The first crypto exchange to secure a public listing in the United States of America following the approval from Securities and Exchange Commission (SEC), Coinbase is one of the oldest crypto trading platforms around. While the San Francisco-based firm enjoyed a lot of success following its listing on NASDAQ in 2021, things haven’t been that great for the exchange recently.
Coinbase has reported losses in three consecutive quarters of 2022 and the exchange has laid off a significant amount of its workforce as well. It seems that the empire created by founder and CEO Brian Armstrong is not as strong as it used to be. After investments in businesses which failed to boost the trading volume and number of users on the platform, the exchange is currently facing tough times as competitors like Binance continue to dominate the industry.
Coinbase is a crypto exchange that allows its users to buy and sell digital assets and also hold them. Additionally, the firm is the largest crypto exchange in the United States mainly due to the strict regulatory requirements of the SEC which has hindered the growth of other firms during the last decade. The exchange supports a wide range of cryptocurrencies but not as wide as other crypto platforms like Binance or Kraken.
Interestingly, with the help of Coinbase, users can send money to other users of the exchange without any hassle. Moreover, the exchange supports all the major payment platforms to buy and sell crypto. However, when it comes to Asian markets, the payment systems supported by the firm are not very user-friendly.
Coinbase works like any other crypto exchange, allowing users to buy and sell cryptocurrencies easily. Moreover, the platform also charges for its services including deposits and withdrawals. Each time when a trade is executed, the customer will have to pay a fee for the same transaction. It is important to note that there are a number of requirements that each candidate needs to fulfill in order to open an account:
Let us now learn about how users can start their journey on Coinbase.
It is fairly easy to use the Coinbase browser as well as the mobile application but the exchange has been slammed by the crypto community for its poor customer services and registration processes.
The web version of Coinbase has all the services that are provided by the mobile version. To register, each user needs to follow these steps:
Now the users are all set to start trading on the Coinbase platform.
To create an account and start trading on Coinbase application, follow these steps:
Compared to crypto exchanges like Binance and others, Coinbase offers a much smaller selection of cryptocurrencies. While new coins are continuously added to the list, the exposure of every user to the crypto market remains low. The exchange has over 200 cryptocurrencies and some of the coins supported include:
All the coins listed on the platform have different trading limits along with maximum and minimum limits for withdrawal. There are some cryptos that can only be traded in exchange for certain fiat currencies like the U.S. dollar or changed to or from other cryptocurrencies.
Moreover, Coinbase supports the following networks for transfers and withdrawals of cryptocurrencies:
As compared to other exchanges Coinbase has a pricey fee structure. The users find the fee a bit complex as it differs for every account type, the size of the transaction, and the funding source. For small transactions, it is usually 0.5 percent of the trade value plus a flat fee based on the size of your transaction.
The minimum amount needed to buy cryptocurrency on Coinbase is $2. Coinbase also charges fees based on factors “including the selected payment method, the size of the order, and market conditions such as volatility and liquidity.” Moreover, Coinbase charges fees to cover the costs for carrying off transactions on the external blockchain networks that support the cryptocurrencies in which it deals.
For stablecoins, the taker fee is 0.01% and the maker fee is 0.00%. For all the coins on the platform trading fees amount to 1.49% of the total transaction amount. For example, if a trader wants to purchase $1,000 worth of Bitcoin using their debit card, they will pay $14.49 (on top of the deposit fee charge). And if a trader then decided to sell their Bitcoin back to USD, then they would have to pay the 1.49% transaction fee again.
Thus it makes Coinbase one of the most expensive cryptocurrency exchanges for buying and selling coins.
Coinbase has limits placed on users’ accounts which is definitely a necessity for non-KYC verified users but seems unreasonable for KYC-verified users. Interestingly, users can see a limit to what they can deposit and withdraw and if they are verified, they can settle transactions with significant values.
There are daily limits imposed on Coinbase users and for those in the US, they can only send around $25k daily but if they want to do more, they can wire transfer directly from the bank. If a user wants to increase their daily limit, they can do so by following these steps.
