Coinbase

There are plenty of options on the Internet when finally comes the time to invest or buy cryptocurrencies,

The simplest option, however, is called Coinbase.

Coinbase is an online exchange in which we can create an account in minutes and invest in Bitcoin, Ethereum or Litecoin, among others.

It currently offers its service through more than 30 countries and allows you to operate by debit card, credit card or bank transfer, as we will see later.

The history of Coinbase

The exchange was founded in July 2011 by Brian Amstrong, its current CEO and FFred Ersham in San Francisco, California.

From the beginning they raised several million dollars from various investors and famous venture capital companies such as Y Combinator, Union Square Ventures or Andreesen Horowitz, becoming the largest startup in the industry of cryptocurrencies and surpassing the billion dollars in revenue in 2017, with more than 10 million registered users at that time.

We will then provide a comprehensive analysis of the services it offers and explains how to open an account and start investing in Coinbase.

Countries with buys and sells available

Coinbase currently offers its services in 103 countries, a list of those you can see here, although its future plans are to expand to more and more regions.

If your country is not on the list, other best-known exchanges are Coinmama, Cex.io, Bitso (only for Mexico) or Ripio (only for Argentina).

Supported Cryptocurrencies

Today, Coinbase allows you to buy and sell:

Although the number of existing cryptocurrencies already exceeds two thousand, Coinbase uses a very exhaustive framework to add new currencies to its platform, called GDAX Digital Asset Framework, which only adds those coins that meet specific prerequisites.

According to internal company sources, they commit to including more assets over time, but their priority is always to protect customer funds and comply with regulatory requirements.

On this page, you can see the updated list and their communications.

Open an account and start investing

Getting started in Coinbase is a relatively simple and short process. It is possible to create an account and invest in cryptocurrencies in 10 minutes.

Before beginning, it is necessary to be over 18 years old and it is good that you have all the material they will ask you already prepared, to make the process shorter and simpler.

What will you need?

It may seem like a lot of requirements and that your privacy is going to be exposed when you have to send them a copy of an identification document, their credit card details or bank account, but Coinbase is a big company and takes the security of its customers very seriously.

Verification of your identity is only necessary if you plan to buy/sell cryptocurrencies and/or withdraw money to your bank account. If at the moment you are only going to receive and send cryptocurrencies you can skip this step, although you will have to complete it later.

Payment Methods

Coinbase offers two payment methods to purchase our first cryptocurrencies:

Purchase Limits

Once our identity is registered and verified, we will see that Coinbase sets weekly buying and selling limits which may be very low in the first few days but which, as time goes by, increase to $6,000 per week by credit or debit card.

Paypal

Coinbase currently only offers the option to purchase cryptocurrencies via Paypal to users in the United States.

If you only want to invest through this option is not a simple process, but you can go to other services such as the platforms Paxful or Wirex, or LocalBitcoins, where you will contact other individuals to make the transaction anonymously.

Your Coinbase Account (Guide)

Once registered in Coinbase and accessing our account, you have many options from the main menu.

Let us see what the platform has to offer:

Here you will be able to see the prices in real time of the cryptocurrencies with their respective graphs, your portfolio with the total balance of your account and the recent activity in terms of transfers or purchases.

In this section, you will be able to buy or sell cryptocurrencies in a simple way. In the box on the right-hand side, you will also see the estimated commissions they will charge for each transaction.

In this section, you will see the accounts of each one of your cryptocurrencies with the respective transactions. Each of them has the option to send and receive cryptocurrencies from outside or from another Coinbase account, as we will see in the next section in more detail.

You will also find the option ‘Vault’ which is a safer method to keep your cryptos in Coinbase. You can configure it to store large amounts of cryptocurrencies, and has the following features:

• Multiple authorizers: You can configure them so that more people have to approve the withdrawals at the same time, thus adding an additional layer of security.
• Time Delayed Withdrawals: Withdrawals from your vault have a 48-hour window during which they can be canceled.
• Offline storage: 98% of the coins are stored completely offline, in geographically distributed physical vaults.

You can learn more about the vault option here.

In this section you will find a submenu with 4 sections:

1. In ‘Addresses‘ you will be able to see all the addresses created for our cryptocurrencies. This is a feature that few people know about, but each Coinbase account is a collection of addresses, not just one! New addresses are automatically generated for each payment and remain associated with your account forever (so it is safe to reuse them).
2. In ‘Periodic Transactions‘ you can schedule purchases and sales of cryptocurrencies on a regular basis, pay recurring bills or rentals, or schedule future payments.
3. In ‘Reports‘ you can create and download reports of various movements or aspects of your account for later study in more detail.
4. In ‘History‘ you can view all transactions in chronological order from the day your account was created.

