Coinbase Investment Strategies: A Beginner's Guide To Getting Started

Coinbase is a popular cryptocurrency exchange platform that allows users to buy, sell, and store various cryptocurrencies. It is a good choice for beginners as it requires little technical knowledge. Coinbase charges fees for trading via the platform, and these fees are relatively high compared to other exchanges. The company is not very transparent about its fees, which are calculated based on various factors such as location, payment method, and market conditions. To start using Coinbase, users need to open an account, verify their identity, and link a payment method. Coinbase offers a simple and intuitive user interface, but its customer service has been criticised for being slow and non-interactive. Overall, Coinbase is a powerful tool for those looking to invest in cryptocurrencies, despite its high fees and customer service issues.

How to open a Coinbase account

To open a Coinbase account, you will need an internet connection and a smartphone. You must be at least 18 years old and have a valid form of identification, such as a passport, Medicare card, or driver's license. You will also need a computer or smartphone connected to the internet, a phone number connected to your smartphone, and the latest version of your browser.

• Visit the Coinbase website (https://www.coinbase.com) or download and open the Coinbase app on your Android or iOS device.
• Click or tap "Get started" and choose your account type.
• Enter your legal full name, email address, and password. Make sure to use your real name as shown on your passport or driver's license.
• Read and accept the User Agreement and Privacy Policy.
• Verify your email address by clicking on the link in the confirmation email sent by Coinbase.
• Verify your phone number by entering the code sent to your phone.
• Add your personal information, including your address, date of birth, and the last four digits of your social security number.
• Select your preferred identification type and provide a photo of your valid ID.
• Answer questions about your source of funds and the total value you expect to transfer in the next 12 months.
• Connect your payment method by linking your bank account, credit/debit card, or PayPal.
• Complete ID verification and set up two-step verification for added security.
• Start buying and trading cryptocurrencies!

By following these steps, you can create and verify your Coinbase account to start investing in various cryptocurrencies confidently. Remember to conduct thorough research and stay informed about the latest trends and security measures in the crypto world.

How to buy and sell cryptocurrency with Coinbase

To start buying and selling cryptocurrency with Coinbase, you must set up an account first. Here is how to do it:

Setting up a Coinbase account:

• Sign up for Coinbase by going to the Coinbase website or downloading the Coinbase app.
• Click Sign Up, enter your name and email address, and create a password.
• Verify your email address by clicking the link sent to your inbox.
• Complete identity verification by clicking on your profile icon and selecting Settings. Under Account, provide personal details, including your date of birth, address, and phone number. You may also need to upload a photo ID for complete verification.
• Link your bank account. From your Coinbase account, go to Settings > Linked Accounts > Link New Account. Select your bank and input your bank login credentials.
• Add a payment method. Under Settings, go to Payment Methods and select "Add Payment Method". You can link a debit card, credit card, or PayPal account.

Buying cryptocurrency with Coinbase:

• Log into your Coinbase account.
• Navigate to the asset's page.
• Enter the amount and click "Buy". Your purchase will happen automatically.
• Alternatively, if you want more control over the trade, you can toggle to Advanced Trading and manually set your preferred price.

Selling cryptocurrency with Coinbase:

• Sign in to your Coinbase account.
• Select the crypto you want to sell and the amount.
• Change the "To" destination if applicable.
• Select "Review order".
• Select "Sell now" to complete the sale.
• Once the crypto sell is complete, the funds will be available in your cash balance.

Cashing out your balance:

• Sign in to your Coinbase account.
• Select your local currency balance.
• Select the "Cash out" tab and enter the amount you want to cash out.
• Select "Transfer to" and choose your cash-out destination.
• Select "Withdraw cash" to complete your transfer.

Coinbase fees explained

Coinbase fees can be complicated, especially for beginners. There are multiple exchanges built into Coinbase, each with its own fee structure. Here is a breakdown of the fees you will incur on the platform:

Coinbase Transaction Fees

Also known as the Coinbase Fee, this is a confusing fee structure that considers multiple factors. You will pay either a flat fee or a variable percentage of the transaction, depending on the region, product, and payment method. Coinbase does not publish these fees, but they are usually 1% or higher. Your final fee could vary from the estimate due to factors such as batching transactions or changes in network congestion levels. All fees are disclosed at the time of the transaction.

Coinbase Spread Fees

Coinbase includes the fees for spread in the price whenever you purchase or sell your crypto. It will also be included in the exchange rate if you convert your crypto. The spread allows Coinbase to temporarily lock in a price for trade execution while you review the transaction details before submitting your transaction. This spread applies to all cryptocurrency transactions on the Coinbase platform and while using the Coinbase Card. There is no spread charged when using Coinbase Advanced because you are placing orders directly on the order book.

