There are many different crypto exchanges you can use, but only a handful of these are big enough to be listed on a stock exchange. One such exchange, Coinbase, is incredibly popular and is the largest in the US by trading volume.
Founded in 2012, Coinbase has grown exponentially over the past decade and today offers products for both retail and institutional investors who want to put their money in crypto. But, if you're new to crypto trading, it's crucial to understand how to use Coinbase, its merits and demerits, and other vital points.
How to Open an Account on Coinbase
If you want to get started with Coinbase, you need first to register an account on the platform. Even though Coinbase is used to buy decentralized currencies, they still have strict KYC (Know Your Customer) requirements.
Coinbase is available in more than 100 countries, including the United States, Canada, Mexico, Australia, the United Kingdom, and many others. To register an account on Coinbase, you will need the following:
- Be above 18 years of age
- Present a government-issued identification document, such as a passport, driver's license, or national ID
- A phone number from a supported country for authentication
- A connected smartphone or computer
- Supported internet browser
Once you have everything, you can click on Get Started to create your account.
Before starting trading on Coinbase, you will also want to select a default payment method. Coinbase supports almost all popular payment methods, including wire transfers, debit or credit cards, and PayPal.
You must choose a secure password (absolutely avoid password recycling) and enable multi-factor authentication to secure your digital assets.
How to Use Coinbase: A Beginner's Guide
The first thing that you need to know is that Coinbase supports more than 100 cryptocurrency pairs. However, you won't find all coins on the platform.
Over the past couple of years, the company has grown exponentially, hitting $7.4 billion [PDF] in revenues. That's partly fueled by new customers, as Coinbase is a very safe place to buy and sell cryptocurrencies.
If you want to purchase popular coins like Bitcoin, Ethereum, Litecoin, or even Dogecoin, you can buy them on Coinbase. At a glance, you can get a simple overview of the crypto market on Coinbase, including the best trading pairs.
Coinbase also lists its market cap, price charts, and pricing changes. You can also view all pairs or select from tradable ones on the platform.
Is Coinbase Free to Use?
Even though Coinbase is free to join and use, you should know that the company charges a small fee per transaction. This depends on several factors, including your preferred payment method, order size, and the prevailing market conditions.
There is a difference in pricing based on whether you use Coinbase or Coinbase Pro (which offers advanced trading features). Coinbase charges 0.5% per transaction and a flat fee for facilitation.
For instance, if you pay via a digital wallet or through USDT, the fee will be less. But if you pay via debit card, expect to pay a slightly higher amount. Coinbase also adds a spread for simple trades, including when you trade between different currency pairs.
When you sign up on Coinbase, you also get access to a digital wallet (hot wallet). This is free to use; Coinbase doesn't charge anything if you want to store your coins on its platform. However, it's essential to know the differences between a hot and a cold wallet before you do.
How to Buy Cryptocurrency on Coinbase
Once you set up an account on Coinbase, you can now proceed to buy listed coins on the platform. To do this, simply click on Buy/Sell on the upper-right-hand side of your screen.
Then, you can simply select the coin you want to buy and choose the quantity. You can also buy directly from the coin's pricing page if you're comparing different currencies.
You will have to choose a payment method, enter the amount, and proceed with the purchase. If the details are correct, Coinbase will process the transaction, and the new coin will be added to your spot wallet. The minimum purchase is 2.00 units denominated in your local currency ($2 or £2, for instance).
Is Coinbase Safe?
If you're planning to invest a significant amount of money in cryptocurrencies, it's evident that safety will be one of your main concerns. However, Coinbase is generally a very secure platform.
However, hacks are not unheard of. There have been cases where people's digital wallets have been drained out within a few hours. But that generally happens due to poor cyber hygiene.
Ideally, if you're going to use Coinbase to invest a large chunk of money in cryptocurrency, it might be wise to move most of your crypto savings into a hardware wallet. There are several excellent hardware wallets that you can buy today which are pretty secure.
More importantly, to secure your account, you must use multi-factor authentication too. More importantly, Coinbase has also taken steps to beef up security on the platform to ease security concerns.
For starters, Coinbase confirms that all digital balances stored on the platform are insured against digital theft. You must note that the policy doesn't cover theft due to unauthorized account access.
Coinbase also states that around 98% of all balances are stored offline, and the Federal Deposit Insurance Corporation insures all dollar balances of $250,000 and upwards. This means that Coinbase is relatively safe, but it's still recommended that you use a non-custodial wallet to store your coins.
Coinbase Is Great, But It's Not the Only Option
If you live in a country where Coinbase isn't available, or if you want to choose an exchange with even lower fees, there are quite a few options available. As cryptocurrencies become more and more mainstream, many exchanges have popped up.
However, Coinbase is still very popular simply because it's more than a decade old, and the company has taken quite a few steps to reassure its users and provide a safe trading environment.