Best Cryptocurrency Exchange

Coinbase Review 2022 – Forbes Advisor

Coinbase Review 2022
Written by publisher team

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2021 was the year Coinbase went mainstream.

Founded in San Francisco nearly a decade ago, one of the world’s largest cryptocurrency exchanges went public in April and is now valued at around $50 billion, which Hyundai is worth.

Coinbase has reached those dizzying heights as demand for cryptocurrencies soar, backed by thousands of stimulus dollars and endless hours under home quarantine. Bitcoin, the most popular digital currency, was under $5,000 when Covid-19 hit America compared to nearly $50,000 a year later.

Traders flocked to Coinbase because it made it easy to buy and sell cryptocurrencies with easy-to-navigate tools and an elegant design. (Except in Hawaii; Aloha residents can’t sign up.) Despite its popularity, Coinbase fees can be quite high, potentially consuming significantly any winnings you might see.

Here’s how to tell if Coinbase is right for you.

Coinbase Pros

  • Wide range of cryptocurrencies to trade
  • Low account minimum
  • Comfortable user experience

Coinbase Cons

  • Expensive fee structure and hard to understand
  • Getting lower fees requires using a completely different Coinbase platform

Cryptocurrencies on Coinbase

You can currently buy the following cryptocurrencies on Coinbase:

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Cardano (ADA)
  • rope (USDT)
  • Internet computer (ICP)
  • Bitcoin Cash (BCH)
  • Litecoin (LTC)
  • Uniswap (UNI)
  • chainlink (link)
  • Excellent Lumens (XLM)
  • Dollar coin (USDC)
  • Polygon (Matic)
  • Ethereum Classic (ETC)
  • EOS (EOS)
  • Aave (AAVE)
  • Bitcoin (WBTC) file
  • Filecoin (FIL)
  • Tezos (XTZ)
  • Dai (Day)
  • Maker (MKR)
  • Cosmos (Atom)
  • allegrand (something)
  • Compound (COMP)
  • Dash (Dash)
  • Zcash (ZEC)
  • Synthetix Network Token (SNX)
  • Yearn.finance (YFI)
  • Sushi Swab (Sushi)
  • Decentraland (MANA)
  • Basic Attention Token (BAT)
  • Enjin coin (ENJ)
  • Graph (GRT)
  • one by one)
  • full (CGLD)
  • 0x (ZRX)
  • Bancor Network Token (BNT)
  • OMG Network (OMG)
  • Curve DAO Token (CRV)
  • anchor (ANKR)
  • 1 inch (1 inch)
  • Ren (Rin)
  • Loop ring (LRC)
  • iExec RLC (RLC)
  • Kipper Network (KNC)
  • Scale (SKL)
  • STORJ
  • Descartes (CTSI)
  • Ugur (delegate)
  • Origin Code (OGN)
  • Balancer
  • Numerair (NMR)
  • NKN (NKN)
  • Civic (CVC)
  • Band Protocol (BAND)
  • NuCypher (NU)
  • Orchid (OXT)
  • Mirror Protocol (MIR)
  • Ampleforth Governance Token (FORTH)
  • District0x (DNT)
  • Tellor (TRB)

Coinbase Fees

One of the reasons Coinbase has generated nearly $3 billion in revenue over the past 12 months, according to Morningstar, is that it charges a bunch of fees. This isn’t necessarily bad – almost all cryptocurrency exchanges charge fees, whether or not they are publicly labeled as such. The problem is that Coinbase’s most consumer-friendly offering, Coinbase’s namesake platform, charges higher fees for its convenience and simplicity than you’d get anywhere else – even on the more sophisticated cryptocurrency exchange, Coinbase Pro.

First, there’s the so-called “spread fee,” which Coinbase says is typically 0.50% of your transaction.

What is that?

When you want to buy a cryptocurrency, such as Bitcoin, you log into your Coinbase account and choose the amount you want to buy, eg $100 worth. To determine the value of Bitcoin, Coinbase uses the exchange rate on Coinbase Pro. Coinbase then adds a spread fee which it calls the “consumer exchange rate”. This is the difference between the price Coinbase pays for cryptocurrency and the price at which it resells it to you. There may be padding on both ends to help Coinbase turn a profit.

Then there’s the aptly named “Coinbase Fee,” which depends on the size of your purchases, the fiat currency you use to make them and how you pay. These fees are larger than either a flat fee or a variable percentage, which can be a bit confusing to find out.

