Coinbase: Long-Term Investment Prospects And Predictions

Coinbase is a cryptocurrency exchange that allows users to buy, sell, exchange, and store cryptocurrencies. It is one of the leading crypto services companies in the world, with a $330 billion-dollar asset base and over 110 million verified users. Coinbase stock has been mirroring the movements of Bitcoin but with lower volatility. The company's revenue growth has been stellar, driven by transaction revenue, and it has successfully diversified its revenue sources by attracting a diverse base of monthly active users. Coinbase's plan to expand its operations beyond a crypto exchange and into areas such as NFTs and cold wallet storage provides diversification and enhanced revenue generation potential. However, Coinbase has faced criticism for its high fees and poor customer service. As such, it is worth evaluating the potential of Coinbase as a long-term investment.

Coinbase's high fees and poor customer service

Coinbase's fees are somewhat complicated and can be relatively high compared to other similar crypto platforms. The platform has multiple exchanges built into it, each with its own fee structure. The Coinbase fee, also known as the Coinbase transaction fee, is a confusing fee structure that considers multiple factors. The user 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.

Additionally, Coinbase includes a spread fee in the price whenever you purchase or sell your crypto. This spread fee is also 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 when using the Coinbase Card.

There are also fees for staking your crypto on the Coinbase platform, where Coinbase charges a commission on the rewards that you earn. For example, for ADA, ATOM, DOT, MATIC, SOL, and XTZ, Coinbase charges a commission of 35%. If you are an eligible Coinbase One member, the commission is slightly lower at 26.3%.

When transferring cryptocurrency off the Coinbase platform, you will be charged a network fee, which varies based on the type of cryptocurrency being transferred and the prevailing network fees for a standalone wallet-to-wallet send. For instance, if you transfer bitcoin using the Lightning network, Coinbase charges a flat 0.1% processing fee.

Adding cash or withdrawing funds from your Coinbase account may also incur fees, depending on the funding method used. Borrowing USD from Coinbase or an affiliate using BTC as collateral and then selling the BTC collateral (as per the loan agreement) will result in a flat fee of 2%.

While the Coinbase Card doesn't have transaction fees, you will pay a spread fee when spending your cryptocurrency balance using the card. There may also be operational fees if you use your Coinbase card at an ATM.

Coinbase Advanced, the platform's advanced trading feature, has its own fee structure. The fees are based on a maker/taker model, with a maximum of 0.40% maker and a maximum of 0.60% taker, depending on your 30-day trailing volume.

Coinbase's high fees, combined with its poor customer service, have been a source of frustration for many users. There are numerous complaints about the ineffectiveness and unresponsiveness of Coinbase's customer support. Users have reported issues with account restrictions, failed deposits and withdrawals, verification problems, and a lack of communication from Coinbase's support team. The company's contact options, such as email and phone support, have also been criticized as unhelpful or non-functional.

Overall, while Coinbase offers an appealing entry point for those looking to invest in cryptocurrency, its high fees and poor customer service are significant drawbacks that potential long-term investors should carefully consider.

Coinbase's security and storage

Coinbase claims to be the most trusted place for people and businesses to buy, sell, and manage crypto. In April 2021, it became the largest public crypto company, meaning it operates with more financial transparency. It publishes financial statements quarterly and is audited annually by an independent third-party as required by law.

Coinbase also respects your rights over your personal information. It collects only the necessary personal data to provide you with the best protection and services and is transparent about how it uses and shares this data.

Coinbase uses state-of-the-art encryption and security. The technology that powers its platform was developed with industry-leading security and encryption at its core. Its security team works constantly to protect you and your assets from emerging threats.

Coinbase offers powerful security features to all its users, including auto-enrolled 2-factor authentication (with security key support), password protection, and multi-approval withdrawals in Coinbase Vault.

Coinbase Wallet is a self-custody web3 wallet that gives you full control of the private keys to your assets on the blockchain. Nobody, including Coinbase, can access your tokens or NFTs without your recovery phrase. The wallet also offers additional security options, including biometrics, passwords, and security locks.

Coinbase Wallet's browser extension is compatible with Ledger hardware wallets, providing an additional layer of security and peace of mind.

Coinbase also provides transaction transparency and advanced security features, such as support for multiple addresses and permission management.

While Coinbase takes extensive security measures, it also recommends users take actionable steps to safeguard their investments and keep their accounts safe from unauthorized access. These include using strong, unique passwords, enabling 2-step verification, and protecting your email and mobile accounts.

Coinbase's staking and rewards

Coinbase offers staking as a way of earning rewards. Staking is a proven and trusted way to earn in crypto, and Coinbase makes staking simple and secure for customers.

Staking lets you earn rewards by helping verify transactions and secure the blockchain. It is faster and more efficient than other methods. Staking is a method of verifying and securing transactions on proof-of-stake blockchains, like Ethereum, Solana, Polygon, and Polkadot. Proof-of-stake blockchains pay crypto asset owners to help verify on-chain transactions and keep the network secure.

You can get started with as little as $1 and unstake your crypto at any time. Unstaking takes a few minutes to a few weeks. You can request to unstake anytime, but you will not be able to sell or send your staked assets until the unstaking process is complete.

Coinbase offers staking across its products, from traditional staking directly with Prime to liquid staking. It also provides a staking API for clients to programmatically access its staking infrastructure through one unified endpoint.

Coinbase takes a commission on all rewards received, and the return rate for customers reflects this. The rewards rate is based on the estimated protocol rate, which is subject to change.

Coinbase's mobile app

Coinbase is available as a mobile app on the App Store and Google Play. The Coinbase Wallet is a self-custody wallet that can be downloaded as a mobile app or desktop browser extension. The app allows users to buy, sell, and manage their digital currency. It also allows users to collect NFTs, earn yield with DeFi, and join a DAO. The app offers advanced trading tools, in-depth technical analysis, and real-time order books.

The Coinbase Wallet is a secure crypto wallet that is compatible with the exchange. It allows users to store crypto assets safely and securely. The wallet can be connected to a Coinbase account to buy crypto or transfer crypto from a Coinbase account to the wallet. The wallet also supports multiple Layer 1 and Layer 2 networks, including Ethereum, all EVM-compatible chains, and Solana.

To get started with the Coinbase Wallet mobile app, users can either create a new self-custody wallet or import an existing wallet using a 12-word recovery phrase from another wallet provider. The recovery phrase is the key to the wallet, and it must be kept safe as Coinbase cannot recover it. Users can choose to back up their recovery phrase to the cloud or manually. If backing up to the cloud, a password will be set to encrypt the backup, which must also be kept safe.

The Coinbase mobile app has received some negative reviews due to high monthly and trade fees, a slow and lagging interface, and issues with transferring funds. However, it has also been praised as one of the best apps for brokerage purposes.

Coinbase's customer support options

Coinbase offers customer support through a dedicated help page on its website. Users can sign in to their Coinbase account to receive personalized support and more easily identify and resolve issues.

Frequently asked questions