Back in the early days of the cryptocurrency market, when only Bitcoin (BTC) and a few other cryptos were available, buying, selling, or exchanging digital currencies was a very complex process. Basically, you had to find someone on the internet who had the cryptocurrency you wanted to buy or was willing to buy cryptos from you and conduct a peer-to-peer trading deal with them.
This was quite complicated because you had to manually search social media groups, crypto-related forums, and online chat rooms for individuals interested in trading cryptocurrencies and you never knew who you would find. You were always at risk of losing your money or digital assets due to a potential scam or fraud because there was no guarantee that the other side would fulfill their end of the agreement.
Luckily, in 2010, just one year after the launch of BTC, the first cryptocurrency exchange platforms appeared, offering users worldwide the convenience of acting as a secure and reliable intermediary in crypto trading and exchanging deals. The number of exchange platforms soon started rapidly rising and today there are more than 400 active exchanges on the market.
Coinbase is one of the most popular crypto exchanges in the world and it’s a great choice for both beginners and advanced traders. Let’s take a look at the many convenient features of Coinbase and finally answer the question of why are Coinbase’s crypto prices higher than those on some other popular platforms.
Coinbase: One of the Largest Crypto Exchanges
Coinbase is one of the largest and most trusted cryptocurrency exchange platforms in the world, right next to the likes of Kraken, Gemini, Binance, and other popular platforms. It’s quite hard to stand out from the mass of more than 400 exchange platforms, but Coinbase manages not only to do so but to also be among the leaders of the crypto exchange market.
The platform was launched back in 2012 by a former Airbnb engineer, Brian Armstrong, and Fred Ehrsam, a former Goldman Sachs trader. The project started as a startup with initial funding of 150,000 USD provided by the Y Combinator startup program, but it soon gathered the attention of large-scale investors that pumped multi-million dollar sums into the company.
In just two years, by 2014, Coinbase had grown into a platform with a steady user base of one million accounts that were trading mostly Bitcoin and a few other altcoins. From the start of its operations, the Coinbase platform complied with all legal regulations and laws in the countries in which it provided its services, so it was among the first fully regulated crypto exchanges under US law.
This policy enabled Coinbase to gather major trust from users, who saw it as a reliable trading medium, especially since the platform enabled bank transfer funding of user accounts almost from its beginning in 2013, which was a huge advantage compared to other platforms.
Funding your crypto trading platform account with a fiat money wire transfer wasn’t a basic feature like it is today when all of the popular exchanges provide this service. This hugely contributed to the popularity of Coinbase, because it allowed users to buy BTC and other cryptos through a very simple process very early on.
Today, Coinbase has more than 56 million verified user accounts and a 335 billion USD quarterly trading volume. It’s also the first crypto exchange that went public on the NASDAQ stock exchange.
When Coinbase was launched in 2012, it was naturally a Bitcoin exchange, just like most exchange platforms, simply because BTC was the only relevant crypto project at the time. Bitcoin’s popularity grew over the years thanks to the crypto community that realized the huge potential of the BTC blockchain because of its tight security and reliability. At the same time, the traffic on Coinbase was also rapidly increasing because people needed a reliable medium for trading BTC and other cryptos.
Soon enough, numerous altcoins that offer various functionalities such as smart contracts started appearing on the market. Coinbase was always an exchange platform that carefully monitored the crypto market for opportunities to expand its services and this is why the platform was always quick to include popular altcoins in their portfolio of tradable currencies.
Currently, more than 50 cryptos are available for buying, selling, and exchanging on Coinbase. The available cryptos besides Bitcoin and Ethereum (ETH) include Litecoin (LTC), Bitcoin Cash (BCH), Ethereum Classic (ETC), Chainlink (LINK), Ripple (XRP), USD Coin (USDC), Uniswap (UNI), Stellar Lumens (XLM), and many other altcoins.
The Coinbase Pro platform even offers a few additional cryptocurrencies. It’s important to note that the possibility to invest in more than 50 cryptos is something quite rare among crypto exchanges and something that only the most popular platforms like Coinbase can boast. There are still many exchange platforms that deal only with Bitcoin or just with a couple of the most popular cryptos such as BTC, ETH, BCH.
As far as crypto-to-crypto trading, Coinbase offers 60 such trading pairs, while 40 assets can be directly traded with BTC. Seven cryptos can be traded for ETH and 11 currencies can be exchanged for the USDC stable coin.
Cryptocurrency exchange platforms mainly profit from the various transaction fees they charge for their services. The fee system on Coinbase is a bit complex and the fee you’ll pay for a trade is essentially influenced by two factors:
- Your trade will initially be charged with a 0.5% fee no matter if it’s a purchase or a sale of assets. This fee may sometimes be lower or higher depending on platform liquidity and crypto price volatility.