Here’s how flat fees are affected for US buyers:

  • Transactions less than or equal to $10, the fee is $0.99
  • Transactions greater than $10 but less than or equal to $25, the fee is $1.49
  • Transactions over $25 but less than or equal to $50, the fee is $1.99
  • Transactions over $50 but less than or equal to $200, the fee is $2.99

After exceeding 200 USD, the fee structure changes to be on a percentage basis, determined by how the cryptocurrency is paid:

  • 1.49% for US bank accounts and Coinbase wallets in US dollars
  • 3.99% for debit card or PayPal

The fee for purchases over $200 may be up to 1.5% of any transaction for a minimum fee of $0.55.

Practically speaking, this means that $100 you get from bitcoin is only $97. While these fees may not seem like much at the moment, over time they can seriously affect your returns. (In the world of traditional equity investing, this dynamic has led to low-cost passive-invested index funds, which charge significantly lower fees than actively managed funds with similar, if not better, performance.)

Let’s say you put $100 into your Coinbase account every month to buy Bitcoin for 20 years. Assuming Bitcoin returns an annual average of, say, 10%, you’ll end up with roughly $66,700 after fees. Although, without the fee, you would have had around $68,700.

By simply executing your trades, Coinbase will deduct over $2000 from your revenue in fees, or about 4.6% of your total revenue.

Hopefully, as consumers have more options for cryptocurrency transactions, Coinbase fees will drop. After Robinhood offered no-fee commissions on stock trades, for example, Charles Schwab and e-commerce, among others, followed suit. Not coincidentally, Robinhood now allows its clients to trade cryptocurrency.

“The race to the bottom of the late 2019 phenomenon with stock trading fees is likely to make its way into the crypto trading space,” says David Trainer, CEO of New Constructs, an investment research firm. “We expect Coinbase’s competitors to reduce their trading fees to zero in an effort to increase their market share.”

Coinbase Features

With its high fees, why has Coinbase become one of the most popular destinations for buying cryptocurrency in the US? many reasons:

Ease of use

For one, it’s incredibly easy to use. Registration takes no time at all. You will need to upload a state or federally issued ID if you wish to register with Coinbase Pro.

You can then link your bank account to your account through the Plaid data transmission network, which is the recommended way to reduce trading costs.

The interface is bright and easy to navigate. The search bar helps you sift through the myriad of crypto offerings available – from Bitcoin to Tellor – and you can set up purchases to repeat continuously.

For those who get a little deeper into the weeds, Coinbase allows you to trade specific cryptocurrencies into other cryptocurrencies, which means you can convert Litecoins to Augur, for example.

protection

Coinbase has built its reputation as a safe place to buy and sell cryptocurrencies. This was a particularly notable claim after the Mount Gox disaster, when approximately 850,000 bitcoins were stolen in 2014. (This total is currently over $37 billion).

Coinbase has never experienced such a disaster, although there have been complaints from customers about the nascent exchange.

It claims that 98% of consumer funds are stored offline in various locations around the world, which helps provide greater security for digital assets. Coinbase keeps your cryptocurrency in its own free wallet service, although you can choose to keep your cryptocurrency in a third-party wallet. You will need to complete two-factor authentication to log in to your account. There are also biometric fingerprints and AES-256 encryption on the private keys.

Furthermore, Coinbase pools the cash in your account with its other US customers and places it in one of three places: US bank custodian accounts, US money market funds, or short-term US Treasuries.

You don’t know where your money is kept, but as much as it is in US banks, you receive FDIC pass insurance of up to $250,000. But remember: As with most investments, the crypto you keep in your account does not benefit from this government protection. You may lose all the money you invest in cryptocurrency.

What about Coinbase Pro?

While Coinbase is designed for newcomers, more advanced traders may be interested in Coinbase Pro. (You don’t need a separate account for the appropriate Coinbase and Coinbase Pro; the same credentials will suffice.)

While the Pro version comes with more complex trading and charting options, the biggest difference is the fees, i.e. they are lower and simpler.

Your trading volume is determined by how much you traded over the previous 30-day period and is calculated in dollars.

The Trader’s fee is applicable when a trade is made and is executed instantly.

Manufacturer’s fee is triggered when an order is made, but is not executed immediately. By virtue of waiting for another customer to match your order (i.e. someone who wants to buy as much as you want to sell), you pay a lower “maker” fee.

It is possible that part of your order will be counted as a recipient and the rest as a maker, depending on how much of your order Coinbase can move at one time.

Anyway, the 0.50% fee for traders under $10,000 is a lot less than the 1.49% (plus the spread) you’d pay on proper Coinbase.

minimum

With a transparent sign-up process, ease of use, and a positive security reputation, Coinbase has become a popular portal for crypto investors looking to get started. However, the fees can be a huge downside, and you should consider moving to the Pro version as soon as you feel comfortable.

* Fee amount varies based on purchase amount and method of purchase. 1.99% (0.5% spread fee + 1.49% Coinbase fee) applies to an order of at least $200 via US bank transfer or Coinbase USD Wallet.

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