Coinbase Review: Is Coinbase Safe?
May 22, 2018
With over 10 million customers served, Coinbase is the world’s most popular cryptocurrency exchange. In this Coinbase review, we’ll answer your questions about the platform, show you how to use it, and compare Coinbase vs the competition.
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- Launched in 2012
- Based out of San Francisco, California, USA
- 10 Million + Customers in 32 Countries
- Buy Methods: Bank Transfer, Debit Cards, Credit Cards (Non U.S. Users)
- Sell Methods: Bank Transfer, PayPal
- Available Cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash, Litecoin
- Above average customer support.
- Has received $200+ Million in funding, valued at over $1.5 Billion
- Cryptocurrency purchases are immediately processed, meaning no wait time to receive your cryptocurrency (unlike most competitors).
- Offers a Mobile App with full features, allowing you to buy, sell, and send cryptocurrency on the go.
- Site: Coinbase.com
One of the most common questions asked is, “Is Coinbase Safe”?
While the short answer is “Yes”, for the full answer we’ve taken into account all aspects of safety you should factor in when choosing an exchange.
Coinbase is a U.S. based company, which makes them subject to the laws and regulations of the United States and the jurisdictions in which they operate. Coinbase remains fully compliant with all regulations.
From Coinbase’s website –
Coinbase is required to comply with many financial services and consumer protection laws, including:
The Bank Secrecy Act, which requires Coinbase to verify customer identities, maintain records of currency transactions for up to 5 years, and report certain transactions.
The USA Patriot Act, which requires Coinbase to designate a compliance officer to ensure compliance with all applicable laws, create procedures and controls to ensure compliance, conduct training, and periodically review the compliance program.
Most states’ money transmission laws and corresponding regulations.
Also adding to the company’s credibility is the investments they’ve received from world renowned investors and investment funds. Coinbase investors include:
- Y Combinator
- Alexis Ohanian (Co-Founder of Reddit)
- Union Square Ventures
- Digital Currency Group
- Bank of Tokyo
- Blockchain Capital
In total they have raised more than $200 million, reaching a $1.6 Billion valuation.
Safety of Funds
Coinbase has set the bar for industry practices in regards to safely storing funds.
- All customer funds are held separately from company operational funds, meaning Coinbase will not use your funds to run their business.
- Coinbase stores 98% of customers’ cryptocurrency funds in secure offline cold storage, using hardware and paper wallets. These wallets are backed up and stored throughout the world in safe deposit boxes and vaults.
- The 2% of cryptocurrency funds stored in online hot wallets are fully insured.
- U.S. based customers’ USD holdings are FDIC insured up to $250,000.
Keep in mind you’re still in charge of securing your personal Coinbase account. If your personal account is compromised due to poor security practices by you, you’re responsible for those lost funds. This brings us to Coinbase’s security features for keeping your account safe.
Coinbase Account Security Features
The following security features can be used to keep your Coinbase account safe:
- 2-Factor Authentication (2FA) – 2FA adds a second layer of protection ensuring valid login attempts. When using 2FA, you’ll not only be required to give your password, but also a freshly generated 2FA pin code. Coinbase supports SMS text 2FA, Google Authenticator, and Authy. We recommend Google Authenticator, as it’s the safest and most well trusted option.
- Coinbase Vault – The “Coinbase Vault” allows you to enable time delayed withdrawals and multiple approvers. This can help secure your funds, even in the event your account was breached.
- Required Verification of New Devices – Coinbase requires verification for new devices trying to access your account through 2FA and email.
Coinbase vs the Competition
The editorial staff at UNHASHED has reviewed all the most popular cryptocurrency exchanges. Below we’ll show the pros and cons of Coinbase vs their competitors.
1) Most Beginner Friendly Option
While Bitcoin and “Altcoins” have seen a huge surge of investors, the process for buying, selling, and storing cryptocurrency still seems daunting to many newbies. With that in mind, Coinbase was created to make these processes as easy as possible for the average investor.
Most alternatives to Coinbase require users to trade on a platform similar to an online stock broker. Coinbase makes it far easier, by directly selling Bitcoin, Ethereum, Bitcoin Cash, and Litecoin to their users. The price and fees that you’ll pay are clearly labeled when you place a purchase or sell order.
2) Trusted by the Cryptocurrency Community and Venture Capitalists
As mentioned above in the “Is Coinbase Safe?” section, the company is well trusted by both the cryptocurrency community and VC investors.
No other exchange has this type of reputation.
3) Coinbase Vault for Safer Cryptocurrency Storage
As outlined in the “Coinbase Account Security Features” section above, Coinbase offers a variety of security features to help you secure your account.
When you first create your account, you’ll be required to enter a mobile telephone number. SMS text messages will be used as a second from of verification (2-Factor Authentication (2FA)) when logging into your account. While SMS 2FA is better than nothing, we recommend using Google Authenticator, as SMS 2FA has various security vulnerabilities.
2FA is a great way to secure your cryptocurrency, but it’s not something you won’t find on competing exchanges. The Coinbase Vault is where the company has taken personal account security to the next level.
The Vault is perfect for long-term investors looking to securely hold Bitcoin, Ethereum, Bitcoin Cash, or Litecoin. In addition to requiring 2FA to move funds from the Vault, you can also require 48 hours before funds are withdrawn from your Vault. This allows you time to cancel withdrawals if your account is ever compromised.
