t provide nearly the selection of cryptocurrencies as most other exchanges.

The core industry coins, Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, are all supported.

Outside of that you will have to find another exchange to purchase any other cryptocurrency, making it a hassle and expensive to purchase via Coinbase since you will then have to pay withdrawal fees to take your coins elsewhere.

There have been rumours that Coinbase will begin to slowly add more cryptocurrencies over time, but that doesn’t seem likely according to the exchange itself.

Most of the coins traded via Coinbase are done so on their associated exchanges trading platform, GDAX. GDAX (Global Digital Asset Exchange) is geared more towards the professional trader or investor and provides more trading liquidity and trading options than Coinbase itself.

TRUST FACTOR

Coinbase holds less than 2% of all customer funds online, lessening the effect of any security breach to the platform.

All US dollar funds held on the exchange are protected by FDIC insurance up to a maximum $250,000 for United States residents.

Simply put, it's hard to find a more trustworthy exchange than Coinbase for protection of funds.

PRIVACY

Coinbase openly tracks user information as well as the transfer and movement of crypto and fiat funds, and has even censored user accounts by freezing or shutting them down if they are violating the exchange’s user agreement.

Additionally, it was the subject of an IRS investigation in which it was forced to hand over trading information for thousands of accounts. This should give potential users at least a bit of hesitation when considering the exchange.

FUNDING & WITHDRAWAL

Funding on Coinbase can be simple and quick, and because Coinbase is regulated by the US government it actually allows for direct integration into US bank accounts.

The exchange recommends bank account transfers via ACH, and even though they take up to 5 business days to complete, prices are locked-in to the rate at the time of purchase, which will not be a problem except for short-term traders.

Bank account information can be saved and makes for easy future purchases.

FUNDING METHODS

METHODTRANSACTION TIME
Bank Acount (ACH)4-5 business days
Debit CardInstant Transfer
Wire Transfer1-3 business days

WITHDRAWAL METHODS

METHODTRANSACTION TIME
Bank Acount (ACH)4-5 business days
Wire Transfer1-3 business days

FEES

Fees on Coinbase are in-line with the industry and won’t make or break any decision on whether or not to use the exchange.

The company has posted on their website a chart of fees that shows fixed fee schedules for purchases and withdrawals of cryptocurrency.

There is a flat 1.5% fee for purchases via US bank account on purchases above $200 and 4% across the board for debit card purchases.

However, smaller purchases made via bank accounts will incur additional fees (as outlined below).

Trades between cryptocurrencies for 0.25% on the accompanying GDAX trading platform might seem low, but are actually higher than other competitors across the industry.

FEES FOR SMALL BANK ACCOUNT PURCHASES

$0.99 for buying and selling at $10.99 and below
$1.49 for buying and selling from $11.00 up to $26.49
$1.99 for buying and selling from $26.50 up to $51.99
$2.99 for buying and selling from $52.00 up to $78.05

CUSTOMER SERVICE

The default customer service option on Coinbase is an automated chatbot that is designed to answer the most basic questions regarding the exchange.

While using the chatbot can be effective if your questions are straightforward, getting in contact with a real person can be difficult and takes an extremely long time to get a response.

SPEED TO COIN

At first glance, the Coinbase identity verification process might be a sign of a slow speed to coin for users.

However, this step is required for any regulated exchange in the United States and provides a layer of security that is extremely beneficial to users.

Past the verification process, Coinbase allows users to go from fiat to cryptocurrency quickly, which is especially important for users in the US who aren’t afforded many secure cryptocurrency options.

Purchases made using a debit card are conducted instantly, and even though coins are locked from trading for about a week, the price per coin and amount are set at the time of purchase, eliminating any price volatility concerns that occur from exchanges which take time to process deposits before purchases can be made.

The Coinbase debit card option provides the quickest, and most secure way to purchase cryptocurrency for American investors.

VOLUME

With its brand name and great reputation, Coinbase doesn’t lack in liquidity on its platform.

It's the second largest Bitcoin trading platform, handling over 15% of all Bitcoin transactions as of February 2018.

It also regularly transacts over $50 million daily in Ethereum and Litecoin on its GDAX trading platform, which provides enough liquidity for even the most active day traders.

Orders of all sizes have no problem being filled for the currencies offered.

FEATURES & BENEFITS

Coinbase doesn’t offer a ton of fancy features or functionality. The mobile platform is easy to use and allows for charting and purchasing cryptocurrency on-the-go. The GDAX platform provides more charting options for technical analysis lovers, but still doesn’t compare to more detailed trading platforms marketed to high-volume traders. Vault wallets give users the option to store cryptocurrency with additional security measures, such as requiring multiple parties to sign-off before funds are withdrawn.

TOTAL SCORE

For someone new looking to purchase cryptocurrency for the first time, Coinbase is one of the best places to go.

With a large amount of liquidity on the industry’s most traded coins, it is easy to get started on their simple-to-use platform.

Seasoned traders can use Coinbase’s related trading platform, GDAX, for their trading needs, but will find a lack of tools to keep them happy.

