What is Coinbase?
Coinbase is one of the more popular and user-friendly choices for cryptocurrency investors to buy/sell Bitcoin, Ethereum, Litecoin, Ethereum Classic, and Bitcoin Cash (more coins are potentially on the way).
If you are new to cryptocurrency, live in the U.S., and are looking to invest for the first time, Coinbase is my #1 recommendation hands down. Coinbase offers everything a cryptocurrency investor needs on one platform (or two if you count their sister site Coinbase Pro (formerly GDAX); both Coinbase and Coinbase Pro use the same logins, and Coinbase the company runs both sites).
Summary: Coinbase (AKA Coinbase Consumer) is going to be most U.S. crypto investors’ starting point and it’ll be their hub for years to come. Coinbase works as a wallet, broker, and more. Make sure to check out other Coinbase products like Coinbase Pro, an exchange where you can save money on fees, and Coinbase Wallet, a wallet that lets you store any Ethereum-based asset and access DApps (and thus gives you access to most Ethereum tokens).
NOTE: We advertise Coinbase on our site. This is because we use Coinbase and find it to be a good first step for new cryptocurrency investors. In other words, we suggest that you use them and thus put the ad up, not the other way around. If you sign up for Coinbase by clicking Coinbase links on our site that take you to Coinbase’s sign up screen (like this one for example), we both get $10 in Bitcoins when you spend $100. Please consider signing up by using our links if you are going to sign up anyway. Once you sign up, you too can offer people the same referral program. 🙂
NOTE: We didn’t create the video below, but feature it as a visual guide to buying cryptocurrency via Coinbase. See our guide below and feel free to ask questions.
Coinbase Exchange Tutorial – How To Buy Bitcoin On Coinbase.
About Coinbase the Company
Coinbase is a digital asset exchange company headquartered in San Francisco, California that provides a cryptocurrency wallet-exchange-broker hybrid service (making Coinbase and its sister site Coinbase Pro a one-stop-shop for cryptocurrency).
How Coinbase Works
As noted above, Coinbase works like this:
Coinbase, the company, has three main products, 1. “Coinbase Consumer” (Which most people call Coinbase, it is the product found at Coinbase.com) where people can buy and sell Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and other coins using dollars in a simple way, 2. Coinbase Pro an exchange aimed at more advanced users where people can trade Bitcoin, Ethereum, Litecoin, Ethereum Classic, 0x, Basic Attention Token, and Bitcoin Cash trading Bitcoin for most of those coins or trading those coins for dollars or the crypto-based dollar substitute USDC, and 3. Coinbase Wallet a way to access Ethereum-based assets.
In other words, Coinbase acts like a broker, providing a user-friendly way for anyone to buy, sell, send, and receive four of the top coins, Coinbase Pro acts like a traditional exchange where customers can trade those same top four coins, and Coinbase Wallet acts as a gateway into the Ethereum ecosystem.
Coinbase is Our Top Recommendation for New Cryptocurrency Investors, but the Next Step Should be Coinbase Pro
We often suggest Coinbase for those investing in cryptocurrency for the first time due to ease of use (for example on our basics of cryptocurrency investing page).
With that in mind, once you get Coinbase down, we also strongly suggest doing most of your trading on Coinbase Pro. Both platforms are run by Coinbase, both use the same logins, and they are truly built to compliment each other. Thus, we strongly suggest signing up for both Coinbase and Coinbase Pro!
TIP: Consider wiring money to Coinbase via the bank wire option once you feel confident in using it. Its the only way to get money into your account without long wait times or buying coins and paying the related fees. On that note, see our guide to not paying fees when you use Coinbase (it is a thing, and it is worth figuring out).
TIP: You need Coinbase to use Coinbase Pro. With that said, once you get your feet wet with Coinbase, you’ll likely want to use Coinbase Pro for almost everything for which a novice would use Coinbase. Coinbase Pro is more intimidating, but having the ability to set limit orders and avoid Coinbase’s fees makes Coinbase Pro more profitable for many investors. Buy and Sell fees on Coinbase are at least 1.43%; on Coinbase Pro they can be as low as 0% (for maker fees). So get on Coinbase, fund your USD wallet, and buy a few coins. However, consider using Coinbase Pro for the bulk of your trades. In short, if you can understand the complications involved in using Coinbase Pro (a Coinbase product), then save yourself fees by using it. As mentioned above, since you need Coinbase to use Coinbase Pro, and since you’ll still find yourself using key Coinbase features like their APP when on to go, we’d appreciate it if you click this link and get your free $10 when you sign up and fund your account.
TIP: It can take over a week to fund your Coinbase/Coinbase Pro, and they share limits. A benefit of Coinbase is you can buy cryptocurrency at the market price plus a fee before your account is funded. To use Coinbase Pro you have to wire or bank transfer money to your account first. So Coinbase has one thing over Coinbase Pro, immediacy for new users. I use Coinbase when I see a good price and don’t have access to my desktop (which Coinbase Pro runs on) or when I don’t have funds in Coinbase Pro (because they are tied up in trades) but want to make a buy immediately.
UPDATE: Coinbase/Coinbase Pro has Bitcoin Cash in December 2017. Thus, Bitcoin Cash and a BCH/BTC trading pair now offered via Coinbase/Coinbase Pro.
