The Pros and Cons of Coinbase
Trading cryptocurrency is becoming more and more popular. There are thousands of cryptocurrencies on the market today and multiple exchanges you can trade them on. The market spans the world and is accessible 24/7 from the different platforms. In 2020, the biggest and most popular crypto exchange is Coinbase.
Coinbase has been around for a long time (in crypto terms), launching in 2012. It has grown from a small startup to a leader in the cryptocurrency exchange space. The platform now boasts over 1,000 employees, 35 million-plus users, and has been used to trade over $220 billion in crypto assets.
Does all this make Coinbase the best exchange to use to trade crypto? We can’t give you a universal yes or no answer to that question, because the answer will vary from investor to investor. What we can do here is lay out the strengths and weaknesses of the platform to help you make an informed decision on whether or not Coinbase is for you.
We’ll cover some of the history of Coinbase, explain what investors like about the site and what they think Coinbase can improve on, and briefly discuss some of Coinbase’s top competitors. Here are the pros and cons of Coinbase.
What is Coinbase?
Coinbase was founded by current CEO Brian Armstrong and his then partner, Fred Ehrsam, who left the company in 2017. At the time, the pioneering cryptocurrency exchange Mt. Gox dominated the scene, handling over 70% of all worldwide cryptocurrency transactions. In 2014, when Mt. Gox was forced to fold due to a major hacking scandal, Coinbase was well-positioned to absorb a good chunk of those trades. This was the year Coinbase surpassed one million users.
Over the course of the next five years, Coinbase continued to grow. They added to their roster of cryptocurrencies that trade on the platform, grew their user base, expanded into new markets, and received large investments from venture capital companies. The platform has experienced attempted hacks and other, internal controversies over the years but has weathered these storms well in most cases to stay on top of the industry.
It is not simply a coincidence that Coinbase is the leading cryptocurrency exchange out there today. There is a lot to like about what the platform offers investors. Here are some of the company’s biggest strengths.
Coinbase is available to trade on in more places than many crypto exchanges. The platform works in over 100 countries and throughout the United States. It is even available to use in New York ,which is something not all crypto exchanges can say. In 2017, they became the just second company to be licensed by the New York State Department of Financial Services to trade Ethereum and the first to be allowed to trade Litecoin.
Coinbase is one of the most intuitive and easy to use crypto platforms available today. The layout on the browser site is clean, simple, and easy to understand. It offers a wide variety of deposit and withdrawal methods and it also has one of the top mobile apps in the industry. The user-friendliness of Coinbase is what attracts so many users to the platform.
Safety and Security
Coinbase takes safety and security very seriously. They have suspended trading on multiple occasions when they see irregularities that might signal an attack on the exchange. There was a high-profile phishing attack on the Coinbase employees in 2019 but the site itself has never been hacked.
While there are plenty of pros that Coinbase offers, the exchange is not perfect. Here are some of the issues that some investors consider to be the platform’s biggest weaknesses.
The Coinbase fee structure is not the highest you will see on crypto exchanges but it is higher than many of its competitors. But for big-time traders, the company does offer Coinbase Pro. This sister platform offers a straightforward sliding scale of fees for market takers and makers based on volume.
There are thousands of cryptocurrencies on the market today, but nowhere near all of them are available on Coinbase. Depending on where you are located, there are generally 50 or fewer cryptocurrencies available to trade through Coinbase at any time. They do offer the most popular ones, including Bitcoin, Ethereum, XRP, Litecoin, and more.
High Bar for Identity Verification
To use the platform, you will need to verify your identity in a number of ways. You need to confirm your email and phone number and, in some cases, add a driver’s license or ID card too. While this might appeal to some people as a comforting security measure, part of the draw of crypto to some is the anonymity, and Coinbase does not let you trade anonymously.
While Coinbase is the most popular exchange around today, it is far from the only one out there. If you are turned off by any of the cons that come along with Coinbase, aren’t overly enthused about the pros, or just want to compare and contrast exchanges to see which feels best, there are a lot of options available to you.
Exchanges like Binance, Kraken, Bitstamp, Gemini, and more are all worth checking out to see how you feel about them versus Coinbase. This breakdown from Cove Markets goes into more detail on some of the most prominent alternative platforms to Coinbase. It is a good starting place to find out more about your other options.
We asked the question, does all this make Coinbase the best exchange to use to trade crypto? The answer depends on what’s important to you. If you want a user-friendly site that is available in many locales and that offers a high level of safety and security, Coinbase might be the best exchange for you. If you value anonymity, a wide selection of cryptocurrencies, and low fees, you may want to investigate some of Coinbase’s competitors. Either way, knowing these pros and cons will help you make a more educated decision as to where you trade crypto.
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