What is Coinbase?
You might have heard the name and wondered who they are. Coinbase is the world’s largest broker for Bitcoin trades.
It is a secure platform which is accessed online which was started to create a true open financial system where individuals can convert digital currencies in and out of their local currency.
Coinbase strives to be a one-stop-shop and offers a digital wallet, an exchange and all the tools required more merchants to perform their transactions.
Where is Coinbase Located?
The Coinbase exchange was founded back in 2012 in San Francisco and has gone on to operate in 32 countries around the globe.
As with all crypto exchanges, some doubters continually ask “Is Coinbase legit?” Because it is a U.S based company, they are obliged to follow specific regulations and laws at both state and federal levels.
- Registered as a Money Services Business with FinCEN.
- Complies with the Bank Secrecy Act.
- Complies with the USA Patriot Act.
- Complies with various states money transmission laws and regulations.
This being said, out of all the other countries where Coinbase operates. None of these require it to hold a license to operate as a crypto-business.
Other countries supported are as follows:
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 and the United States.
How Coinbase Works
When you sign up to create an account, you add all of your personal details, and then a 7 digit code is sent to your phone.
Once you enter this, you might need to verify your account, or this could be left until later. Do this as soon as you can.
To make trades, all you need to do is click ‘Buy/Sell’ at the top of the page. Merely choose the crypto you wish to trade, click on the payment method, and the value in dollars.
Next, you are passed to confirm your transaction. You will see it can take up to 3-business days, and then you click on Confirm ‘Buy.’
Depositing and sending is done from the Accounts tab. Here you add the address you are sending the crypto, the amount and then click send.
2FA is required to complete the transaction, then you will see a charge for the miners who process the transaction.
Coinbase transaction fees can range from 1.49% up to 3.99%. This all depends on methods of payment. Credit card payments having the highest costs.
On the whole, Coinbase fees are generally cheaper than much of their competitors who operate a business model which is similar.
Like many exchanges Coinbase’s transaction limits can vary from country to country along with levels of account verification, and also the payment method used.
Users can apply for higher limits, but these won’t apply to credit card transactions.
All limits allowable for your account can be viewed from your account limits page, but for verified U.S customers the weekly limits are:
- $5,000 purchase through a bank account
- $50 purchase through Debit/ Credit card
- $50,000 sell limit
Accepted Payment Methods
Coinbase only allows 3 methods of payment although these can only be used in specific areas.
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Coinbase verification is completed as a matter of security aside from allowing users to make more significant transactions.
This is conducted as part of the regulations for operating in the US and remaining compliant with KYC/ AML laws.
The process is straightforward, and all you need to do is navigate to the ‘Trade’ page where an additional message is shown asking for further information.
Select ‘Submit ID + Photo Verification.’
Next, you select which form of ID you will be submitting, and then you use your webcam to take a picture of the document, and then a picture of your face.
When completed, it takes a couple of minutes for the verification process, and then you can carry on performing transactions.
For US customers, forms of ID accepted are state-issued ID’s such as Driver’s License or Identification cards. Passports are not allowed.
At present Coinbase only supports transactions for 5 main cryptocurrencies. These are available in both the regular Coinbase and Coinbase Pro
- Bitcoin (BTC)
- Litecoin (LTC)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Ethereum Classic (ETC)
One feature is the ‘Shift Card’ which is available to Coinbase users. This is a Coinbase debit card (Visa) and can be used in various US states to spend BTC in areas where VISA is accepted. The card costs $10, but there are no domestic fees or fees associated with BTC to USD.
All customer funds that are held on Coinbase are kept separate from the operational funds of the company.
The customer funds are held in different custodial bank accounts, this means if there is a problem with insolvency, these funds are returned to customers rather than creditors having access.
On top of this 98% of customers, funds are held in secure offline ‘cold storage’ in hardware wallet and paper wallets. These wallets are then securely stored in vaults and safety deposit boxes in various locations.
Any remaining customer funds which remain on Coinbase and are online are fully insured by ‘Lloyd’s of London.’ US customers who make use of the Coinbase wallet are protected up to a maximum value of $250,000
Personal accounts are still users responsibility, so all coins should be held in personal offline wallets.
Customer support is catered for by email along with an extensive Knowledge Base and FQQs section which is available for customers.
Due to an increase in customer demand, any email response should be received within 24-72 hours.
On occasions, some users have become frustrated because their replies have not adequately answered their issues sufficiently.
Is Coinbase Safe?
With all the verification and security measures Coinbase goes through to protect users cryptocurrencies, it is a secure exchange to use.
As an added security measure, users are advised to set up 2-factor authentication with a Coinbase app verification system. The Google Coinbase Authenticator and Authy are the recommended options above the regular SMS text option.
Is Coinbase safe to use? If you take a look at privacy, this is very different. Coinbase has all of your details which include name, email address, telephone number and a few other personal information. They know all of your wallet addresses and your balance. It isn’t safe if you wish to remain anonymous.
Added to this, there were reports of coins being tracked once they are withdrawn from the exchange.
Coinbase is a part of the Blockchain Alliance, and as part of this, they frown upon coins being used for illegal activities, buying illegal substances, or gambling.
Coinbase might be the best bitcoin exchange where newcomers to the cryptocurrency world can become accustomed to purchasing coins.
When users look at how to use Coinbase, it is simple to create an account and begin making trades or transactions.
There are many more pros associated with the company, and the only drawbacks are they monitor your spending habits, they do have higher fees than regular exchanges, and there is a reliance on using their wallets.
For new users who are looking to use any of the big 3 coins BTC, ETH or Litecoin, it is a safe and secure starting point.