One of the oldest and most important exchanges today is Coinbase . This exchange platform is characterized by being very simple to use and allowing the purchase of cryptocurrencies with fiat. In this article we will explain everything you need to know about this centralized exchange.

What is Coinbase

It is a regulated cryptocurrency exchange based in the United States with a simple and easy-to-use interface that allows the purchase, sale and storage of cryptocurrencies. Coinbase offers a very simple user interface designed for users who are just starting out in this segment.

If you want to earn € 8.47 in Bitcoin, register with this link on Coinbase if you buy or sell more than € 84.73.

We must emphasize that Coinbase is one of the exchanges with the highest commissions , something that we will discuss in more detail later. In addition, the platform, as it is based on US regulation , can track movements and transfer information to the US Treasury and to those of other countries or states where it operates.

History

The Coinbase company was founded in 2012 by Brian Armstrong and Fred Ehrsam . Both created the company with the simple intention of offering a platform that would allow the purchase and sale of Bitcoin by bank transfer. In addition, they have always sought to offer a high degree of security for users .

This idea, nowadays so simple, then meant a great leap in the accessibility to the purchase and sale of Bitcoin. Before this, Bitcoin purchases required significant technical knowledge and the use of complex payment systems. For example, making bank transfers from abroad or the use of financial intermediaries, something that was (and still is) risky, since you must place your trust in a third party.

One of the biggest changes of the Coinbase exchange occurred in 2014. It was when the company expanded its operations with Bitcoin that it began to work with the main service providers about what they will accept this cryptocurrency as a direct payment method. It started in 2014 to work with platforms such as Stripe and Dish to allow payments with Bitcoin.

Additionally, in 2015 it obtained the first Bitcoin exchange license licensed in the United States. Coinbase thus became the first cryptocurrency exchange approved by regulatory authorities.

Characteristics

This exchange is intended for users who want to invest in cryptocurrencies and transact with them . Above all, Coinbase focuses on new users with limited knowledge in the field of cryptocurrencies and / or trading. The user interface (GUI) is intended to be accessible and simple to use , making it more accessible to users.

The exchange is characterized in addition to offering the purchase and / or sale of cryptocurrencies, other possibilities. It allows to transact cryptocurrencies, conversion between cryptocurrencies, the custodian by the platform of our cryptocurrencies and other interesting proposals.

Coinbase recently blogged about plans to support Ethereum 2.0 , which is shifting from proof-of-work consensus to proof-of-stake consensus. Since the beginning of 2021, the platform allows leveraging ether thinking about the change to the new version of the platform. Thus, users will be able to “trade” Ethereum 2.0 and Ethereum with the rest of the supported cryptocurrencies.

What is Coinbase Pro

It is an advanced version of the exchange reserved for specialized traders and investors. Coinbase Pro has advanced features for trading and futures, with a somewhat more complex interface . This platform offers lower commissions for use than its simple version. You also have FDIC insurance of up to $ 250,000.

Coinbase Pro allows users to purchase and / or sell cryptocurrencies, as well as withdraw and / or deposit their assets to an independent wallet or to another exchange. It offers advanced Stop Order, Limit Order and Time Limit Effective Order, Items Not Available on Coinbase features . Additionally, they offer access to a private API key that allows users easy integration with third-party applications such as HyperTrader.

Differences between Coinbase and Coinbase Pro

What is Coinbase Prime

Solution developed specifically for institutions, where bank operations desk and asset management are offered. Coinbase Prime is intended for asset managers, private companies, hedge funds, private wealth managers, etc. It is an institutional solution for companies that want to add and manage cryptocurrencies as part of their corporate treasury strategy.

Through the Coinbase Prime platform, institutional investors have access to pools of diversified liquidity. Here we offer OTC trading, algorithmic orders, margin financing, and an advanced market data product.

Coinbase Prime allows a developing company to outsource its stake in order to increase its funding. The other companies and investors can acquire the shares based on the reputation of the company. Trading in OTC blocks and buying and selling shares on the stock market is also allowed.

What can we do at Coinbase

We are now going to see all the possibilities that the platform offers us with respect to the home user.

Buy and sell cryptocurrencies

The origin of Coinbase is precisely in the purchase and / or sale of Bitcoin that has been extended to other cryptocurrencies. We just have to log in and go to the “buy / sell” section. In addition, we can buy and / or sell cryptocurrencies on the page of the currency that we want or by looking at the wallet within the platform of the cryptocurrency that interests us.

Currently this centralized exchange offers us up to 85 cryptocurrencies and tokens to buy and / or sell. We must emphasize that some may not be available in your country, since availability varies by country. We can also carry out purchase and / or sale actions from the Coinbase applications for Android and iOS.