Overall, Coinbase continues to be a go-to for onboarding investors to the cryptocurrency marketplace.

COINBASE – USER GUIDE

Coinbase provides step-by-step instructions that get users from signup to cryptocurrency in an easy-to-follow system. Just make sure you're prepared with personal information and documentation to get past the user verification process.

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1. Sign up

Signing up will take time and will require giving over personal information, such as address and social security number.

After navigating to the Coinbase homepage, click the link at the top right of the page to sign up for a new account.

Initially, the only information needed is first and last name, email, state of residence, and password creation.

There's an option to sign up as an institutional investor or merchant if you are looking to accept cryptocurrency payments or make larger institutional investments on behalf of a financial firm.

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2. Verification

One of the drawbacks to being the only regulated US cryptocurrency exchange means that all new users in the United States must provide identity to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.

This shouldn’t prevent anyone from using the exchange (unless you are planning on conducting fishy business), but is an impediment nonetheless.

After signing up you will be asked to verify your email address.

Once your email address is verified you are immediately asked to add a phone number to your account.

Make sure you input the correct phone number as a verification code will immediately be sent to the phone number on file.

After verifying email and phone number, the identity verification process begins. This is something that is required for all US-based customers.

Basic information such as address, date of birth, and social security number must be provided.

Next, you must upload a form of government-issued identification.

The ID must be scanned and attached to your Coinbase account in the appropriate format (see below) to be considered valid. This can be done by using a computer webcam or mobile phone to take the photo, or by uploading a photo to the exchange directly.

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3. Authentication

Coinbase provides options for 2-factor-verification (2FA) or use of a third-party authentication app such as Google Authenticator or Authy.

All forms of 2FA entail time-based one-time (TBOT) passwords that reset quickly if not used, ensuring the most security possible.

SMS 2FA comes as the default setting, but there are options to change this at any time.

To use a third party authentication app (i.e. Google Authenticator, Authy, etc.) you will need to enable the authenticator by scanning a QR code and inputting the 2-step verification code given to you by the application.

Before you complete the process, make sure to write down your secret code which is needed in case your phone is ever lost or stolen.

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4. Payment Method

Now that your account has been fully verified and you have set-up 2FA, you will see these steps are marked as completed on your Coinbase homepage.

The last step to complete before trading is to add a payment method to fund your account. Navigate to the “Add a payment method” option on the bottom of your Coinbase dashboard.

Another benefit of being a regulated exchange means that Coinbase can connect directly with most US-based banks and keep banking information on file.

The alternative, using account information to verify several small deposits, can take up to 5 days and severely delay trading. Use the instant authorization option if your bank allows for it.

Instant connection to your bank will not require a deposit of any kind, but will make it easier to purchase cryptocurrency when you are ready.

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5. Purchase Cryptocurrency

Purchasing cryptocurrency on Coinbase couldn’t be easier. First, decide on the cryptocurrency you are looking to purchase. Then choose the payment method and amount of fiat currency you are looking to spend.

Coinbase will automatically calculate the amount of Bitcoin you will receive for the dollar amount entered.

On the left side of the screen you will see final information about your purchase, the price of Bitcoin at the time of purchase, applicable Coinbase fees, and when your purchase will be available to use.

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6. Trade/Market View

Coinbase itself doesn’t provide a trading or market view to speak of, but its GDAX platform offers tools for traders. This requires navigating away from Coinbase and on to GDAX itself as a separate trading platform.

The default view in GDAX offers a right-to-left pane view of the order book, price chart with additional charting features, and previous trade history.

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7. Finalize Buy Order

Once you click the Buy Bitcoin button at the bottom of the screen you will be given a confirmation of your purchase. This confirmation will reiterate the price and amount of Bitcoin you just purchased along with the fees from Coinbase.

There's also a reference code attached to every Coinbase transaction. This is important to remember if you are ever looking to dispute a transaction or you think there is a problem.

If you don’t take note of your reference code right away, don’t worry, Coinbase stores all transactions and reference codes in their platform which you can call upon at any time via the applicable wallet.

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8. Withdraw

The withdrawal procedure is just as simple as depositing. Navigate to the Buy/Sell option on the homepage navigation and click over to Sell.

Here you will see options to sell from any of your cryptocurrency or fiat wallets to any bank account you have on file. Select the wallet you would like to sell/withdraw from and where you would like it to be deposited.

Then, decide on the amount you wish to deposit.

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Bonus Tip - Account Limits

It's important to know your buying limits on Coinbase. Limits are enforced to slowly integrate users into the Coinbase platform.

Limits can be found under the Settings option in the home navigation pane.

Here you will find the limits currently set on your account, as well as how much of your limits you have already used to date.

Notes on how to increase your buy and sell limits are listed under each method and help to understand actions you can take to increase your limits as needed.

Coinbase

9

Ease

8.0/10

Trust

10.0/10

Funding

9.0/10

Fees

8.0/10

Pros

  • Easy-to-use platform for newcomers
  • Great security and reputable brand name
  • Clean and simple platform

Cons

  • Only a few coins to choose from
  • Very little charting features
  • Personal data and trading information could be given to US government