In this section you will find 6 sub-sections to be able to configure up to the minimum detail of our account, changing our personal data, the password, the associated telephone number, the notifications by e-mail, the activation of the authentication of two factors (2FA), the bank accounts or linked cards, as well as being able to see the limits of weekly purchase and sale.

Send and Receive cryptocurrencies from Coinbase

To send or receive cryptocurrencies from our account or simply know our addresses (please note that the addresses are different for each of the coins) we will go to the ‘Accounts‘ section of the main menu:

For this example, I will use my Bitcoin wallet (BTC Wallet).

Send Bitcoins

By clicking on the ‘Send’ button, another tab will be opened in which you can choose whether to send your bitcoins to another Bitcoin address or to an email address. If we choose this second option, we will not be charged any commission, but the recipient will be required to open an account on Coinbase as well.

If you send bitcoins to another BTC address you will be charged the typical mining commission at that time. This fee is paid to the miners, who are the ones that process the transactions and secure the network. Coinbase does not benefit from these commissions.

It is also important to note that you cannot send cryptocurrencies to other wallets of different currencies. In other words, if we send Bitcoin Cash or Ethereum, for example, to a Bitcoin address, that transmission would be lost forever.

Receive Bitcoins

By clicking on the ‘Receive’ button, you will be able to see the address so that another external person can send you cryptocurrencies, as well as the QR code associated with it.

Commissions and how to skip them

For each country, Coinbase applies different commissions, but they are usually 3.99% for card purchases and 1.49% for purchases and sales after making a bank transfer, as indicated here.

Luckily, they also provide a not very popular alternative to skip all those commissions and buy cryptocurrencies at almost zero cost.

The first thing we will do is go to the trading platform Coinbase Pro (formerly known as GDAX), also owned by the company Coinbase to familiarize ourselves with it. If we already have an account created in Coinbase previously, we will be allowed to log in with the same username and password, as they are linked.

For not paying any commission, the procedure would be as follows:

1. You make a bank transfer to Coinbase with the amount of euros/dollars you want to invest. By moving your money in this way and not by credit/debit card, you will only pay a commission of 0.15€. You will have to wait 1-3 days for the money to arrive.
2. Once you have the money in our account, you will go to Coinbase Pro, click on the pair that you want (for example BTC/EUR) and then on the ‘Deposit’ button.
3. Between the options that are shown, you will choose ‘Coinbase Account’ and you will move from there the amount of euros that you want by clicking on EUR Wallet in the drop-down menu. This process will be totally instantaneous and free.
4. Now you can buy the cryptocurrency! If you do not want to pay any commission, instead of placing the order ‘Market’ for which you would buy at the market price available at that moment, you will place it at ‘Limit’ – at which you choose the price – and wait for it to be made by the market. If the price ‘moves away’ from the price you have placed, you can always remove the order at no cost and set a new one.

It may seem a little complicated at first, but once you do this action two or three times and you get familiar with it, becomes simple. Another good point is that you can transfer your cryptocurrencies or euros from Coinbase Pro to Coinbase or vice versa as often as you want.

Coinbase Security

After the multitude of hacks and scandals that this industry has had in its short history, it is normal for people to take very seriously the security of their cryptocurrencies.

Coinbase did not want to stay behind in this aspect, prioritizing the security of its customers’ funds and securing all-digital currency.

If the platform suffers an online storage failure, the insurance policy will pay to cover lost customer funds. In addition, they store less than 2% of the funds online, the rest is stored offline in physical vaults.

This insurance policy does not cover any loss resulting from the commitment of your individual Coinbase account, so it is everyone’s responsibility to use a secure password, activate 2FA authentication with an app such as Google Authenticator and always keep track of all login credentials you use to access Coinbase and Coinbase Pro.

Coinbase staff will never ask you for your password, 2-factor authentication codes or other login credentials. Nor will you ever be asked to perform a remote login or installation of support software on your computer.

Finally, it is also good practice to save the Coinbase page in your bookmarks to avoid pishing and to verify that the browser bar always shows the https:// in front of the URL.

Privacy in Coinbase

This aspect is probably the most controversial fact of this platform.

Coinbase is highly regulated and complies with all financial institution laws in its home country: the United States. These include AML (Anti-Money Laundering) and KYC (Know Your Customer) practices.