Coinbase Network Fees

For transactions on cryptocurrency networks (i.e. transfers of cryptocurrency off the Coinbase platform), Coinbase incurs and pays network transaction fees (e.g. miner fees). When you send cryptocurrency from your Coinbase wallet to another wallet, they charge a fee based on their estimate of the prevailing network fees for a standalone wallet-to-wallet send. The final fee that Coinbase pays may differ from the estimated fee.

Coinbase Lightning Network Processing Fee

The Lightning Network is a micropayment network that enables the transfer of bitcoin without incurring the transaction fee associated with the Bitcoin blockchain. When you send bitcoin from Coinbase via the Lightning Network, they charge a processing fee equal to 0.1% of the amount of bitcoin transferred.

Coinbase Cash Fees

When you add cash or cash out, you may be charged a fee depending on the payment method you select. It is important to review the fee details before completing the transaction to understand any associated charges.

Coinbase Trading Fees and Spread

When you buy, sell, or convert cryptocurrencies on Coinbase, fees are charged. These fees are calculated at the time you place your order and can be influenced by factors such as your chosen payment method, order size, market conditions, jurisdictional location, asset, and other costs they incur to facilitate your transaction. Before submitting your transaction, you can view the fees in the trade preview screen. Please note that fees may vary for similar transactions.

Coinbase Advanced Fees

Coinbase Advanced is the advanced trading platform of Coinbase that is suitable for more experienced traders. Coinbase Advanced fees are based on a maker/taker model. The fees have a maximum of 0.40% maker and a maximum of 0.60% taker, based on your 30-day trailing volume.

Coinbase security and customer service

Coinbase has been criticized for its poor customer service, with users reporting non-human communication and slow response times. The company primarily offers customer support via email, and many customers have complained that it is difficult to reach representatives and that their issues are not resolved in a timely manner. Former employees have stated that the company's customer service practices have changed over time, with representatives struggling to keep up with the growing demand. In response, Coinbase has acknowledged the delays in response time and has announced plans to roll out live chat messaging and phone support.

Coinbase takes security seriously and employs various measures to protect its customers' assets and information. They use state-of-the-art encryption and security protocols, including a compulsory 2-factor authentication (2FA) system, to safeguard user accounts. Additionally, they hold customers' assets 1:1, meaning they don't lend or take any action with your assets without your permission. Coinbase also offers tools like password protection and multi-approval withdrawals in the Coinbase Vault to enhance security.

To protect against emerging threats, Coinbase's security team constantly monitors and adapts its security measures. They also encourage users to remain vigilant and take steps to guard against unauthorized access to their accounts. For example, users should never give out their 2FA security codes or passwords, as Coinbase staff will never ask for this information.

While Coinbase has implemented robust security measures, there have been reports of account takeovers and hacks. In some cases, users have lost significant amounts of money due to unauthorized access to their accounts. It's important to note that cryptocurrency transactions are irreversible, so users should be cautious when sending cryptocurrency to external addresses.

Coinbase has a Bug Bounty program that encourages the disclosure of security vulnerabilities, demonstrating their commitment to staying ahead of potential threats. Overall, while Coinbase has faced some challenges with customer service and security, they continue to make improvements and prioritize the protection of their users' assets and information.

Coinbase vs. other cryptocurrency companies

Coinbase is a major US-based cryptocurrency exchange and a platform where crypto assets may be traded. It is a publicly traded company, with shares listed on the Nasdaq exchange under the ticker symbol COIN. Coinbase stock gives investors exposure to the cryptocurrency market without directly investing in cryptocurrency.

When compared to other cryptocurrency companies, Coinbase offers a highly intuitive and user-friendly platform, making it a great choice for beginners. It also has several features that serve as an effective onramp for beginners to learn about buying and selling cryptocurrencies. Additionally, Coinbase makes it easy to trade one cryptocurrency for another or buy cryptocurrencies with fiat. However, the fees for this convenience are higher than some other platforms.

Crypto.com, for example, may offer lower fees depending on how you purchase your crypto. However, with Crypto.com, you won't be able to trade one cryptocurrency for another. Crypto.com also has a more extensive selection of cryptocurrencies to choose from than Coinbase.

Another popular cryptocurrency company is Binance, which, along with Coinbase and Crypto.com, is one of the most popular places to buy cryptocurrencies. Binance has the upper hand over Coinbase when it comes to buying cryptocurrencies due to its lower fees and more advanced trading platform.

Overall, when compared to other cryptocurrency companies, Coinbase stands out for its user-friendliness, convenience, and educational resources. However, its fees are generally higher than competitors like Crypto.com and Binance.

Frequently asked questions