Coinbase is one of the most popular and biggest cryptocurrency exchanges which is based in San Francisco and subject to US regulations. Additionally, it operates in 102 countries. Cryptocurrencies like Bitcoin, Ether, Litecoin, Bitcoin Cash, and other digital assets can also be traded through this exchange. Moreover, the exchange provides convenient access through smartphones with reasonable exchange fees.
Coinbase Exchange Details
|Available on mobile||Yes|
|Number of supported coins/tokens||30|
|Number of supported trading pairs||81|
|Supported fiat currency||USD, EUR, GBP|
|HQ Location||San Francisco, California, US|
|Company Owner||Coinbase, Inc.|
In June 2012, Coinbase was founded by Brian Armstrong and Fred Ehrsam, yet its services to trade bitcoins through bank transfers were launched later in October. Accordingly, Coinbase quickly became one of the largest BTC providers next to Mt. Gox.
Throughout 2012 and 2013, investors and venture capitalists also started seeing the potential in Armstrong & Ehrsam’s firm and started to invest. The founders then participated in a Y Combinator startup incubator.
A year after, the company also received $30 million worth of funding from venture capital firms namely Union Square Ventures, Andreessen Horowitz, Ribbit Capital, and Union Square Ventures (USV)
The company eventually grew to one million users in 2014. At this time, the company made partnerships with Overstock, Expedia, Dell, Dish Network, and Time Inc. allowing them to accept bitcoin payments.
At the time, Coinbase had enrolled just one billion-dollar merchant, Overstock.com, and regardless of enthusiasm that more would come aboard, months had passed without another major announcement.
Then, just as quickly, the company’s roster of partners expanded. In late May, the second billion-dollar company joined the ecosystem with the addition of satellite TV service provider DISH. Major brand names like Expedia and Dell also followed suit.
In January 2015, the Coinbase exchange was launched for professional traders. Later on, it was rebranded as the Global Digital Asset Exchange in May 2016.
2017 – 2019
In 2017, Coinbase got the BitLicense and the trading license for Litecoin (LTC), Ethereum (ETH), and Bitcoin Cash (BCH). By November, the US Internal Revenue Service ordered Coinbase to report users with at least $20,000 transactions in a year.
While in April 2018, an announcement from Coinbase was released for their early-stage venture fund. A month later, Coinbase Ventures’ first investment in Compound Labs was declared.
Notably, Coinbase’s non-U.S. revenue grew 20% to €153 million (U.S.$173 million) in 2018 stated, resulting in a net profit of €6.6 million.
The following year due to a suspicious attack on the network, Coinbase stopped its trading service on Ethereum Classic (ETC) and a targeted hacking attempt was done in mid-June. Despite these negative circumstances, 2019 was a good year for Coinbase.
In fact, in February of 2019, Coinbase acquired an Italy-based startup blockchain intelligence platform Neutrino, for an undisclosed price. Due to Neutrino’s tech, Coinbase prevents theft of funds from peoples’ accounts, investigate ransomware attacks, and identify scams.
The leading crypto exchange is divided into several categories: firstly, Coinbase for retail users, secondly, Coinbase Pro for professional traders, and lastly, Coinbase Prime for institutional clients. Each platform particularly has different functions that can cater to various types of users.
Coinbase Pro also has less sophisticated integration options. It uses the maker-taker model for fees. Thus, maker traders do not need to pay any fee as they place orders which are not filled immediately by matching to an existing order. On the other hand, taker orders are done at market price and filled at once.
Additionally, Coinbase Pro has a Federal Deposit Insurance Corporation (FDIC) insurance only for funds held in USD, not any other coins or balances, in order to protect the funds if Coinbase goes bust.
The main difference to be noted between Coinbase and Coinbase Pro is that the Coinbase Pro offers real-time order books, charting tools, and other technical tools in order to help the advanced traders to make the most out of the exchange.
On the other hand, Coinbase Prime is for institutions — typically asset managers or trading desks at banks. They have offerings that financial institutions expect, like Financial Information eXchange (FIX) integration.
Moreover, this enables institutional users to place and block orders and make use of special order execution algorithms. Crucially, it also offers margin trading to institutions.
Both Coinbase Pro and Coinbase Prime also offer cheaper transaction charges and more supported cryptocurrencies. However, crypto support is still substantially fewer than other exchanges in the industry.
Here are some screenshots of how these platforms will look like:
Key Features and Functions
- Easy to buy bitcoin and top altcoins: Coinbase lets you purchase cryptocurrency securely using credit/debit cards, bank account, wire transfer as well as other cryptocurrencies and other localized payment methods.