How to Get Started Trading Cryptocurrency With Coinbase.com
The process for getting started trading cryptocurrencies is simple, but there are a few vital concepts to review (just like above, but this time applied to using Coinbase).
First, to sign up for coinbase.com.
- Sign up for Coinbase.com to create a digital currency wallet where you can securely store digital currency.
- Connect your bank account, debit card, or credit card so that you can exchange digital currency into and out of your local currency (you’ll probably also want to add optional info and upload your ID to expand your purchasing limit).
- Buy Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, and Litecoin (trading USD, aka US dollars, for cryptocurrency).
- Sell Bitcoin, Ethereum, Bitcoin Cash, Ethereum Classic, and Litecoin (trading USD, aka US dollars, for cryptocurrency).
- Consider signing up for another exchange and trading cryptocurrency for cryptocurrency (and then transferring that back into Bitcoin, Bitcoin Cash, Ethereum, and Litecoin, and then back into Coinbase, and then back into USD). Don’t forget to record your transactions for the tax man and to brush up on the tax implications (I can’t stress that enough).
- FIRST AND FOREMOST: USE TWO FACTOR AUTHENTICATION AND A STRONG PASSWORD. MAKE SURE TO ENABLE ALL SECURITY FEATURES IN COINBASE. Coinbase/Coinbase Pro is insured, but not against your account getting hacked, just against something happening on their side.
- I strongly suggest you use a bank account, and likewise strongly suggest you don’t use a debit or credit card. Please note, only some banks are supported. Yours might not be. The fees are lower with a bank account. The fees are rather high without one.
- When you sign in with your bank account, you’ll need to input your bank account login. That may feel shady, but is the process (read about it at Coinbase).
- If you use your bank account, you have to wait 3-5 days for your bank to approve the pairing (so you can’t trade for about a week after you sign up).
- There are limits to how much you can buy or sell in a week. Adding a photo ID and other payment methods will increase your limits. Otherwise your limits increase (quickly) over time as you trade.
- Coinbase now has instant purchase when you buy with your bank account. CAVEAT: Not all Coinbase accounts have instant purchase. Most do at this point, but from what I understand not all do (and not all do for new users).
- There are fees involved with buying from Coinbase and some types of trading on Coinbase Pro (which can in cases get lower as you buy / trade more). Other exchanges have better rates than Coinbase (for example Coinbase Pro itself has better rates). However, rarely do exchanges have a better fee schedule than Coinbase Pro. In other words, when using Coinbase specifically, you’ll pay a little bit more than market price (or sell for a bit less than market price) and pay a small fee when trading on Coinbase (this is a trade-off for ease of use). NOTES: To be clear, there are essentially two sets of fees when you buy with Coinbase. One is them charging you more per coin than on Coinbase Pro or other exchanges; the other is an actual fee (currently paid in crypto, not USD, so if you buy 1 Ether, you get a little less than 1 Ether but pay the market price). That is the price you pay for them doing all the work and taking the risk of the price changing quickly when you buy. Not a reason not to use Coinbase and only use Coinbase Pro every time, but it is something to keep in the back of your mind if you start making lots of buys.
- Set up 2-factor authentication. That helps to secure your account by sending a code to your phone when you log in.
- To trade coins, you need to go into settings and make sure your wallets are set up (BTC, BCH, LTC, ETH, ETC, and USD wallets can be found under “accounts”).
- The benefit of a USD wallet on Coinbase is that you can put money in that and then buy coins instantly from the wallet. If you try to buy directly with your bank account, the transaction can take about a week. A credit card doesn’t have this problem, but limits are lower on a credit card. TIP: I almost always deposit USD in my wallet as opposed to buying coins directly from Coinbase via my bank account when using Coinbase to buy (I do this on-the-go sometimes). You can also wire money if you need the funds to be in the wallet quicker. On that note, I almost always then use Coinbase Pro to buy and sell coins when I’m on a desktop. I then use Coinbase as my wallet and mobile app.
- You don’t have to buy a whole coin. You can buy fractions of coins. BitCoins are expensive here in 2017, so consider buying fractions of a coin to start if you don’t have a big bankroll. It has historically been a mistake to buy only ETH and LTC because BTC costs more. You need to think of which one will increase in and retain value, buying all three in equal $ amounts (and ignoring how many of each coin that amounts too) is one way to avoid making the wrong choice based on price tag per coin.
- When you buy a coin, take a breath and review the information. An extra decimal place can mean big money considering a single BitCoin can trade for over
- Download the app. This lets you trade cryptocurrency from your phone. The market is volatile; transactions are slow. When it is time to buy or sell, you need to do it ASAP.
- Set alerts. Alerts can help you decide when to buy or sell.
- There is a feature that lets you buy incrementally over time. Averaging in a position on a weekly basis is a solid conservative move that Coinbase will automate for you.
- Cryptocurrency is volatile! There is always the chance that the market will crash, or that you will face some other catastrophe. Cryptocurrency isn’t a centrally controlled and regulated fiat currency. If you lose a coin or someone cheats you, there is nothing you can do about it (which is why you want to have 2-factor authentication set-up).