Overview: Coinbase is one of the largest cryptocurrency exchanges in the world and allows its users to easily buy, sell and trade over 100 crypto assets. However, users should be wary of its transaction fees and other possible risks of crypto trading.
If you’re familiar with crypto, you’ve probably already heard about Coinbase, one of the earliest and most popular cryptocurrency exchanges. With its easy to use platform and range of trading features, Coinbase is very popular among crypto investors, specially beginners. But, is it the right crypto trading solution for you?
This guide will give you a complete overview on Coinbase and the crypto buying, selling and trading features it offers.
What is Coinbase?
Coinbase is a US-based cryptocurrency exchange with over 73 million users spread over more than 100 countries. The company was founded in 2012 with the purpose of providing an accessible, secure and easy-to-use platform to acquire, sell and exchange crypto. It is available from web browsers and as a mobile app. Since its birth, Coinbase has seen incredible growth, with a current quarterly volume traded of $327B. It also became the first crypto exchange to go public on the Nasdaq in 2021.
What You Need To Know To Trade On Coinbase
With Coinbase’s user-friendly platform, anyone can monitor, buy, sell and trade a wide range of cryptocurrencies. Users can also set up an ongoing investment strategy by scheduling recurring buys with a daily, weekly or monthly timeline.
Let’s take a glance at the most relevant features for trading crypto on Coinbase:
How much capital do you actually need to start trading crypto on Coinbase? Coinbase makes crypto trading easy for all, with its low minimum trade amount. Users can purchase or sell as little as $2.00 of any cryptocurrency.
Coinbase has variable maximum trading amounts that are determined based on your region and your payment method of choice.
Coinbase supports over 100 different cryptocurrencies, giving you a wide range of trading options. Some of the most popular digital currencies you can buy, sell and exchange on Coinbase include:
- Bitcoin (BTC)
- Cardano (ADA)
- Ethereum (ETH)
- Avalanche (AVAX)
- Polygon (MATIC)
- Polkadot (DOT)
- Solana (SOL)
- Uniswap (UNI)
- Litecoin (LTC)
What happens after you purchase crypto on Coinbase? The exchange offers you several options for storing and managing your assets.
One option is to keep your cryptocurrency coins and tokens directly on your account on the exchange and allow Coinbase to store them for you. This is also known as custodial storage. In this scenario, you won’t have access to your private keys, which will be kept directly by Coinbase and protected through their own security measures. Crypto investors should keep in mind that there is significant risk in entrusting your private keys to a third-party, even with a reputable and trustworthy exchange such as Coinbase, since they are the only way to verify possession of digital assets. On the other hand, beginners can find comfort in custodial storage, since it eliminates the responsibility of securing their private keys, setting-up a crypto wallet, and keeping track of passwords and recovery seeds.
Another option is to trade on the Coinbase exchange and use Coinbase’s non-custodial software wallet, “Coinbase Wallet”, for storage. Using this alternative gives you complete access to your private keys.
Finally, you can also transfer your assets from the Coinbase exchange to any other wallet of your choice, such as a hardware wallet that provides a higher level of security.
In terms of security, Coinbase has many security measures in place to protect the assets of the users trading on their exchange. For starters, 98% of customers’ crypto is stored offline in cold storage. The remaining 2% is used to accommodate for the exchanges trading volume. Other security measures include two-factor authentication, data encryption and biometric logins.
Coinbase also has FDIC insurance protecting their users against crypto theft. Their insurance policy covers losses up to a maximum of $250,000. Users can further protect their assets by using a third-party wallet to hold their crypto.
One of the downsides of trading on Coinbase is having to navigate their complex fee structure. While Coinbase offers one of the most user-friendly and simple trading experiences, its fees are confusing and tend to be higher than what you’ll find when trading on other platforms.
In summary, users are charged fees, which can vary depending on several factors, whenever they purchase, sell or convert crypto on Coinbase. Fees are calculated at the moment of the transaction and are affected by order size, payment method and market conditions. These specific fees are visible to the user on the trade preview screen on each transaction.
Additionally, fees include the spread fee, which allows coinbase to temporarily lock in a price while your trades are being reviewed and processed.
If you are looking for more extensive trading features and lower fees, users can upgrade to using Coinbase Pro. Here are some of the features of the Coinbase Pro Platform:
- No maximum trading amount
- Advanced crypto charting
- More than 250 cryptocurrencies supported
- Advanced trading options: stop order, limit order, and margin orders.
- Get lower fees due to Coinbase Pro’s maker-taker tiered fee structure, with lower fees for higher trading volumes.
The Good: Coinbase Pros
- Trade with over 100 cryptocurrencies to choose from.
- Buy and sell with a low minimum of $2.
- Easy and intuitive set-up and trading experience, which is ideal for total beginners.
- Custodial and non-custodial storage options.
- Trustworthy company that offers reliable security measures and asset insurance.
The Bad: Coinbase Cons
- Has a complex fee structure that depends on many variable factors.
- Higher fees when compared to other trading platforms.
- Without linking your account to a crypto-wallet, you’ll have no control of your private keys.
How To Trade On Coinbase?
1. Create an account
To start trading all you have to do is open a free Coinbase account on your computer or phone. To do so you’ll also need to provide a government-issued ID, email address and phone number for verification.
2. Link a payment method
Depending on your country of residence, you’ll have different payment methods at your disposal. Options include: bank account, Debit Card, Wire Transfer, PayPal, Google Pay and Apple Pay.
3. Trade on Coinbase
Just sign in and head over to the Buy/Sell section to start. You can also directly trade between two cryptocurrencies from the “Convert” option.
Is trading on Coinbase safe?
Due to its little regulation and high volatility, there are inherent risks to trading with crypto. Keeping that in mind, the Coinbase exchange is not only user friendly, but also a well-established company that offers a secure trading platform. As of today, it hasn’t been subject to any major hacks or theft in the past.
Should you trade on Coinbase?
Coinbase is a trustworthy great trading solution for beginners, offering an easy to navigate platform with a simple account set-up process. Its intuitive buying, selling and exchange features and low trading minimum make it easy for anyone to start trading crypto. However, there are some downsides to using Coinbase, which include high fees and a complicated, variable fee structure. In terms of security, there are also additional risks to using the exchange without a wallet, since you’ll have to access your assets’ private keys. Nonetheless, Coinbase is a great option for those just getting started with crypto, as it is a well established company that offers a maximum level of convenience.