Coinbase is perhaps the most popular and best-known place to buy Bitcoin, creating a simple interface making it as painless as possible for the cryptocurrency newbie.
Journalists, bloggers, writers, traders, financial industry professionals and many others consider Coinbase’s Ethereum, Bitcoin, and Litecoin prices the industry standard. Coinbase reportedly has 11.9 million users in 32 countries that have invested $40 billion through it and has also featured as the number one trending app in the Apple app store.
Yet an online search will reveal large numbers of complaints about Coinbase. Any trip to the various digital forums or Reddit will turn up dozens of complaints from Coinbase customers that had their accounts frozen. There are also more than a few complaints about bad customer service at Coinbase out there. Although when you have as many customers as Coinbase does, it is perhaps normal.
What is Coinbase?
Many people will wonder why Coinbase has so many users – if it gets so many complaints.
Despite what many people think, Coinbase is not really a cryptocurrency exchange, it is primarily a digital wallet that is linked with a large and popular U.S. bitcoin and altcoin exchange called GDAX. So whilst you can purchase Bitcoin through Coinbase you are actually buying it from GDAX through Coinbase’s interface. Instead, Coinbase is actually a company and platform that offers a number of cryptocurrency and blockchain services including the wallet.
Coinbase was one of the first cryptocurrency companies to seek mainstream investment. It raised $117 million from bankers, investment bankers, and venture capitalists. The company also has close relationships with the banking community, which is why many cryptocurrency geeks distrust it.
Unlike some altcoin wallet providers, Coinbase operates more like a bank or a commercial service such as PayPal. It is centralized, has a rigid set of rules you must follow, and goes out of its way to comply with the law and banking regulations.
Most people will be very comfortable with that, but a lot of libertarians and cryptocurrency enthusiasts hate it. Conversely, a lot of ordinary people will find Coinbase’s respectability, mainstream acceptance, and willingness to work with authorities as strong selling points.
Is Coinbase a Scam?
Coinbase is about as far from a scam or a rip off than you can get. This company goes out of its’ way to discourage illegal and fraudulent activity.
Coinbase’s strict protocols add an extra layer of fraud and theft prevention, but as with all security measures it can be real easy for average people to get blocked by them. All a person has to do is make one unusual step or mistake to get caught in the security.
A lot of the people who were blocked or thrown out of Coinbase were probably doing something wrong or potentially illegal. Some of them are badmouthing Coinbase because it makes it harder to pull scams and thefts with cryptocurrency.
There is an ethical dimension to the argument over Coinbase. Cryptocurrency users need to ask themselves if they want to use solutions facilitate illegal or unethical activities. If the answer is no, solutions like Coinbase that at least try to prevent such shenanigans are a good alternative.
There are some serious advantages to using Coinbase that everybody should be aware of. The potential benefits of Coinbase include:
• A website and digital wallet that makes it very simple to purchase and store your Bitcoin.
• You can use your Coinbase account to trade Bitcoin at its more advanced sister site, GDAX.
• High level of customer support and security.
• Management takes aggressive measures to discourage fraud, money laundering, and other illegal activities.
• Serves customers in the United States and 31 other countries.
• High-level of transparency. It is one of the few cryptocurrency wallets that lists the countries where its services or available and the number of users.
• Lots of satisfied customers.
• Coinbase goes out of its way to implement a higher level of security. The company offers a $50,000 bounty to hackers who can crack its security, Fortune reported. This enables Coinbase to identify holes in security and plug them faster.
• Offers secure offline and online storage.
• The cryptocurrency stored at Coinbase is insured. Almost no other cryptocurrency solution offers this.
• Full control of your private cryptocurrency keys is available in the signature vault.
• Large, well-funded organization with advanced technology.
• Offers solutions for traders, merchants and developers.
• Accepts Visa and MasterCard credit and debit card payments.
• Accepts bank transfers from several countries; including the United States. That means some users can purchase cryptocurrency with cash at Coinbase.
• Simple charts make it easy to learn what Litecoin, Bitcoin, and Ethereum prices are.
Coinbase Drawbacks and Limitations
Despite all that, there are some serious drawbacks and limitations to Coinbase that you should be aware. Some of these limits make Coinbase almost useless for many cryptocurrency users.
Major limitations to Coinbase include:
• It only works with three cryptocurrencies right now; Bitcoin, Ethereum, and Litecoin. No other altcoins are accepted.
• Fees are high relative to other exchanges.
• Most major altcoins; including such popular currencies as Zcash, DASH, NEO, and Dogecoin are not available through Coinbase.
• The stringent security measures will throw out some legitimate transactions and cut off some legitimate customers.
• Coinbase goes out of its way to track every transaction. This provides more security but compromises privacy. It also creates records that law enforcement, tax collectors, and hackers can access and use to track altcoin owners.
• Direct trading on an exchange is not available through Coinbase. You will have to get a separate account at an exchange to trade.
• Coinbase’s high-profile and $40 billion in cryptocurrency assets make it a big target for criminals and tax collectors.
• America’s feared national tax collection agency; the Internal Revenue Service (IRS), has already targeted Coinbase and its users. The IRS is investigating people who bought more than $20,000 worth of altcoins through Coinbase, Fortune reported. Foreign tax collectors such as Britain’s Inland Revenue and Revenue Canada are undoubtedly targeting Coinbase as well.
• Centralized operations like Coinbase’s can be shut down fairly quickly by hackers or authorities.
Should You Use Coinbase?
Buy Or Sell $100 (£76) Of Digital Currency Or More At Coinbase And Earn $10 (£7) Of Free Bitcoin!
Coinbase is a good resource for beginners and persons who want simply buy modest amounts of Ethereum, Bitcoin, and Litecoin. It is also a great resource for persons that want to monitor the prices and market metrics of those cryptocurrencies.
An average person that wants to get started in Bitcoin or Ethereum investment will be well served by Coinbase. Those that want to make larger investments; trade, or buy other altcoins such as Zcash and DASH, would be better served by using their Coinbase account over at their linked exchange, GDAX or using other exchanges such as Bitfinex.
Serious cryptocurrency users should probably take advantage of a standalone wallet solution such as myEtherWallet. Persons who are worried about security should use a resource like Coinbase to buy cryptocurrency – but store it offline in a cryptocurrency hardware wallet such as a Ledger Nano S.
Even with all its potential drawbacks, Coinbase is still a great resource for altcoin users. Every user should check into it because this company is pioneering ethical and professional utilization of cryptocurrency.