Coinbase Review 2024
United States not accepted.Pros
- One of the most trusted brands in the crypto space
- Well-regarded crypto exchange with thousands of tokens available
- Powerful purpose-built crypto trading platform with backtesting capabilities
Cons
- Lower safety score vs established crypto brokers
- Occasional bugs have caused issues on the system
- Coinbase trades don't take place anonymously
Coinbase Review
Coinbase is a platform for storing, buying, selling and paying for services in cryptocurrency. They offer a ‘one stop shop’, acting as a wallet and an exchange, plus providing a multitude of trading tools and resources.
So, with over 10 million customers and $6 billion worth of exchanged digital currency, let’s explore why day trading on Coinbase has become so popular.
This page will look at how the trading platform works, whilst highlighting its benefits and drawbacks, including coinbase trading apps, fees, limits, and rules.
Note! If you intend to trade cryptocurrency, you don’t necessarily want to own actual coins. It can be cheaper and more efficient to trade price movements using derivatives, where you can also leverage the results.
See our cryptocurrency day trading guide.
What Is Coinbase?
Coinbase is a global digital asset exchange company (GDAX).
Essentially, it’s a secure online platform, used for the buying, selling, and transferring of digital currencies. Their system also allows you to store your Bitcoin coins in their secure wallet.
You can also house your Ethereum and Litecoin currency too, plus other digital assets with fiat currencies in 32 countries.
If you want to start day trading cryptocurrencies, you require a platform to trade on, an intermediary to communicate with the blockchain network.
That’s what Coinbase can offer you, a quick and easy way to cut facilitate and trade your cryptocurrencies.
Why Use Coinbase?
So, if you’re interested in storing and trading digital currencies, Coinbase could be of significant service. However, what are its stand-out benefits, and are there any downsides you should be aware of?
Benefits
Cuts Through Noise
Coinbase allows you to skip through the complex underlying technology associated with digital currencies. You don’t need an in-depth understanding of blockchain technology, or to hold a long-term view as to the success of currencies like Bitcoin.
The Coinbase trading platform offers a straightforward way for you to capitalise on the volatility in the cryptocurrency market. Volatility which saw Bitcoin increase five-fold in the first nine months of 2017.
Margin Trading
You can also benefit from Coinbase margin trading (Though not if you are in the UK). This enables you to borrow money from your broker to make more trades. It’s best to think of it as a short-term loan.
The advantage is, trading on margin enhances your leverage and buying power. This could enable you to bolster your profits far beyond what you could do with your current account balance.
If you see a big move on the horizon, you can truly profit from it.
On top of that, Coinbase fees have been cut on margin trading. This means you won’t pay any interest or additional costs at this time.
The downside is, you will need a minimum of $5,000,000 invested on a discretionary basis to qualify for a margin account.
Promising Change For Traders
Previously, customers had to wait several days to receive their digital currency after a transaction. Now you can purchase bitcoin and other currencies directly from your bank account. What does this mean? It enables you to trade in real-time with GDAX.
Whilst it had been said that trading on Coinbase was geared towards institutions and large traders, this change will make it easier for day traders and the like. The popularity of this change was quickly apparent. The price of Litecoin jumped over 12% in the afternoon of the announcement, followed by a surge in Coinbase day trading.
Powerful Trading Platform
The Coinbase trading platform has everything the intraday trader needs. It offers a sophisticated and easy to navigate platform.
The platform comes with log books, advanced charting capabilities, and a straightforward ordering process. It also collects trade history and allows for backtesting.
Since you’ll be spending the majority of your day on the platform, finding a system as comprehensive as Coinbase is of great advantage.
Apps
The mobile Coinbase app comes with glowing customer reviews. It offers quick and easy charting, plus fast execution speeds.
You no longer have to miss an important price move because you’re stuck on a train, or halfway through cooking dinner.
Their app is available on both Apple and Android devices.
Download the Coinbase App from their website.
Security
You also get reassuring security with Coinbase. 98% of digital assets will be secured in offline storage. Coinbase promises customers “sensitive data that would normally reside on our servers is disconnected entirely from the internet.” That data is encrypted and transferred to USB drives, as well as paper backups, which are then stored in deposit vaults across the world.
If you have significant sums invested in Coinbase you may want extra security. That’s where Coinbase vault comes in. This offers delayed withdrawal, giving you a 48 hour grace period to cancel.
In addition, you can have multiple approvers, ensuring trading capital can’t be accessed as a result of a brief lapse in judgement.
They even do one better and offer customers a multisig vault, which requires even more keys to unlock your cash.
Insurance
You also benefit from strong insurance protection. Because Coinbase holds all fiat currency in a USD wallet, it is covered by FDIC insurance. Cover extends to $250,000.
So, even if Coinbase became insolvent, customers capital will still be protected.
Drawbacks
Despite the numerous benefits of day trading on Coinbase, there remains several pitfalls worth highlighting.