- Supports many fiat currencies: Fiat currency is a government-issued currency that isn’t backed by a commodity such as gold. Coinbase is a worldwide exchange that supports many fiat currencies.
- Coinbase’s own USDC stablecoin: Coinbase has added support of USD Coin (USDC) on its platform. Coinbase customers in qualifying countries can buy, sell, receive, and send USDC. It is also a fully regulated, verifiable, and transparent stablecoin with regular audits.
- Coinbase Card: Coinbase customers from the UK, Spain, Germany, France, Italy, Ireland, the Netherlands, and many more countries can also order a Visa debit card that allows you to buy and sell goods and services with cryptocurrency.
- Earn crypto with Coinbase: Coinbase Earn program lets people earn cryptocurrencies ($50) by merely learning and completing courses about cryptocurrencies.
- Coinbase Custody: Custody services are a way for large financial organizations to securely deposit their assets in a way that is insured. This could certainly lead to increased institutional adoption of cryptocurrencies.
- Coinbase Commerce: Coinbase Commerce is a place where merchants can accept crypto payments in a fully decentralized way. All the funds will be solely controlled by the customer. This platform will not have access to any of the funds that people receive.
- Coinbase Ventures: Coinbase Ventures is Coinbase’s investment arm that aims to invest in initial stage cryptocurrency and blockchain startups. It also helps to move the innovative space forward in a positive way.
- Coinbase Wallet: Coinbase Wallet gives access to a wide range of decentralized services such as buying and storing tokens, participating in ICOs and airdrops, collecting rare digital collectibles, browsing decentralized apps, and shopping at stores that accept crypto.
Coinbase also provides different levels of support for various cryptocurrencies. Availability to buy, sell, withdraw, and deposit supported cryptocurrencies may vary from one asset to another. Considering this, fees and availability normally depend on the country and selected payment method.
Coinbase supports the ff. crypto assets on its platform:
|Algorand (ALGO)||Civic (CVC)||Kyber Network (KNC)||Augur (REP)|
|Cosmos (ATOM)||Dai (DAI)||Chainlink (LINK)||USD Coin (USDC)|
|Band Protocol (BAND)||Dash (DASH)||Loom Network (LOOM)||Stellar (XLM)|
|Basic Attention Token (BAT)||District0x (DNT)||Litecoin (LTC)||XRP (XRP)|
|Bitcoin (BTC)||EOS (EOS)||Maker (MKR)||Tezos (XTZ)|
|Bitcoin Cash (BCH)||Ethereum (ETH)||Numeraire (NMR)||Zcash (ZEC)|
|Bitcoin SV (BSV)||Ethereum Classic (ETC)||OMG Network (OMG)||Ox (ZRX)|
|Compound (COMP)||Golem (GNT)||Orchid (OXT)||
Coinbase normally charges a rate of 0.5% for cryptocurrency purchases and sales done on its platform. Despite that, the actual distribution may be high or low due to market fluctuations in the cryptocurrency price displayed on Coinbase between the time when the order is placed and executed.
In general, Coinbase fees are categorized into two: (a) a flat fee or (b) a variable percentage fee determined by region, payment type, and product feature.
With this in mind, the variable percentage fee structure varies by location. However, these fees do not apply to cryptocurrency conversions. In fact, the Coinbase fee will always be the greater of the minimum flat fees or the variable fees described below.
With a cryptocurrency conversion, people can either accomplish it in single or multiple transactions. For example, users can directly convert Bitcoin to Ethereum (a cryptocurrency conversion), or can sell bitcoin and then purchase Ethereum (a cryptocurrency sale followed by another cryptocurrency purchase).
The flat fees are as follows:
|Total Transaction Amount||Transaction Fee (USD, EUR, GBP)|
|Less than $10||$0.99, €0,99, £0,99|
|More than $10, Less than $25||$1.49, €1,49, £1,49|
|More than $25, Less than $50||$1.99, €1,99, £1,99|
|More than $50, Less than $200||$2.99, €2,99, £2,99|
For example, people in the US who wish to purchase $100 worth of bitcoin with a US bank account or through their USD digital wallet, the flat fee can be calculated as $2.99 while the variable percentage fee would either be 1.49% of the total transaction or $1.49.
Since the flat fee is greater than 1.49% of the total transaction, users have to pay the greater amount of fee which is $2.99. If people want to purchase bitcoin with a debit card, they would be charged a fee of 3.99% since the variable percentage fee for this payment method is greater than the flat fee.
