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Over a relatively short period, the cryptocurrency market has experienced significant growth, now valued at hundreds of billions of dollars collectively. Whether you are interested in investing in cryptocurrency or using it for transactions, you have likely come across Coinbase. With millions of users, Coinbase is one of the most popular cryptocurrency exchanges, known for its user-friendly interface and accessibility, which have contributed to its widespread popularity.
Essentially, Coinbase is a platform where users can buy and sell popular cryptocurrencies like Bitcoin, Ethereum, and Solana. While not every cryptocurrency is supported on Coinbase, there are over 260 different types available on the platform. Despite thousands of cryptocurrencies existing globally, Coinbase focuses on offering the most widely traded options, making it suitable for the majority of users.
This accessibility makes Coinbase an attractive choice for novice cryptocurrency investors looking to trade their preferred coins. However, questions arise regarding the safety and fees associated with using Coinbase, which we will address in detail below.
In June 2023, the Securities and Exchange Commission filed a lawsuit against Coinbase, alleging illegal operations as an exchange, broker-dealer, and clearing agency, and the sale of unregistered securities. The lawsuit accuses Coinbase of knowingly violating securities laws designed to safeguard investors. The case is expected to progress through appeals courts and possibly reach the U.S. Supreme Court if not resolved earlier.
Getting Started with Coinbase: A Beginner’s Guide
For individuals new to Coinbase and cryptocurrency in general, the platform may seem overwhelming at first. However, the process is straightforward, and we will guide you through the initial steps.
Opening a Coinbase Account
Creating a Coinbase account is a simple process. Here’s what you need to register, according to Coinbase:
- Must be at least 18 years old
- A government-issued photo ID, such as a driver’s license or state ID
- A device with internet access
- A phone number for SMS verification
- The latest version of your web browser
If you meet these requirements, you can proceed to create an account by providing your basic information such as name, email, state of residence, and setting a password. It is crucial to choose a strong, unique password to secure your account.
Additionally, adding a payment method is necessary to fund your Coinbase account. U.S. customers have various options including bank accounts, debit cards, PayPal, Apple Pay, or wire transfers. Note that PayPal is exclusive to U.S. customers and can only be used for buying or cashing out cryptocurrency.
Once your account is set up and a payment method is added, you can begin trading cryptocurrencies on Coinbase.
Cryptocurrencies Supported by Coinbase
While Coinbase does not support every cryptocurrency, it offers access to many popular coins, ensuring most users can trade without issues. With over 260 coins available, here are some of the popular ones accessible on Coinbase:
- Bitcoin
- Ethereum
- Cardano
- Solana
- Dogecoin
- Chainlink
- Litecoin
- Tether
- Bitcoin Cash
For a complete list of supported cryptocurrencies, visit the Coinbase website.
Trading Fees on Coinbase
Understanding fees on Coinbase can be complex as they depend on account type, transaction size, and funding source. Factors such as country/region, payment method, and product can influence the fee structure.
For smaller transactions, users incur a spread mark-up of 0.5 percent of the trade value plus a flat fee based on the transaction size, as outlined below:
| Transaction Amount | Fee |
|---|---|
| $10 or less | $0.99 |
| More than $10 and up to $25 | $1.49 |
| More than $25 and up to $50 | $1.99 |
| More than $50 and up to $200 | $2.99 |
Although the price of one Bitcoin exceeds these dollar amounts, Coinbase allows users to purchase fractions of coins, enabling small investments. The spread mark-up cost is already incorporated into the purchase or sale price.
For transactions above $200, users face a spread mark-up of 0.5 percent of the total trade value, with Coinbase applying variable fees based on the payment method for transactions exceeding $200:
| Payment Method | Fee |
|---|---|
| U.S. Bank Account | 1.49 percent |
| Coinbase USD Wallet | 1.49 percent |
| Debit Card | 3.99 percent |
| Instant Card Withdrawal | Up to 1.5 percent of any transaction; minimum fee of $0.55 |
Notably, fees can significantly impact small transactions, eating into the purchase amount.
For more experienced traders, Coinbase Pro offers advanced trading options and enhanced charting features, along with a simpler and lower fee structure.
To familiarize yourself with Coinbase’s fees, you can preview an order using the following steps.
Buying and Selling Cryptocurrencies on Coinbase
If you have linked a payment method to Coinbase, buying and selling cryptocurrencies is a straightforward process. When logged into your account, follow these steps to purchase cryptocurrency:
- Click the Buy/Sell button in the upper right-hand corner.
- Specify whether it is a one-time purchase or recurring (daily/weekly/monthly).
- Enter the purchase amount.
- Select the cryptocurrency to buy.
- Choose your payment method.
When purchasing with a bank account, transactions typically take 3 to 5 business days to complete, as per Coinbase.
Selling on Coinbase is equally simple. Enter the desired amount to sell or select “sell all,” choose the coin to sell, and indicate the preferred payment method. The same fees apply to both buying and selling transactions.
Is Coinbase Secure?
Concerns about Coinbase’s security are natural, especially for significant investments on a relatively new platform. While Coinbase implements security measures like two-factor authentication, it is not immune to security breaches. Incidents of Coinbase users losing funds overnight have been reported, with SIM swapping cited as a common cause.
Despite these risks, utilizing non-custodial wallets or hardware wallets can enhance security by storing cryptocurrencies independently from Coinbase. These wallets allow users to manage their own crypto using apps, software, or hardware, ensuring that even if a hacker gains access to a Coinbase account, they cannot access the wallet where the cryptocurrency is stored.
However, this approach requires users to remember their private key or password, a potential downside as losing access to the wallet can result in significant losses. While more secure, the responsibility lies with the user to ensure access to their wallet.
Final Thoughts
For newcomers to cryptocurrency, Coinbase offers a user-friendly platform to begin trading. Although easy to use, users should be mindful of the fees associated with transactions, particularly for small amounts of cryptocurrency. While Coinbase serves as a great starting point, it may not suit everyone due to high fees and extended processing times. Alternative methods exist for purchasing cryptocurrencies like Bitcoin, offering lower fees and faster transactions.
Before investing in cryptocurrency, ensure it aligns with a diversified investment strategy that includes traditional assets such as stocks, bonds, and real estate. Having cash reserves in a money market account or high-yield savings account is also recommended to mitigate the volatility often associated with cryptocurrency investments.
Editorial Disclaimer: Investors are advised to conduct independent research on investment strategies before making decisions. Past performance of investment products does not guarantee future price appreciation.