That is why all first-time customers are encouraged to provide a lot of personal information, such as phone number, bank account, and identity card, making anonymity impossible.

You should also note that by performing these actions Coinbase may close your account at any time:

Although the money will most likely be returned to your bank, it would be a costly, frustrating and inconvenient experience.

Where my private keys are?

In the previous part of the article -Coinbase’s security- I did not mention anything about the private keys because I think this subject deserves a separate section.

While the nature of Bitcoin and the rest of cryptocurrencies, in general, is decentralized, giving back the responsibility to the user and providing the option for everyone to secure their own funds through the use of private keys, using Coinbase we have no access to them at any time.

However beautiful, secure and efficient may seem the platform, you should never trust Coinbase to act as your main crypto wallet, as it is a centralized entity so:

If you do not have the private keys, you do not own your coins.

The same applies equally to all exchanges and third-party services that store your coins.

For this reason, I recommend using Coinbase only to exchange your fiat money (euros or dollars) for cryptocurrencies and then transfer them to secure storage where you do own the private keys, such as the Trezor or Ledger hardware wallets, for example.

Coinbase customer service

Coinbase team is usually very quick in solving problems on their platform. You can see At any time the current status of the service and past issues here.

On the other hand, they are not so quick to solve personal problems, but you can always write them an email, call them at +1 (888) 908-7930 or visit their FAQ page.

Once you have seen the main options of this platform, let us take a look at other services and services it offers.

App for Android and iOS

The service also provides an app from which you can perform virtually all the functions discussed above. You can download it for different devices from here.

Coinbase Commerce

Perfect for all those who own online business, Coinbase Commerce allows us to easily start accepting payments in cryptocurrencies or receive donations.

To use this service you need to create a separate account as it is completely separate from Coinbase.

On the other hand, it gives you a very simple tool to create our products with a fixed price, a highlighted image, and description, showing us the code of the products to add them to our e-commerce.

Affiliate Program

Coinbase has an affiliate program that can be used by any registered user to provide $10 to both the referring user and the referred user when this one exceeds $100 invested in the platform.

For example, if you register using our custom link, you and I will be given $10 once you reach $100.

Coinbase Card

Coinbase also provides the option of having a VISA card to easily spend your cryptocurrencies. However, this service is currently only available in the UK. Learn more about it here.

Developers and APIs

Coinbase also provides an API that makes it easy to integrate Bitcoin, Bitcoin Cash, Litecoin and Ethereum into new and existing applications.

Coinbase’s APIs  enable a variety of capabilities; from simply collecting read-only data to building something that has never been done before.

It has the ability to:

It is available in Python, Ruby, Node.js, and PHP.

Contact and Social Networks

You can contact the Coinbase support team 365 days a year by sending them an email through this page, as well as by phone +1 (888) 908-7930 or through their official Twitter accounts @coinbase and @coinbasesupport.

In addition, we can find them in Reddit, Facebook or read their corporate blog in Medium, where they make most of their announcements and explain the news of the service.

Pros and Cons of Coinbase

After explaining the ins and outs of Coinbase, let us bring out the pros and cons of this service.

Pros

Cons

Conclusion

For any new user in the industry, Coinbase may seem like a great choice when it comes to acquiring their first cryptocurrencies, as it offers a great user experience for both registration and purchase, with a clean, simple and flawless design.

Coinbase can be a cheap, popular and convenient option. However, it is impossible for me to recommend it without some prior warnings:

You should never trust this platform to act as your permanent wallet, as you do not have your private keys. Although the Coinbase Vault offers a security plus, it is still not as secure as storing your cryptocurrencies personally.

If you are not sure how to store your bitcoins, I always recommend the purchase of a hardware wallet.

Of course, do not use Coinbase for any illegal actions with your bitcoins and if you really are someone who believes in the Bitcoin philosophy, consider whether your actions are aligned with those values it promotes, such as decentralization and open-source.

I recommend using the service only to make initial purchases of cryptocurrencies, which will be transferred to other places (such as trading platforms like Binance) or store in your own personal wallets.

Finally, I also strongly recommend that you get well informed about your country’s regulation of taxes on the purchase and sale of crypto coins.

For example, In Spain, they are treated as if they were an intangible asset, so if you buy or sell cryptocurrencies and make a profit, it will be considered as a capital gain or loss in income.

In this case, it will be added to the rest of capital gains and losses, such as those resulting from operating in the stock exchange or buying an investment fund.

Here is a list of the most frequently asked questions (FAQ) about Coinbase: