Our Coinbase review will explain to you whether the platform is something which you can bank on, to trade, buy and sell cryptocurrencies or not. Get more familiar with the platform by reading about it in this article.
Here are a few things that we are going to cover in this article:
- What is a Crypto Exchange?
- Types of Cryptocurrency Exchanges
- List of Exchange Platforms
- About Coinbase
- Coinbase Products and Services
- Security Measures
- Comparing Fees
- Pros and Cons
What is a Crypto Exchange?
Cryptocurrency Exchanges are online platforms; a platform where you can exchange one cryptocurrency with other cryptocurrencies. Or to put it just, it all relies on exchanges, whether it is a stock exchange or a cryptocurrency exchange.
If you are want to trade on the platform professionally, you can have access to some authentic tools. These tools require you to verify your ID and create an account. There is no requirement of creating an account if you want to carry a simple and straightforward trade.
Cryptocurrency exchange or digital currency exchange are known to be market makers that take the bid-ask spreads, charging it as transaction commissions, either as service or as matching platforms.
The cryptocurrency exchange platforms facilitate as brick and mortar business, it exchanges electronically transferred money and digital currencies.
Exchanges often operate outside Western countries to refrain from the regulations and prosecutions. Platforms accept credit card payments, wire transfers and other forms of payments that exchange for digital currencies or cryptocurrencies.
As of now, the regulations on cryptocurrency and digital exchange platforms operate with unclear jurisdictions, as they are yet to learn about how to deal with the business of these kinds.
Like we said before, cryptocurrency exchange platforms work similar to the stock exchanges, where traders buy and sell shares and derivatives. Exchanges gain profit from changing rates, whereas in crypto exchanges, traders utilize cryptocurrency pairs to generate earnings from resilient currency rates.
Types of Cryptocurrency exchanges
In order to start trading on an exchange platform, you first need to know various types of cryptocurrency exchange platforms. We’ve listed the types of exchanges below:
Trading Platforms are websites or a marketplace which connects potential buyers and sellers to buy and sell cryptocurrency orders. There is no interaction between buyers and sellers, as they only have to communicate with the platform.
Exchange Platforms charge a minimum fee upon the cessation of every transaction.
Cryptocurrency brokers operate just like the forex exchange services. Visitors on these platforms can buy cryptocurrencies with the prices set by the brokers.
Cryptocurrency brokers are traded through a dealer network and are often referred to as Over The Counter (OTC) market. The cryptocurrency brokers search for sellers or buyers who individually hold massive pools of cryptocurrencies and pair them up for sale. Generally, the settlement period is fast than an exchange, given that they are more flexible and convenient.
The direct trading platforms offer direct person to person trading; exchanges like these are also referred to as a peer-to-peer trading platform. Usually, these platforms don’t use a fixed market price. Here, sellers set their own exchange rates and buyers work on Over The Counter(OTC) Exchange.
Direct Trading is vital in regions where trading is limited, carry on some extensive research and make sure you are trading on a trusted platform that is into dealing with fine rated users.
A List of Exchange Platforms
Bitfinex, a cryptocurrency exchange platform providing state of the art services to both the digital currency traders and the liquidity providers. It was founded in 2012 as a peer-to-peer Bitcoin exchange platform.
In 2015, the platform was hacked, the lost cost the users about $400,000. In 2016, Users of Bitfinex lost about $73 million from their accounts.
As an exchange platform, Bitfinex provides users access peer-to-peer financing, an Over The Counter(OTC) market and marginal trading of assets with a wide range of cryptocurrencies. The primary focus of Bitfinex is to provide users globally with support, tools for professional traders and providers of liquidity.
- Margin Trading: The platform allows you to trade with 3.3x leverage, offering traders with access to peer-to-peer fund market.
- Margin Funding: The platform offers traders with interest that is willing to trade with some leverage. The trading system of Bitfinex can earn users some interest in both fiat currencies and cryptocurrencies. The currencies include USD, EURO, Bitcoin, Ripple, Ether and many more.
- Customizable Interface: Customers of Bitfinex can customize the platform’s layout, select themes, also set up notifications or data preferences.
Kraken was founded in 2011, with its headquarters in San Francisco. It is the largest Bitcoin exchange platform in terms of Euro volume and liquidity. The platform allows trading in fiat currencies like US Dollars, Canadian Dollars, British Pounds and Japanese Yen.
- Margin Trading: The traders of Bitcoin can enjoy trading with 5x leverage.
- Mobile Applications: Kraken offers iOS users with a mobile application. Although they are yet to create an app for android users. But the exchange platform can always be accessed from a web browser.
- Authentication: The platform provides both two-way authentication and PGP/GPG encryption.
Cex.io was founded in 2013, it became the first cloud mining software, which has now gone onto become a multi-functional cryptocurrency, garnering over a million of user around the world.
This exchange platform provides users to add funds by using their Visa/ Master debit or credit cards and also wire transfer. From Bitcoin to institutional traders, every user is provided with a multi-level account system, an approach by Cex.io towards the users.
The platform provides global coverage, multiple payment methods and 24/7 customer support along with proven stability that assures the safety of assets and data.
- Support: The website provides a separate section for the ones struggling to learn about Cex.io.
- Multiple Fiat-Currency Support: The exchange platform offering support for trading pairs with multiple fiat-currency support. There is no such need to purchase bitcoin first to buy different cryptocurrencies.
- Secure Platform: It is a registered and secure platform; registered as Money Services Business USA’s Financial Crimes Enforcement Network.
Now let’s speak about Coinbase, the exchange platform to which the article is dedicated to.
Coinbase was established in San Francisco in 2012. It currently operates in over 30 countries; the largest bitcoin broker and has now provided services to more than 20 million customers worldwide with the volume of trading crossing the mark of over 150 billion.
Brian Armstrong and Fred Ehrsam founded Coinbase as part of Y Combinator; it is perhaps the oldest exchange that is around. Initially, it only started out as a Bitcoin brokerage, but then went to add a lot more services on the platform.
Coinbase allows users to trade cryptocurrencies at a fixed price that is based on the market value; this then facilitates users to purchase cryptocurrencies rapidly than other exchange platforms. In addition to bank transfers, Coinbase also supports payment via credit cards.
Also read, How To Buy Bitcoins Anonymously
Coinbase Pro was formerly known as GDAX; Pro works as a cryptocurrency exchange platform. The platform allows users to trade a variety of cryptocurrencies such as BTC, ETH, LTC, ZRX and BCH.
It facilitates users as a cutting-edge trading platform by offering an intuitive user interface with real-time order books, trade history and much more. Trading fees on Pro are 0% for maker orders and 0.5% for taker orders.
The primary service of Coinbase Brokerage service is to offer to buy and to sell of cryptocurrencies to the users. Beginners in the cry-world, often make their first purchase with Coinbase, owing to its reputation and user-friendliness of the platform.
There are quite a few flaws with Coinbase, first is that you don’t get complete authority over the funds. You may also not get direct access to coins. Also, you don’t receive either private key or a seed phrase.
Generally, it works similarly to a bank; you put your money in the bank, you have no control over it, but the bank does.
The Coinbase wallet was earlier known as Toshi; the wallet application is available to both Android and iOS users. The wallet manages to store the private keys with Secure Enclave and authentic biometric technology.
Coinbase wallet will come to be enticing to you as it offers you distinct ways to earn cryptocurrencies. As a user, you get paid on completion of specific tasks, participating in communities, solve questions and much more.
A fascinating fact about Coinbase is that it started as a wallet, and later on transformed as an exchange only platform. Now, they are back with offering wallet services again.
Coinbase Prime is a professional trading platform to all the institutional clients and offering them a liquidity pool supporting all the Coinbase products.
There is a dedicated team located in New York that will guide you through the process of onboarding and advice on execution strategies. The platform stores digital currencies on a state-of-the-art custody architecture.
Security measures they use to secure assets
The common perceptions of cryptocurrency users are that the platforms are still equipped with high risks. Mt. Gox has set the example on how the cryptocurrency users need to stay on a safer side.
Questions regarding its safety have been raised since the exchange platform is the world’s largest bitcoin exchange. Coinbase complies with all the regulations set by the US state and Federal Law.
The regulations that it adheres to have restored faith among the investors and users, following the Mt. Gox incident. Coinbase has backing from high-profile investors which include Bank of Tokyo and BBVA, thereby enhancing the platform’s legitimacy.
Once you are a Coinbase user, you can also link your bank account with the platform, because of the regularity it holds licenses in the districts it operates in.
Coinbase follows complete transparency when storing funds on the platform. Coinbase differentiates customer and company operational funds. It also states that the funds held by customers are stored in bank accounts and during the time of insolvency, neither does Coinbase nor the creditors have rights or entitlements to customer funds.
Coinbase Vault offers an excellent solution for you to store large amounts of Bitcoin on the platform. The Vault account is approved by several approvers, enabling you to store Bitcoin safely.
Coinbase adheres to the KYC norms as it involves the features of buy/sell. And because of this, it asks users their name, phone number, email address and phone number.
Coinbase states that 98% of cryptocurrency funds are stored offline in hardware and paper wallets, which are then stored on vaults and safety deposit boxes across the world. The remaining 2% of the currencies are stored online is insured, in case of a hack, the customers are entitled to recover the funds lost.
Fees compared to other exchanges:
Let us look at the comparison of fees against its competitors.
- Fees: 3.99%
- Availability: 33 Countries
- Fees: 6%
- Availability: Worldwide
- Fees: 0.1%
- Availability: Worldwide
- Fees: 3.5%
- Availability: Worldwide
Note: The fees might vary based on your country and purchase size.
Pros and Cons of using Coinbase
Coinbase is a brilliant platform for beginners to start with their journey in trading. Newbies will find it easier to exchange currencies on Coinbase, as it gives more payment methods.
Why should you go for Coinbase?
- It offers a range of options for fiat deposits and withdrawals.
- Providing services to both mobile and online wallets.
- If the platform gets hacked, users can have their funds reimbursed; funds are insured.
- The platform is user-friendly and has an intuitive interface.
- Other than Bank Transfers, users can also purchase cryptocurrencies via credit and debit cards.
- To prevent manipulation of funds, the platform offers 2FA and multi-signature support.
Why not go for Coinbase?
- As a user, all your spendings are monitored and you don’t stay anonymous.
- The fees are on a bit higher side comparing to other exchanges. Fees are 1.49% for bank transfers and 3.99% for credit and debit card purchases.
- The problem that users often face is the delay of funds up to 3 days.
Also read, What is Altcoin?
Summarizing the Review
Coinbase is simple, cheap and a popular trading platform. The company has put in a lot of effort in making the user-experience clean for the beginners to start with their cryptocurrency journey.
The major drawback is that you don’t have authority over your coins. Also, your transactions and spendings are being tracked. If you are looking for an alternative to the traditional financial system, you should better go with another bitcoin exchange.
Coinbase is currently focusing on its growth rather than focusing on customer support, which has made them receive plenty of negative reviews. Coinbase is an excellent exchange platform; however, we suggest you to use a wallet to store all your currencies safely. Look to store your cryptocurrencies on hardware wallets such as the Trezor and Ledger.
So this was our review on Coinbase, hope we brought in the information you were looking for. If you have a few questions or queries about the exchange platform, write to us in the comments section below.