Micheal Barton takes a look at one of the world’s leading trading platforms in our Coinbase review – explaining how it works, the cons, the protection, and how it can help you enjoy the fruits of crypto currencies.
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There have been some tremendous stories of the money to be made by investing or trading in cryptocurrencies (cryptos) like Bitcoin, Ethereum, and Ripple. But how do you invest?
Cryptos aren’t traded on traditional stock exchanges. While some brokers will take and place orders in cryptos, you can buy and sell on specialised crypto exchanges. One of the biggest and best-known is Coinbase.
If you’re considering investing in cryptos, you’ll want to read this review of Coinbase.
If you are considering investing/trading in cryptocurrencies, Coinbase provides an easy-to-use trading platform with access to a wide range of cryptos. It offers plenty of educational resources, opportunities to earn crypto rewards – including staking to profit from interest on coins you hold – and advanced accounts to reduce chargeable fees.
Overall, Coinbase is a great trading platform for beginners and more advanced crypto traders.
What Is Coinbase?
Coinbase is one of the world’s leading crypto exchanges. Its shares are traded on the Nasdaq exchange in the United States, and it currently has a market capitalisation of more than £15 billion.
To give you some idea of how big this makes the company, it’s worth more than almost two-thirds of the companies traded on the FTSE 100. It has a higher market value than companies like Aviva, M&G, Rightmove, and Sainsbury’s!
First founded in 2012, Coinbase went public in 2021. It has around 100 million registered users worldwide ─ 9 million of these are considered active users, trading at least once a month. It manages around £650 billion of crypto assets, with annual trading volumes of around £650 billion. (It was double this, but the value of cryptocurrencies has halved since their peak in late 2021.)
Coinbase is one of the safer crypto exchanges – which is important when you’re rolling the dice in a market that can feel like gambling on a roulette wheel. It’s an exchange that is suitable for newbies and crypto veterans alike.
You can use Coinbase on your computer or as an app on your smartphone, and the Pro version has a tonne of features that will satisfy experienced traders, yet are easy enough to navigate if you’re a beginner.
Let’s dive into Coinbase, to answer the question you’re asking: “Is Coinbase right for me?”
The Best Bits
Kicking off with the best features of Coinbase, and you’ll love what it has to offer:
Coinbase offers three trading platforms: Coinbase Exchange, Coinbase Pro, and Coinbase Advanced. Each offers a step up on the trading ladder, with more advanced functions and market access. For example, should you trade on Coinbase Advanced, you’ll have access to professional standard charting and trade without paying a spread (the difference between buying and selling prices), as well as placing market, limit, and stop orders.
Coinbase One is the newest trading platform from the exchange. For a monthly fee, you can trade fee-free (within limits), though the price spread will usually be included in the buy/sell prices.
Crypto Education – Free Crypto Coins in Your Account!
Whatever your level of experience in cryptos – or trading – there is always something to learn. Coinbase has a pretty good educational element, with guides on all you need to know. This includes introductions to Bitcoin and other cryptos, tax on crypto trading, and more.
Whether it’s basic tips or advanced trading strategies you want to understand, or simply to stay updated with the market, you’ll find it on Coinbase. There are video lessons and quizzes to take, too. But the best part is this – you get paid to learn!
Here’s how it works:
- Watch a video
- Take a quiz
- Receive crypto into your Coinbase account for every quiz you complete
You can start to earn crypto rewards as soon as you open your account.
Most other crypto exchanges make you wait a few days or weeks before you can make a withdrawal after purchasing crypto coins. They want to see the trade fully settled and your payment cleared.
This isn’t the case with Coinbase. You can make a withdrawal immediately after you have traded crypto coins.
A Great Selection of Cryptos to Trade
While some other crypto exchanges provide access to trade in more cryptos than Coinbase, you won’t be disappointed with the range it offers. Of course, you can invest and trade in all the major cryptos, including Bitcoin, Tether, Ethereum, Ripple, and Litecoin.
In addition to these big guns, Coinbase allows you to trade around 250 other cryptos, including newer digital coins.
