Coinbase Review 2020: Pros, Cons and How It Compares

Coinbase is one of the most established cryptocurrency exchanges in the United States and one of the largest in the world. But always consider the risks of trading these speculative currencies.

Kevin VoigtNovember 3, 2020
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Our Take

The bottom line: Coinbase is the largest U.S.-based cryptocurrency exchange, trading more than 30 cryptocurrencies. Coinbase fees, however, can be confusing and higher than some competitors. While Coinbase offers attractive security features, cryptocurrency trading is highly volatile, so always consider the risks.

Coinbase

Coinbase

Fees

0.5% - 4.5%

varies by type of transaction; other fees may apply

Account Minimum

$2

Promotion

None

no promotion at this time

Pros & Cons

Pros

  • Offers access to more than 30 cryptocurrencies.

  • Low minimum to fund account.

  • Cryptocurrency is insured in event website is hacked.

Cons

  • Higher fees than other cryptocurrency exchanges.

  • U.S. availability in only 42 states.

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Full Review

Coinbase was launched in San Francisco in 2012 and is the largest cryptocurrency trading platform in the U.S. It’s also ranked among the top crypto exchanges in the world by traffic, liquidity and trading volumes, according to CoinMarketCap.com, a market research website.

Besides a cryptocurrency brokerage, Coinbase also offers custodial services for cryptocurrency storage for institutions, a cryptocurrency payments platform for businesses and its own cryptocurrency, USD Coin, a stable cryptocurrency linked to the U.S. dollar.

This review focuses on the company's brokerage operation. Users have the choice to trade on Coinbase or Coinbase Pro, a premium service that includes the ability to make crypto-to-crypto transactions and other advanced trading functions. Coinbase also has a free digital wallet for users on both iOS and Android platforms.

One feature of Coinbase: While cryptocurrency brokerages are not insured by the Securities Investor Protection Corporation, or SIPC, Coinbase privately insures its site for any losses due to theft or hacks of the site.

Coinbase is best for:

  • Cryptocurrency traders.

  • Traders who want to trade cryptocurrency for other cryptocurrencies.

Coinbase at a glance

Account minimum

$2.

Minimum trade

$2.

Trading and transaction fees

0.5% to 4.5% depending on payment method, cryptocurrency type, transaction size and platform. Other fees may apply.

Tradable securities

Cryptocurrency only.

Number of cryptocurrencies

32, with a further few available in Pro.

Digital wallet offered?

Yes.

Coinbase features you should know

Cryptocurrencies offered: Currently Coinbase offers 32 cryptocurrencies to U.S. customers to trade, and 36 on Coinbase Pro, a larger number than many other platforms. For example, eToro offers roughly half as many, and Robinhood and SoFi Active Investing less than that.

Coinbase users can trade these cryptocurrencies: Cosmos, Algorand, Band Protocol, Basic Attention Token, Bitcoin, Bitcoin Cash, Bitcoin Satoshi Vision, Celo, Compound, Dai, Dash, EOS, Ethereum, Ethereum Classic, Kyber Network, Chainlink, Loopring, Litecoin, Maker, Numeraire, OMG Network, Orchid, Augur, Stablecoin, UMA, Uniswap, Stellar Lumens, Ripple, Tezos, yearn.finance, Zcash and 0x.

Coinbase Pro also offers Civic, district0x, Golem, Loom and Decentraland, but not Bitcoin Satoshi Vision.

Trading platforms: Coinbase users can trade on two platforms: the original Coinbase platform, which allows users to use U.S. dollars to purchase cryptocurrency, and Coinbase Pro. Formerly known as GDAX, Coinbase Pro has advanced charting functions and allows users to make crypto-to-crypto transactions, as well as place market, limit and stop orders.

Crypto trading costs: Coinbase's fee structure is a confusing combination of elements that depend on two factors:

  • Coinbase charges a spread of about 0.5% for cryptocurrency sales and purchases; rates may be higher or lower depending on market fluctuations.

  • Coinbase also charges a fee, the greater of either a flat fee or a variable one depending on the amount purchased and the payment type.

Coinbase gives these fee guidelines for total amount of trade:

Total trade amount

Fee

$10 or less

$0.99

More than $10 and up to $25

$1.49

More than $25 and up to $50

$1.99

More than $50 and up to $200

$2.99

And these fee guidelines for payment type in the U.S.:

Payment method

Fee

U.S. bank account or Coinbase wallet

1.49%

Debit card

3.99%

Instant card withdrawal

Up to 1.5% (minimum fee of $0.55)

ACH transfer

Free

Wire transfer

$10 ($25 outgoing)

So if you purchase $100 of bitcoin through your U.S. bank account, the flat fee would be calculated as $2.99 (rather than 1.49%, or $1.49, as the $2.99 is the higher of the two), along with the spread, which is the difference between the bid and ask price of the currency.

By comparison, Coinbase Pro’s pricing model is more straightforward. It's based on your monthly trading volume and liquidity of the asset at the time of purchase; if immediately available, you're charged a “taker” fee, and if your order needs to wait for a buyer, you are charged a “maker” fee. With Coinbase Pro, deposits and withdrawals must be made through a bank account; no card purchases are allowed. Wire transfer fees still apply.

Pricing tier

Taker fee

Maker fee

Up to $10K

0.50%

0.50%

$10K - $50K

0.35%

0.35%

$50K - $100K

0.25%

0.15%

$100K - $1M

0.20%

0.10%

$1M - $10M

0.18%

0.08%

$10M - $50M

0.15%

0.05%

$50M - $100M

0.10%

0.00%

$100M - $300M

0.07%

0.00%

$300M - $500M

0.06%

0.00%

$500M - $1B

0.05%

0.00%

$1B+

0.04%

0.00%

For the basic service on the regular Coinbase platform, the transaction minimum is $2, up to a total of $25,000 per day. With Coinbase Pro, trade and balance levels are unlimited, and while withdrawals are initially limited to $25,000 a day, users can request an increase in that amount.

Security and insurance: While cryptocurrency exchanges are not protected by the Federal Deposit Insurance Corporation or the SIPC, Coinbase says that all of the digital currency it holds online is insured. The company says it holds less than 2% of customer funds online, with the rest stored in offline cold storage — away from possible online breaches — and says that if it were to suffer a breach of its online storage, "the insurance policy would pay out to cover any customer funds lost as a result."

The company notes the insurance covers only losses related to Coinbase cybersecurity or employee theft; breaches to individual Coinbase accounts (say, if your password were compromised) are not covered.

Cash balances are held in U.S. custodial accounts, money market funds or U.S. Treasurys. If your funds are held in U.S. banks, they are insured up to $250,000 per individual by the FDIC.

Coinbase Earn: A novel way to “earn while you learn,” Coinbase provides a series of video classes and exams as a way to educate yourself about cryptocurrency trading and 12 of the cryptocurrencies on offer. Users can earn more than $115 worth of cryptocurrencies covered in the classes.

Cryptocurrency trading available in 42 states: Coinbase is licensed in 42 states, as well as Washington, D.C., and Puerto Rico. It's currently not available in these states: California, Hawaii, Indiana, Massachusetts, Missouri, Montana, Utah and Wisconsin.

Is Coinbase right for you?

Coinbase is considered one of the top cryptocurrency exchanges in the U.S. The interface for Coinbase basic service is quick and user-friendly, but costs can be difficult to track unless you use the more advanced Coinbase Pro.

But understand that investing in cryptocurrencies like Bitcoin is highly speculative and known for its volatility. A common guideline: Never invest any more than you can afford to lose.