If you are eligible for an increase limit, you will receive a notification about the same.
Buying and selling cryptocurrencies on Coinbase is fairly easy like other crypto exchange platforms but there is a huge price charged for the same service. Moreover, the exchange has also deactivated Coinbase Pro and introduced a new advanced platform called “Advanced Trade.”
While the basic version might be easy, the advanced version of the exchange is for professional traders who know how to read charts and use the tools provided by the exchange.
Once a user has set up an account and linked it to their banking account, they are ready to buy crypto on the platform via these steps:
On the other hand, if you are using your bank account, it will take around 3-5 business days for the money to come into your account, which is a major loss for many crypto investors since the industry is very volatile.
To sell a crypto asset, you need to follow these steps:
Following are the steps to sell cryptocurrencies at Coinbase:
When it comes to selling on Coinbase, the user just has to enter how much you want to sell or select all options. Then specify which coin they want to sell and how you want to be paid. Note that the same fees will be applied whether the user is buying or selling.
Coinbase has a smaller number of pros as compared to its cons and this is a major reason why the once-leading exchange is so behind in terms of trading volume then the more dominant Binance. Crypto is an innovative industry and Coinbase has not been able to provide sufficient exposure to the space due to its limited support for crypto coins and a failed NFT platform.
The exchange suffered huge losses in 2022 and as a result, had to let go of a significant amount of its workforce and desert many ventures as well. The exchange tried to expand into Asia but was unable to generate a broader appeal for its services.
Coinbase’s fall from grace and its losses are a sign that users are shifting to substantially stronger exchanges. There have been multiple regulatory issues with the exchange as well.
Coinbase executives have been accused of insider trading, an activity which has become a headache for investors in the 2021 market bull run. In July 2022, the prosecutors for the Southern District of New York (SDNY) along with the United States SEC charged Coinbase product manager, Ishan Wahi, along with Nikhil Wahi (Ishan’s brother) and Sameer Ramani (a friend) in the first insider trading case of the crypto industry.
The SEC alleges that Wahi shared crucial information with his brother and Ramani about the listing of certain crypto coins which they used to make a profit of around $1.2 million. The crypto community questioned Coinbase’s ability to check its employees.
On the other hand, a report from WSJ claimed that Coinbase executives including CEO Armstrong, sold their stocks gradually following the listing of the stock on NASDAQ. They were able to sell their holdings at strong profits which led to the 90% decline in the price of the COIN share.
Although the buying and selling of cryptocurrencies from Coinbase is not extremely complex, it is tiresome when compared to the user interface of other crypto exchanges. However, when it comes to the application, users have called it horrible for their trading practices. People claim that the application is slow and that they had to wait for minutes for the exchange to show the price action of a searched crypto coin.
The application, which people claim to be very slow, also constantly tells people to verify themselves although they have done it already. Furthermore, users have also expressed issues when it comes to the payment methods supported by Coinbase and the safety of their usernames and passwords.
Coinbase users have stated that the application also freezes at times and is buggy. Loading of charts and price actions have become a hassle for the existing users.
Over the years complaints regarding the safety features of the Coinbase application have piled up. Back in 2018, customers stated that they were overcharged and filed complaints with respected authorities. Additionally, the customer complaints against Coinbase jumped more than 100% in January of that year. Moreover, users also stated that they were doubly charged for their transactions.
On the other hand, as per a Quartz report, out of the 889 cases against Coinbase in January 2018, 400 were categorized as “money was not available when promised.” Meanwhile the exchange stated that it will be increasing its staff to facilitate their concerns but to this date, users have reported that the customer services of Coinbase are not good.
Interestingly, in December 2021, Coinbase froze a crypto coin by the name of GYEN during the time when it skyrocketed. This resulted in substantial losses to the investors who missed the rally of the coin.
Coinbase decided to expand its presence in India and Japan, two of the budding markets for the crypto industry. Interestingly, the exchange even hired employees in India only to lay them off in 2022. Moreover, the exchange also announced that it will leave the Japanese crypto space due volatile market conditions.