Staking ─ Get Paid to Hold Crypto
Another cool feature of Coinbase is that you can earn rewards by staking certain cryptos in Coinbase. How much you can earn depends upon the blockchain protocol (in its simplest from, the method by which cryptos are transacted through the blockchain).
You can stake cryptos in your Coinbase app, and begin earning rewards as soon as the staking process is complete. Rewards are paid in crypto coins of the same crypto as staked, and are automatically staked, too.
How much can you earn this way? While it depends upon the coin you are staking, the annual percentage yield (APY) ranges from around 2% to 10%. That’s not to be sniffed at!
As a Coinbase account holder, you can apply for a Coinbase credit card. This works like a pre-paid debit card which is linked to your Coinbase account. Accepted by thousands of merchants around the world, this means that your cryptocurrencies can work like Fiat money (the notes and coins in your pocket or bank account).
There are no transaction fees applied to spending on your Coinbase Card, though you will pay the spread when transferring value to your card.
You may also earn crypto rewards when you use your Coinbase Card – and these can be the equivalent of up to 4% of your spending.
The Not-So-Good Bits
If you follow Wallet Savvy, you’ll know that we’re honest in our reviews. We tell you the cons as well as the pros. Here’s what you should be wary of about Coinbase:
Coinbase may be one of the largest crypto exchanges, but this doesn’t mean it is the cheapest. Far from it.
There are many ways you can pay for trading on Coinbase, and the fees can be challenging and complex to understand – and they are different depending on which platform you use and how you pay to trade.
When you place an order, you’ll be able to see the fee and the breakdown of how this fee is composed. But by this time, you will have made up your mind to trade. The fees become almost inconsequential (it’s an emotional thing). A little sneaky, in my opinion – and smaller transactions are hit hardest.
It Costs to Stake, and Limited Opportunity to Do So
While the rewards to stake your crypto look generous, there is a downside. Coinbase charges a rather extortionate 25% commission. That’s going to put a big dent in your APY.
Rewards Could Be Better
It’s great that you can earn rewards on Coinbase. But while they look attractive, your options to be rewarded by staking are limited. If this is your focus for investing in cryptocurrency, there are other exchanges with better rewards programs on a wider range of cryptos.
Withdrawals Do Not Always Happen Smoothly
While withdrawals should be immediate, this is not always the case. Indeed, it appears that most of the 1-star reviews on Trustpilot (which constitute 79% of all reviews on Trustpilot) are complaints about delays in paying out.
If you need your money quickly, you might not receive it for days or even weeks. It’s there, it’s just bottlenecked for some reason.
Coinbase is in the middle of a legal battle with the regulatory authorities in the United States. It has been accused of promoting unregistered securities through its staking programs. It is also alleged that Coinbase is acting as an unregistered amalgam of exchange, broker, and clearing agency. It could be hit with millions in fines and penalties.
How Does Coinbase Work?
Coinbase works very much like most other trading platforms, except you can only trade cryptocurrencies (and NFTs – more about these shortly) on it.
Once you have set up your Coinbase trading account, you can place orders and pay for your purchases using any of the following payment methods:
- Debit card
- Bank transfer
- Direct transfer from a European bank account (a SEPA transfer)
You can also set up a Coinbase Wallet, and link it to your Coinbase account. This lets you store your crypto coins (and NFTs) in a safe place, under your own name (with full control over it). However, this is not the only advantage of a Coinbase Wallet. You’ll also be able to:
- Mint your own NFTs
- Use advanced security to keep your digital assets safe
- Easily transfer your digital assets
- Trade directly from your wallet
- Store cryptos in your wallet, even if they haven’t been purchased on Coinbase
You don’t need a Coinbase Wallet as soon as you open your Coinbase account – you can set up your wallet at any time. If you’re new to Coinbase, this allows you to get used to things first.
Buying and Selling NFTs on Coinbase
Non-Fungible Tokens (NFTs) really hit the market big in 2021. An NFT is a unique digital asset. It cannot be replaced by something else. In the non-digital world, a £5 note is not non-fungible – it’s easily replaced with other money. The Mona Lisa, on the other hand, is non-fungible – it’s a one-off.
