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Coinbase Crypto Exchange

Bitcoins

The Coinbase crypto exchange was originally built by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader, to make it easy for non-technical people to use Bitcoin. After securing $150,000 through Y Combinator in June 2012, the company expanded its focus to include professional traders through what’s now known as Coinbase Pro.

Let’s take a closer look at the company’s evolution over the years and why Coinbase Pro has become the most popular platform for professional cryptocurrency traders.

A Brief History

Coinbase began as a platform for non-technical people to use Bitcoin. Founder and CEO Brian Armstrong recognized early on that it wasn’t easy for non-programmers to buy and sell cryptocurrencies. Prior to Coinbase, new users had to download a software wallet onto their computer and operate a node on the bitcoin network.

In 2015, the company broadened its focus to financial professionals. The company raised $75 million from the NYSE and several major banks, expanded to support Ethereum, and launched the Coinbase Exchange—a U.S. bitcoin exchange for professional traders that was rebranded as the Global Digital Asset Exchange (GDAX) a year later.

The company’s goal shifted to becoming the world’s largest crypto exchange with an international footprint that extended beyond just the United States. With the rise of other crypto exchanges and the ubiquity of its Coinbase brand, the company eventually rebranded GDAX as Coinbase Pro in 2018 to streamline its branding across different markets.

Coinbase vs. Coinbase Pro

Regular Coinbase provides an easy, user friendly interface for the average person to buy and sell cryptocurrencies. The main drawback is that fees can be very high. More sophisticated volume traders that understand limit orders and such will prefer using Coinbase Pro. Fees tend to be much less (in my experience) and gives the user more options for placing trades. Coinbase Pro also provides more in-depth insights into the markets and active traders care about the details and pricing structure.

Coinbase Pro is built for professional traders (or sophisticated swing traders) whereas Coinbase Prime is built for institutional traders. These days, institutional players account for roughly half of the $225+ billion assets on its platform, but even individual professional traders generate greater revenue from fees given their higher volumes than typical Coinbase users.

Coinbase Crypto Exchange

Coinbase Pro Premium Features

  • Real-time Data: Coinbase Pro provides a WebSocket feed that lets traders access real-time market data along with a trading API that supports programmatic trading bots. Traders can also view a live order book to see market depth and provide greater insight than simply looking at the market price.
  • Order Types: Coinbase Pro offers limit orders and stop orders in addition to simple market orders. Limit orders enable traders to buy or sell at a specific price whereas stop orders enable traders to sell an asset when it hits a specific price, which provides them with a lot more flexibility in managing their positions.
  • Low Fees: Coinbase Pro has a maker-taker fee structure that translates to lower costs for high volume traders. By comparison, Coinbase uses a spread, flat fee, and variable fee depending on a variety of factors. Coinbase fees can be upwards of 3.49% compared to around 0.5% or lower for most Coinbase Pro users.
  • Diverse Assets: Coinbase Pro provides access to bitcoin and more than 50 altcoins, which is more than the standard Coinbase accounts. These altcoins open the door to new opportunities but may be more volatile and unproven than established coins.
  • Technical Tools: Coinbase Pro provides a range of technical analysis tools, including real-time price charts with technical indicators, as well as an API for advanced analytics.

Coinbase Pro vs. Other Exchanges

Coinbase Pro comes with some unique features that make it more stable and secure than other exchanges. For instance, all U.S. dollar balances are FDIC insured for up to $250,000 whereas crypto assets on the exchange are fully insured. About 98% of all Coinbase assets are stored offline in cold storage and there has never been a successful Coinbase hack.

Of course, there are also some drawbacks to keep in mind. Coinbase has been criticized for its privacy practices following the acquisition of Neutrino—a blockchain startup that sought to uncover the identity of address owners. The company has also expressed interest in selling its analytics software to the DEA and IRS, which is a red flag for some privacy-focused users.

There are some alternatives to Coinbase Pro, such as:

  • Binance US
  • Kraken
  • Bittrex
  • Bitstamp
  • Gemini

Coinbase Pro tends to be highly liquid compared to many other exchanges, but some people think their fees are on the high side. Professional traders tend to ok with higher fees in exchange for the high-quality platform, unbeatable security, and strong reputation. Traders might also use a variety of exchanges based on their unique requirements.  

Getting Started

Coinbase is one of the most user-friendly cryptocurrency platforms out there. You can sign up in a few easy steps by visiting Coinbase Pro, clicking Get Started and following the steps. Note that all Coinbase Pro users will need to provide some form of identification, such as a state-issued photo ID, to buy and sell—including with the standard Coinbase account. If you want more coaching on getting started with crypto try our course call Buy Crypto, Safely!

If you already have a Coinbase account, you can easily migrate to Coinbase Pro:

  1. Go to the Coinbase Pro page.
  2. Select Deposit under Wallet Balance.
  3. Select the currency type.
  4. Deposit from Coinbase to Pro.
  5. Select the Coinbase Account.
  6. Enter the amount to transfer.
  7. Select Deposit.

Coinbase Pro also provides users important tax documents that they need to file taxes each year. With the IRS cracking down on tax evasion, it has never been more important to ensure that you’re accurately reporting your income. These documents can be found in the Coinbase Tax Center.

Alternatives to Coinbase

  • Binance.US is a world-class crypto exchange with support for hundreds of altcoins while maintaining some of the lowest fees in the industry.
  • Kraken is known for its top-notch security and high trading limits. Unfortunately, there are some limits for U.S.-based traders and investors.
  • Bittrex is a US based exchange founded in 2013 and headquartered in Seattle Washington. The company was founded by three former Microsoft employees. Bittrex claims to put an emphasis on security by employing an elastic, multistage wallet strategy that always keeps 80%-90% of funds safely offline.
  • Gemini was founded by the Winklevoss twins and is known for its regulatory compliance and exceptional customer support.
  • eToro is a popular platform for trading all kinds of securities, including cryptocurrencies. It also offers CopyPortfolios™ to easily build crypto portfolios.
  • FTX is a leading crypto derivatives platform that offers access to futures, options, volatility, spot, and leveraged tokens with up to 100x leverage.
  • Crypto.com is a popular platform for those seeking a lot of different capabilities, such as paying their bills with crypto or loaning cash.

The Bottom Line

Coinbase’s business focuses on novice as well as advanced crypto traders. While most novice users preferring Coinbase, more advanced users preferring Coinbase Pro with its real-time market insights, advanced order types, technical tools, and lower fees. While there are other exchanges with lower fees, few can match the security and reputation of Coinbase.

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