It is possible that Coinbase might cease to operate in India in the near future as the financial condition of the exchange is not looking very optimistic. Therefore, for clients in India, Coinbase might not be the most beneficial exchange to store their assets into. It seems that the exchange has deprioritized India and has formally left Japan as well does not reflect well on its customers, both institutional and retail.
Users of Coinbase exchange in India can witness a further degradation in the services provided by the exchange in the near future because of the lack of attention of the executives in the region.
Coinbase announced that it would accept the Unified Payments Interface (UPI), the most-used payments system in India, but suspended the service after only three days.
Coinbase, one of the oldest crypto exchanges around, is regulated in the US but is not suitable for markets like India and Japan due to poor mobile application infrastructure and expensive transaction fees. Moreover, the exchange has abandoned many of its ventures recently and let go of many employees.
Coinbase is regulated by the United States Securities and Exchange Commission and the United Kingdom’s Financial Conduct Authority (FCA).
Customers can add two-factor authentication (2FA) for their accounts on Coinbase and it is crucial to note that almost all the funds are stored in cold storages as per the exchange. However, it is crucial to note that back in 2021, almost 6,000 Coinbase customers got their crypto stolen by hackers who took advantage of a flaw in the company’s SMS account recovery process to gain access to the accounts and then transfer the funds to wallets not associated with the exchange.
Coinbase’s new layer-2 network, “Base,” powered by Optimism, has caused a surge of interest in the Ethereum-based scaling solution, with its native token OP seeing a 16% price increase. The partnership with Optimism and the DAO for open-source development on the OP stack has been seen as a positive step forward for Coinbase, as layer-2 solutions continue to gain traction for their ability to speed up and reduce the cost of transactions on the Ethereum blockchain.
Coinbase has stated that there is no way to register with the Securities and Exchange Commission (SEC), despite calls from the regulator’s Chair, Gary Gensler, for crypto exchanges to register with the agency. Coinbase submitted a petition to the SEC in June 2022, outlining specific issues that needed to be resolved for crypto platforms to register with the SEC, but the exchange has not received any response from the regulator. Coinbase’s chief policy officer, Faryar Shirzad, said that the lack of clarity from the SEC is preventing the exchange from building a crypto securities market in the US.
Coinbase might be the largest crypto exchange in the United States but its services are not on par with other crypto exchanges due to high transaction fees and poor customer support as well. Moreover, the mobile application of the exchange is known for being slow and not capable of supporting trades in real time due to freezing issues.
While the platform provides all of the services that its competitors do, it is still behind in terms of infrastructure and customer support. Despite being the only crypto exchange listed on NASDAQ, Coinbase has failed to attract customers in other regions like India and Japan due to high fees and regulatory issues.
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
These are cryptocurrency exchanges built on the blockchain. DEX is operated by the user smart contract thus eliminating the intermediaries and centralizing authority.
Decentralised networks try to lower the level of trust that participants must place in one another, and the ability to exert pressure and authority over one another in ways that degrade the functionality of the network.
An exchange with a framework where all the decisions and actions are controlled and governed by a single authority.
These exchanges ensure extra safety and protection in trading and transactions through a developed, centralised platform, centralised exchanges offer higher levels of comfort.
Yes, in order to protect users’ data a regulatory authority clearing cryptocurrency is required, which can reveal all information about the performance of the digital assets, their risks, and potential is extremely important.
In order to operate legally, the wallet should be licensed.
If a trader is serious and committed to long-term investment in cryptocurrencies, they must go for cold wallets for securing and storing their digital assets.
A cold wallet is a safer option as it is not connected to the internet and there are no chances of online fraud and scams.
These are incentives that could be in the form of discounts on trading fees that are in the form of rewards for users who promote and refer the exchange to friends and family.
A user or trader can trade individually on an exchange but in auto trading robots it is done by programmed to automatically carry out trade.