Many businesses entered the cryptocurrency markets in recent years. With bitcoin dictating the progress, it was only a matter of time when financial professionals would take an interest. Right now, there are over a hundred exchanges and platforms where you, as a trader, can buy and sell coins.
There is an abundance of choices out there when it comes to coin trading, with infrastructure showing no signs of stopping its growth. Thus, it is important to note what are these exchanges, how do they protect their clients and how do they fare against each other.
This article reviews one of the giants in the cryptocurrency industry, the Coinbase exchange. We investigate the platform’s registration & verification process, trade fees, deposit methods as well as liquidity rate.
General Information about Coinbase
Coinbase is one of the largest cryptocurrency companies in the world, offering its services in 32 countries. The firm’s headquarters is based in the UK, adhering to the British legal system while there is a US office as well. The company adheres to Bank Secrecy and the USA Patriot Acts and is registered as a financial organization with FinCEN.
Currently, Coinbase estimates that over 7.5 million clients use the platform’s services. The exchange also supports mobile app platforms, both iOS and Android included through a free download.
Account Registration and Verification
Anyone can register an account at Coinbase as long as you are over 18 years old. Suffice to say, only those living in 32 serviced countries can actually use the services. The registration process is straightforward and lasts for less than 5 minutes of your time.
Once registered, you set up two-factor authentication (2FA) and then simply fill out the profile form with your personal details.
Verification is necessary to do, since you cannot buy or sell coins without completed identity check. At this stage, you have to provide scanned ID card and proof of address as part of the verification process.
This means that if you were looking for an anonymous way to get coins, Coinbase would definitely not be your choice.
At Coinbase, you can trade bitcoins, Ethereum and Litecoin through “Buy/Sell” option at the top of the page. Nothing special here as many, other providers use the top three currencies in the market. It is important to say that the most popular cryptocurrency is bitcoin and has the biggest support.
Deposit Methods Coinbase
You can deposit funds into your Coinbase wallet using PayPal, bank transfer, and credit or debit cards. PayPal serves for instant buys and sells but comes with lower payment limits. Bank transfers are the most popular option as they are cheap and have large transaction limits.
Credit/debit cards have the same properties as PayPal but work just as fine. Interesting choice of deposit options and a bit larger one at that, as many other platforms offer one-two methods. Bitfinex offers bank transfers only while Bitstamp does not offer PayPal as a method of payment.
Exchange Rate and Fees
The exchange rate at Coinbase represents the order value from GDAX platform with added 25 to 100 basis points depending on the coins’ value fluctuations.
The fees change according to the method you use when buying/selling digital money at Coinbase. The bank transfers (SEPA, US bank, and Xfers transfers) all cost 1.49% while credit cards cost 3.99% of the value. PayPal fee stands at 3.99% plus the fees charged by the PayPal itself.
SEPA and ACH transfers are processed free while wire transfers would cost you $10 for inbound and $25 for outbound transfers.
Since Coinbase has over 7 million clients, its liquidity rate is one of the best in the world. Add to that newly formed GDAX exchange and you have two large sources of fiat and cryptocurrencies for Coinbase to use.
The company also keeps most of the coins in cold storage while 10% of the USD funds are kept at bank accounts at all times.
Comparison with Other Exchanges
It is always a good idea to compare functions and features of exchange with others in the industry.Thus, we compiled a table with important trade information that you should be aware of.
Founded in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase quickly grew to one of the largest cryptocurrency platforms in the world. In 2014, the company had over million users by acquiring he blockchain explorer service Blockr and the web bookmarking company Kippt. Coinbase also formed numerous strategic partnerships with several financial firms like Overstock, Dell, Expedia, Dish Network, Time Inc. The year 2015 was the year when the first big funding project was successfully conducted, resulting in $75 million raised.
Throughout the years 2015 and 2017, the company added several countries and licensed its services. The most notable license is the BitLicense from the New York State Department of Financial Services (DFS).
When compared to Bitstamp, Coinbase offers somewhat poorer security functions to its client base. You have 2FA, session history as well as the confirmation of devices. Security might be adequate but cybercrime does not sit tight. Coinbase needs to upgrade its security if they wish to hold the title of the safest place to trade coins.
Pros and Cons
⬤ low deposit and withdrawal fees for PayPal and credit cards
⬤ additional sourcing and liquidity at GDAX
⬤ PayPal available as deposit option
⬤ exchange rate depends on the GDAX and does not take into consideration other platforms
⬤ verification is a must
⬤ service available for traders located in 32 countries only
⬤ geared towards beginners only
Much like Bitstamp and other similar platforms, Coinbase is geared completely towards beginners. The GDAX’s aim is to cover professionals in the industry but we do deem that Coinbase can do a little better job at transaction functions.
Apart from that, security is average, fees are low and liquidity is awesome. Platform follows most of the regulations set by different regulative bodies, thus verification is unavoidable. If you just started investing I coins, Coinbase would be a place for you to learn. Otherwise, GDAX would be a whole lot better choice to make.