What is Coinbase and how does it work?
In a short period of time, cryptocurrencies have gone from being a small, alternative investment to collectively worth hundreds of billions of dollars. Whether you want to invest in crypto or use it as a form of payment, you may have heard of Coinbase. After all, with millions of users, it is one of the most popular cryptocurrency exchanges online. It is one of the easiest ways to buy cryptocurrency which has helped fuel its explosion in popularity.
In a nutshell, Coinbase is a cryptocurrency exchange where you can buy popular coins like Bitcoin, Ethereum, and Solana. Not every coin is supported on Coinbase, but there are over 120 different types of cryptocurrencies on the platform. Meanwhile, there are thousands of different cryptocurrencies available around the world. Still, Coinbase lets you trade the most popular types of crypto, so it works well for most purposes.
All this makes Coinbase a great place for new crypto investors to buy and sell their favorite coins. But is it safe to use Coinbase? What about fees? We will address these and other questions below.
How to Use Coinbase: A Beginner’s Guide
If you are new to Coinbase and perhaps even cryptocurrency in general, this all may seem overwhelming. Don’t worry it’s actually quite simple, and we’ll show you how to get started.
how to open coinbase account
Opening a Coinbase account is easy. Here’s what Coinbase says you’ll need to create an account:
- be at least 18 years old
- Government-issued photo ID, such as a driving license or state ID
- computer or smartphone with internet access
- A phone number for SMS verification
- the latest version of your internet browser
If none of this is a problem, you are ready to create an account. To do this, enter your first and last name, email, state of residence and create a password. You must also check the box confirming that you are at least 18 years of age. After that the only thing left is to set a password. Be sure to set a strong, unique password to keep your account secure.
You will also want to add a payment method so that you can transfer funds to your Coinbase account. US customers can use a variety of methods, including bank accounts, debit cards, PayPal, Apple Pay, or wire transfers. Note that PayPal is only available to US customers, and you can only use it to buy cryptocurrency or cash out.
Once you have created your account and added a payment method, you are ready to start trading cryptocurrencies.
Which cryptocurrencies does Coinbase support?
While Coinbase does not support every cryptocurrency, it does support many of the most popular coins. So most people buying and selling on Coinbase will have no problem. However, more advanced traders may find that they need to set up an account elsewhere.
There are over 120 coins available on Coinbase. We won’t list each one, but here are some of the most popular ones that Coinbase provides access to:
You can find the full list on the Coinbase website.
How much does it cost to do business?
Fees on Coinbase can be a bit complicated, but they depend on your account type, transaction size, and funding source. Many factors can affect the fee you will ultimately pay, including your country/region, payment method, and product.
For smaller transactions, you’ll pay a spread mark-up of 0.5 percent of your trade value plus a similar fee depending on the size of your transaction:
|$10 or less||$0.99|
|Over $10 and $25 . until||$1.49|
|over $25 and $50 . until||$1.99|
|over $50 and $200. until||$2.99|
Although the price of one bitcoin is much higher than these dollar amounts, Coinbase lets you buy fractions of coins, so you can still buy smaller amounts. The cost of the spread mark-up is already included in your purchase or sale price.
For amounts above $200, you will pay a spread mark-up of 0.5 percent of your total trade value, and transactions above $200 are charged with Coinbase’s variable fee as follows, depending on whether How do you pay for crypto:
|US 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 $0.55|
As you may have noticed, fees eat up a significant portion of your purchases for those small amounts.
If you are a more advanced trader, Coinbase Pro may be worth considering. With Pro, you will get additional trading options and advanced charting features. Coinbase Pro also offers a much simpler (and lower) fee structure.
The easiest way to familiarize yourself with Coinbase’s fees is to preview an order, which you can place using the steps below.
How to Buy and Sell Cryptocurrencies on Coinbase
If you’ve already linked a payment method to Coinbase, buying and selling couldn’t be easier. Here are the steps to buy cryptocurrency when logged into your Coinbase account:
- Click the Buy/Sell button in the top right corner.
- Specify whether this is a one-time purchase or daily/weekly/monthly.
- Enter the amount of your purchase.
- Select the cryptocurrency to buy.
- Choose your payment method.
Keep in mind that when you make a purchase using a bank account, it usually takes 3 to 5 business days for the transaction to complete, according to Coinbase.
Selling on Coinbase is even easier. All you have to do is select how much you want to sell (or “Sell All”). Then indicate which coin you want to sell and how you want to get paid. Note that the same fee applies to buying and selling.
Is Coinbase Safe?
It is natural to wonder whether Coinbase is safe, especially if you are investing a lot. Plus, it’s still a relatively new platform. While Coinbase is generally a secure platform and has security measures such as two-factor authentication, it is not impervious to attacks. A quick online search reveals that Coinbase users’ accounts have been wiped out overnight. Experts are pointing to SIM swapping as one of the reasons for these incidents.
While this may sound scary, that doesn’t mean you have to avoid Coinbase. There are some measures you can take to make things even more difficult for potential hackers, such as using a non-custodial wallet. Another option is a hardware wallet.
The idea behind these different types of wallets is that you are not dependent on Coinbase to store your money. They allow you to store your own crypto using an app, software or hardware. So if someone gains access to your coinbase account, it will not give them access to the wallet where your cryptocurrency is actually stored.
The downside of this approach is that you have to remember your own password, also known as the private key. If you have heard reports of people losing millions because they ran out of their cryptocurrency wallets, they probably have a non-custodial wallet. Although this method is more secure, it is your responsibility to ensure that you can access your wallet.
Coinbase is an easy way for those who are new to cryptocurrencies to get started. Its easy-to-use interface lets people buy and sell crypto in just a few clicks. While not every type of cryptocurrency is supported, you will find many of the most popular coins out there.
One thing to keep in mind about Coinbase is that fees can add up, especially when buying small amounts of crypto. For example, you will pay a $0.99 variable fee when buying $0.99 worth of cryptocurrency, which means your fee could be around 10% (and this is on top of the spread mark-up already built into the price).
These are among the biggest reasons why Coinbase is useful for beginners, but it is not for everyone. If you want to avoid Coinbase’s high fees and long processing times, there are many other ways to buy cryptocurrencies like bitcoin.
And if you choose to invest in cryptocurrencies, make sure it is part of a diversified investment strategy. That means investing in tried-and-true assets like stocks and bonds, and real estate, if you choose to. Also, don’t forget to keep cash on hand, ideally in a money market account or high-yield savings account. Taking these steps will help you cope with the volatility that comes with investing in cryptocurrency.
Editorial Disclaimer: All investors are advised to do their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price increases.