Reliability
The complex work of blockchain and other unverified reasons have meant the Coinbase payout system can be somewhat temperamental.
Some customers report significantly delayed payout periods. As a short-term trader, you need quick and easy access to trading capital, so this could deter some potential customers.
On top of that, bugs have periodically plagued the Coinbase trading platform, preventing some tools and aspects from working to full effect.
Whilst Coinbase is working hard to remedy these issues, you don’t want to worry about platform reliability when you have trading decisions to focus on.
Pseudonymity
Trading through Coinbaise deprives you of Pseudonymity. Your name is directly attached to your trading and bank accounts.
This means transition history is straightforward to uncover. In addition, you can’t actually verify your transactions are taking place on the blockchain. Instead, you can only put your faith in the middleman, Coinbase.
Setting Up
Fortunately, setting up on Coinbase is a walk in the park. You need to follow three simple steps before you can start trading.
- Register – This entails creating a digital currency wallet where you can store all online currency.
- Connect – You need to connect your debit or credit, to your Coinbase account. This enables you to exchange digital currency into and out of your local currency.
- Purchase – The fun part. You buy the digital currency of your choice. Coinbase is the biggest Bitcoin exchange in the world, but you can also purchase Ethereum and Litecoin too.
Once you’re signed up and funded, using Coinbase for trading Bitcoin and other currencies works much like other trading platforms. Within trading hours the platform provides real-time cryptocurrency prices, and won’t look too dissimilar from your usual online stock tracker.
Coinbase Trading Rules & Fees
Before you take the plunge and set up an account, take note of the trading limits and regulations you’ll have to adhere to.
Rules
Before you start using Coinbase and trading pairs of digital currencies, you should understand account limitations. If you use a bank account you will get higher limits, of $100 transactions, and up to $2,500 a week.
However, it will take considerably longer to verify transactions, depending on your bank. When you’re selling Bitcoin, it could take up to several days for the proceeds of the sale to appear in your account.
Using a debit or credit card will restrict you to lower, $200 a week limits. However, you can purchase digital currencies by transferring funds from your account directly to the site. These transactions will show up in your Coinbase wallet instantly.
You can also use PayPal. You can sell any digital currency with ease to your PayPal account. Once you’ve cashed out, your digital currency will be exchanged into local currency. Again, this transaction will also be instantaneous.
Fees
They offer a straightforward and competitive fee structure. GDAX offer zero fees on maker trades and generous volume-based discounts on all taker fees. These fees could see you pay as little as 0.1%.
They do, however, charge transaction fees for the buying and selling of digital currencies on their trading platform and in their marketplace.
These fees vary depending on your location. In the US, for example, the transaction rate is 4%, plus various additional costs, dependant on payment method. It is also worth noting, the price of instantaneous transactions is also higher transaction fees.
Trading Bots
Cryptocurrencies and Coinbase trading APIs are extremely open systems, enabling any intraday trader to try his luck. That means there is big business in exploring the use of algorithmic trading on the platform.
If you’ve already formulated a successful strategy, then why not increase profits by employing an automated bot to carry out the heavy lifting?
Take the Python trading bot, rife on Coinbase. It follows a simple exponential moving average strategy. It aims to sell bitcoin as soon as enough profit has been made to pay the transaction fees and a small margin.
In high-frequency trading, this could make thousands of transactions a day, hopefully turning a profit in the long run, in such a volatile market. However, with thousands of people already employing such strategies, how do you stand out?
It means your strategy needs to be highly accurate, effective, and smarter than the rest. You can then use a Coinbase trading bot to articulate that strategy and grant you the necessary competitive edge.
Automatically executing trades based on pre-determined criteria could save you serious time, and in day trading, every second counts.
How To Trade With Coinbase
Coinbase facilitates the buying and selling of a huge range of cryptocurrencies.
So those wishing to trade on the platform can either buy and hold particular coins, or actively trade by buying and selling (or speculating) on price movements.
The market spreads are competitive at Coinbase, making day trading and speculation possible.
The trading platform (or market place) is consistent across both the website and the mobile app so traders can maintain positions on the go.
The first step is to create a hosted wallet:
Once you have the wallet, you can buy and sell coins and / or speculate on price movements.
Capital Measures
As the company is publicly listed in the US, all customers have access to published financial reports, including details of how funds are held. This is similar to the proof of reserves method used by competitors such as Kraken.
In the third quarter of 2022, Coinbase’s published financials confirmed a large amount of money is held in USD reserves. The report indicated $5.6 billion in liquid USD reserves, with $5 billion held in cash and cash equivalents.
Customer assets are also available in a one-to-one ratio. This means that the firm has funds available 24/7, 365 days a year.
Fund Safety
For non-US-based customers, Coinbase holds client funds as cash in custodial accounts. This money is held separately from Coinbase’s operating funds, meaning the exchange will not use these to cover expenses or for any other corporate purposes.