- The second element is a Coinbase fee that’s either a flat fee or a variable fee that depends on the purchased amount of assets and the payment method for those assets. In any case, the user will pay the higher of those two fees depending on platform calculations.
If you’re trading less than 10 USD worth of assets, then your fee is 0.99 USD, which is the lowest trading fee, while trades that are between 50 and 200 USD incur a 2.99 USD fee.
Different payment methods imply various fees. For instance, if you’re paying for cryptos with a USD bank account or with assets in your Coinbase wallet, your fee will be a standard 1.49% of the total purchased amount. In case you’re paying with a debit card, the fee will be a total of 3.99%.
If you want to buy assets with an ACH transfer, then you won’t incur any fees, but if you’re paying with a wire transfer, then your standard fee will always be 10 USD. In case you want to withdraw funds through a wire transfer, the fee is 25 USD.
The minimum transaction amount on Coinbase is 2 USD, while the daily maximum is 25,000 USD. On Coinbase Pro, however, there are no daily trading limits, but the withdrawal limit is 25,000 USD. The withdrawal limit can be increased on Coinbase Pro on user request.
Crypto exchange platform users always pay attention to platform security when opening an account on a certain platform. Cryptocurrencies and exchange platforms are prime targets for cyber attacks, so it’s very important for a platform to provide top-of-the-line security for its users.
Coinbase values the safety of user funds dearly and that’s why only 2% of all funds on the platform are kept online, to provide platform liquidity, while 98% of all cryptos are safely stored in the company’s cold crypto storage, offline. This means that even if a cyber attack was successful and able to compromise Coinbase security, the attackers would only be able to steal 2% of the assets on the platform and even this amount is insured by the platform, so users don’t have to worry about their assets getting stolen.
However, the Coinbase insurance policy won’t cover stolen funds from users in case their passwords get compromised by a third party, because the safety of those passwords is the sole responsibility of the users.
If you’re storing fiat money such as USD on your Coinbase exchange account for buying cryptos, that money is being stored by the platform in US Treasuries or US bank accounts, pooled together with the fiat money of other platform users. Since this is fiat money, it’s insured directly by the FDIC (Federal Deposit Insurance Corporation) up to the amount of 250,000 USD per user.
All user information is protected by advanced Coinbase encryption and accounts can be set to require 2FA (two-factor authentication). You can also set up biometric login features such as face recognition or fingerprint scanning if you wish. Even so, it is highly recommended that you use a complex password and never share it with other people because Coinbase can’t protect your assets if your password gets stolen.
As far as customer support goes, users have a customer support chatbot available 24/7 and it works quite well, answering the most common questions and issues. In case the chatbot can’t solve your problem, you can always send a detailed email to the Coinbase customer support team, which is known to reply fast with adequate solutions for your issues.
While the Coinbase platform provides all the necessary features for both crypto beginners and experienced users, there is also the Coinbase Pro platform, formerly known as GDAX, which goes a few steps further by providing advanced trading features. This platform is mainly meant for crypto brokers that deal with digital currencies on a daily basis as a business.
If you’re an active crypto trader who constantly deals with crypto investments, buying, selling, and exchanging assets, then the Pro version of the Coinbase platform might be more suitable for your needs. Crypto beginners don’t usually use price charts that show detailed market fluctuations that much, but advanced users can make great use of detailed charts in order to make the right trading decisions.
That’s why Coinbase Pro has advanced charts that go into all the details of the changes of Bitcoin prices and other altcoins. If you know how to read charts appropriately and have some in-depth knowledge of the market, these charts can help you recognize pricing fluctuation patterns.
The trading fees are lower on Coinbase Pro compared to the basic platform and they use a maker and taker model. This means that if you’re a market taker who purchases cryptos at the exact price currently listed on the market, you’ll be charged a higher fee compared to a market maker that sends out purchase requests at a different price than the current one on the market. Market makers provide liquidity for Coinbase Pro by generating more demand for a specific crypto at a certain price. In turn, the platform rewards market makers with lower fees.
Also, the fees are calculated based on your trading volume during the last 30 days. The more you trade, the lower the fees. This is why Coinbase Pro is more suitable for active traders with huge trading volumes.
Coinbase Earn and Coinbase Learn
Just like other popular crypto exchanges, Coinbase also has a very detailed educational platform, meant to teach crypto beginners loads of basic cryptocurrency knowledge, but it’s also very informative for advanced crypto users.
