Coinbase Review [Is it Safe?] Our Take on the Exchange
Last Updated April 29, 2018
In this Coinbase review, we will take a thorough look at the world’s largest Bitcoin broker. While it does not function as a traditional marketplace, Coinbase is a great point of entry where you can exchange traditional fiat currencies for cryptocurrency.
A brief review of the Coinbase History
Like many other startups, Coinbase was incepted in San Francisco’s Silicon Valley. Its founders, Brian Armstrong and Fred Ehrsam, created the concept in July of 2011, making it one of the oldest coin exchanges in existence; their vision, to create a brokerage exchange of the three most popular cryptocurrencies: Bitcoin, Ethereum, and Litecoin. In June of 2012, Armstrong and Ehrsam launched their product, their stated goal, to offer a digital currency wallet and exchange platform viable for both consumers and crypto merchants.
By 2013, Coinbase had more funding than any other Bitcoin start up and quickly became the largest cryptocurrency exchange brokerage in the world. Later in this Coinbase review we will go further in depth over the variety of reasons why Coinbase became so popular and what about its model worked so effectively. Briefly, though, Coinbase was unique in that it permitted users to exchange cryptocurrencies at a set price based on their market value, which in turn allowed users to either sell or buy cryptocurrencies at a much faster rate than that provided by other exchanges currently on the market. They also were one of the first companies to take the risk and accept credit cards as a means of purchasing coins.
While it began as merely a brokerage, whereby it sold Bitcoins directly to customers, in May of 2016, Coinbase added a secondary product by joining the GDAX, (global digital asset exchange). As of today, Coinbase operates in 32 countries, with its three largest consumer hubs coming from the United States, United Kingdom, and Brazil. It has north of eight million customers and has facilitated the exchange of hundreds of billions dollars worth of coins.
How to Get Started on Coinbase
Below we will review how Coinbase works and the positives and negatives of the system:
How it works
It is important to understand that Coinbase functions in a manner that is far more similar to the operations of a bank than the actions of a broker. Much of this is due in part to the fact that it was the first of any digital exchange company to receive a VCOL (virtual currency operating license). In order to receive this and to participate with major banks, it would have to adopt more stringent banking laws and regulations. Therefore, Coinbase complies with AML (anti-money laundering) and KYC (know your customer) regulations.
- KYC Regulations and Coinbase – Because of increased corruption, money laundering, and bribery passing through international banks by criminal enterprises, Know Your Customer regulations were introduced by large banks so that financial institutions could spare banks from being used to hide or clean money, regardless of whether or not they were intentionally doing so. There are four main pillars to KYC that help banks become better acquainted with the people using their banks:
- Monitoring transactions
- Customer identification procedures
- Risk management
- Customer acceptance policy
While you may wish to protect your identity and transactions and may shy at the notion of being required to fill out quite a lot of personal information, this Coinbase review has found that such regulations not only curb crime, mainly by preventing money laundering but also protect you as a customer in the long term. This sort of compliance means that your purchases are secure and guaranteed by Coinbase, which is a rarity in the relatively unsafe virtual currency market.
Because of this Coinbase will monitor how you spend their coins and have the power to shut down your account if you do any of the following:
- Adult service transactions
- Purchase or sale of illegal imports via darknet markets
- Gambling with bitcoin, including gambling that is considered to be skill-based
- Resale of coins on other exchanges, especially those that do not follow KYC or AML regulations
It should be noted that some accounts have been shut down or frozen for various arbitrary reasons, but that is not the norm. If your account is suspended or shutdown, while it may be an inconvenience, take heart in the fact that your money is guaranteed to be returned to you. The safety and security of their website and their customer base as a whole are more important to them than potentially upsetting a customer. A word of advice, do not do shady things with your digital currency and you should be fine.
As mentioned previously in this Coinbase review, the service operates in a variety of countries. Because of this, the payment methods available might be different depending on where you are living. That said, the following is generally applicable to the majority of users and the platform is especially useful for American digital investors.
Coinbase provides its brokerage services to the following countries: the United States, Canada, the United Kingdom and Singapore. It also supports the following EU countries: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland.
Customers may acquire or unload Bitcoin, Ethereum, or Litecoin in a variety of ways including a SEPA transfer, Interac Online, a connected bank account, A Paypal account (for sellers), EFT payments, SWIFT transfer, ACH transfer and via major credit cards. While the company has plans to add more cryptocurrencies to their digital marketplace, for now if you wish to purchase alternative coins, you will have to utilize a different platform.
