Coinbase Review: Should You Use Coinbase to Buy Bitcoin, Ethereum, and Litecoin?

Prices for Bitcoin, Ethereum, and Litecoin are on the rise, and there are tons of cryptocurrency newbies looking to invest.

This has lead to a wave of new companies that allow users to buy and sell cryptocurrencies using their exchanges.

Coinbase is arguably the largest and most popular exchange out there, with over 13 million users.

But does that mean that it’s a good place to buy cryptocurrency like Bitcoin, Ethereum, and Litecoin?

We’re going to find out what the pros and cons are of Coinbase in this review. But first, here’s a brief overview of the company.

A Brief History of Coinbase

Coinbase was created in San Francisco, California in 2012 by Brian Armstrong as a platform to buy and sell digital currency.

pasted image 0 52

(Image Source)

Since launching, the company has helped users in 32 countries exchange more than $50 billion worth of cryptocurrency.

pasted image 0 56

(Image Source)

Coinbase currently serves users in the following countries:

  • Australia
  • Austria
  • Belgium
  • Bulgaria
  • Canada
  • Croatia
  • Cyprus
  • Czech Republic
  • Denmark
  • Finland
  • Greece
  • Hungary
  • Ireland
  • Italy
  • Jersey
  • Latvia
  • Liechtenstein
  • Malta
  • Monaco
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • San Marino
  • Singapore
  • Slovakia
  • Slovenia
  • Spain
  • Sweden
  • Switzerland
  • United Kingdom
  • United States

Coinbase works a bit differently than the traditional exchange.

Rather than making users trade coins on a market, the company sells tokens to users at a set price based off of the current market price.

This makes it easier and quicker for users to purchase cryptocurrency than on a regular exchange.

Coinbase accepts credit cards and bank transfers, which is rare for an exchange. Once users have verified their account, they can instantly buy Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.

Fees range from 1.49% to 3.99%, depending on the type of payment method you choose to purchase coins.

The highest fees are applied to credit cards, while the lowest fees apply to payments made via bank account.

pasted image 0 50

(Image Source)

You can save as much as 2.5% just by doing bank transfers over a credit or debit card to make purchases.

These fees are lower than most other competitors that are selling crypto directly to users, like Coinmama.

Coinbase also plans to add more cryptocurrencies in the future, so you might be able to buy other altcoins besides Bitcoin, Ethereum, and Litecoin on the platform soon.

Here are the pros of the Coinbase exchange.

Close Ties to the Banking Establishment

Coinbase received an original $106 million in venture capital funding from over 20 different investors.

To date, Coinbase has raised approximately $217 million from investors.

Most of these investors are traditional banking establishments, like BBVA or USAA.

pasted image 0 54

(Image Source)

This is good news to most, since most banks and financial institutions are against the use of Bitcoin and other cryptocurrencies.

The company also heavily focuses on keeping funds safe.

Safe Keeping of Funds

Coinbase makes sure to separate customers funds and any operational costs.

Customer funds are kept in custodial bank accounts, so your money is safe from being spent to keep Coinbase operating.

The company also claims, “even if Coinbase were to becomes insolvent, the funds held in the custodial bank accounts could not be claimed by Coinbase or its creditors.”

This means that any funds purchased through the Coinbase exchange are yours, even if Coinbase goes out of business.

Coinbase says, “the Funds held in those accounts would be returnable to Coinbase’s customers.”

The measures that Coinbase takes to ensure that your funds are secure are impressive. As much as 98% of customer funds are stored offline through secure cold storage.

Screen Shot 2018 02 23 at 12.41.07 PM

(Image Source)

That means that your cryptocurrency is held safe on hardware and paper wallets out of the hands of hackers.

Physical wallets are then stored in vaults or safety deposit boxes in various locations around the world.

The remaining portion, stored online, is insured. Users residing in the U.S. using the Coinbase USD wallet are also covered by a maximum of $250,000 in FDIC insurance.

Additionally, Coinbase also complies with these laws and regulations:

Despite all of the security, customers are still held liable if their accounts happen to become compromised.

That’s why you need a wallet to secure your own cryptocurrency. Coinbase also provides a key that you can use if your user key is lost.

pasted image 0 51

(Image Source)

Wallet key security is simple and allows users to store keys without having to worry about security. Coinbase manages wallet key security for users.

The company used to offer multi-signature vaults that allow advanced users to manage the security for their own keys.

As of August 31, 2017, Coinbase no longer supports the creation of new multisig vaults. Any existing vaults, however, will continue to function normally.

Two-factor authentication is also offered to users, which provides an additional layer of security.

Two-Factor Authentication

Two-factor authentication requires for you to give a security code that is sent to a seperate device in order to log in to your account.

Multiple two-factor authentication methods are available. The most basic one is via SMS texts, but it is even more efficient to set up a third party app like Google Authenticator instead.

Coinbase also sends confirmation emails every time that a login is completed on a device that the company doesn’t recognize.

pasted image 0 59

(Image Source)

Cons

Here are some things about Coinbase that could use some improvement.

Closed and Frozen Accounts

The most common grievance that people have against Coinbase is that they are quick to close and freeze accounts, sometimes with little to no explanation.

This is to be expected with an organization that is as compliant with legislature and traditional banking laws as Coinbase is.

Here’s what a freeze notice email from the company looks like:

pasted image 0 48

(Image Source)

Although most people interested in purchasing cryptocurrency are concerned with privacy, Coinbase tracks how you spend coins on their exchange.