Coinbase Earn motivates users to learn about different cryptocurrencies and aspects of crypto trading by awarding them cryptocurrencies. There are a bunch of different categories for various cryptos. All you have to do is watch videos from a specific category and successfully answer the quiz at the end and you’ll be rewarded a certain amount of the cryptos that were presented in the educational videos. This is a great way to motivate users to expand their crypto knowledge.
Also, independently of Coinbase Earn, there is the Learn section of the Coinbase platform which has numerous subcategories for both beginners and experienced users. If you’re totally new to cryptocurrencies and trading, the Learn section is a great place to educate yourself about everything you need to know before investing in digital currencies. The Tips & Tutorials section is especially useful if you’re just starting trading on Coinbase. There’s even a section about crypto taxes that explains all you need to know about filing your annual crypto taxes.
Coinbase Mobile App
Most crypto investors and traders want to be able to quickly access their portfolio of assets and conduct trades as fast as possible. This is why all popular exchange platforms have mobile app versions, so traders can do business on the go. The Coinbase App is compatible with both Android and Apple iOS mobile devices.
A good and easy-to-navigate user interface is one of the most important aspects of every exchange platform app. The Coinbase app excels in this field because it’s very simple to use. All of the necessary functions for buying and trading assets are available in just a few clicks. With their app, Coinbase has made buying Bitcoin, Ethereum, and other cryptos so simple that even a total crypto beginner who wants to invest in digital currencies can do so in a matter of minutes. You just need to connect your bank account or debit card as a payment method and you’re ready to buy assets.
All of the features you can access through the web version of the platform are also available through the app, with an even better layout than the web version.
As an all-around cryptocurrency exchange platform that covers all user needs, the Coinbase platform also has its own cryptocurrency wallet that fits perfectly with the platform. The Coinbase wallet is one of the most popular hot wallets on the market, thanks to its integration with the Coinbase platform which is already one of the largest exchanges in the world.
When users sign up for a Coinbase account, they always get offered to create a Coinbase wallet account in order to easily manage their cryptos, buy, sell, or exchange them. Users sometimes have trust issues with web wallets because they store private keys online and not offline like cold wallets such as Trezor or Ledger, but the Coinbase wallet excels in the field of security and there’s no reason to think your assets aren’t secure if you store them using this wallet. The Secure Enclave cryptographic solution is responsible for keeping all of your data safe at all times.
Apart from being compatible with all the cryptos available on Coinbase, the wallet is also compatible with several fiat currencies such as the U.S dollar and you can even connect the wallet with a crypto-friendly bank account. You can even store some non-fungible tokens and collectibles such as Crypto Punks and Crypto Kitties in your Coinbase wallet.
Why Is Trading on Coinbase Sometimes More Expensive?
Trading on Coinbase is very simple and convenient and that convenience comes at a price. The fees that Coinbase charges when buying and trading cryptos are somewhat higher than the fees on many less popular exchange platforms. This is because those smaller exchanges don’t offer such a reliable and trustworthy portfolio of services like Coinbase.
Smaller exchange platforms usually provide only a couple of services and don’t have a wide choice of tradable cryptos. On top of that, cyber security is a huge issue for many smaller exchange platforms that don’t have tight security measures and developer teams that are constantly looking for bugs and ways to improve user safety.
The choice of available cryptos on Coinbase is a reflection of market circumstances and platform flexibility, with the aim of providing users with all of the assets that are making an impact on the market. Less popular exchanges don’t have the possibility to rapidly include new cryptocurrencies in their portfolio and integrate them into their system. This is why a lot of platforms only choose to trade with just a couple of the top cryptos.
The Coinbase platform provides users with top-of-the-line security, more than 50 tradable assets, numerous trading pairs, and advanced trading options. On top of this, the platform also has educational resources and a built-in crypto wallet, along with a top-quality mobile app. While transferring cryptos from an exchange platform account to your wallet always incur extra fees, if you use the Coinbase wallet, then you won’t be charged any additional fees.
All of these Coinbase features form a very reliable exchange platform ecosystem, which can’t come for free and this is why the fees on Coinbase are somewhat higher. Even so, the Coinbase Pro platform offers active traders the possibility to considerably lower all Coinbase fees if they have a certain monthly trading volume.
A Few Final Words…
It can be quite difficult to decide between the hundreds of available cryptocurrency exchange platforms on the internet and select one that’s really trustworthy. Numerous exchange platforms offer a few great features but lack some other ones. Coinbase, on the other hand, is a crypto exchange that has all aspects of crypto trading covered with some of the best services in the industry and that’s something that’s really worth the somewhat higher fees.