Coinbase Review (2018)

Coinbase has now added support for GBP deposits and withdrawals through the Faster Payments network. Coinbase’s biggest EU market can now buy bitcoin easier, quicker, and cheaper than ever before.

But wait…

Who are Coinbase? Why is this such a big deal? Is Coinbase the best way to buy bitcoin in the UK?

In this Coinbase review, we’ll be covering all of this:

Advantages & Disadvantages

Advantages

Disadvantages

Who Are Coinbase?

Coinbase was founded June 2012 in the United States by Brian Armstrong and Fred Ehrsam.

Their mission is to: “create an open financial system for the world” to “bring about more economic freedom, innovation, efficiency, and equality of opportunity in the world”.

They:

In other words? They’re doing damn well.

How Does Coinbase Work?

When you buy or sell bitcoin to Coinbase, you’re dealing directly with them.

Some people think that Coinbase is an exchange (where you buy/sell to others), but they’re actually a brokerage (i.e., act as a middleman between buyers and sellers). Coinbase Pro (explained later) is the exchange platform which they offer.

Coinbase provides a simple platform that makes it quick and easy to buy and sell bitcoin in over 30 countries (with transparent and competitive fees). Because of this, Coinbase are well-recommended across the crypto-community (especially for beginners).

Payment Methods & Fees

Payment MethodFunds AvailableCurrencyFees
Bank TransferAbout 30 minutesGBP1.49%
Debit CardInstantGBP3.99%
Credit CardInstantGBP3.99%
SEPA Transfer1-2 daysEUR1.49%

You’ll pay the lowest fees when buying bitcoin with a UK bank transfer. It’s not instant, but it’ll usually get processed in under 15 minutes. Just check that your bank supports the Faster Payments (check here).

Credit and debit card fees are cheaper than many alternatives too.

CompanyFees (Approximate)Website
Wirex1.5%Visit
Coinbase4%Visit
Uphold4.5%Visit
Coinmama10.8%Visit

Coinbase Faster Payments

Back in March 2018, Coinbase announced that they’d received an e-money license from the UK Financial Conduct Authority (FCA).

This means that Coinbase can (finally) process GBP payments through a UK bank (Barclays) and utilise the Faster Payments Service (FPS).

According to a recent blog post (2nd August 2018):

Coinbase, Coinbase Pro and Coinbase Prime GBP support is now live for some of our existing customers, and we will continue rolling this out to all UK customers in the coming weeks.

That’s a big deal.

Previously, UK cryptocurrency users had to make deposits and withdrawals to/from Coinbase in euros through SEPA transfers. This involved hidden fees (imperfect FX rates from sterling to euros) and delays (SEPA payments take 1-2 days). This was enough to put many crypto-newcomers off.

 UK Faster PaymentsSEPA Payments
CurrencyGBPEUR
RecipientsMost UK banksEU countries
SpeedUp to 2 hours1-2 business days
Availability24/7Mon-Fri
CostFreeVaries
LimitsHigh (usually £250,000)Varies

Zeeshan Feroz (Coinbase’s UK CEO) has said that: “having domestic GBP payments with Barclays reduces the cost, improves the customer experience…and makes the transaction faster”. UK customers will find that the experience is now “streamline”.

Coinbase Pro

Coinbase Pro Interface

A segment of the Coinbase Pro interface.

With Coinbase Pro, it’s possible to buy and sell Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC) without paying any fees. Absolutely nothing.

Coinbase Pro (owned by Coinbase) is an exchange platform aimed at traders and crypto-enthusiasts. Until recently, it was known as GDAX.

When you register for a Coinbase account, you’ll automatically become a Coinbase Pro member too (you’ll be able to login at Coinbase Pro with your Coinbase details).

These are the key differences between Coinbase and Coinbase Pro.

 CoinbaseCoinbase Pro
ServiceBrokerExchange
Target CustomersRetail investorsTraders & enthusiasts
CurrenciesBTC, BCH, ETH, LTCBTC, BCH, ETH, LTC
Ease of UseEasyHard
Minimum Purchase£1.990.001 BTC
Fees1.5%+0% Maker | 0.3% Taker

Even though the fees are lower, I wouldn’t recommend Coinbase Pro to absolute beginners. It’ll probably just overwhelm you (unless you have a background in trading).

However, I would recommend taking the time and effort to learn how to use Coinbase Pro if you’re looking to buy or sell larger amounts. As illustrated below, Coinbase’s fees will add up.

 Fees (%)Cost (£) of £5000 Purchase
Coinbase (Debit/Credit Cards)4%£200
Coinbase (UK Bank Transfer)1.5%£75
Coinbase Pro (Maker)0.3%£15
Coinbase Pro (Taker)0%£0

Coinbase Limits

Coinbase selling limits

My Coinbase buying & selling limits.

