Here’s How Coinbase Works For Beginners

Coinbase is a popular cryptocurrency exchange that allows you to buy and sell a variety of cryptocurrencies, including Bitcoin, Ethereum, and Solana. The platform is known for its user-friendly interface and is a great option for first-time crypto investors. When I started my journey in crypto, it was Coinbase that was my first exchange. It's been around since 2012, and love it or hate it, Coinbase has done a lot for the crypto industry by onboarding new investors easily.

Opening An Account

To open a Coinbase account, you will need to be at least 18 years old and have a government-issued photo ID, such as a driver's license or state ID. You will also need a computer or smartphone with internet access and a phone number for SMS verification.

Once you have created your account and added a payment method, you can start trading cryptocurrencies.

You can add funds to your account via bank transfer, debit card, PayPal, Apple Pay, or wire transfer. Depending on your funding choices, there are different fees associated with your crypto purchases. When at all possible, I prefer to use bank transfers because they have the lowest fees when compared with the other options.

Coinbase supports over 120 different cryptocurrencies, including many of the most popular altcoins. However, more advanced traders may find that they need to set up an account elsewhere to access more niche coins. While starting with Coinbase is a solid bet, I suggest you set up multiple crypto exchange accounts.

Fees on Coinbase can vary depending on the size of the transaction and the funding source. For smaller transactions, the fee is a spread markup of 0.5% of the trade value plus a flat fee based on the size of the transaction. For example, a transaction of $10 or less would have a fee of $0.99, while a transaction of more than $50 and up to $200 would have a fee of $2.99.

One of the great things about crypto is that it allows you to buy fractions of coins, so you don't have to invest a large amount of money to start trading. You don't need to buy a whole Bitcoin for example. When I started, I would only invest say $20 for a few satoshis which is a fraction of a Bitcoin.

User Funds

Coinbase is a regulated platform and has implemented security measures to protect your assets and personal information. Please keep in mind, that while they have strong security measures, if they ever go bankrupt, and your funds are left on the exchange, they can withhold your crypto to help pay off their debts.

It's important to understand that your funds are not insured by the government and can be subject to losses in the event of a security breach. To protect your assets, Coinbase carries crime insurance that covers a portion of your digital assets held across its storage systems against losses from theft, including cyber-attacks. However, this policy does not cover any losses resulting from unauthorized access to your personal Coinbase account due to a breach or loss of your credentials. Therefore, it's important for you to use strong passwords and maintain control of all your login credentials.

In terms of cash balances such as U.S. dollars, British pounds, or euros, they are held in your Coinbase account and may be held in custodial accounts at U.S. banks or invested in liquid U.S. Treasuries or USD-denominated money market funds in accordance with state money transmitter laws.

For U.S. customers, funds held as cash in pooled custodial accounts are insured by the FDIC up to $250,000 per individual.

For non-U.S. customers like myself who are based in Canada, funds are held as cash in dedicated custodial accounts. Again, I only leave a small portion of my assets on the exchange and hold the majority of my crypto in a hardware wallet.

In case of a covered security event, Coinbase will strive to restore your assets, however, total losses may exceed insurance recoveries so your funds may still be lost. Again, store most of your crypto in a hardware wallet like a ledger.

Crypto

One of the perks of using Coinbase is their "learn crypto" program. Once you've signed up to their platform, you'll have access to quizzes. These quizzes are super simple and are designed to help you understand a particular crypto project. Once you finish a short quiz, you're then rewarded with crypto.

It's an easy risk-free way to earn some crypto for beginners. Mind you, you're not being rewarded with large sums of cryptos, but only a few dollars worth.

Coinbase doesn't offer the largest listings of altcoins, you'll have to visit an exchange such as Binance or Kucoin.

However, Coinbase is a bit more selective of which projects they list on their platform, and it's become somewhat of a holy grail for crypto projects to get a listing. Coinbase has a large base of institutional clients as well as individual investors.

It boasts some 98 million users for 2022 which is up from 56 million users in 2021, with a valuation of $18 billion.

Crypto Card

Coinbase's crypto card is a Visa debit card that allows you to spend your cryptocurrency on just about anything. It gives you the ability to earn rewards in crypto on every eligible purchase, so you can buy everyday items with crypto.

You can earn up to 4% back in crypto rewards on your purchases, which helps you grow your crypto portfolio.

It also allows you to spend US dollars, in addition to crypto, which means you can have flexibility in how you use your funds.

You can choose to earn 1% back in ETH, DOGE, or BTC or 4% back in GRT or XLM. Starting this week, you can also choose to earn 1% back in DAI or 4% back in AMP or RLY.

There's an option that offers you the ability to deposit any percentage of your paycheck into your Coinbase account in crypto or USD.

I personally don't own a Coinbase card, but I do own one from Crypto.com which earns me rewards points as well.

I also have a Ledger CL crypto card which does the same things as the Coinbase card.

Coinbase is an easy-to-use platform with a ton of features for newbie crypto investors. It has a decent selection of altcoins with more added on a consistent basis. It's one of the longest and most trusted exchanges, and it will most likely be so for years to come.