There are not many exchanges that are as reliable and convenient as Coinbase. If you are looking to buy bitcoin using your fiat currency, Coinbase is the perfect choice for you. Based in San Francisco, Coinbase is the world’s largest bitcoin broker and exchange. Raising over $75 million as of August 2020, it is a legitimate platform for buying and selling bitcoin and has many trusted investors. But, is it safe to buy bitcoin on Coinbase?
Yes, it is entirely safe to buy bitcoins on Coinbase. Through its exchange Coinbase Pro, traders can buy and sell bitcoin and other cryptocurrencies on the platform. In turn, Coinbase takes a cut from such transactions. On the other hand, buyers purchase bitcoin directly from the platform at the offered price using their digital wallets.
This article will discuss what Coinbase is, how it works, its benefits, drawbacks, and whether it is the right exchange option for you. Without further ado, let us get started!
A quick brief of Coinbase and its features
As mentioned earlier, you can buy bitcoin on Coinbase. Coinbase is a digital currency broker and exchange that allows you to buy and sell bitcoin and other cryptocurrencies. It holds over $20 billion in assets and enables users to purchase crypto from fiat currencies. Since its foundation in 2012, the California-based platform has had over $50 billion in crypto traded on it.
Coinbase has two main functions: a professional trading platform and an exchange broker. It is also primarily used as an entry point in the cryptocurrency market. Since it only allows the purchase of bitcoin, litecoin, ether, and bitcoin cash, Coinbase is one of the most secure and trusted platforms in the crypto industry. It is also very rare that the platform adds new coins that could potentially be equities or securities.
The platform also has a very easy-to-use interface that is ideal for both beginners and experienced traders in the crypto industry. The platform offers a convenient tool that comes with a neat and easy to navigate design.
If you would like to transact with fiat currency but send money with bitcoin, you can use the ‘instant exchange’ feature on Coinbase. As a result, it offers a seamless and instant transaction that allows you to pay with fiat, and the payment is automatically converted into bitcoin. The service requires no extra fees, and it is hassle-free.
The platform also offers its users a Coinbase shift card that allows them to spend bitcoin in their Coinbase wallet. Like a Visa debit card, U.S. users can spend the bitcoin in their Coinbase wallets in select states. It is also vital to note that the platform offers various payment options to allow its users to convert fiat currency into crypto easily.
Is it really safe to buy bitcoin on Coinbase?
As one of the mainstream cryptocurrency exchanges in the U.S., Coinbase is a fully licensed and regulated exchange platform in 40 U.S. states and territories. Initially, the platform began as only a bitcoin trading platform. It soon expanded its list of trading cryptocurrencies to include Litecoin, Ethereum, Bitcoin Cash, XRO, and other cryptocurrencies.
Coinbase is one of four exchanges to have a license under the pilot BitLicense program in New York. In turn, it strictly follows Know Your Customer (KYC) rules and ensures adherence to its rules and regulations.
Thus, the platform does not allow anonymous users. Every trader on the platform must submit a form of personal identification. In some cases, proof of address is compulsory, especially when using the platform’s buy and sell features.
Also, all the assets on Coinbase are under an insurance policy. Thus, you cannot technically lose your crypto through hacking or theft of the platform. With all these measures put in place, Coinbase is one of the most legit platforms for honest users in the crypto industry. However, users should also beware of the possibility of getting scammed on Coinbase. Though rare, it is possible.
What are some disadvantages of buying bitcoin on Coinbase?
Although Coinbase offers a variety of products to its users, it also has some downsides. Some of them include:
a). Limited account spending
Coinbase limits the amount you spend and how often you can spend from your Coinbase wallet. Based on certain factors, including your account’s age, preferred payment method, and buying history, the platform implies limits that are calculated automatically.
b). High fees
Compared to its competitors, Coinbase charges relatively high fees. This is mainly because it offers a wide variety of payment platforms and in many different currencies. However, Coinbase Pro has lower fees compared to the standard version. It is also free to switch to and offers more useful features for beginners in the crypto market.
c). Lack of control of wallet keys
When users buy cryptocurrency on any exchange, they are stored in a digital wallet that Coinbase controls. Like with other centralized exchanges, Coinbase has full autonomous control over the user’s holdings. However, users can avoid this by withdrawing their crypto into their personal wallet, preferably a hard wallet.
d). Lack of altcoin variety for altcoin traders
New investors in bitcoin have an array of altcoins to use on the platform. However, serious and experienced traders will not find enough options of altcoins to trade on this platform. However, Coinbase is continuously adding altcoins over time.
Generally, Coinbase is one of the best broker exchanges and trading platforms available in the crypto market. Not only can users safely buy bitcoin on Coinbase, but the platform is also insured, highly trusted, and very easy-to-use, even for new investors. By far, it is one of the simplest ways to buy bitcoin. However, users should also take care of their digital currency while on the platform. It is advisable to store your crypto in a hardware wallet if you plan to hold it for a long-term.