You can buy and sell NFTs through your Coinbase Wallet (and even create, or mint, your own), but you’ll need to own a few Ethereum coins first. Connect your Coinbase Wallet to Coinbase NFT, and you’re ready to buy your first NFT.
Coinbase – For Beginners and Experienced Crypto Traders
Coinbase is a great introductory crypto trading platform. It’s easy to use, and you can get started almost immediately. With a tonne of educational materials, ways to earn extra coins, a large selection of cryptos to trade, and a wallet to secure your coins, you’ll soon be a crypto king or queen!
However, as your experience grows, you’ll be able to take advantage of the innovative features of Coinbase Pro or Coinbase Advanced. You won’t need to re-register to use this platform, and can place limit orders, stop orders (a way to limit your risk), see a full history of trades for many cryptos, and access real-time data.
Unfortunately, Coinbase fees are not as easy to decipher as its trading platform is easy to use. Its fees matrix is complicated by different pricing according to several factors. These include the type of account you have (One is fee-free), the amount you are trading (One has limits for fee-free trades), and the payment method (using your debit card is expensive).
All this means that the costs to trade (buy or sell) range from near to zero to around 5%. You’ll receive a fees breakdown when you craft your order.
Is Coinbase Safe to Use?
In the UK, Coinbase is authorised by the Financial Conduct Authority (FCA). There has been a lot of news about crypto coins being ‘stolen’. Coinbase has insurance to protect assets from theft – though this doesn’t cover unauthorised access to your Coinbase Wallet or Coinbase accounts. However, you should also be aware that the insurance doesn’t cover the full value of crypto that it holds for customers.
Though Coinbase is regulated by the FCA, cryptocurrencies are not. Therefore, you won’t have the protection of the Financial Services Compensation Scheme to fall back on. The FCA also says that you are unlikely to be able to use the Financial Ombudsman Service to lodge complaints or adjudicate in disputes.
There was some concern that customers’ crypto holdings would be used to pay back its debt if the company went bankrupt, but Coinbase has confirmed that this is not the case – and that its retail customers’ assets are protected in the same way that institutional investors’ assets are protected.
Finally, Coinbase stores most of its customers’ assets in ‘cold storage’. This means they are held in devices that aren’t connected to the internet, which offers greater protection against cybercriminals.
When logging into your Coinbase account, the platform uses two-factor authentication (2FA). This provides extra protection against unauthorised access to your account.
You’ll find a large help resource on the Coinbase App and website, with FAQs covering everything from logging in to trading and holding cryptos in your Coinbase Wallet. For most, this is all the help you’ll need.
You’ll also find a live chat, and can also send emails to the customer help centre. While this is handy, you won’t get an immediate response (personally, I don’t like having to wait 24 hours and longer for an answer to my queries).
You may also be requested to show proof of identity when using customer support – infuriating, but comforting simultaneously.
The Bottom Line
Investing and trading in cryptos is a high-risk activity. Prices can be extremely volatile, and while it is possible to make huge profits (and many have), it is also possible to make large losses (and many have).
Coinbase makes trading and investing in cryptocurrencies less confusing. It’s an easy trading platform to use, and its educational resources will help you get the hang of things quickly. It’s a great platform for beginners, and good for more advanced crypto traders, too.
You’ll have a good range of cryptos to choose from, including all the major coins, and some neat trading tools to help you. The platform’s biggest disadvantage is the fees it charges (and the complexity of those fees). These will especially impact you if you are starting out trading smaller amounts, but you can ‘trade up’ to Coinbase Pro and Advanced to reduce the fees you pay.
Here’s a summary of the pros and cons of using Coinbase:
|The Pros||The Cons|
|Easy-to-use trading platform||High fees|
|Plenty of crypto education||High commissions on staking rewards|
|Chance to earn crypto rewards||Rewards could be higher|
|Fast withdrawal||Withdrawals don’t always happen smoothly|
|Large selection of cryptos to trade|
Overall, Coinbase hasn’t achieved the valuation it has by providing a bad service and a shoddy trading platform. If you are considering trading or investing in cryptocurrencies, it’s one of the best crypto exchanges available, though you’ll want to advance from the regular account as soon as possible to reduce the fees you pay.