4) Accepts Debit and Credit Cards for Purchases with Lowest Fees in the Industry
Most exchanges only allow you to deposit/withdrawal via bank transfers and wires. Coinbase offers this option, but also adds alternatives.
Coinbase is one of the few cryptocurrency exchanges that allows you to buy Bitcoin, Ethereum, Bitcoin Cash, and Litecoin with debit and credit cards. Not only does it allow you to use cards, but it also offers the lowest fees among the few card accepting exchanges. If you’re from the United States and creating a new account, unfortunately you’ll no longer be able to use credit cards, but you can still use debit cards.
|Exchange||Beginner Friendly||Estimated Credit Card Buy Fees||Estimated Credit Card Buy Limits|
|~4%||Limits vary by account age,|
history, and more. Many new users
claim daily limits of $200 or less. *(1)
Coinbase also allows you to sell cryptocurrencies in exchange for USD to PayPal at a 3.99% fee.
5) Industry Best Fund Storage and Insurance
Cryptocurrency exchanges hold huge amounts of both cryptocurrency and fiat currency (USD, EUR, etc.) funds. This of course makes them huge targets for hackers. To combat this risk, Coinbase uses industry leading measures to both protect and insure funds.
98% of customer cryptocurrency funds are stores offline in secure cold storage. These offline wallets are duplicated and stored in various vaults and safe deposit boxes around the world. Since these funds aren’t stored online, they’re kept safe from hackers.
The 2% of customer cryptocurrency funds that are held online are fully insured. United States residents who hold USD on Coinbase are FDIC insured, up to $250,000.
It’s also important to note that company operational funds are segregated from customer funds, meaning Coinbase won’t use your funds to run their business operations.
We haven’t come across any competing exchange with the same level of combined security/insurance.
6) Mobile App
Coinbase offers a mobile app, giving you access to all the features of Coinbase on the go. This is particularly useful for users looking to make purchases with cryptocurrency at brick and mortar stores.
Coinbase is the only major fiat accepting cryptocurrency exchange with a mobile app we’ve come across.
1) Buys and Sells via Bank Transfer Have Higher Fees Than Competitors
Coinbase charges roughly a 1.49% fee when you buy or sell using your bank account. This is good bit more than GDAX and Kraken who charge 036% or less.
When factoring in fees, you should decide if Coinbase’s pros make up for these fees in your mind.
2) Limited Number of Cryptocurrencies
If you’re comparing Coinbase to all other cryptocurrency exchanges, it ranks somewhere in the middle in the number of coins it offers. As mentioned previously, Coinbase supports buying, selling, and storing:
- Bitcoin Cash
This is of course more than the many exchanges that only offer Bitcoin, but far less than exchanges like Kraken. With that said, Bitcoin and Ethereum are the two largest cryptocurrencies, so this should be sufficient for the needs of many new investors.
Below you can see the step-by-step process for using Coinbase to buy Bitcoin, Ethereum, Bitcoin Cash, and/or Litecoin.
Step 1) Sign Up to Coinbase
Click the “Sign Up” button in the upper right-hand corner of the website.
At first you’ll need to provide your name, email address, and state.
Once you’ve submitted the above form, Coinbase will send you an email. You’ll need to click the link in that email to confirm your email address.
The link you clicked will bring you to the below form, where you’ll be asked to enter your mobile phone number. You’ll be sent a text message from Coinbase to verify your phone number.
Step 2) Add Your Payment Method
After verifying your phone number, you’re Coinbase account will look like this.
Add your payment method; Bank Account or Debit/Credit Card
If using a bank account, you’ll be able to log into your bank account from your Coinbase account to connect the two. Coinbase does not store your bank account information, but if you don’t wish to log into your bank through coinbase, then you can use a wire transfer or Credit/Debit Card.
If using a Debit or Credit card, you’ll likely need to verify your identity first by uploading a picture of your ID.
You’ll then be able to enter your card information.
Coinbase will make two small charges to your card, which you’ll need to look up then enter the amounts into Coinbase to verify your card.
3) Buy Bitcoin, Ethereum, Bitcoin Cash, and/or Litecoin on Coinbase
After setting up your payment method, navigate to the “Buy/Sell” page of your Coinbase account.
Next choose the cryptocurrency you want to purchase, as well as your payment method and the amount you want to buy.
The price and fees will be displayed on the right-hand side of the page.
Click the buy button.
You will have another chance to review your order. Make sure everything is correct and click “Confirm Buy”.
If you used a credit or debit card, the Bitcoin, Ethereum, Bitcoin Cash, or Litecoin you purchased will be instantly available in your account. If you used your bank account, you’ll likely have to wait a few days to receive your cryptocurrency (the time frame will be clearly stated prior to placing your order).
In our opinion, Coinbase is the most beginner-friendly way to buy and sell Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. For those of you making your first investment in cryptocurrency, it’s a safe and easy to use option.
- Community Trust Grade
- User Experience
- Available Cryptocurrencies
- Deposit/Withdrawal Methods
- Customer Support
With industry leading security and an intuitive user interface, Coinbase is our top recommended exchange for Cryptocurrency newcomers.