Coinbase Review: How It Works, Fee Structure, Buying and Selling Limits, and More

Coinbase, the largest Bitcoin broker by volume and users, is one of the most used and trusted exchanges in the world. Our Coinbase review will tell you everything you need to know about this exchange.

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Coinbase Overview

Coinbase is the world’s largest cryptocurrency exchange, which has carved out a niche for itself as an easy-to-use way for average people to buy and sell Bitcoin.

Founded in 2012, Coinbase is based in the United States but available to users in over 30 countries worldwide.

Currencies Supported:

Coinbase currently supports 4 cryptocurrencies:

• Bitcoin
• Bitcoin Cash
• Litecoin
• Ethereum

At inception, the company started a simply an exchange that users could use to purchase Bitcoin. As time progressed, they’ve now branched out into alternative digital currencies, and have also included support to send digital currency among one another, through GDAX.

While there are currently only 4 digital currencies available on Coinbase, there are rumors that the company will introduce more altcoins in the future. In recent days this speculation has led the internet to hope that this will include Ripple.

Update: Coinbase has made an official announcement that they won’t be adding new cryptocurrencies in 2018. This is bad news for many speculators, but many still think Ripple will end up on the exchange.

Where Coinbase Shines

• Clean and simple interface.
• They have a well-documented API that is great for developers.
• Users can fund their accounts using a wide variety of payment methods.
• Instant buy via credit or debit cards makes purchasing Bitcoin nearly instant.
• Overall, a great entry into buying, selling, and trading cryptocurrencies.

Where Coinbase Can Improve

• Due to increasing popularity, Coinbase sees huge spikes in new accounts, or massive trading volumes when prices increase or decrease. As a result, they’ve had to shut off trading to keep their system from collapsing. This is not good.
• According to Reddit and other reports, Coinbase allegedly tracks customer activity to combat illegal and fraudulent activity. This won’t matter for the majority of users, but if you are doing either of these activities, you’ve been warned.
• Customer support is still fairly lacking. Like most startups experiencing a rapid growth rate, support channels are still not being scaled correctly to keep up. We expect this to improve in the future, but if you submit a help request, expect a response to be fairly delayed.

Payment Methods Accepted

There are a wide variety of methods that users can take advantage of to fund their accounts.

In the United States, customers can fund their account using…

• a connected bank account (ACH)
• a credit or debit card, a wire transfer
• PayPal

Each method has it’s own benefits, but one of the most popular is with a debit or credit card since payments are reflected much quicker than the other methods. Payment methods vary by geographical region, and there are too many different options to list in this one page.

For a complete list of Coinbase payment methods available in your country, please visit their official website to learn more.

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Is Coinbase Safe?

While the safety of buying and selling cryptocurrencies is never guaranteed, Coinbase is one of the most trusted and popular Bitcoin, Ethereum, and Litecoin exchanges available.

Coinbase offers two types of wallets for trading and hardened account security: regular wallets managed by the company and Vaults.

Wallets

Wallets are the basic way for average users to buy, sell, and store coins. Wallet key security is managed by Coinbase, meaning users don’t have to do much in terms of security.

Coinbase wallets are convenient, but users looking to step up the security should consider using a Multisignature Wallet, or “Vault”. After all, Coinbase is, by it’s own admission, a regulated exchange.

Users should treat Coinbase wallets as a means to access their funds when trading, but store funds in a Coinbase vault or an offline secure wallet.

Vaults

Vaults, as they’re referred to on Coinbase, are just wallets taken to the next level, and require users to self-manage the security of their wallet keys.

These types of wallets use a technology called “multisignature“, which means there are multiple steps required to make withdrawals. If a user account were to be hacked, it would be fairly difficult to get funds out with this feature enabled.

Coinbase vaults use advanced security features, including time-delayed withdrawals, multiple approvers, and offline storage. The best part is that all of these security features come free of charge, meaning vaults are 100% free to use.

Two Factor Authentication

This is a fairly basic security precaution that should need to explanation, but many users are still fairly ignorant about this topic.

If you know what two factor authentication is, keep reading to learn how to enable it. If you don’t, here’s a quick explanation about what the technology is.