This chart below provides information on payment methods available to Coinbase users, as well as the fees, transfer times, and countries availability.
|#||Payment Method||Countries||Funds Available||Currency||Fees|
|1||Bank Transfer||USA||5-7 business days**||USD||1.49%|
|2||Credit / Debit Card||USA||Occurs instantly||EUR||3.99%|
|3||Credit / Debit Card||Canada||Occurs instantly||CAD||3.99%|
|4||SEPA Transfer||Europe||1-3 Business Days||EUR||1.49%|
|5||Credit / Debit Card||Europe||Occurs instantly||EUR||3.99%|
|6||Credit / Debit Card||UK||Occurs instantly||GBP||3.99%|
|7||Xfers Transfer||Singapore||Occurs instantly||SGD||1.49%|
|8||Credit / Debit Card||Australia||Occurs instantly||AUD||3.99%|
How to purchase coinsAs you can see, in this Coinbase review of fees, the charges are quite low, especially when compared to other digital exchanges such as Coinmama or CEX. It should also be noted that depositing currencies into your account is free. Following that, Coinbase will charge a 1.49% per purchase fee.
Getting started with Coinbase is quite easy. The operating system is very beginner friendly and proves to be an intuitive process.
Coinbase lets you buy bitcoins instantly with a credit card or debit card. Here are step-by-step instructions to help make the buying process easier for you:
- Step 1 – create an account – this includes your personal details and login information, after creating your account you will need to upload an identification scan.
- Step 2 – go to account settings – After logging in, navigate to the right corner of the page, click on your account name and a drop-down menu will appear. Click “settings,” then “payment methods.”
- Step 3 – add payment method – Once you have reached the payment methods screen, select an option, including adding your Paypal account or a credit/debit card.
- Step 4 – enter your information – Odds are you have done this a thousand times. Enter the name on your card, the card number, the expiration date, the CV, and the Zip code.
- Step 5 – await confirmation – If your card or payment method has been successfully added you will receive a confirmation reply.
- Step 6 – purchase coins – At this stage, you can visit the buy page, enter the amount of a coin you wish to purchase and then click “buy bitcoin instantly.” Upon completing this task, your coins will be delivered to your digital wallet.
Controversies and Questions about Coinbase
Since we are still in the relative infancy of digital crypto exchange, there are understandably kinks, drawbacks, and controversies surrounding just about any platform you chose. Coinbase is considered ancient in the crypto world, and it is only five years old, so as time moves on, and the market and technology further develop, these platforms will continue to improve and work out issues. Now, we will review coinbases’ consumer complaints or controversies as revealed by a perusal through the various crypto subreddits or alternate internet crypto forums.
- Customer Service/Support – A handful of ex Coinbase users have lamented the lack of user support provided by Coinbase. At times, Coinbase did not respond to complaints for up to three weeks. Others complained that they were not as helpful as they would have liked. That said, as mentioned above, Coinbase is a relatively young company with a massive user base, so there will inevitably be some issues from a statistical standpoint. While the vast majority of users encounter no problems, some have been left jaded by the experience. Coinbase claims that their average response time to an issue falls within a 48-hour period. Review Coinbase’ FAQ section page and the support forum to see how other users dealt with any issues.
- GDAX bugs and outages – Some users expressed frustration over GDAX bugs. Coinbase has only been operating on the GDAX for two years, so the system is once again relatively novel.
- Frozen account –The most vocal complaint levied against Coinbase is when some users receive the digital equivalent of the “black spot,” the feared “account freeze notice.” If received, Coinbase temporarily suspends your account until the matter is resolved. As mentioned above, much of this is due to their integration with traditional banking laws and following of AML and KYC regulations. A select few users complained that their account was frozen erroneously and were understandably upset. Like it or not, Coinbase takes pride in its legislative compliance and its reputation, so, some users will inevitably be swept up in the efforts to prevent digital crime or money laundering. Coinbase says that they are continuously working to improve their accuracy as well as their communication with the customer
- Lack of privacy – For those who wish to remain anonymous and their digital actions and exchanges to be unmonitored, Coinbase is not for you. By following KYC and AML regulations, you trade your anonymity for security and insurance that your money is safe and that Coinbase is not providing a haven for criminal enterprises or activities. While Coinbase understands individuals desire for privacy, they believe this monitoring to be better not, just for their user base, but for the world as a whole. You have to respect the fact that they are willing to lose potential customers by refusing to turn a blind eye and simply allowing their website to operate as a trade route for illicit activates; activities which could lead to the degradation of society.
- Ties to the Banking Establishment – Coinbase makes no secret that it has forged bonds and close ties to traditional banking institutions. They have received more than $100,000,000 in investment and capital funding, which should illustrate that it is backed by trusted investors who believe in Coinbase and its methods. Purists within the bitcoin community will decry these banking ties, saying this defeats the purpose of bitcoins and altcoins since they were created to be a decentralized currency.
Coinbase Review Conclusions
In summary, Coinbase is a great entry point, especially for novice Americans coin investors, looking to break into the market. Initial plunges into Bitcoin, Ethereum, and Litecoin, should provide a solid crypto investment introduction and Coinbase’ interface is easy to pick up. While there are admittedly some complaints about Coinbase, including their customer support and frozen accounts, overall, the pros outweigh the cons. Coinbase has developed a sterling relationship within the banking community and is backed by multiple investors with millions of dollars; it is heavily regulated, which provides you security and insurance from breaches or hacks; its fees are reasonable, especially when compared to alternate exchanges. As of now, Coinbase is one of the best USD to Bitcoin marketplaces available.
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