This guide walks you through the ins and outs of using one of the world’s most popular cryptocurrency exchanges, Coinbase.
Introduction to Coinbase
Coinbase is one of the first and largest bitcoin exchanges in the world. Established in 2012, Coinbase has processed billions of dollars in fiat-to-crypto transactions every year. Their dedication to providing a legally-compliant one-stop shop for buying 50+ different cryptocurrencies with cash is largely unparalleled.
In addition to acting as a fiat/crypto and crypto/crypto exchange, Coinbase also provides a highly-secure wallet and storage system. They also have a comprehensive selection of cryptocurrency education resources to help you master your crypto game. You can even earn small amounts of crypto by completing specific learning tasks.
Why Choose Coinbase?
The simple answer is this: there is no more accessible and safer way to purchase cryptocurrency than Coinbase. Sure, some alternatives may be faster, but none of them have the infrastructure to ensure that you are securely buying crypto.
With 89+ million users, Coinbase allows customers in 100+ countries to easily trade their local currency for BTC or 50+ other cryptocurrencies and offers wallet support to citizens of almost every country on the planet. Thanks to their intuitive, easy-to-use interface, securely buying BTC can’t get much easier.
Unlike most of its competitors that are comparable in size, Coinbase has never been hacked, thanks to employing a tremendously competent security team. In addition, as of May 2020, Coinbase had the most BTC reserves on hand of any crypto exchange, meaning they are more robust and financially healthy than all other exchanges.
In addition, Coinbase is always willing to work with their customers to make sure a solution can be found for almost every problem imaginable. They have gone to great lengths to prioritize user experience, staying true to their mission of making Bitcoin readily available to the masses.
Brief History of Coinbase
Coinbase was founded in 2012 by current CEO Brian Armstrong and Fred Ehrsam. Armstrong had previously worked at Airbnb, where he recognized the importance of carrying out cheap microtransactions.
At the time, BTC transactions were incredibly cheap (or even free), and Armstrong saw the future of a technology like Bitcoin to have a transformative effect on modern finances. However, he also saw how tough it was for those outside of a tightly-knit cryptography circle to purchase bitcoin. So, together with Ehrsam, they managed to raise enough funds to start up a first-of-its-kind company with a clear goal in mind: allowing people to buy bitcoin quickly and safely. Coinbase had already processed over a million dollars in bitcoin transactions within less than a year.
In 2016, Coinbase added support for Ethereum, and in 2017 they obtained the highly sought-after BitLicense from the New York Department of Financial Services. This put Coinbase at the foremost of cryptocurrency exchanges in legal and regulatory compliance.
By the end of 2018, they had added Bitcoin Cash (BCH), Ethereum Classic (ETC), Ripple (XRP), and Litecoin (LTC) to their trading services, bringing in an estimated $1.3 billion in revenue for the year.
In 2019, Coinbase added several more coins for trading, including Tezos (XTZ), staked for rewards generation in Coinbase user wallets. By the end of January 2020, Coinbase had professional trading apps available for iOS and Android users, supporting 50 trading pairs to customers in over 100 countries.
Coinbase listed its IPO in 2021, peaking with a valuation of around $68 BILLION!
Getting Started With Coinbase
Coinbase will let you create an account from just about anywhere in the world; however, you can only buy bitcoin and other cryptocurrencies using local fiat currencies from select countries. These countries are:
- United States (49 of 50 states)
- United Kingdom (also including Gibraltar, Guernsey, Isle of Man, and Jersey)
- Czech Republic
- San Marino
Citizens from several other countries are allowed to perform cryptocurrency conversion (converting one coin to another), and even more are allowed to set up a crypto wallet. This means that while not everyone can buy or trade cryptocurrencies through Coinbase, anyone can store their coins using their wallet service.
How to Register an Account at Coinbase
Opening an account with Coinbase is quite simple and only requires verification of an email address and phone number to get started. From the Coinbase home page, click on the “Create Account” button to get started. Next, you will be asked to check your email to verify your email address.
