IIAwards - Review of Coinbase
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9 November
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As part of the recently announced IIAwards, in which we celebrate innovations in the fintech and crypto industry, today we will talk about Coinbase.

General information

As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors and its own US dollar stablecoin. Founded in 2012 by Brian Armstrong and Fred Ehrsam as part of Y Combinator, Coinbase is one of the oldest exchanges around. Coinbase started out as a Bitcoin brokerage service (selling Bitcoins directly to customers), but additional services were added along the way. Coinbase is fully regulated and licensed. The company has raised over $540M from leading investors such as Andreessen Horowitz, Rabbit Capital and The NYSE.

Commissions & fees - (2/5)

Coinbase has an incredibly convoluted fee system that is also quite expensive if you are not using Coinbase Pro. The cost of trading on Coinbase's standard platform is quite high in comparison to its competitors. Those who are new to cryptos and are looking for ease of use may overlook this. Coinbase’s fees also vary across different countries and regions. The regular spread fee is equal to 0.5%, however, as a result of market fluctuations this can differ. There is a "Coinbase Fee" in addition to the spread and the cost of depositing money mentioned above in the chart. This fee is dependent on the value of the purchase, payment type (debit/credit), and region you are purchasing from. Coinbase gives the following examples of "Coinbase Fees" one might experience on its platform:

  • If the total transaction amount is less than or equal to 10 USD, the fee is 0.99 USD/0.99 EUR/0.99 GBP.
  • If the total transaction amount is more than 10 USD but less than or equal to 2 USD, the fee is 1.49 USD/1,49 EUR/1.49 GBP.
  • If the total transaction amount is more than $25 but less than or equal to 50 USD, the fee is 1.99 USD/1.99 EUR/1.99 GBP.
  • If the total transaction amount is more than $50 but less than or equal to 200 USD, the fee is 2.99 USD/2.99 EUR/2.99 GBP.

On the other hand, Coinbase Pro fees are significantly less expensive and less complicated. With Coinbase Pro, digital assets and ACH transfers are free to deposit and withdraw. Wire transfers are 10 USD to deposit and 25 USD to withdraw.

Markets & products - (4/5)

Coinbase has a solid number of options to invest and trade in and has plans to add more to the list. At the moment, Coinbase offers over 25 cryptocurrencies for investment, trading and also staking. The main cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), XRP (XRP), Chainlink (LINK), Bitcoin Cash (BCH), Bitcoin Satoshi's Vision (BSV) (Send Only), Litecoin (LTC), EOS (EOS) and Tezos (XTZ) among others. It is possible to trade all of the introduced currencies without having to convert from your base currency into another cryptocurrency. Coinbase's popularity stems from having one of the easiest and fastest buying processes. It also helps that they are a US regulated company. Since Coinbase is in the US, if you are a US resident, you won’t have to file the IRS Form FBAR (Report of Foreign Bank and Financial Accounts) for foreign accounts with over 10,000 USD. Whilst Coinbase has a great variety of solid altcoin options for newer investors to dabble with, those interested in seriously trading altcoins will not find too many here. With this being said, Coinbase does plan on continuously adding more altcoins over time.

Advanced trading platform - (2/5)

Coinbase is perhaps one of the easiest on-ramps to crypto investing. It is easy to sign up and buy cryptocurrencies within a matter of minutes. It also has a learning program that pays users cryptocurrency to learn more about how cryptocurrencies work. Coinbase's clear, user-friendly dashboard allows the company's clients to see prices and the value of their assets, any time of day, from any location through Coinbase's website and mobile app. While US investors can also use the Robinhood trading app to invest in Cryptocurrencies, however, unlike Coinbase or Coinbase Pro, they will not have direct access to their coins. This means that they cannot withdraw Bitcoins or other cryptocurrencies from the app. This solution is good only if you’re looking to trade cryptocurrencies, as opposed to holding them.

Innovative account opening - (2/5)

Signing up for Coinbase is a very straightforward and easy process. First, you enter your name, e-mail and a password you wish to use. It will then tell you to verify your e-mail. Next, Coinbase asks you to enter in your phone number to send a code that you must enter. Coinbase will use this number to send two-step verification codes. After this stage, the website will prompt you to enter your identification information. Just like any bank account or investment account, you must prove your identity via state identification. For users in the United States, this will require a social security number. At this point, your Coinbase account is operational. To begin trading, you can add your bank account, credit card or debit card information to enable deposits and withdrawals.

Customer service - (3/5)

Coinbase offers services in more than 100 different countries. The customer support is available only in English and can be reached primarily via e-mail, by entering the inquiry on the company website. The company indicates that their phone channel is used for account compromise support. Their e-mail response team has recently been overwhelmed, and consequently, it takes more time than usual to respond. However, Coinbase's website is equipped with numerous informative articles on the company's helpful FAQ section. These articles include information on a variety of topics ranging from technical manuals to tips on how not to fall victim to phishing.

Mobile trading / Apps - (2/5)

The Coinbase Wallet apps are decentralized and are available on both the Apple App Store and the Google Play store. They adhere to the highest security measures including Secure Enclave and biometric authentication technology. The mobile app has an advanced alert mechanism that allows its clients to build knowledge and monitor their portfolio on the go, including automatic buys and price alerts.

Digital security - (4/5)

Coinbase uses a variety of safety measures for account holders. It is important to understand that any crypto on any exchange account is only as secure as the account holder makes it. It is imperative to use strong passwords and to utilize the available security features. Coinbase has two-step verification, biometric fingerprint logins and insurance in the event that Coinbase itself is breached (this insurance does not apply if your account is breached due to your own lack of security measures). The site also stores 98% of users' funds in offline cold storage. Digital currency is not considered legal tender and therefore is not backed by SIPC or FDIC. Coinbase provides insurance by pooling Coinbase balances and holding them in USD custodial accounts, USD denominated money market funds or liquid US Treasuries. Coinbase provides a solid amount of security in comparison to a number of other leading exchanges. This is one of the reasons why Coinbase is a great offering for those looking to safely get started investing in cryptocurrencies.

Novelties

In 2018 Coinbase launched their independent mobile wallet for iOS and Android. The wallet stores the private keys on the user’s device and only they have access to the funds. This brings Coinbase full circle as it started out as a wallet, transitioned to an exchange, and now they are offering wallet services again. Unlike the Coinbase app, which lets you buy and sell coins and manage your fiat and coin holdings on the Coinbase platform. Coinbase wallet is like other mobile wallet apps where the private key to your coins is held on your mobile device. You do not need a Coinbase account to use a Coinbase wallet.

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