Should you use Coinbase to buy Bitcoin?
Coinbase is a popular cryptocurrency exchange, ideal for new investors. If you plan to buy Bitcoin (BTC) in US dollars and live in any US state except Hawaii, there are several ways you can do so through Coinbase.
There are a lot of cryptocurrency apps and exchanges out there right now, but there is no one-size-fits-all solution – different people just want different things. Here are some questions to ask yourself when evaluating a crypto platform, whether it’s Coinbase or one of its competitors.
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1. How easy is it to deposit and withdraw money?
Crypto exchanges charge fees in different ways and with varying degrees of transparency. Some make depositing and trading cheap, but then cost you a high fee when you want to make a withdrawal. Others just don’t have much means to pay using (traditional) fiat currencies like the US dollar.
Coinbase allows you to buy Bitcoin by debit card, PayPal, and Apple Pay. You can also buy directly from your bank account and make electronic deposits. You will pay 3.99% to buy through PayPal or debit card and 1.49% to buy from your bank account. Withdrawal fees are calculated at the time of withdrawal.
It’s easy to deposit money with Coinbase and it’s great to have multiple options. But it’s not cheap – and several exchanges offer much better rates.
2. Is it easy to use?
This is where Coinbase shines. Its interface is intuitive and simple, just like its mobile application. Advanced users can upgrade to Coinbase Pro, an advanced platform with more features and lower fees.
If you are new to crypto and are buying Bitcoin for the first time, you will find a wealth of useful information and videos. You can even earn as you learn – some cryptos pay tokens to people who learn about their project.
Be aware that Coinbase has recently come under criticism for its customer support, especially the lack of in-person phone support. He says he is striving to offer more channels and better support.
3. What are the trading fees?
As with deposits and withdrawals, Coinbase charges above average fees. It is also not very transparent about the amount of fees. The fees are displayed when you make the transaction, and it’s hard to know how they’re calculated and if you’re getting the best rate.
For example, at the time of writing, CoinMarketCap stated that 0.01 BTC is worth around $ 435. On Coinbase, that 0.01 BTC would have cost around $ 455 – a 3.99% card fee plus an additional undefined spread.
If you want to keep costs down, don’t be afraid to create accounts with multiple exchanges and preview prices to make sure you get the best deal. You don’t need to deposit any money to open an account, and if an exchange isn’t open on its costs, going this route may be the only way to compare apples to apples.
4. How secure is it?
There have been various high profile cryptocurrency exchange hacks over the years, starting with Mt. Gox in 2014. Centralized exchanges are common targets for criminals, and once digital assets have been stolen , they are very difficult to recover.
This is why I am looking for scholarships that show that they will be proactive in protecting my funds. Coinbase ticks a lot of boxes here:
- It keeps 98% of the assets in a cold room. This means that the funds are stored offline making them difficult to hack.
- It has civil liability insurance. If your bank account is hacked or if you are the victim of fraud, you will often be able to get the money back. This is not the case with most crypto accounts. But if an exchange has external insurance – like Coinbase does – you might be able to make a claim.
- Balances in US dollars are insured by the FDIC. FDIC insurance means that if Coinbase goes bankrupt, US accounts are covered for up to $ 250,000 per person. This does not apply to crypto assets.
5. What parts does it support?
Coinbase has made efforts to increase its coin selection in recent months and now offers around 90 coins to US customers. It’s not the biggest selection on the market, but it’s a decent range of coins, and traders can buy most of the best coins by market cap.
If you are only interested in buying Bitcoin, this won’t be a big factor in your decision. But if you want to get into other types of cryptocurrency, Coinbase is here for you.
6. Can I earn interest?
Coinbase recently had to put aside plans for a loan / income product. Several exchanges lend money through decentralized loans and use the proceeds to pay high interest rates on client deposits. However, the SEC told Coinbase that it could not proceed with the launch.
As a result, Bitcoin holders cannot earn interest on their holdings. However, Coinbase allows investors to bet a handful of coins. Staking involves tying up assets to keep particular networks secure and can be a good way to earn rewards.
Should you use Coinbase to buy Bitcoin?
Coinbase is a solid crypto exchange, and the fact that the company is listed in the United States and tries to stay on the right side of regulation is reassuring. SEC Chairman Gary Gensler recently called crypto “the Wild West” and with good reason. There are a lot of bad actors, from shady trades to outright scams.
Coinbase’s fees could certainly be lower, but if you are buying Bitcoin for the first time, it is a safe and reliable choice. Read our top cryptocurrency picks and essential guide if you’re looking for more options or more information on cryptocurrency investing.