And here’s a quick tutorial on how to enable two factor authentication on your Coinbase account.

Additional Coinbase Security Features

Not only are there special types of cold storage and security precautions to keep coins safe, but since the company is based in the United States, they must go to great lengths to keep user accounts safe. These include:

• They are registered as a Money Services Business with FinCEN.
• Complies with the Bank Secrecy Act.
• Complies with the USA Patriot Act.
• United States residents are covered by FDIC insurance on their Coinbase USD wallets, up to a maximum of $250,000.

In addition to meeting many different government regulations and investing heavily in cybersecurity, Coinbase also is under the microscope for simply being so big. What I mean by that is there are many different people trying to get into it all at once, and with that many eyes constantly watching, most security loopholes and bugs get noticed quickly.

Users can also take even more steps to protect their funds, including usage of hardware wallets, two factor authentication, protecting passwords and login details, and more. At the end of the day, an exchange or wallet service can only do so much, and it’s up to the user to secure themselves as well.

So is Coinbase safe? I firmly believe of all the exchanges currently in operation, Coinbase stands out among the rest in this area.

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How Does Coinbase Work?

You’ve made it this far in our Coinbase review, so you probably already know what you’re doing. However, if you’re still wondering, “how do you buy Bitcoin?”, or “how do you buy Ethereum?” then look no further.

People wanting to purchase cryptocurrency must have a platform to trade them on. They must have a middle man that matches buyers and sellers. Coinbase is the exchange where that happens.

Coinbase is without a doubt the easiest and most user-friendly Bitcoin exchange that I’ve used so far. Everything is so easy to do and very straight-forward.

Buying and Selling

To buy and sell cryptocurrency on Coinbase, users first need to fund their account by linking a bank account, credit/debit card, or initiating a wire transfer. Credit and debit cards are a great way to make small purchases, but for larger purchases a bank account or wire transfer is the way to go.

• Credit/Debit Cards: instant transactions, high fees, low limits
• Bank accounts: longer transaction times, lower fees, higher limits
• Wire transfers: longer transaction times, lower fees, highest limits

Typically, Coinbase limits users to a daily/weekly maximum that they can buy and sell. As time progresses, these limits increase, allowing for larger purchases and sales.

Once the funds have cleared, actually buying and selling tokens is remarkably simple. Here’s a quick gif from their blog that outlines the process:

While Coinbase is incredibly easy to use, that comes with a price. Fees when using this service are quite a bit higher than other exchanges, which means each time you buy, sell, or send, just expect them to take a healthy cut.

But how high are these fees exactly? This brings me to my next point.

Coinbase Fees

Coinbase fees are relatively high for a Bitcoin exchange, hence the reason why a lot of the more experienced traders use other exchanges such as Kraken or Bitfinex.

Fees are incurred when making a deposit, withdrawal, and also both buying and selling digital currency, and are either added or subtracted from a transaction.

When making a purchase, the Coinbase fee is added to the transaction amount, but for sales, the Coinbase fees are subtracted from the transaction amount.

Ex from the company’s blog:

• You want to buy $100 of Bitcoin. The fee is 1.49%. Your payment method will be charged $101.49, but you will only receive $100 in Bitcoin.
• You want to sell $100 of Bitcoin. The fee is 1.49%. You will receive $98.51, after $100 worth of Bitcoin is removed from your account. $98.51 will be credited to your preferred payment method.

At first, these fee amounts don’t sound like a lot, but they really add up, especially if you are making daily purchases and working towards increasing your limits. Coinbase is smart, and they know how to nickel and dime users.

However, a few smart users have found a way around these fees. The solution involves using GDAX, the exchange platform owned by Coinbase. Since both exchanges use the same backend, you can buy coins from the same source.

I could explain it all, or you could just watch the video that breaks it down step-by-step:

Coinbase Buying/Selling Limits and Liquidity

The buying, selling, deposit and withdrawal limits on Coinbase are automatically calculated, and depend on factors including the type of payment a user chooses, the age of their account, as well as undisclosed additional factors.

These limits are specific to each user, and can be seen by clicking on the Verifications tab within your account.

