First thing’s first: it is the best bitcoin exchange in the United States market, particularly from a product and liquidity perspective.  And the secondary markets are not too shabby either – the GBP and EUR markets are also extremely liquid whether trading against bitcoin, ethereum, litecoin, even with bitcoin cash.  Trading fees are low, all the important deposit options are enabled for each market, and the dollar and bitcoin cold storage accounts are insured, just like a real bank!   

However, Coinbase has a number of infuriating warts.  The support is still inadequate, though improving since the beginning of 2018.  While support lags, Coinbase has been turning its attention to institutional investors.  This is excellent, we just hope it does not come at the expense retail customer support, which is already lacking.  Jury is out.

Coinbase has made a number of questionable choices on the corporate level.  They avoided integrating Segwit until extremely late in the game, while at the same time wholeheartedly supported Segwit2x until AFTER the bitter and embarrassing collapse.  In doing so they disrupted their own exchange (literally, they stopped allowing trading) and generated a large dose of uncertainty in the market. Their ostensible reason for this support – to lower fees and scale bitcoin – is undermined by their disinclination to integrate Segwit and transaction batching, which…lowers fees and scales bitcoin.  Their CEO voiced that he has “fallen out of love” with bitcoin despite the fact that bitcoin continues to be the backbone of his company.  His personal love interests are his own business, except they seem to inform company strategic decisions.  Crypto Kitties before Segwit and the like.  

All that being said, they are currently the best bitcoin exchange in the USA market.  We use them ourselves.  And hey, they offer you $10 free if you buy $100 in bitcoin so, you know.  Who doesn’t like $10.

The Coinbase Wallet

In our view, the Coinbase wallet provides the most robust security in the exchange marketplace.  According to Coinbase and confirmed by independent audit, over 97% of coins are held in “cold” storage, which might be compared to a bank safe.  The private keys responsible for authorizing cold storage transactions are fragmented between paper and offline hard drives, split amongst different locations, with backups should any storage points be compromised or key fragments lost.

Coinbase provides users a robust set of security features to protect against client-side malware attacks.  Two factor authentication is is available upon login and withdrawal, and can be customized to trigger only over a predetermined maximum daily transaction limit.  Passwords are hashed and encrypted server side.

The Vault

Individual users are offered a multisignature cold storage solution called “the vault”.  One key is stored on the Coinbase server; the second is a shared key, which is generated client-side and encrypted with a user’s password.  This key is stored locally by the user and encrypted with Coinbase.  The third key is a user key, which must be securely stored on the client side, preferably offline.  Any two of three keys can authorize a transaction.  Additional email approvers, like a spouse or business partner, may be added at the account holder’s discretion.  After a transaction is signed, a 48 hour withdrawal delay applies to ensure the vault has not been compromised.

Opening an Account

Please find below the verification requirements for bitcoin trading at Coinbase.

Once your account has been verified, Coinbase offers the following deposit options to users:

Coinbase offers US traders an instant trade option meant to compensate for the slow ACH transfer time.  Coinbase will advance up to $1,000 a week in bitcoin against pending ACH transactions.  To activate this option, users must input their credit card details, which protects Coinbase against users reversing the transfer after claiming the instant advance.  At this time, only Visa and Mastercards associated with a US-based address are eligible for the program.

The GDAX Exchange and Brokerage

The standard Coinbase broker service is simple and intuitive .  Buy bitcoin directly from your cash wallet, and deposit them right into your vault.  Bitcoin sales pay out directly to fiat wallets.  There is a flat fee of 1% applied to transactions.

GDAX Exchange offers some of the largest trading volumes in bitcoin, ethereum and litecoin in the market.   Fees – .25% for takers and free for makers – are extremely low, and spreads are usually quite thin.  The exchange is available also via the excellent iOS and Android Apps, so you may trade on the go.

Coinbase might not be for you if:

You live outside the United States.  

Coinbase caters primarily to the US market, though markets are offered in GBP and EUR as well.  They have a hard enough time taking care of US customers; if you live in the UK check out our reviews of the best UK exchanges.  Eurozone residents, check out Kraken, which is the leading provider of euro liquidity on a superior platform, and Canadians are well served by QuadrigaCX.

Non-US residents looking to trade the spot market should have a look at bitfinex, which not only provides the leading 3:1 margin trading in the market (complete with a lending market if that is your thing).  The exchange is superior, there are tons more cryptocurrencies available, and the fees can often be lower.  

You want to leverage your trades.

If it is margin trading you are after, bitmex offers the best futures and spot margin markets in the business.  They do not accept US traffic, though there are plenty of customers who have no qualms using a VPN to hide their location – be forewarned that is against the terms of service however.  

You are not a fan of the IRS.

Most (all?) reputable exchanges require KYC verification for accounts that deposit fiat.  However, Coinbase is squarely within the crosshairs of the IRS.  There is a current court case in which the IRS has asked Coinbase to hand over customer information.  Coinbase is fighting this in court, but the process is more advanced with them than the competition.  If you are super private, you need to find a proper p2p exchange – localbitcoins is your best bet.  US competition like Gemini will eventually share the same fate as Coinbase, whatever that might be; however, at this particular moment in time it seems they are less targeted.  

Of course, you can check out BitReview’s list of the best US bitcoin exchanges to further compare Coinbase to the competitions.

Bottom Line

Coinbase is an incredible product, backed by professional management and infrastructure.  It represents the mainstreaming of bitcoin, to the delight of some and the dismay of others.  Coinbase’s ascendence in the US conjures images of Wall Street trading, of winklevoss twins launching ETFs, of hedge funds investing and bitcoin growing in value and importance.  From a security standpoint, there is no safer place to hold and trade funds.

The financial clout, reserve management and cold storage insurance insures that, in the unlikely event of a breach, Coinbase will have no problem compensating customers.  The vault services also protect users from the much more likely client-side malware attacks that could result in lost coin.

As we mentioned in the introduction, we have issues with Coinbase’s support, as well as the decisions they have made strategically, some of which has negatively impacted the bitcoin market.  However, at this moment they are the best exchange in the US market, and for most that will be the most important consideration!  Get your $10 Free now!