With a fully verified account, I’m able to:

  • Buy up to £100,000 worth of cryptocurrency every week.
  • Sell up to £100,000 worth of cryptocurrency every week.

When you initially sign up, you’ll have lower limits.

You can check your own account limits here. On this same page, it’ll also show you what actions you can take to increase your limits. You can find more details about Coinbase account limits here.
If you need higher limits, then apply for it at the bottom of this page.

Coinbase Wallet

Coinbase host wallets for every cryptocurrency which they support.

These wallets have basic functionality (send and receive), support 2FA, and are perfect if you’re just starting to learn about cryptocurrency.

However, they’ll never be as secure as a properly setup external wallet. With hosted wallets like this:

  • You’re trusting that they’re keeping your funds secure.
  • They could block access to your funds (temporarily or permanently).
  • ‘If you don’t own the private key, you don’t own the bitcoin(s).’

Because of such issues, hardware wallets are well-recommended across the cryptocurrency community. The most popular options are the Ledger Nano S and Trezor.

Coinbase Vaults

Coinbase wallet vault

Coinbase also has ‘vault wallets’ for each cryptocurrency which they support.

These behave like normal cryptocurrency wallets, but with additional steps required to withdraw any funds:

  • Require authorisation from two email addresses.
  • Sends notifications to your email addresses and mobile.
  • Withdrawal delay of 48 hours.

If you’re not going to use an external wallet, then I’d setup and use these vaults. However, they’re a poor substitute for a properly setup external wallet.

Check out this page for more details.

Is Coinbase Safe?

Coinbase is it safe

Nothing is ever 100%, BUT Coinbase is a legit cryptocurrency exchange.

If all you want is an overview, check out this page.

Regulation

Over the last few years, Coinbase has been collecting financial licenses like Pokémon cards.

They’ve been getting cosy with regulators so that they can bring cryptocurrency to more and more people (through their platform).

Coinbase is:

Cryptocurrency Funds

Coinbase store 98% of customers’ cryptocurrencies offline in cold-storage.

These cold-storage backups are split and distributed around the world in safe deposit boxes and vaults.

Even if one portion of these backups was stolen, your funds would still be safe. Thieves would need to compromise multiple locations (and people) to steal the cryptocurrency. Because Coinbase has multiple backups of the same wallet, it’s also not an issue if they ‘lose’ one segment of their backup.

Coinbase store just 2% of customers’ cryptocurrencies in (insured) online wallets.

If the security of these online wallets is compromised, then customers would be reimbursed for any funds which are lost/stolen.

Their insurance policy only “covers any losses resulting from a breach of Coinbase’s physical security, cyber security, or by employee theft”. This means that if your individual account is compromised, then you’re not covered.

Fiat Funds

Coinbase store customers’ fiat currencies (i.e., a government-issued currency, like GBP) in separate accounts to the ones they use to run their business. Even if Coinbase went up in flames(!), any fiat currencies on Coinbase should be safe. They couldn’t be claimed by Coinbase or creditors.

USD funds are stored on behalf of US customers in US banks insured by the Federal Deposit Insurance Corporation (FDIC). If a bank where your funds are kept ‘fails’, you’re covered up to $250,000.

Unfortunately, UK customers aren’t protected in the same way by the Financial Services Compensation Scheme (FSCS).

Coinbase Mobile App

Coinbase mobile app

Coinbase’s mobile app (available on Android and iOS) is packed with all of Coinbase’s main features. You can:

  • Buy or sell bitcoin (with connected accounts).
  • Access all your wallets on the go.
  • Send and request funds from your contacts, or through NFC and QR codes.
  • Monitor cryptocurrency prices.
  • Setup price alerts for Bitcoin, Ethereum, and Litecoin.
  • Protect the app with a passcode.

Why Do Some People Dislike Coinbase?

This 99bitcoins post explains the main reasons people dislike Coinbase. Here’s a summary of a few points they make:

They summarise their post with this:

“While Coinbase may be a cheap, popular and convenient option, they’ve demonstrated a disturbing lack of regard for those unique properties which ultimately give Bitcoin its value.

Ouch.

Coinbase Alternatives

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Conclusion: A Great Way to Buy Bitcoin in the UK

With the introduction of UK faster payments, Coinbase is one of the cheapest and easiest ways to buy bitcoin in the UK.

If you’re looking to buy your first slice of bitcoin (without getting ripped off), then Coinbase is your best choice. It’s absolutely perfect if you’re a beginner or non-technical user.

Ready to get started? Sign up now!

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