Coinbase Exchange Review
Coinbase is one of the oldest cryptocurrency exchanges. It was created in 2011, and since that time it has elevated itself into a popular exchange despite many complaints in recent years that some account holders have experienced issues in withdrawing their funds. Coinbase has been backed by many venture capital organizations in the United States, and it serves over 13 million users. The exchange has also established partnerships with large companies to help those companies accept cryptocurrency payments.
Coinbase is based in San Francisco, the home of its operations since the company was founded in 2011. In October of 2012, a rudimentary version of the platform emerged to help individuals buy and sell Bitcoin with bank transfers. This was unique at the time, as most US financial institutions were leery of cryptocurrency transactions. Brian Armstrong and Fred Ehrsam partnered to launch the company. They were joined by Ben Reeves. The addition of Reeves added credibility to the venture as Reeves was the founder of Blockchain.info, the main provider of Bitcoin wallets. Armstrong ultimately left the company after a dispute with the other partners regarding the implementation of the Coinbase wallet.
Four venture capital firms began investing in the exchange in 2013. $30 million in capital was raised by these firms, and Coinbase soon became a full-service exchange with more than one million users. Since 2014, that number has grown exponentially. The exchange claims that it now serves over 13 million active users. More investments followed in 2014, with an additional $75 million in capital being provided by multiple banks and the New York Stock Exchange. This move caused a fair amount of controversy within the United States.
At the same time, Coinbase was forging partnerships with recognized brands to help those companies accept Bitcoin as a method of payment. The companies included Overstock, Dell, and Dish Network. While some praised the partnerships as innovative and important to the acceptance of blockchain technology, the experiment failed for many of the companies involved. Most of them have since abandoned the acceptance of cryptocurrency, citing its volatile nature as a primary reason.
Coinbase has gone through a rebranding effort that began in 2016 with the company’s decision to begin providing trading with the Ethereum token. Today, the exchange offers trading of Bitcoin, Bitcoin Cash, Ether, and Litecoin. It is one of the only cryptocurrency exchanges that will allow users to purchase digital assets with a credit or debit card. Bank transfers are also still accepted for digital token purchases. The trading service is now available in 32 countries. The Coinbase wallet is available to the residents of 192 countries.
The exchange encountered some negative press in 2018 when it revealed that the personal information of approximately 13,000 traders had been revealed to the IRS. The transaction records that were provided to the IRS only covered the years of 2013-2015. This caused concern among some investors that the exchange was drawing the attention of US financial regulators. This news, however, does not seem to have had much affect on the overall trading volume of the exchange.
Far more concerning is a report that customer complaints against the exchange rose by more than 100% in January of 2018. In almost every case, the complaints involved account holders having their withdrawals restricted or canceled. Many have speculated that the reason for this is Bitcoin’s rise in value during the last months of 2017. Allegations that Coinbase was unable to satisfy the withdrawal requests of traders who made substantial profits in 2017 cast a dark shadow over the exchange in the first half of 2018.
It should be noted, however, that Coinbase has been able to secure insurance which covers the cryptocurrency stored on their servers. The company has also been able to create secure offsite vault storage of digital assets which should serve to increase the confidence of investors.
Getting Started With Coinbase
Trading cryptocurrency at Coinbase begins with creating an account. Opening an account is very simple and only requires a name, email address, and password. After a user confirms their email address, they are allowed to log in to the main site. They are then prompted to proceed through the remaining steps of account creation.
The first order of business is to establish which type of account will be opened. Users can opt to create an individual account which is designed for single traders, or they can create a business account for any established business that is able to provide the proper credentials.
Two-factor authentication is required by Coinbase for the purposes of security. The primary method involves the verification of a phone number for each account holder. Users will be sent a text message with a unique code that must be entered on the Coinbase website. There are other methods of authentication available for those who prefer not to provide a phone number, but this method is the most common.
The account holder will then proceed with setting up payment methods that serve as a means of funding the account. There are two primary ways that an account can be funded. The first of these is with a bank transfer. Adding a bank account requires that the user is able to verify their account. Coinbase will use the routing and account numbers provided to make two small deposits to the user’s account. These deposit amounts will be less than $1. When the deposits post, the user must enter the amounts on the Coinbase website to verify the account.
