Best Cryptocurrency Exchange

Should You Use Coinbase to Buy Bitcoin?

Should You Use Coinbase to Buy Bitcoin?
Written by publisher team

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Here are some questions to ask before signing up for Coinbase.

Coinbase is a popular cryptocurrency trading platform ideal for new investors. If you plan to buy Bitcoin (BTC) using US dollars and live in any US state except Hawaii, you can do so in two ways through Coinbase.

There are many great cryptocurrency exchange apps on the market right now, but there is no one-size-fits-all solution – different people want different things. Here are some questions you should ask yourself when evaluating a crypto platform, whether it’s Coinbase or one of its competitors.

1. How easy is it to deposit and withdraw funds?

Cryptocurrency exchanges charge fees in different ways and with varying degrees of transparency. Some make it cheap to deposit and trade, but they charge you exorbitant fees when you want to make a withdrawal. Others simply don’t have many ways you can pay with (traditional) fiat currencies like the US dollar.

Coinbase allows you to buy Bitcoin via debit card, PayPal, and Apple Pay. You can also buy directly from your bank account and make electronic deposits. You will pay 3.99% for purchases via PayPal or debit card and 1.49% for purchases from your bank account. Withdrawal fees are calculated at the time of withdrawal.

It’s easy to deposit money at Coinbase and it’s great to have several options. But it’s not cheap – and many exchanges offer much better prices.

2. Is it easy to use?

This is where Coinbase shines. Its interface is easy to use and straightforward, as is the mobile application. Advanced users can switch to Coinbase Pro, an advanced platform with more features and lower fees.

If you are new to crypto and buying Bitcoin for the first time, you will find a wealth of useful information and videos. You can even earn as you learn – some cryptocurrencies pay tokens for people who learn about their project.

Be aware that Coinbase has been criticized lately for its customer support, particularly the lack of personal phone assistance. It says it is working to introduce more channels and improve 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 shown when you make the transaction, and it’s hard to know how to calculate it and if you’re getting the best rate.

For example, at the time of writing, CoinMarketCap said 0.01 BTC is worth about $435. On Coinbase, 0.01 BTC would have cost around $455 – a 3.99% card fee plus an additional unlimited spread.

If you want to cut costs, don’t be afraid to create accounts with more than one exchange and preview prices to make sure you get the best deal. You don’t have to deposit money to open an account, and if the exchange isn’t open about its costs, going this route could be the only way to compare apples to apples.

4. How safe is it?

There have been many 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 are stolen, they are difficult to recover.

That’s why I look for exchanges that prove they will be proactive in protecting my money. Coinbase lists a lot of funds here:

  • Maintains 98% of assets in cold storage. This means that the funds are stored offline, which makes it difficult to hack.
  • It has third party crime insurance. If your bank account has been hacked or you fall victim to fraud, you will often be able to get a refund. This is not the case with most crypto accounts. But if the exchange has offshore insurance – as Coinbase does – you may be able to file a claim.
  • US dollar balances are insured by the FDIC. FDIC insurance means that in the event of a Coinbase bankruptcy, US accounts are covered by up to $250,000 per person. This does not apply to crypto assets.

5. What currencies do you support?

Coinbase has been increasing the choice of coins in recent months and now offers about 90 coins to US customers. This is not the biggest selection in the market, but it is a good selection of coins, and traders can buy most of the top coins by market cap.

If you are only interested in buying Bitcoin, this will not be a huge factor in your decision. But if you want to branch out into other types of cryptocurrency, Coinbase has you covered.

6. Can I earn interest?

Coinbase was recently forced to suspend its lending/earning product plans. Many exchanges lend money through decentralized loans and use the proceeds to pay high interest rates on customer deposits. However, the Securities and Exchange Commission has told Coinbase that it cannot proceed with the launch.

As a result, bitcoin owners cannot earn interest on their property. However, Coinbase allows investors to buy a handful of coins. Staking involves tethering assets to help keep certain 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 US-listed and trying to stay on the right side of regulation is reassuring. SEC President Gary Gensler recently described cryptocurrency as the “Wild West,” and for good reason. There are a lot of bad actors – from dodgy exchanges to third-party scams.

Coinbase fees may certainly be lower, but if you are buying Bitcoin for the first time, this is a safe and reliable option. Read our top picks for cryptocurrency and the essential guide if you’re looking for more options or more information about investing in cryptocurrency.

Buy and sell cryptocurrencies on an exchange chosen by experts

There are hundreds of platforms around the world waiting to give you access to thousands of cryptocurrencies. In order to find the right feature for you, you will need to decide which features are most important to you.

To help you get started, our independent experts have tested the options to bring you some of our best crypto exchanges for 2021. Check out the list here and start your crypto journey, today.

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