If you are new to cryptocurrency, one of the first platforms you will likely hear about is Coinbase. In this guide, we will discuss what Coinbase is, why it exists, how its wallet works, and the pros and cons of using it.
In the next lesson, you can move on to setting up and using a Coinbase account step by step. For now, let us break down everything you need to know.
What Is Coinbase?
Coinbase is one of the largest cryptocurrency platforms in the world. It operates both:
- A digital wallet
- A cryptocurrency exchange
Coinbase owns the exchange formerly known as GDAX, which later became Coinbase Pro. While the exchange is used for trading, this article focuses specifically on the Coinbase digital wallet product.
The Coinbase wallet allows users to:
- Buy cryptocurrencies
- Sell cryptocurrencies
- Store digital assets
- Send and receive crypto
Supported cryptocurrencies typically include:
- Bitcoin
- Bitcoin Cash
- Ethereum
- Litecoin
You can access Coinbase through:
- A smartphone app
- A web browser
Why Does Coinbase Exist?
Coinbase was created to make cryptocurrency simple and accessible.
Cryptocurrency wallets and exchanges can be intimidating for beginners. Coinbase solves this by offering:
- A clean and easy interface
- Direct integration between wallet and exchange
- The ability to buy crypto with fiat currency
The integration between the wallet and exchange is similar to how Microsoft Windows and Microsoft Office worked together in the 1990s. Everything is connected and streamlined.
One of Coinbase’s most notable features is that it allows users to buy Bitcoin and other cryptocurrencies directly with fiat currency, such as USD or AUD, from their phone or computer.
Most software wallets do not offer this feature.
Key Features of the Coinbase Wallet
1. Buy Crypto with Fiat Currency
You can purchase crypto using:
- Bank account
- Debit card
- Wire transfer
Available payment methods vary by country. Always check the official support documentation for your region.
2. Account Balance Display
Coinbase clearly displays balances across multiple wallets, including:
- Bitcoin wallet
- Ethereum wallet
- Bitcoin Cash wallet
- Litecoin wallet
- US dollar wallet
This makes portfolio tracking simple and user friendly.
3. Referral Program
Coinbase includes a referral program that allows you to earn rewards when you invite friends to join the platform.
4. Strong Identity Verification
Coinbase requires:
- Full legal name
- Email address
- Valid bank account
- Government ID in many cases
This makes it more secure than many anonymous software wallets, but also more time consuming to set up.
Pros of Using Coinbase
Here are the main advantages of the Coinbase wallet:
Easy to Use
Coinbase is designed for beginners. The interface is intuitive and clean.
Direct Fiat On Ramp
You can buy crypto directly with traditional currency, which removes the need for complicated transfer steps.
Integrated Exchange Access
Because Coinbase connects directly to its exchange, transferring between your wallet and exchange account is seamless.
Multi Wallet Support
You can manage several cryptocurrencies and even store fiat currency in one place.
Beginner Friendly Security
Identity verification adds an additional layer of protection against fraud and account misuse.
Cons of Using Coinbase
While Coinbase is powerful, it does have drawbacks.
You Do Not Control Your Private Keys
Coinbase is a hosted wallet. This means:
- You do not control your private keys
- Coinbase technically holds custody of your crypto
In crypto, private key control equals ownership. If you do not control your private keys, your funds are ultimately in the hands of the company.
This creates counterparty risk.
Slower Setup Process
Setting up Coinbase can take several days. You may need to:
- Upload a passport or driver license
- Wait for identity verification
- Wait for bank transfers to clear
This is standard for regulated exchanges, but it can feel slow.
Sending to Non Coinbase Users
Sending crypto is easiest when both parties use Coinbase. If the recipient does not use Coinbase, you must use a public wallet address.
Best Use Case for Coinbase
In my experience, the best way to use Coinbase is:
- Buy Bitcoin or Ethereum on Coinbase
- Transfer the crypto to a wallet you fully control
For example, many users purchase crypto on Coinbase and then move it to:
- A hardware wallet
- A cold storage solution
- A non custodial wallet where they control the private keys
This approach gives you the convenience of fiat purchasing combined with the security of full ownership.
Is Coinbase Safe?
Coinbase is one of the most established crypto companies in the world. However, it is still a custodial platform.
The safest long term strategy for serious investors is:
- Use Coinbase for purchasing
- Use self custody for storage
Remember a simple rule in crypto:
Not your keys, not your coins.
Final Thoughts
Coinbase exists to make cryptocurrency accessible to the masses. It combines:
- A wallet
- An exchange
- Fiat purchasing
- A clean user interface
For beginners, it is one of the easiest ways to enter the crypto market.
However, if you are serious about long term security, consider using Coinbase as a gateway, not a vault. Buy your crypto there, then transfer it to a wallet you fully control.
In the next lesson, we will walk through exactly how to set up and use a Coinbase account step by step.
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