US customer funds are also held as cash, in pooled custodial accounts by banks with FDIC insurance, as outlined above. This means all US dollar deposits stored in USD wallets with Coinbase are fully insured by the Federal Deposit Insurance Corporation (FDIC) up to a maximum of $250,000 per individual.
Coinbase Account Protection
The exchange offers additional fund protection policies via their Coinbase One account. The $30 per month subscription provides eligible users with access to a one-time reimbursement for up to $1,000,000 in the case of a compromise to your Coinbase account. This includes funds lost due to vulnerabilities in Coinbase’s security protocols.
Bug Bounty Program
Coinbase also runs a “Bug Bounty” program, offering rewards to external security researchers who recognize software issues that may generate financial vulnerabilities for customers.
At the beginning of 2022, a security researcher was awarded $250,000, one of the biggest payouts ever, for discovering a security vulnerability in Coinbase that could have permitted customers to ‘sell’ currency they did not own.
Coinbase Verdict
Coinbase trading volume has boomed in recent years and it isn’t hard to see why. Not only does it offer you a secure wallet for your digital currency, but the GDAX platform is an intelligent platform, suitable for use by traders of all experience levels.
Before you jump in at the deep end though, check the transaction fees remain competitive for your location, and that you can meet their stringent account rules.
Top 3 Alternatives to Coinbase
Compare Coinbase with the top 3 similar brokers that accept traders from your location.
- IG – Founded in 1974, IG is part of IG Group Holdings Plc, a publicly traded (LSE: IGG) brokerage. The brand-US offers spread betting, CFD and forex trading across an almost unrivalled selection of 17,000+ markets, with a range of user-friendly platforms and investing apps. For 50 years, IG has maintained its position as an industry leader, excelling in all key areas for traders.
- Interactive Brokers – Interactive Brokers (IBKR) is a premier brokerage, providing access to 150 markets in 33 countries, along with a suite of comprehensive investment services. With over 40 years of experience, this Nasdaq-listed firm adheres to stringent regulations by the SEC, FCA, CIRO, and SFC, amongst others, and is one of the most trusted brokers for trading around the globe.
- Kraken – Kraken is a leading cryptocurrency exchange with a proprietary trading terminal and a list of 220+ tradeable crypto tokens. Up to 1:5 leverage is available with stable rollover fees on spot crypto trading and up to 1:50 on futures. The exchange also supports crypto staking and has an interactive NFT marketplace.
Coinbase Comparison Table
| Coinbase | IG | Interactive Brokers | Kraken | |
|---|---|---|---|---|
| Rating | 3.5 | 4.7 | 4.3 | 3.9 |
| Markets | Cryptos | CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting | Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies | Cryptos |
| Demo Account | No | Yes | Yes | Yes |
| Minimum Deposit | $0 | $0 | $0 | $10 |
| Minimum Trade | 0.0001 XBT | 0.01 Lots | $100 | Variable |
| Regulators | CBoI | FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB, AFM | FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM | FCA, FinCEN, FINTRAC, AUSTRAC, FSA |
| Bonus | £5/$5 in BTC. Terms and Conditions Apply. See Review | – | – | Lower fees when trading volume exceeds $50,000 in 30 days |
| Education | No | Yes | Yes | Yes |
| Platforms | AlgoTrader | Web, ProRealTime, L2 Dealer, MT4, TradingView, AutoChartist, TradingCentral | Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, eSignal, TradingCentral | AlgoTrader |
| Leverage | – | 1:30 (Retail), 1:250 (Pro) | 1:50 | – |
| Payment Methods | 10 | 6 | 6 | 6 |
| Visit | – | Visit | Visit | Visit |
| Review | – | IG Review |
Interactive Brokers Review |
Kraken Review |
Compare Trading Instruments
Compare the markets and instruments offered by Coinbase and its competitors. Please note, some markets may only be available via CFDs or other derivatives.
| Coinbase | IG | Interactive Brokers | Kraken | |
|---|---|---|---|---|
| CFD | No | Yes | Yes | No |
| Forex | No | Yes | Yes | No |
| Stocks | No | Yes | Yes | No |
| Commodities | No | Yes | Yes | No |
| Oil | No | Yes | No | No |
| Gold | No | Yes | Yes | No |
| Copper | No | Yes | No | No |
| Silver | No | Yes | No | No |
| Corn | No | No | No | No |
| Crypto | Yes | Yes | Yes | Yes |
| Futures | No | Yes | Yes | Yes |
| Options | No | Yes | Yes | No |
| ETFs | No | Yes | Yes | No |
| Bonds | No | Yes | Yes | No |
| Warrants | No | Yes | Yes | No |
| Spreadbetting | No | Yes | No | No |
| Volatility Index | No | Yes | No | No |
Coinbase vs Other Brokers
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