So you’ve decided to take the plunge into the exciting waters of cryptocurrency. Coinbase is a great place to start your journey, as it’s a simple way to get yourself some of the most famous currencies in an easy, straight-forward manner.
What is Coinbase?
Coinbase is a global digital asset exchange (GDAX) which provides the ability to buy and sell cryptocurrencies. The interface that Coinbase provides gives the user an easy, efficient way to interact with the blockchain, the technology that tracks the movement of each cryptocurrency coin and asset.
Coinbase functions as an intermediary between the user and the blockchain itself, as your average person won’t have the technical knowledge required to interact with the blockchain directly.
Coinbase offers the ability to easily purchase these cryptocurrencies with your credit card, debit card or bank account by depositing funds into Coinbase. You can then use these funds to purchase cryptocurrencies which will then be stored on Coinbase as well.
Coinbase supports a limited amount of cryptocurrencies, currently Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH) and Ethereum Classic (ETC).
Trading on Coinbase does come with a few drawbacks. When you make an account on coinbase you’ll have to attach a card or bank account to it which means that you are giving up your anonymity. Trading on Coinbase also loses one of the primary advantages of blockchain technology, that of it being trustless system, because as efficient and and user friendly as Coinbase is it's still a middleman.
While Coinbase is a reputable exchange with several checks and balances, and is located in the USA which means it’s affected by financial and security laws that ensure it’s not going to vanish overnight with your money, you’re still entrusting your money to a third party which removes one of the benefits of cryptocurrencies. If you can interact directly with the blockchain yourself, then only you will ever have access to your assets.
How to use Coinbase?
Sign up for an account. Make an account for Coinbase here. You’ll have to link your phone number to your account too, but the extra layer of security is always welcome.
Once you have signed in, you’ll be greeted by the Dashboard. Here you’ll be able to see a snap shot of your account, your balances of cryptocurrencies and FIAT currency, and the currency prices of the currencies available to trade on the exchange.
Along the banner at the top of the page, you’ll see a range of options:
- Buy/Sell will, unsurprisingly, allow you to buy and sell cryptocurrencies. You’ll first have to add a payment method to purchase, and a proof of ID to sell them back into FIAT however.
- Accounts will show you your current assets, both crypto currencies and FIAT.
- Tools will provide you with a number of trading options, including recurring transactions, reports and your trade history.
- Settings will allow you to make changes surrounding your account, including your security and preferences etc.
To purchase some crytocurrency, you'll have to add some fiat money first by depositing it onto the site. You can then go to buy/sell, and exchange your fiat money for crypto. When the transaction is complete, the cryptocurrency will be added to your account. It's as simple as that.
How safe is Coinbase?
Coinbase takes a number of precautions to keep your currency safe when it’s on their website. 98% of the funds on the website are kept offline, so they can’t be accessed by hackers. The remaining 2% are held online and are covered in the event of a breach.
The fiat currency held on the site remains in custodial bank accounts, so if you have money in the USD wallet on Coinbase, it’s covered by FDIC insurance of up to $250,000. This protects the customer’s money in the event that Coinbase becomes insolvent.
Security is the very foremost concern when it comes to cryptocurrency, and these exchanges live and die by their reputation – it is firmly within the interest of Coinbase to make your time with them as simple and trouble free as possible and they do a very good job of this.
Coinbase does a great job of bridging the gap between cryptocurrency and the wider population. It's simple, no nonsense approach and slick interface are only going to help towards the goal of mass adoption of crypto into the mainstream.