From my experience, increasing my transaction limits was pretty easy, and was done by providing additional verification, as well as maxing out my daily and weekly purchases. It appears that Coinbase wants you consistently using their exchange, and will reward you for that use.

Higher transaction limits from the start would be nice, especially if you’re the type of user who has a severe case of FOMO of FUD. If you’re a newbie to the space, however, put in the time and effort it takes to get your limits raised and be patient: you’ll get there eventually.

On another note, liquidity is sometimes lacking. In times of marketing moving events like high trading volume and large price swings (especially dips), Coinbase liquidity has been reported as an issue for many users.

For example, in mid-December when Bitcoin prices were wildly fluctuating, the exchange halted trading, causing mass panic among users who were shocked when the found themselves unable to complete transactions. They received this message during the panic:

As time progresses, Coinbase liquidity seems to be less of an issue. I’ll chalk the past issues up to growing pains, but it’s definitely something to keep in mind when using this platform.

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Customer Support

Whether you have an issue, compliment, or simply need to ask a question, contacting Coinbase support is the first step to take.

There are 4 ways to contact customer service representatives, all with their own pros and cons.

• Email: the simplest way to contact Coinbase. Provide as much information as necessary when submitting a request.
• Phone: the best way to get real-time help for issues and queries. Number: +1 (888) 908-7930
• Twitter: the main outlet Coinbase uses for status updates, announcements, and other important information. They can’t answer account-specific questions via Twitter, but it’s a great way to bring unsolved issues to the attention of customer service representatives.
• Reddit: Coinbase is not very active on Reddit (even though the should be), but the reddit.com/r/coinbase subreddit is a great way to contact other Coinbase users for related information and questions.

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FAQ

Does Coinbase have a phone number?

Coinbase operates a customer support line for account-related issues, both general and urgent.

Phone hours of operation:
Monday – Friday, 24 hours.

+1 (888) 908-7930

Does Coinbase support Paypal transactions?

Customers using this exchange are able to sell tokens to receive instant Payment using PayPal. However, they cannot use PayPal to buy, deposit, or withdraw funds to or from their Coinbase account.

This method is best for quick sells.

Is Coinbase safe to link to a bank account?

Coinbase is heavily regulated, and adheres to both federal and state-specific policies, laws, and regulations. It’s received an immense amount of scrutiny, and unlike Bitconnect, is a legitimate business that does not appear to be a scam.

Keep close tabs on personal security, but overall, it appears to be safe to link your bank account to Coinbase.

How do I get a Bitcoin address on Coinbase?

It’s super easy to get a Bitcoin address on Coinbase, and only takes a few steps to get started:

1. Sign up for Coinbase. Click here to create an account.
2. Find the Addresses section within your user account.
3. Click “Create New Address”

That’s it! Once you create a Bitcoin address, it will be associated with your account and you can use it to buy, sell, send, and receive Bitcoin.

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My Thoughts On Coinbase

Coinbase was the first exchange I used when I dove into the crazy world of cryptocurrency. I was a steady and loyal user that completed a good amount of transactions.

In all the time I spent using Coinbase, I found everything I was trying to do incredibly simple and easy to understand. I can’t think of a single time I was left confused when trying to take an action.

I’ve said it before and I’ll say it again. Coinbase was designed with the beginner in mind.

The fact that you can easily trade cryptocurrency and store it within the vaults in your account is a major plus. This allows you to do what you do best without the complications of other exchanges.

Based on my experience, I would highly recommend going with this company if you are looking to make the jump into crypto. They will walk you through the entire process, every step of the way, and support is there to help you through any problem you may have.

While Coinbase shuttered my account for no apparent reason (I’ll write about that experience in a separate post), I’ve just come to accept that was part of growing pains and increasing regulation. I was doing nothing wrong, but who knows, maybe tons of people around me were and I got caught up in the crackdown. I’ll probably never know for sure.

At any rate, give the company a shot and you likely won’t be disappointed.

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Coinbase Alternatives

If you aren’t sold on Coinbase, then check out some popular alternatives:

• Kraken – a great step up from the basic exchange, great for making more advanced trades.
• Cex.io – a powerful platform packed with a ton of advanced features.
• Bitfinex – one of the most advanced and capable cryptocurrency exchanges you can find.