Updated: Apr 10, 2020
Coinbase is the most recognizable name in the crypto industry, as a highly trusted digital currency exchange. The base is great for beginners who are looking to get their feet wet in the cryptocurrency trading pool, particularly in the US. This is primarily owing to its ease-of-use and flexibility with various cryptocurrencies, although the selection can be disappointing if you are looking for variety. The fact that Coinbase offers deposit insurance is enticing enough for any cryptocurrency investor, to sign up.
This user guide will explain what Coinbase is all about, notable features, pros, cons, list of supported coins, products on offer and step-by-step instructions that will help you through the process of sign-up, to getting your first cryptocurrency on Coinbase.
Who they are and what they do
Coinbase was founded by Brian Armstrong and Fred Ehrsam in July 2011, as a digital currency exchange platform. In 2015, the platform got approved by U.S regulators to become the first-ever licensed U.S. Bitcoin exchange.
Coinbase, with its headquarters in San Francisco, has become the largest platform for buying and selling cryptocurrencies in the world. The company serves more than 10 million customers, supports 32 countries, and has more than $50 billion in digital currency exchanges.
To lend perspective about the magnanimity of this exchange, the Coinbase iOS app, on December 9, 2017, became the most downloaded app featured in the Apple App Store. The name Coinbase has become a brand in crypto circles, something like Coca-Cola. It is the go-to place for people looking to buy, trade or hold cryptocurrencies, and particularly so for newbies that are looking for a hassle-free platform with an intuitive interface to help get their game on.
Features of Coinbase
Mobile application for both Android and iOS devices
Free GDAX account for all users
Separate wallets for each currency
Vault wallets for long-term storage with increased security
High trading volumes
Fiat currency brokering for Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC)
Pros of Coinbase
An easy-to-use platform for newcomers
Reputable brand name
Clean and simple platform
Cons of Coinbase
Limited coin selection and trading pairs to choose from
Very little charting features
The US government may have access to personal data and trading information
Products Offered by Coinbase
There are essentially three products on offer from Coinbase – GDAX, cryptocurrency wallet, and Shift cryptocurrency debit card.
GDAX or the Global Digital Asset Exchange is meant for professional traders and not beginners, as it is an advanced trading platform. Still, it is important to understand the difference between Coinbase and GDAX.
Coinbase makes buying and selling of cryptocurrencies easy, although it does come with higher fees. You may want to switch to GDAX as you gain momentum as a crypto trader later on, since it acts as an intuitive interface with real-time order books, charting tools, history of trades, and a simple order process.
The second product on offer is the Coinbase cryptocurrency wallet, which in essence, is a hosted wallet. This means that Coinbase holds the private keys to your wallet, and can protect your funds better by using their secure cold-storage technology.
The third notable product on offer to US customers is the Shift cryptocurrency debit card, which is also advertised as “the first US Bitcoin debit card.”
This Visa debit card comes connected to your Coinbase account and allows you to track and manage your funds, balance, and transactions anytime, anywhere.
List of Digital Currencies Accepted in the US
There are three Coinbase options - Coinbase, Coinbase Pro, and Coinbase Prime. Varying types of support are available for different digital currencies, depending upon the membership level. Some of the more popular cryptocurrencies supported by Coinbase include ALGO, BAT, BTC, BCH, DASH, ETC, ETH, LINK, REP, USDC XRP, XTZ, AND ZEC.
You can find a complete list of supported currencies here.
Coinbase Trading Fee
Coinbase uses a maker-taker fee model to determine its trading fees. Maker orders (that provide liquidity) are charged differently than taker orders (that take liquidity). You would be considered a taker if you place an order at the market price, which gets filled immediately.
Orders that are not immediately matched by an existing order are placed in the order book. You will be considered the maker if another customer places an order (as the taker), which matches yours.
On Coinbase you are required to pay a portion of the taker fees if you place an order, which immediately gets matched partially. The remainder of the order shall be placed in the order book, and you will be required to pay the maker fee when it eventually gets matched.
The fees on Coinbase for small transactions are:
$0.99 for buying and selling at $10.99 and below
$1.49 for buying and selling from $11.00 up to $26.49
$1.99 for buying and selling from $26.50 up to $51.99
$2.99 for buying and selling from $52.00 up to $78.05
If you use your USD wallet or bank account for trading, then the fixed fee of $2.99 shall cover it. However, a variable fee at 1.49% will kick in for transactions, made above $201.