After opening the email sent to the address provided to Coinbase, click on the “Verify Email Address” link. This will transport you back to the Coinbase account creation page. Next, provide Coinbase with your cell phone number and click “Send Code.” You will receive a text message from Coinbase with a code to enter on the next screen.
After entering the code from your text message, click the blue button on your account dashboard screen. And that’s it! Your account is now registered.
How to Get Your Account Verified
You will see three options at the top of your dashboard: Home, Trade, and Accounts. Click the Trade tab and then “Verify your ID” to start the ID verification process. Keep in mind that you must fill all the fields provided by Coinbase in the Identity Verification Required screen to be eligible for crypto trading. After all your information has been entered, click the “Continue” button at the bottom of the screen.
You will then be brought to the Identity Verification screen. Here you will choose the type of ID you want to use by clicking on the corresponding option (usually a passport, state ID, or driver’s license). After taking a picture of your document and your face, you will be brought to a screen that says, “We’re verifying your ID. We will email you once your verification has completed.” This process could take as little as a few minutes or as long as 24 hours.
Attaching a Preferred Payment Method
After Coinbase has verified your identification, the next step will be adding a payment method to fund your account. Coinbase accepts a few different payment methods, including bank transfer, debit, and credit cards. In addition, you can link your PayPal account to make purchases. Don’t be too concerned if Coinbase takes a week or even longer to verify your bank information. 5-10 days is standard when waiting for PayPal to confirm your funding method.
Making a Purchase
After your payment method has been activated, you will now be able to purchase or sell more than 50 different cryptocurrencies. After clicking “Trade” and selecting the type of coin you wish to purchase, simply type in the value of the amount you want to buy, which for bitcoin is as low as 0.001 BTC (that would be 1/1000th of 1 bitcoin or one mBTC). You will then pay the rate shown on your screen using your preferred payment method. Next, click “Continue” and then confirm your purchase. Purchases are processed as soon as they are cleared with your payment provider.
Coinbase Supported Coins
Before making a crypto purchase from Coinbase, it is good to have some background knowledge of the coins they are offering, so we have made short summaries of each listing for your reference. Most verified users can purchase or sell any of the following coins, and Coinbase offers wallets for all of the following coins, meaning you can keep your coins stored there as a custodial solution.
Bitcoin (BTC): As you probably know, this is the first and most popular cryptocurrency. Though hundreds of competitors have come and gone with the mission of replacing its spot at #1, BTC remains the most widely used and traded cryptocurrency by far. BTC’s market cap is worth more than all other coins combined (that’s 5,500+ coins and tokens). Bitcoin is easily the least risky of all crypto purchases and often the most rewarding.
Ethereum (ETH): The first industrial-scale “platform coin,” you probably know Ethereum as the host of ICO tokens and DApps, but ETH itself is a great digital currency choice as well. Transferring ETH is quick and painless, with block times of around 30 seconds and transaction fees usually less than 30 cents. In addition, an entire financial ecosystem resides on top of the Ethereum blockchain, meaning it is not likely to go away any time soon.
Ripple (XRP): Somewhat surprisingly, the development of Ripple predates that of Bitcoin. The entire goal behind Ripple is to provide a real-time settlement system for financial institutions to speed up certain types of transactions. Indeed, it has been adopted by a small number of banks and used for such purposes. In addition, it also serves as an effective way to transfer value.
Bitcoin Cash (BCH): Born out of a desire to be a more efficient version of peer-to-peer electronic cash than BTC, Bitcoin Cash features lower trading fees and a guaranteed network confirmation after only one block. This means that BCH is frequently faster and cheaper to send than BTC, though it is not nearly as widespread in terms of acceptance as a method of payment.
Litecoin (LTC): Litecoin is regarded as the world’s first significant altcoin. Featuring block times of around 2 or 2.5 minutes in length and transaction fees of less than a penny, Litecoin is also a faster, cheaper alternative to BTC. It also has the advantage of having been around for quite a few years, which has given it time to become adopted by several merchants and services as a payment method.
EOS (EOS): A second-generation platform coin built with scalability and speed in mind. EOS changes the traditional structure and order of the blockchain while introducing improvements in address conventions and fee structure (transactions do not have fees in the traditional sense). The EOS platform is competitive with Ethereum in DApp building and is very quick and cheap to send as a currency.
Tezos (XTZ): Tezos is another platform coin that seeks to improve the implementation of smart contracts and the DApp creation process. Tezos also aims to have a more decentralized governance structure, which means that its holders and users are a welcome part of the decision-making process regarding its future development.
Chainlink (LINK): Far removed from acting as a traditional cryptocurrency, Chainlink is a decentralized oracle network that seeks to bridge the gap between the Ethereum blockchain and real-world data.
Productive participants are rewarded with LINK tokens, which are also the means of payment for the use of its services.
Stellar (XLM): Similar to Ripple, the goal of Stellar is to act as a way of efficiently transferring value from one form to another, but its target audience is those who are unbanked rather than the banks themselves. In addition to employing smart contracts, the Stellar network supports transactions at the cost of less than a penny.
Ethereum Classic (ETC): This is the original, unforked version of Ethereum. It does not enjoy the same popularity as ETH, but it can do everything ETH can, including token and smart contract creation.
USD Coin (USDC): After Tether, USDC is the second most popular stablecoin, meaning it is backed by real dollars and pegged to the value of the USD. As an Ethereum token, USDC can easily be traded for Ethereum tokens on several exchanges. It’s also a great way of preserving the stability of a cryptocurrency portfolio during volatile periods.
Dash (DASH): One of the original privacy coins, DASH has a feature that allows coins to be sent completely anonymously. This renders it quite different from traditional cryptos like Bitcoin and Ethereum, whose blockchains are very transparent.
Cosmos (ATOM): Cosmos is a 3 rd generation cryptocurrency that connects different blockchains to communicate data to and from various networks. It is also committed to making blockchain and app building easier for developers.
Zcash (ZEC): Zcash is another privacy coin that accomplishes its goal in a manner completely different from that of Dash while still letting the user have the option of transparency.
Basic Attention Token (BAT): BAT is an Ethereum token native to the Brave browser. You can earn the token simply by viewing ads in Brave or received as donations from users to their favorite websites. In addition, advertisers purchase ad space in Brave with BAT.
OmiseGO (OMG): An Ethereum token, OmiseGO is the cryptocurrency extension of the southeast Asia-based financial services company, Omise. Their goal is to use Ethereum’s smart contract features to provide financial services to those whose access to traditional services is limited.
Augur (REP): In production since 2015, Augur has been using Ethereum to build a prediction oracle through which future outcomes can be obtained using a “wisdom of the crowd”-type approach. Those who correctly guess outcomes of events are rewarded in REP, which is the Augur system native token.
Kyber Network (KNC): An Ethereum token, Kyber Network is building a protocol that will allow token swaps to be integrated into any application. This will allow for the seamless conversion of any Ethereum token to be accepted as a payment method.
Dai (DAI): Dai is an Ethereum-based stablecoin that involves a managed fund pool to keep its value pegged to the dollar. It is among the most highly-used stablecoins in DEXs and other Ethereum token exchanges.
0x (ZRX): An Ethereum-based token, 0x is an open-source protocol specializing in providing liquidity and smart contract infrastructure to allow for the exchange of other Ethereum tokens.
Orchid (OXT): The newest token to be added to Coinbase, Orchid provides a service where internet bandwidth can be bought and sold using OXT. This allows for people to browse the web and perform downloads in a genuinely anonymous fashion, essentially offering a crypto-powered VPN service.
I’ve read enough; send me to Coinbase!