Accepted Payment Methods
In view of this, Coinbase follows different payment methods in numerous countries. For instance, Coinbase users located in Australia can make a purchase with their debit cards. Here, the pre-fund of the account will not be required to place an order. As a result, the purchase will be completed right away.
|CUSTOMERS BASED ON COUNTRY||PAYMENT METHODS|
|US customers||Bank account, Debit card, Wire Transfer, and PayPal|
|European customers||SEPA Transfer, 3D Secure Card, Instant Card Withdrawals, Ideal/Sofort as well as PayPal withdrawals|
|Canadian customers||Debit cards and PayPal|
|Singapore customers||Credit or debit card|
|UK customers||Faster Payments, SEPA Transfer, 3D Secure card, PayPal as well as Instant card|
Controversies & Issues
In January 2018, Coinbase CEO Bryan Armstrong was criticized on Twitter for creating the excessive transaction demand on the Bitcoin network, in which some of the users were referred to as “spamming the network”.
While in February 2018, Coinbase acknowledged that an error for credit and debit purchases of cryptocurrencies wherein some customers were overcharged. The problem arose when banks and card issuers changed the merchant category code (MCC).
Therefore, customers who purchased cryptocurrency on Coinbase platforms between January 22 and February 11, 2018 have been affected. At first, Visa blamed Coinbase for this incident, reporting that it had not made any system changes which resulted in duplicate transaction cardholders.
In February 2020, Coinbase was one of the entities which have been working with Clearview AI, a controversial facial recognition technology provider. To clarify, the said tech provider faced legal threats from Apple and Google for lack of scrutiny into its practices.
In May 2020, Coinbase’s official website and mobile app both experienced issues. Nevertheless, after around 45 minutes, the issue has been corrected. However, during that time, the price of Bitcoin has tumbled from $9,500 to $8,100, leaving users helpless and unable to trade. Because of this, a lot of users were unhappy and the exchange got a pretty disreputable image for crashing during huge changes in Bitcoin’s price.
On June 1, 2020, Coinbase delivered that there was an increase in traffic by 5 times in a span of 4 minutes when the Bitcoin price spiked. Thereby, their autoscaling system created a backlog. According to the team, they are also working on the problem of price-related traffic spikes.
Pros and Cons
- Great UI for managing crypto funds
- Excellent mobile application for monitoring and sending/receiving crypto
- Also provides a wide variety of fiat deposit and withdrawal options
- Online and mobile wallet services
- Two-factor authentication and multi-signature security option to prevent unauthorized manipulation of funds
- Not to mention instant transfers between Coinbase users
- Not all coins are available to purchase
- Tax information could still be improved
- Lack of customer support
- Under load/high volume, the site and application become unresponsive
- The fees are relatively high, compared to other crypto exchanges
- Services offered: 3/5
- Cryptocurrency support: 3.5/5
- Fees: 3/5
- Security: 4.5/5
- Review Score: 3.5
Coinbase is one of the few cryptocurrency exchanges available to both US and European customers. The exchange itself keeps up protection against theft and hacks, giving clients security and confidence when using its services.
However, the exchange only offers spot trading, and its fees are not exactly the most competitive out there. Its frequent crashes during Bitcoin price volatility are starting to make loyal customers look somewhere else.
Coinbase is a global digital asset exchange (GDAX) company that provides a venue to buy and sell crypto as well as send information to the blockchain network in order to verify the transactions.
Yes, Coinbase is safe for trading. Coinbase keeps all its assets in an offline cold storage that can’t be easily accessed by anyone. Users have full control over the buying/selling of their coins and can decide to store them at Coinbase.
Yes, Coinbase meets with all applicable laws and regulations in each jurisdiction in which it operates. Coinbase is licensed to engage in money transmission in most US areas. Coinbase has also been registered as a Money Services Business with Financial Crimes Enforcement Network (FinCEN).
People can use the platform independently from the age of 18. Coinbase allows individuals aged 13 to 18 to create an account when they have approval from their parents or guardian. By accessing or using Coinbase, people represent and warrant that they are 18 years old or above.
Henceforth, get the latest news about Coinbase on CoinQuora’s exclusive Coinbase News section.
Disclaimer: This material must not be used as the basis for making any investment decisions. This serves only as helpful material about the crypto exchange. Trading digital assets involve risk and can result in the loss of investment capital. Hence, always make sure to do in-depth research before engaging or investing in any crypto assets