Conversely, if you use your debit or credit card for purchasing and deposit the proceeds in your PayPal account, Coinbase shall charge a variable fee of 3.99% for transactions worth $78.05 and above.
Step-By-Step User Guide
Coinbase has an easy-to-follow system that is listed out in its step-by-step instruction guide. You just need to make sure that you have your documentation and personal information handy, to get past their user verification process.
Step 1: Sign up
Signing up takes a little bit of time and requires personal information, such as social security numbers and addresses. You need to click on the signup link at the top right of the Coinbase homepage, to create a new account.
Initially, the only information you need to furnish is the email, first and last name, and state of residence. You would have to create a password as well.
If you are planning on making large institutional investments, on behalf of a financial firm or looking to accept payments in cryptocurrencies, then you should choose the institutional investor or merchant option.
Step 2: Verification
This step is a lengthy and cumbersome process, required by the United States regulations. Coinbase is the only regulated US cryptocurrency exchange, which means that all new users in the US must comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) laws.
Unless you are planning to conduct fishy business, this should not prevent you from signing up, but it can nevertheless, be an impediment.
You will be asked to verify your email address after signing up, and once you are done with that, it will immediately ask you to add a phone number. Make sure you add the correct number to your account because the verification code will be immediately sent to it. The identification process shall commence after email and phone number are verified. This step is mandatory for all US customers.
Basic information such as date of birth, address, and social security number needs to be provided. Next, you will have to upload a government-issued identification.
The ID needs to be scanned and attached in the appropriate format in your Coinbase account, to be considered valid. You can use your computer webcam or mobile phone to complete this step.
You can either use a third-party authentication app, like Google Authenticator or Authy or choose the 2-factor-verification (2FA).
To use a third-party authentication app, you shall have to scan a QR code to enable the authenticator. You would also have to input the 2-step verification code provided by the authenticator.
All 2-factor-verification forms make use of time-based one-time (TBOT) passwords that are reset quickly if not used. This ensures maximum security.
4. Payment Method
The last step to complete on your Coinbase account to begin trading is to fund your account by adding a payment method. Click on the “add a payment method” on your Coinbase dashboard.
A major benefit of being a regulated exchange means, Coinbase can directly connect with your US-based bank, and keep your banking information on file. The alternative is to use your account information to verify several small deposits. However, this can severely delay trading, as it can take up to 5 days. If your bank allows, then it is recommended that you make use of their instant authorization option.
You won’t need any deposit for an instant connection to your bank. Also, it will make purchasing cryptocurrency very easy when you are ready.
5. Purchase Cryptocurrency
Cryptocurrency purchase on Coinbase is very easy and straightforward. Once you decide on the cryptocurrency you are looking to purchase, choose your payment method and the amount of money you are looking to spend.
Coinbase will automatically calculate the number of crypto coins you will receive for the dollar value entered. You can see the final information of your purchase on the left side of the screen, including the price of the coin at the time of purchase, applicable trading fees, and when your purchase will be made available for use.
You will be confirmed your crypto purchase when you click on the buy button at the bottom. This confirmation of your purchase will reiterate the amount and price of the crypto coin you purchased, along with Coinbase fees.
Each Coinbase transaction has a reference code attached to it, which is important in case you want to dispute any transaction. You can call upon this reference code anytime through the applicable wallet, since Coinbase stores the information on its platform.
Withdrawals on Coinbase are just as simple and straightforward as purchases. Navigate to the homepage navigation, click on the Buy/Sell option, and then select Sell.
You will find all options of your cryptocurrency and fiat wallets here, plus, the bank accounts you have on file for deposits. Select the wallet you want to sell/withdraw from the account, where you want the amount to be deposited.
Decide on the amount and click Sell.
Bonus Tip – Are there account limits on Coinbase?
You must identify your buying limits on Coinbase, which are put in place to integrate users in the platform slowly. Limits are present in the home navigation pane under the Settings option.
These limits are the ones currently set on your account and tend to change from time to time. Make sure to read the notes that explain the steps you can take, for increasing your buy and sell limits.