Coinbase Review: Pros & Cons, Features, & Fees

Coinbase is one of the largest cryptocurrency exchanges in the world, with over 98 million registered users.

The platform is also available in over 100 countries and makes buying popular cryptocurrencies like Bitcoin and Ethereum fast, simple, and secure.

And security is really the selling point Coinbase stresses. For starters, 98% of all customer funds are stored offline and Coinbase states it’s never been hacked. Furthermore, Coinbase requires two-factor authentication on all accounts. And you can store your crypto on a Coinbase wallet, making it very beginner-friendly.

But, there are plenty of cryptocurrency exchanges out there. To decide if Coinbase is right for you, it’s important to know the main features, pros and cons, and how this leading U.S. exchange stacks up against the competition. Here's what you need to know.

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Pros And Cons

What Is Coinbase?

Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. At the time, Bitcoin was worth around $6. But cryptocurrency and Coinbase have both grown tremendously since then.

According to CoinMarketCap, Coinbase is the second largest cryptocurrency exchange in the world behind Binance in terms of trading volume, liquidity, and weekly visits.

Coinbase went public in 2021 and trades under the ticker symbol COIN.

What Does It Offer?

Coinbase is popular because it’s beginner-friendly and secure. Once you create an account and verify your identity, you can buy dozens of popular cryptocurrencies with funds directly from your bank account. If you ever want to sell, you can also do so through Coinbase.

The fact that Coinbase is a U.S. company is also comforting for U.S. residents. Tax time is kept simple as Coinbase issues a 1099-MISC if you earn more than $600 in rewards from the platform in a calendar year.

Plus, with numerous other features, Coinbase is one of the best ways to begin investing in cryptocurrency if you’re looking to diversify your portfolio.

Simple Trading

Coinbase covers 287 markets and supports over 90 coins, including:

• Bitcoin
• Ethereum
• Cardano
• Binance Coin
• Tether
• XRP
• Dogecoin
• Solana
• Polkadot
• USD Coin
• Uniswap

When you sign up, you link your bank account to Coinbase and can begin buying coins with USD. You can use the desktop version or Coinbase’s free mobile app for Android or iOS to buy and sell.

Liquidity is also a selling point. Smaller exchanges with low liquidity often have high fees and make it difficult to process large transactions. In contrast, Coinbase has over $5 billion in transaction volume every 24 hours.

USDC Rewards

Coinbase has been actively promoting their USDC rewards program as a strong alternative to savings accounts. Right now, you can earn up to 5.20% APY on your USDC balance.

The USDC Rewards program is tiered, and here are the current tiers:

Coinbase Wallet

When you buy cryptocurrency, you store it in a wallet. Many cryptocurrency exchanges provide their own digital wallet to simplify holding crypto for users. Alternatively, you can use third-party wallet providers like Exodus. Finally, you can buy a physical crypto wallet, known as a hard wallet, like Ledger or Trezor, to store your crypto.

The variety of cryptocurrency wallets can seem overwhelming for new investors. Thankfully, Coinbase offers a free wallet for storing your crypto and NFTs.

The wallet supports over 500 tokens. And you can manage your wallet from your smartphone or computer. You don’t need a Coinbase account to use its wallet. But it goes hand-in-hand with opening a Coinbase account and buying your first cryptocurrencies.

Loans

If you need to take out a loan, you can now borrow up to $1,000,000 from Coinbase by leveraging your Bitcoin as collateral.

Coinbase lets you borrow up to 40% of the value of Bitcoin you hold as cash, up to $100,000. There’s an 8% APR, no fees or credit checks, and the money deposits right to your PayPal or bank account. You have to pay the interest due each month ($10 minimum). But other than that there isn’t a repayment plan or loan term.

The minimum loan amount is $2,000 in most states. But Coinbase may different loan terms depending on where you live, so visit Coinbase’s borrowing page to learn more.

The main advantage of this Bitcoin-backed loan is that you don’t have to sell your Bitcoin if you need cash for an emergency. You also get the money quickly. And Coinbase doesn’t lend out your Bitcoin while it’s leveraged, so it’s waiting for you when you pay off your loan.

Coinbase Card

The Coinbase Card is a Visa® debit card that lets you spend assets in your Coinbase account and earn rewards in the process.