Because of this, they can shut down your account for the following reasons:

  • Cryptocurrency gambling
  • Sale or purchase of any contraband
  • Any transactions related to adult services
  • Resale of coins on other exchanges
  • Any other reasons that their algorithm may not agree with

Your money will be refunded to your bank if Coinbase shuts down your account, but a closed or frozen account is still an inconvenient experience.

Especially if there is little to no explanation for why your account has been terminated.

Buy and sell limits are another frustrating Coinbase feature.

Buy and Sell Limits

Buy and sell limits depend on user location, verification status, and payment method.

Users can view their limits at any time by viewing their account limits page.

If you are a U.S. customer that is verified, these will likely be your weekly limits

  • $5,000 Buy through Bank Account.
  • $50 Buy through Credit/Debit Card
  • $50,000 Sell

pasted image 0 53

(Image Source)

You can always apply for higher limits if these limits aren’t suitable for you.

Bank transfers offer the highest limit, but they can take a long time to complete. Many customers tend to complain about this online:

pasted image 0 62

(Image Source)

But Coinbase isn’t quick to respond. Which brings us to our next con…

Poor Customer Service

Coinbase doesn’t seem to offer any form of live chat customer service. However, they do offer email support, phone support, an FAQ page, and a knowledge base.

Many customers complain that Coinbase should be more responsive when it comes to customer complaints.

Even customer complaints on Coinbase’s reddit page tend to go unanswered for more than 24 hours at a time. The same goes for their Twitter page.

There was also a recent scandal causing some Coinbase customers to be charged incorrectly for purchases of cryptocurrency with debit or credit cards.

pasted image 0 55

(Image Source)

The company claims that future purchases won’t be affected by this issue and that any customers who were overcharged will be refunded.

Downtime of the site is another issue.

Coinbase Downtime

As Bitcoin prices rise and more new customers flock to Coinbase, downtime for the website and app during times of high usage has been on the rise.

pasted image 0 49

(Image Source)

During these times, users are unable to trade or purchase any coins on the platform.

This is a common issue with most exchanges as cryptocurrency rises in popularity, and Coinbase says they’re working on the issue.

Now that we’ve covered the pros and cons of Coinbase, let’s talk about how to use it.

How to Use Coinbase to Buy Cryptocurrency

In this step by step guide, I’ll show you how to use Coinbase to buy Bitcoin, Ethereum, or Litecoin.

1. Sign Up For an Account and Select Account Type

To get started, create your account. Enter in your name, email, password, and state. Choose whether you want to use an individual or business account.

pasted image 0 57

(Image Source)

Next, verify your phone number.

2. Verify Your Phone Number

Once you verify your email address, you’ll need to link your phone to your account.

This two-factor authentication helps you secure your account by requiring a code from your phone when making large transactions.

pasted image 0 58

(Image Source)

Next, you need to set up your payment method.

3. Set Up Payment Method

Setting up a payment method with Coinbase is easy.

pasted image 0 61

(Image Source)

Coinbase accepts funds through bank transfer, credit or debit card, or a PayPal account.

If you set up a bank account with Coinbase, they’ll run two small transactions with amounts that you’ll have to verify.

The same thing may happen when you put a card on file. You may even have to upload photos of your card.

Once your payment method has been entered, you’re ready to buy.

4. Buy Bitcoin, Ethereum, and/or Litecoin

The last step is to finally make your purchase(s).

Select whether you want to buy Bitcoin, Ethereum, or Litecoin. The current price will be displayed with each coin.

Enter in the dollar amount you want to spend or the total amount of coins you want to buy.

Any fees that Coinbase will charge to your transaction are disclosed at the time that you place your order.

pasted image 0 60

(Image Source)

Your account will then be credited with the total amount of cryptocurrency that you bought. As the market changes, so will the value of your account.

Conclusion

As prices for Bitcoin, Ethereum, and Litecoin rise, you’re probably wondering what exchange you should use to invest.

Coinbase is the most popular exchange out there, with millions of users. But does that mean that you should trust the company with your money?

And better yet – your coins?

Here are the pros and cons of using Coinbase to buy cryptocurrency.

Pros

  • Close ties to the banking establishment means more security
  • Safe keeping of funds offline/funds are insured
  • Two factor-authentication

Cons

  • Accounts are frozen or closed often
  • Buy and sell limits aren’t very high right away
  • Poor customer service
  • Increased downtime as new customers sign up for the service

Overall, Coinbase is relatively easy to use.

Just sign up for your account, verify your phone number, set up a payment method, and select how much Bitcoin, Ethereum, and/or Litecoin you want to purchase.

Do I recommend Coinbase?

Yes. Coinbase is a great exchange for the new or experienced user looking to buy or sell cryptocurrency. It’s a great place to buy Bitcoin, Ethereum, and Litecoin.

Since a large number of investors are financial companies, funds are secure and safely kept in cold storage. Two-factor authentication adds an extra layer of security.

However, if you’re looking to buy other altcoins, Coinbase doesn’t offer them just yet.

And closed and frozen accounts are common. Buy and sell limits could be higher, and customer service could use a few improvements, like live chat.

Downtime is a concern as more users flock to the platform.

All things considered, Coinbase is an easy to use, secure exchange. The company has plans to improve on their issues and continue to cater to its millions of users.

If you’ve been wondering about whether or not to give Coinbase a try, hesitate no longer!

Leave a Comment: