With its higher-than-average fees, why has Coinbase become one of the most popular destinations to purchase cryptocurrencies in the U.S.? Here are a few reasons:
Ease of Use
Coinbase is incredibly easy to use. Signing up takes no time at all, and you can then link your bank account to your account through data transfer network Plaid, the recommended method to minimize trading costs.
The interface is bright and simple to navigate. A search bar helps you sift through the myriad of crypto offerings available—from Bitcoin to Tellor—and you can set up purchases to recur on an ongoing basis.
For those a bit deeper in the weeds, Coinbase allows you to trade select cryptos to other cryptos, meaning you could convert your Litecoins to Augur, for example.
Security
Coinbase built its reputation as a secure place to buy and sell crypto. That was an especially salient claim after the Mt. Gox debacle, when roughly 850,000 Bitcoin were stolen in 2014. Coinbase has never had such a calamity, though there have of course been customer complaints about the fledgling exchange.
The platform claims that 98% of consumer funds are stored offline in various locations around the world, which helps provide even greater security for digital assets. Coinbase holds your crypto in its free wallet service, though you can choose to hold your crypto in a third-party wallet. You’ll need to complete a two-factor authentication to sign into your account. There’s also biometric fingerprints and AES-256 encryption on private keys.
In addition, Coinbase pools the cash in your account with its other U.S. customers and puts them in one of three places: custodial accounts at U.S. banks, U.S. money market funds or short-term U.S. Treasuries.
You don’t know where your funds are held, but to the extent they’re in U.S. banks, you receive pass-through FDIC insurance up to $250,000. But remember: As with most investments, the crypto you hold in your account does not benefit from this governmental protection. You may lose all of the money you invest in cryptocurrencies.
Education
Through its Learn platform, Coinbase rewards users with cryptocurrencies as they complete lessons. The interactive, Instagram Stories-like lessons take less than 10 minutes each, and rewards normally range from $1 to $5 worth of whatever coin users are learning about.
Staking Rewards
Those who hold certain coins in their Coinbase accounts are eligible to earn rewards if they let Coinbase stake them, or use them as collateral to verify transactions for proof-of-stake cryptocurrencies, like Ethereum. Coinbase takes 25% of the staking profits as a fee.
Coinbase Pro
Whereas Coinbase is designed for newcomers, more advanced traders might be interested in Coinbase Pro. You can use the same credentials on both Coinbase and Coinbase Pro.
Coinbase Pro offers a comprehensive crypto trading experience, complete with advanced charting capabilities and a wider variety of order types, from market to stop and limit. And, perhaps most importantly, it charges substantially lower trading fees and allows for free transfers between Coinbase and Coinbase Pro wallets.
