What is Coinbase and How to Use Coinbase?

Coinbase is one of the most popular cryptocurrency exchanges in the world. Photo: The Street

Cryptocurrencies have been one of the fastest-growing financial trends in recent history, with roughly 150 million people taking part in the digital coin market since its 2009 inception with Bitcoin. As this new form of money inches closer and closer to the mainstream, the question of who the bank for this currency will naturally follow. In 2012, Coinbase sought to provide the answer.

What Is Coinbase?

Coinbase is one of the most popular cryptocurrency exchanges in the world, based in the U.S. and operating at varying capacities in 103 other countries including the likes of the U.K., Mexico, and Spain. A cryptocurrency exchange, as the name suggests, functions as a middleman in the crypto market, providing a platform for users to buy and sell different coins. Exchanges vary on factors ranging from the type of coins it trades, whether it allows for purchases with fiat money (USD, EUR, JPY), transaction fees, and processing times, according to The Street.

For those looking to purchase the most popular cryptocurrencies with fiat money, Coinbase remains one of the most secure and used options out there. It features an easy-to-use interface that makes it great for those looking to get into buying and trading cryptocurrencies for the first time. Processing times can be lengthy though, typically lasting between three to five days, another reason why this service caters more toward those looking into cryptocurrencies for the first time than those looking to make serious trades.

Remember though, while it allows you to buy and sell coins, you can't store them there. For that, you'll need a wallet. These come in the form of hardware, software, online services, or even paper. They're intended for the security of your coin in case someone ever hacks an exchange. While Coinbase itself carries the rare distinction of never being hacked, many users' individual accounts have been compromised in the past. Setting up a personal wallet rather than relying on the one Coinbase provides is likely your safest option.

Which Cryptocurrencies Does Coinbase Support?

Photo: The Coinbase Blog

Here are all 15 cryptocurrencies supported by Coinbase, listed in order of their current market cap.

Bitcoin ($177.7 billion)

Ethereum ($22.5 billion)

XRP ($13.3 billion)

Litecoin ($5.6 billion)

Bitcoin Cash ($5.4 billion)

EOS ($3.8 billion)

Stellar Lumens ($1.7 billion)

Chainlink ($802.6 million)

Ethereum Classic ($679.7 million)

Zcash ($493.1 million)

USD Coin ($404.8 million)

Basic Attention Token ($297.7 million)

Ox ($134.8 million)

Augur ($129 million)

Dai ($80.2 million)

How to Buy and Sell Cryptocurrency on Coinbase?

The first step to trading cryptocurrency on Coinbase is making an account. This part is straightforward: enter your name, email, password, and the state you live in. Then just verify your email, and you're in. Depending on the state you live in, you may have to enter further information disclosing your employment and your purposes in using Coinbase.

Actually, trading means putting in personal financial information. You can input info from your bank account, credit/debit card, address, and ID. The cap on your buying options rises as you provide more data, with the final cap resting at $50,000 for USD and €30,000 for EUR.

Your purchasing methods rely on either banking accounts, credit/debit cards, and wire transfers via Paypal (PYPL) - Get Report. Keep in mind that these all come with different fees and processing times. Banking accounts have the lowest but take 4-5 days. Credit/debit cards and wire transfers are faster at instant processing and 1-3 days respectively, but they come with higher fees.

Once you have at least one of those options set up on your account, you can select a coin, your wallet, and what payment method you'll be using. After this, you input how much money you'd like to put down and will then see how much of your chosen currency you'll get back for it. The service allows you to buy coins in fractions, something especially useful for its most popular cryptocurrency, Bitcoin, which currently resides at the prohibitively high price of $9,972.16 per coin.

Selling mirrors the buying process. Select what wallet you're taking coins from, which you'd like to sell and how much, then see what that translates to in your chosen form of fiat money. After that, select your payment method, and simply sell.

How Much Are Coinbase Fees?

Photo: Boxmining

Coinbase incorporates a mix of fixed and variable fees. It charges a flat fee for smaller purchases, organized like this:

99 cents for buying/selling at or below $10.99

$1.49 for buying/selling from $11 to $26.49

$1.99 for buying/selling from $25.40 to $51.99

$2.99 for buying/selling from $52 to $78.05

Once your purchases or sales exceed $78.05, the rate changes depending on your payment method. If you use your bank account, the flat $2.99 fee continues up to buying or selling at $200. Once you exceed that, a variable 1.49% fee comes into play. For those using their credit/debit card or wire transfers, a variable fee of 3.99% begins for anything at or exceeding $78.06.

Provided the financial institution backing your payment method doesn't tack on any fees, these should be the only ones you are charged. It'll be computed in your purchase by subtracting its value in the form of the coin you receive. For example, if you pay $10 for Ethereum, you'll receive $9.01 worth of Ethereum.

Is Coinbase Safe?

Coinbase is one of only 4 exchanges to have a license in NY under the pilot BitLicense program. As such, it adheres to strict KYC (Know Your Customer) rules and stays as compliant as possible to regulations and rules, Bit Degree noted.

As I mentioned earlier, it has over 40 licenses to operate in just the U.S. alone and is licensed to legally operate in the other 31 countries that make its list.

On top of that, Coinbase keeps its assets insured, so you can’t technically lose any of your money by hacking and theft!

Another thing that makes Coinbase so safe to use is the fact that it can’t be used anonymously. Due to the KYC rules, users must submit a government-issued piece of ID and, in some cases, address verification in order to use the platforms BUY and SELL features. As you can probably see, security is yet another positive aspect of this Coinbase review.

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