We can acquire cryptocurrencies with credit / debit card and bank transfer using fiat currency (they only accept US dollar, euro and English pound). Also, we can do it from cryptocurrency to cryptocurrency, without problem.

Cryptocurrency transactions

It offers users different methods of use for the cryptocurrencies that we have in possession . We can conduct transactions such as the purchase of physical goods, digital products, gift cards, donations, and gifts. Most of these transactions use third-party software, but they acquire certain data from Coinbase to confirm identity.

As is normal, the exchange allows manual payments from its wallets. This also allows direct transfers using the addresses of the cryptocurrency in question.

Cryptocurrency to cryptocurrency conversion

Logically, the centralized exchange offers us the possibility of converting between different cryptocurrencies and tokens . If we have bitcoins and we want ether, we make the change within the platform quickly and easily. Although we make conversions between different cryptocurrencies, the platform will always show us the price in fiat money, so that we have it easier.

Note that all conversions are instantaneous and the price of cryptocurrencies will always be market. The price is constantly adapted according to the operations that are carried out.

Cryptocurrency storage

Coinbase’s security is very high and very strict to prevent users from losing their cryptocurrencies. If anyone wants even more security, Coinbase offers a “vault” feature that acts as a high-security wallet . The cryptocurrencies and tokens in this case are stored in a cold wallet whose security is provided by the exchange.

This vault integrates several additional layers of security. It allows the creation of a system of multiple signatures by email and also adds a waiting period of 48 hours before making the withdrawal. Withdrawal of funds can be stopped at any time.

We can send the assets in the vault to our main account or to another portfolio as we want.

Coinbase card

Those users who want to can choose to purchase a Coinbase debit card. This card allows you to pay in millions of businesses around the world with our cryptocurrencies, making the conversion instantaneously. The Coinbase card is issued by Visa and offers a “contactless” function.

This debit card can be easily managed and tracked using the Coinbase Card app that is available for Android and iOS. Since the launch of this card in early 2019, more than $ 1 million has already been spent on this card.

What cryptocurrencies are available on Coinbase

We have collected the cryptocurrencies and tokens currently supported by Coinbase. We leave you the page where the company publishes the list and we recommend that you also follow them on Twitter, since there they also communicate if they add or delist new cryptocurrencies or tokens.

How to open an account on Coinbase

The process of creating a user account is simple, as in the rest of the platforms. But, while others allow us to operate without verifying our identity (passing the KYC-AML processes) , here it is necessary to verify our identity to operate.

The exchange asks us, first of all, to put our name and surname, an email address and accept the terms and conditions. After passing this process, we will be asked to put our legal jurisdiction , come on, to put in which country we reside. If you do the account for a company, right next to it you have the tab to create the company account, with small changes in the form.

Once we have filled in the fields and click “send”, we will receive an email to verify the email address. This is a common process in the vast majority of platforms, to prevent third parties from registering with our mail.

After the email address is confirmed, a two-step identification process will begin . A phone number is required in which we will receive a random code that we must enter to verify the property. Thus our account will be validated, to go to the verification point of our identity. In order to deposit funds in the account and be able to make transactions, we must complete this step.

We will be asked for our physical address and the typical images of a state identification document (DNI, driver’s license, passport, etc.) . Additionally, an easy recognition will be requested.

Later we will be asked to add a payment method, if we want. We have the option to choose between a bank account, a debit / credit card or through PayPal.

Coinbase commissions

Within the Coinbase exchange we find different types of commissions depending on the operations. Operating within the platform, buying and withdrawing our cryptocurrencies and / or tokens has a cost.

Purchase and sale rates

The fees that this centralized exchange buys in buying and selling operations are a bit messy. For starters, there is a margin of entry in all cases of 0.5% that the exchange establishes . This is the market rate for any cryptocurrency, although it may vary based on market circumstances.

Additionally, the exchange charges a so-called “Coinbase fee” on all transactions. It is a flat rate or a percentage rate depending on our country of residence and the type of payment.

This flat rate “Coinbase fee” applies only to users with less than $ 200 in account. Normally a fee of 1.49% per transaction and 3.99% for credit and debit cards is applied .

Cryptocurrency conversion

It allows to exchange between cryptocurrencies and tokens within the platform. Coinbase in this case charges a commission of 1% , which can vary a bit depending on the state of the network.

Deposits and withdrawals

We are now going to talk about the commissions that the exchange will charge us according to the country in which we are.

US Users

Any deposit or withdrawal made via bank transfer can be delayed between 1-3 days . Deposits or withdrawals in bank accounts (ACH) can be delayed between 4-5 days. For both cases, only business days are taken into account, something that we must take into account.