Coinbase Purchase & Trading Fees
Coinbase’s fee structure is relatively straightforward but varies depending on where you live and what payment you use to make a purchase. For example, in the U.S., when using a bank account or USD wallet, fees are flat for purchases up to $200: $0.99 for purchases up to $10, $1.49 for purchases up to $25, $1.99 for purchases up to $50, and $2.99 for purchases up to $200. Beyond that, fees are calculated using 1.49% of the total requested purchase amount.
In addition, Coinbase charges a 0.50% spread fee to cover market fluctuations, which may occasionally be slightly higher or lower. The fee for using a debit card is 3.99%, as is the fee for using credit cards (in countries that allow crypto purchases to be made with credit cards). Coinbase does not charge for ACH deposits and charges $10 for wire transfer deposits.
Cryptocurrency conversion fees are usually about 2%, which means it is much cheaper to convert one crypto into another than selling one and buying the other in two separate transactions.
Coinbase will never charge you to store coins in your wallet and will not charge a transaction fee for coins being sent within their network (to another Coinbase account holder). However, if you want to send coins to a recipient outside of Coinbase, you will have to pay a transaction fee. Bitcoin transaction fees are almost always the most expensive and vary greatly, whereas most other coins have smaller fees. These fees go to miners as an incentive for helping to secure the blockchain.
When a cryptocurrency network is busy, that’s when fees tend to go up. However, since Coinbase usually sends several transactions simultaneously, their transaction fees will never be at a significant premium to the current average transaction fee rate at the time.
If you are an investor, Coinbase makes it incredibly easy to keep track of the value of your purchases. Using the Portfolio feature, you can track the performance of your Coinbase features both individually and as a whole. For example, your balances can be monitored and tracked in real-time in the denomination of your preferred currency (USD, EUR, GBP, etc.), and set to time frames of 1 hour, 24 hours, one week, one month, one year, or all-time. In addition, the Portfolio feature shows you the current balance of each coin you hold there in terms of fiat currency, as well as its current allocation as a percentage toward your total portfolio fiat value.
Earn Free Crypto
This feature allows you to earn a small number of cryptocurrencies currently supported by Coinbase in exchange for completing educational courses on them. All you have to do is watch a series of videos to complete the program, after which Coinbase will send you a reward so that you can test out the coin and how it works on your own.
Coinbase employs excellent systems security, which is why they are among the few mega-sized cryptocurrency exchanges to have never been hacked. This makes them among the most trustworthy of exchanges for not only making purchases but storing your coins on as well. It is, of course, still recommended that you activate 2-FA in the form of an authenticator (such as Google Authenticator), receive a text message, or use a security key to prevent unauthorized transfers from your account. Coinbase also has flexible privacy options that allow you to download a copy of your data if something fishy or strange happens to your account holdings.
Raising Your Account Limit
After accepting the Coinbase terms of service and verifying your email address, you will be automatically placed at Level 1 verification. This means you can receive and send cryptocurrency without any additional type of identification. However, Coinbase will need to verify your personal information and photo ID to buy and sell crypto. This will place your account at Level 2 and allow you to deposit up to $25,000 per day for U.S. customers. As far as fiat withdrawals are concerned, they are limited by the method you are using. For those in the EU, you will have to unlock Level 3 verification to make sends and receive on the blockchain. To do this, you will need to submit a PDF copy of a utility bill or bank statement less than three months old to verify your current address.
Coinbase Mobile App
It’s possible to do pretty much everything on the Coinbase app (available for both Android and iOS) that you can do on the website, and then some. Set price alerts, automated buys, and keep track of your portfolio on the go. The Coinbase app is extraordinarily secure for a crypto trading app, and it is pretty much a must-have for all regular users of Coinbase.
Use your Coinbase balance to fund a Visa debit card by signing up with Coinbase Card. After registering and receiving your card, download the Coinbase Card app to choose which crypto balances you spend from when using your card.
This means that now you can spend your crypto on just about anything, anywhere. In addition, you can easily track your purchases through the app, which can also be used to lock your card if you should lose it instantly.
Benefits of Coinbase (Over Competitors)
– Security. Having never been hacked, Coinbase sets the standard for security among cryptocurrency exchanges.
– Regulatory compliance. Coinbase complies with all legal obligations set forward by the federal and state governments of their service areas.
– Ease of purchase. There’s no easier, safer way to purchase cryptocurrency than through Coinbase.
– Integrated merchant solutions. Using a developer-friendly API and pre-developed apps, Coinbase makes it especially easy for websites and vendors to accept as payment any of the 50+ different cryptocurrencies they support.
– Mobile app. Coinbase’s app allows users to make purchases, send, and receive crypto while on the go.
Limitations of Coinbase
– Verification process. Along with the funding method set up, the verification process can be relatively lengthy, with the whole thing taking up to two to three weeks before coin purchases and sales are enabled.
– Fees. Security and regulation come at a price manifested in relatively high fees; it is often cheaper to buy crypto at other exchanges.
– Non-personal ownership of private keys. Coinbase users do not hold the private keys to their coins; instead, they are stored in custodial wallets maintained by Coinbase.
– Lack of anonymity/privacy. There is no way to purchase crypto anonymously through Coinbase. The company also readily complies with requests by the IRS and other government agencies for user transaction history, deposit/withdrawal records, and even personal information.
First, it is not recommended that you use Coinbase for day trading or even short-term trading as fees will cut into profits more significantly than other crypto trading platforms. Instead, you will want to use Coinbase Pro for these purposes. The main version of Coinbase is geared toward making crypto purchases that are to be used either as medium-to-long term investments, sending to others, or purchasing things with crypto.
If you plan on doing some crypto investing through Coinbase, the best advice we can give you is to do your research! There are some basic principles to be aware of, like avoiding buying after a massive “pump” or run-up in price and avoiding selling after the price has endured a massive decrease or “dump.” For those with a more long-term approach to investing, these principles are no match for the power of correctly determining the fundamental value. This fundamental value allows a coin to achieve massive success.
You may have noticed by now that there’s a lot of hype surrounding major cryptocurrency projects, and it is good to keep in mind that most of them are usually generated by those who are already well invested in the said coin. Therefore, just because somebody is hyping up a coin — whether it is a Twitter comment, YouTube video, or even news article — doesn’t necessarily mean it has a solid fundamental value. This is why it is of the utmost importance to perform your own research and not rely on the words of others when making your cryptocurrency investment decisions.
Coins like Bitcoin and Ethereum have proven themselves over the years because they are technologically sound and provide an element of usefulness to society. That is ultimately why they are among the biggest gainers in the cryptocurrency investment space. Before investing in any coin, you should ask yourself the following questions:
- What does this coin/project hope to accomplish in the long run?
- How does this coin/project plan on accomplishing its goals?
- How will society benefit from the successful implementation of these goals?
The answer to these questions will help you understand whether or not a cryptocurrency is a suitable long-term investment. Ideally, they should be determined by performing your own research rather than relying on the advice of others. There’s a lot to learn about the cryptocurrency space and many ways to separate short-sighted projects from those built to last. In summary, learn as much as you can before plunking down your hard-earned money into any coin offered at Coinbase, and don’t be afraid to ask questions to help clarify something you may not understand.
Wrapping it up
We’ve done our best to present to you the ins-and-outs of Coinbase, which by our consensus is probably the most user-friendly and reliable cryptocurrency exchange that there is out there. Coinbase does a great job of doing what it set out to do: sell cryptocurrency easily and safely to all those who wish to acquire it. While they do provide some excellent educational resources as far as using crypto is concerned, it helps to have a basic understanding of cryptocurrency before making purchases. So, whether you are looking to do some investing or plan to use cryptocurrency for other purposes, we heartily recommend Coinbase as your crypto provider.
Feel free to use any of our guides on the basics of crypto to bolster your knowledge on the subject. Alternatively, you can leave us a question about Coinbase or crypto purchasing in general in the comment box below, and we’ll be sure to get back to you as soon as we can.
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