Credit cards can also be added. The verification method for these involves making a screenshot of the card. PayPal accounts can also be linked to the exchange, but no deposits are permitted. Only withdrawals may be made to a PayPal account.
It should also be noted that all Coinbase accounts are subject to verification processes. The manner in which a user chooses to verify their account can determine tier levels which provide more deposit/withdrawal options in addition to greater transaction limits. The standard type of verification that is employed by other exchanges is also used by Coinbase. Users can be required to submit a photo scan of a government-issued ID as well as proof of residence. The latter can usually be managed by submitting a recent utility bill.
The final step is for users to purchase cryptocurrency. This is accomplished with a simple interface that features a streamlined dashboard. There are tabs which can be selected for individual cryptocurrencies. It is important that the user choose the proper tab for the digital token they wish to buy. Once the transaction is complete, the digital tokens are available in wallets provided exclusively for Coinbase account holders. These funds may then be traded on the exchange.
Coinbase Fees and Limits
The transaction fees and limits at Coinbase are primarily determined by two factors. The first of these is the account holder’s country of residence. The second is according to the level of identity verification the account holder has been willing to provide. Limits can be viewed on the Account Limits page of the user’s profile.
The fee schedules and limits at Coinbase can be complex and have changed often in the wake of the exchange being required to hand over information to the IRS on all users who invest more than $20,000 per year. Users are advised to check the website for recent changes to fees and limits. General limits for fully verified accounts are as follows:
US residents may make a maximum of $50,000 in transactions per week
European residents can have a maximum of $30,000 in their account at any time
The fees charged by Coinbase depend upon the method of deposit. Credit card fees are typically higher than fees accrued from bank transfers. Overall, Coinbase has a lower fee schedule than many other exchanges. Fees range from 1.49% to 3.99%.
Trading Cryptocurrencies at Coinbase
Coinbase currently supports purchase and trading of Bitcoin, Bitcoin Cash, Ether, and Litecoin. These digital coins can be traded against and purchased with fiat currencies such as the USD and EUR. Coinbase has stated that they are going to consider adding more cryptocurrencies such as Ripple to their platform. They have also shown a willingness to add hard forks such as Bitcoin Cash in the past.
For traders, the platform developed by Coinbase is GDAX, the Global Digital Asset Exchange. This platform was designed with professional traders in mind. It includes advanced tools that will probably be unfamiliar to the novice trader. While GDAX is an arm of Coinbase, it exists as its own separate entity. Additional verification measures and deposit limits can apply.
Popular Opinion of Coinbase
Coinbase has been subject to much negative press in the early months of 2018. An independent reporting agency concluded that customer complaints against Coinbase increased by more than 100% in January of 2018. More than 400 of these complaints involved account holders not being able to access their funds.
Many users were also concerned when Coinbase revealed it would be turning over account information to the IRS for more than 13,000 users in the United States. While this caused anger among some customers, the exchange does not have control in this matter. The failure to comply with IRS requests could have led to the closure of the exchange in the United States. Coinbase has now announced that all US account holders who transact more than $25,000 are subject to IRS reporting.
Many users do seem to appreciate the transparency of the exchange. Coinbase has taken strong measures to prevent any funds from being stolen from customer accounts. It uses a combination of methods which include storing cash assets in banks. The company has also been applauded for the investments it has received from important financial institutions. Cryptocurrency that is stored online by Coinbase has been insured against loss.
Overall the reputation of the company is very strong
Coinbase offers FDIC insured accounts
Personal and business accounts available
Very secure platform
Credit and debit cards accepted for cryptocurrency purchases after verification
Accepts US traders
Customer support tends to be very slow
Verification process can be slow
Only a small number of cryptocurrencies available
Our Opinion of Coinbase
Coinbase has a strong reputation for providing legitimate exchange services. The company has been in business for almost ten years, making it one of the first providers of this service. It is also helpful that the company has received numerous investments from venture capital companies, banks, and the New York Stock Exchange. Overall, customers seem to be happy with the services offered by Coinbase.
With that being said, the increase in complaints against the company following the Bitcoin boom of 2017 haven’t helped Coinbase’s reputation. It is particularly concerning that complaints revolve around traders being unable to access their funds. The other primary issue with this exchange is that its customer service could stand to be vastly improved.
We award Coinbase 4 out of 5 stars on our cryptocurrency exchange rating scale.