Europe Users

It allows making deposits and withdrawals by SEPA transfer that can be delayed between 1-3 business days.

UK Users

Typically sterling bank transfer deposits and withdrawals are completed within 1 business day. Withdrawals in euros by SEPA transfer can be delayed between 1-3 business days.

Canadian and Australian Users

Unfortunately Coinbase does not have support for Canadian dollars and Australian dollars . But Australian and Canadian users can sell their cryptocurrency and transfer it using PayPal. The funds will go directly to users’ PayPal accounts, with Coinbase not holding the funds.

Buy and sell through PayPal

Coinbase currently allows users in Europe, the United States, Canada, the United Kingdom, and Australia to withdraw funds using PayPal without any hassle.

Summary of commissions by country

What is the security of Coinbase

It is considered one of the safest cryptocurrency exchanges in the industry. It has multiple layers of security that makes it very difficult to steal cryptocurrencies and tokens. Additionally, it has a deposit insurance that covers all digital and fiduciary assets in user accounts.

It also has a secure vault service to add more security for the user. This service has a transaction verification system by email. In addition, transactions have a settlement time of two days, in case there will be any type of unauthorized transaction or transfer.

Cold storage

Coinbase stores up to 98% of digital assets in a “cold storage” system . This is nothing more than saving the private keys on a device not connected to the internet to avoid possible hacks and theft of assets. A custodian system that is recommended to all users who have cryptocurrencies.

Physical copies of private keys without an internet connection are stored in safe deposit boxes distributed throughout the world. Assets are divided in order, in the event of a security breach, to minimize the hypothetical theft of assets as much as possible.

Customer data

The theft of exchange customer data can also pose a risk to users. Stealing your access credentials or your payment information can be a big problem. To avoid this, Coinbase encrypts and stores this information offline. They make a backup copy on paper and on storage devices, which are also distributed around the world and deposited in safes.

Mandatory two-step verification

To increase user security and prevent unauthorized intrusion into the user’s account, Coinbase enforces a 2-step verification system. This ensures that unauthorized intrusion is highly unlikely.

Said two-step access method can be secured by means of an authentication application such as Google Authenticator or by means of a code that is sent by text message to our telephone number added to our account.

Customer vaults

As we have previously indicated, the possibility of storing digital assets (totally or partially) in a “vault” portfolio is offered . This system is a custodian of the assets in a cold wallet, which is not connected to the network until a transaction is requested. For the transaction to be executed, you must wait a period of 48 hours, for security reasons.

A period of 48 hours is established in case the user’s account has suffered a security breach. Coinbase will send the user’s email a message that this operation has been requested. This allows the user to report a security breach (if any) and void the transaction. Thus the client of this exchange will not lose assets at any time.

Institutional security

The exchange takes security very seriously, but even more so when it comes to working with companies in the financial industry. Coinbase has a background check system for its workers , encryption of storage units, and state-of-the-art security features.

Coinbase is respected by financial institutions, hedge funds, and investment firms for its tight security measures.

Sure

Despite the exchange’s gigantic security measures, an asset theft is always likely. Coinbase for Digital Assets offer no-cost hedge insurance for platform clients . Trust assets, on the other hand, have FDIC deposit protection coverage of up to $ 250,000 per account.

USD Coin (USDC), the stablecoin of Coinbase

The stable cryptocurrencies or stablecoin are those that have their price linked to fiat currencies, precious metals or based on complex algorithms. USD Coin (USDC) is the stablecoin developed by Coinbase for its own exchange platform. Each unit of USDC is backed by 1 physical dollar, at least in theory. Additionally, USDC holders within the Coinbase exchange can earn rewards for holding this stablecoin.

Its main characteristics are:

• Stable price: Customers who have dollars in their account can exchange them for 1 USDC in a 1: 1 ratio. In addition, it is a safeguard for when there are strong price movements in the cryptocurrency market.
• Asset-backed: All USDCs are backed by a dollar or an objectively equivalently priced asset. These are stored in accounts of different regulated financial institutions in the United States
• Ethereum-based: USD Coin tokens work within the Ethereum blockchain. This allows you to store them in any wallet compatible with Ethereum. Additionally, it can be used in decentralized finance and by other exchanges.
• Global Transactions: Designed to allow you to send dollars around the world quickly and easily. In addition, it allows users to save a lot of costs for transacting their money.

Currently USDC is available on the exchanges: Kyber Network, Binance , Poloniex, OKEX, Bitfinex, Uniswap , KuCoin, LAToken or BitMart, among others. We can also use USD Coin in the payment gateways and platforms: Bitpay, Ledger, Nexo or Compound, among others.

Coinbase IPO (IPO COIN)

One of Coinbase’s big milestones took place on April 14, 2021, when the exchange began trading on the Nasdaq . The US technology exchange ruled a price of $ 250 per share . This assumed that the exchange would be worth $ 65.3 billion in value on a diluted basis.

Coinbase opted for a direct listing on the market rather than launching an initial public offering, which is often conventional. Rather than first selling the shares to institutional investors, they decided to put them all on the market directly and make them tradable.

Coinbase positives and negatives

Let’s see, in a summarized way, what are the positive and negative aspects of the exchange. This will allow us to assess in a clearer way whether or not we are interested in operating on this exchange platform.

Positive aspects

• Security: We can safely say that Coinbase is the most secure exchange today. The platform forces users to do a two-step verification, something that adds security. Over 98% of digital assets are in a cold portfolio and have insurance for digital and fiduciary assets. In addition, it offers a secure vault with delayed withdrawals in case of a security breach in the client’s account.
• Simple interface: The exchange has been developed to be used by any user , regardless of their knowledge of cryptocurrencies. It allows you to buy and / or sell cryptocurrencies, transact with them, store them and carry out exchange between cryptocurrencies and tokens in a simple way. All through a very simple and easy-to-use GUI.
• Information and support: Something very interesting about this exchange is that it has a very good customer service system . It also has an information system for users who are starting out in this field.
• Payment options: Coinbase has a large number of payment options, ranging from bank transfers to credit / debit cards and even PayPal. The exchange accepts the main payment systems, facilitating access to the acquisition of cryptocurrencies.
• High liquidity: It offers us high liquidity, so we should not have problems when acquiring or operating them. It also protects investors from market movements, which can occasionally be quite abrupt.

Negative aspects

• Operating costs: The Coinbase exchange is currently the most expensive, this is obvious. This platform is the one with the highest fees and differences in terms of fiat to crypto and crypto to crypto transactions, within the industry . There are many users who acquire assets in this exchange and pass them on to other platforms, to save a large part of the commissions.
• Regulations: Although for some, complying with the regulations of different countries and government agencies is positive, for others it is not so positive. Bitcoin was born with the idea of ​​offering privacy to users, something that is broken with the KYC-AML processes. This makes the fact that Coinbase has such rigid verification measures and complies with different government regulations, not well seen by many users who want more privacy.
• Limited listed assets: This exchange currently offers access to different cryptocurrencies and tokens, but not all of the available ones, not even all of those that could be considered “popular . ” Coinbase offers access to a limited number of cryptocurrencies and tokens, and listing new ones is often difficult.
• Trading cryptocurrencies: The simple version of the exchange has limited analytical tools. Those who want to perform trading tasks depend on data and tools external to the exchange. Coinbase Pro it is true that it offers more capabilities for trading, but it is still more limited than other platforms in the segment.
• Users do not control their private keys: Like all centralized exchanges, it offers us a public address, but not the private keys. The cryptocurrencies that we acquire on Coinbase are at all times under the control of the exchange . The user does not have control of their assets, something that goes against the essence of cryptocurrencies. Of course, the user can send the cryptocurrencies to their own wallet.

Interest in DeFi by Coinbase

The growth of decentralized finance or DeFi has sparked many interests within the industry . Coinbase has been one of those that has shown interest in this growing sector.

For those who still do not know what DeFi are, they are new platforms that seek to bring conventional financial solutions to the cryptocurrency space. They are based on decentralization and the security offered by blockchain technology. In addition, they allow users to obtain passive income by “lending” their tokens through liquidity pols. If you want to know more about what DeFi is and how it works , we leave you an article about it

Coinbase Wallet, the exchange’s smartphone app, allows us to earn interest through DeFi products. Through this application we can earn returns of up to 6% per year. This service to date required access through Coinbase’s own browser DApp or through the desktop through WalletLink. The integration of this system within the smartphone application makes everything easier. Users can now add their assets to a liquidity pool with the simple push of a button on their smartphone.

Final words on Coinbase

This exchange is characterized by being very easy to use and offering great security measures to prevent improper access to our account. Coinbase offers a very simple GUI suitable for any user, regardless of their knowledge. Then we have Coinbase Pro, for users who want to opt for trading and who have advanced knowledge of asset trading. They even offer a version for financial institutions, such as Coinbase Prime.

The big objection that Coinbase and the vast majority of centralized exchanges have is that we have to go through KYC-AML processes. Bitcoin and the rest of cryptocurrencies are based on the privacy of the user, something that breaks when passing processes where we must verify our identity. This is why centralized exchanges are highly criticized because they eliminate privacy and give information to governments about user operations.