There isn’t an annual fee and you can open a Coinbase Card in every state except Hawaii. As a cardholder, you can use the Coinbase Card anywhere that accepts Visa and earn 1% cash back in Bitcoin or 4% cash back in Stellar Lumens.

Coinbase actually converts your assets into USD to complete transactions, so you’re not paying merchants with cryptocurrency. However, you should also consider if spending your crypto to earn cash-back rewards is worth it.

The risk of spending with the Coinbase Card is that various cryptocurrencies appreciate rapidly, meaning you would have earned more in appreciation than cash-back rewards. But this is a promising addition to Coinbase’s features and highlights another way the company makes utilizing cryptocurrency more beginner-friendly.

Coinbase Advanced Trading

If you’re serious about crypto trading, Coinbase Advanced Trading (formerly Coinbase Pro) is for you.

Unlike the regular exchange, Coinbase Advanced Trading is meant for active trading and supports more transaction types, including stop orders and limit orders. You also get charting tools and a user-friendly dashboard to monitor prices in real-time and track your trading history.

Coinbase Advanced Trading also caters to high-frequency traders. With its API, you can get real-time market data and even develop trading bots. There’s also an unlimited trading amount whereas regular Coinbase has variable daily purchase and deposit limits depending on where you live.

Ultimately, if you actively trade cryptocurrency and want more research tools, Coinbase Advanced Trading is worth considering. Just review their fee structure and compare it to other trading platforms, like Kraken, to find what’s most cost-effective for your trading style.

Are There Any Fees?

There are three main factors that influence how much you pay in fees on the standard Coinbase platform: payment method, order size, and market liquidity. This fee is usually around $0.99 to $2.99 depending on your transaction volume and current liquidity.

You see how much you’re paying in fees before placing an order, so you won’t be caught with any surprises. Coinbase also charges flat fees on certain payment methods:

Finally, Coinbase also charges around 0.50% in spread fees when you purchase or trade your crypto.

These fees add up quickly if you’re frequently trading or liquidity is low. This is why active traders use Coinbase Advanced Trading, which has a variable fee table depending on how much you’re trading and if your order completes instantly (taker) or if your order doesn’t complete instantly (maker) and is placed on the order book.

Here’s how the Coinbase Advanced Trading fees break down:

Most traders will likely be in the under $10,000 range, meaning they'll pay a 0.50% taker or maker fee.

How Does Coinbase Compare?

By focusing on security and simplicity, Coinbase has become one of the most popular exchanges in not only the U.S. but the world.

But if keeping costs to a minimum is your main priority, you may want to look at another platform like Kraken or Binance. Here's how Coinbase compares:

How Do I Open An Account?

Signing up with Coinbase is free. You create an account with your name and email. From there, you verify your email address, phone number, and complete a brief questionnaire about where you live, your income, and how you plan on using Coinbase.

Coinbase also requires verifying your identity. You do this by uploading a photo of your driver’s license, government photo ID, or your passport.

Afterwards, you link your bank account to your Coinbase account. Coinbase may ask you to verify your identity again randomly to prevent fraud.

Is Coinbase Safe?

Coinbase promotes its security protocols as one of the perks of using the platform. And for the most part, this claim is true. Only 2% of assets from Coinbase users are held online. Plus, two-factor authentication and a secure wallet help protect your account.

Coinbase has an insurance policy on its customers' crypto assets to protect against losses from theft and cybersecurity breaches. And USD cash funds receive up to $250,000 FDIC insurance protection.

However, Coinbase doesn’t insure your crypto or USD funds against losses that result from unauthorized access of your account. So, if someone steals your password or your computer or phone are compromised and you lose access to your account, you aren’t protected.

This is why it’s important to use a strong password, enable two-factor authentication, and to protect your devices. Ultimately, Coinbase is secure. But protecting your password and overall cybersecurity is up to you.

Is Coinbase Worth It?

If you’re new to cryptocurrency investing, Coinbase is one of the easiest ways to get started. 

You can purchase various coins with as little as $2 for a minimum deposit. And you also get a free Coinbase wallet to securely store your assets. Support for over 90 coins and making trades with funds right from your bank account are also advantages.

The main drawback of Coinbase is its fees. More active traders often turn to Coinbase alternatives like Binance and Kraken. But if you decide to stick with Coinbase, look into Coinbase Pro to save on trade costs.

Coinbase Features