While writing this article I understood the difference between a crypto-broker and a crypto-exchange:
Coinbase is the broker and acts as an intermediary between you and the Coinbase Exchange to buy your desired assets. The entry level is rather low, it's easy to use, the fees are horrendous with 1.5% per trade or 2% for a conversion.
Coinbase Pro on the other hand is a real crypto exchange. It acts as an intermediary between sellers and buyers. Fees for trading are with 0.5% of the volume quite high.
Just a remark: There is also a third layer of Coinbase -> Coinbase Prime, which aims at institutions.
We will compare in the folllowing sections the fee structure of Coinbase (I) and Coinbase Pro (II). Then we will have a short look at the Coinbase Referral Program (III) and a longer look at the Earn Program (IV). Eventually we will highlight the safety of your funds (V).
Fiat deposit and withdrawal fees are negligible and won't be dealt with.
I.) Coinbase Fees
The following applies only to Coinbase (not Coinbase Pro), and the summary is: The broker is a waste of time and fees. Better go directly to II.: Coinbase Pro and skip section I.
I don't like trading at Coinbase at all.
It's only possible to buy/sell crypto from/to fiat OR convert one crypto to another, but there are no "traiding pairs" and the fee composition is compound and confusing:
Coinbase charges a spread of about 0.5% for cryptocurrency purchases and sales, but I couldn't recognize this spread in my trades.
Then they have additionally either
tiered fees, belittling called "flat rates" so that you will pay
- 1 USD/EUR/GBP for every transaction worth up to 10 USD,
- 1,5 USD/EUR/GBP for every transaction up to 25 USD,
- 2 USD/EUR/GBP for every transaction up to 50 USD,
- 3 USD/EUR/GBP for every transaction up to 200 USD,
OR a percentage of 1.5% of the volume traded if it surpasses 200 USD.
OR a percentage of 2% (instead of 2*1.5%) of the volume when converting one cryptocurrency to another (if it surpasses 200 USD).
[Being in Austria the flat rates in EUR will always be more expensive than those in USD – in my humble opinion, that's ridiculous. (But still better than instant buying with a debit card, where a fee of 4% applies, which is absurd.) ]
At least Coinbase is transparent in its overpricing, the preview shows the detailed costs and they write elsewhere:
"As a reminder, the Coinbase Fee will always be the greater of the minimum flat fees or the variable fees."
That means: If you got for example a reward of 6 USD in CELO from the Coinbase Earn Program, you will lose about 1 USD while converting to fiat.
II.) Fees at Coinbase Pro
Everything is different here, it's just a normal exchange for individual traders and offers also a trading API for automated trading. There are only a few trading pairs. It is limited to customers from the US, UK and EU. I was able to log in straight with my Coinbase credentials (without a second layer of verification with a second IDs of different type as it was actually foreseen for EU-customers).
Fun fact – only concerning crypto/fiat: Depending wether you live in the US, UK or Europe you will have more or less trading pairs to trade on fiat currencies. EU customers will be able to trade ALGO, BAND, BTC, BCH, CGLD, EOS, ETH, ETC, LINK, LTC, NMR, OMG, UMA, XLM, XTZ, XRP, ZRX to EUR. ATOM for example can only be traded in the US, BAND can be traded everywhere execpt in the state of New York, MKR, OXT & COMP only in the US but not in the state of New York, XLM can only be traded in the EU. UK customers are free to choose wether they want to trade against GBP or EUR, otherwise you are limited to your home currency, exception made: EOS can be traded everywhere but not against GBP. For more details have a closer look yourself https://help.coinbase.com/en/pro/trading-and-funding/cryptocurrency-trading-pairs/locations-and-trading-pairs This means that you may have to exchange your MKR for a crypto currency before you can convert it to fiat currency. But well - maybe that's exactly what you want.
The fee structure
depends on the volume traded during the last 30 days and is as follows:
Pricing Tier Taker Maker
Up to $10k 0.50% 0.50%
$10k - $50k 0.35% 0.35%
$50k - $100k 0.25% 0.15%
$100k - $1m 0.20% 0.10%
...
$1b+ 0.04% 0.00% :)
The two accounts (Coinbase and Coinbase Pro) are linked, but use separate wallets. You can easily, instantaneously and free of cost transfer funds form your Coinbase wallet to your Coinbase Pro wallet by: Being at Coinbase Pro -> Trade –> Deposit –> selecting the desired currency –> selecting Coinbase Account -> Determining the amount –> clicking on Deposit. So it is needless to say: you will not trade/exchange your funds on Coinbase but on Coinbase Pro!
The equivalent of your trading volume or deposit must exceed 5 units of your fiat currency.
Trading Pairs
Unfortunately you will miss most of direct trading pairs, so you will maybe have to trade twice (and pay twice the trading fee) to obtain your desired coin. Examples given:
You will only be able to trade against the fiat currency of the region your are living in but sometimes not even that.
Considering five coins from Coinbase Earn: EOS, COMP, ALGO, MKR and CGLD. As EU customers you have only to choose from maximum two traiding pairs per coin:
EOS/BTC, EOS/EUR
COMP/BTC
ALGO/EUR
MKR/BTC
CGLD/BTC, CGLD/EUR.
In short: Considering the fees Coinbase is not convincing, still there are two remaining Pluses: Coinbase Earn and Security at Coinbase.
If you allready read enough of "hey, here is my link, please register, you will get plenty", please skip sections III & IV and go directly to section V or the tip box.
III.) Registration bonus at Coinbase
A completely usual referral program: The invitee registers, trades a minimum of all in all 100 USD within 180 days of opening his or her account, and invitee and invitant will both receive a 10 USD referral bonus in BTC. Here is my link, if you are not yet registered, thanks in advance!
Register for Coinbase and get 10 USD in BTC
You don't necessarily have to transfer fiat to your Coinbase wallet or at least not only fiat to achieve the volume, because there is
IV.) Coinbase Earn
Three friends of mine and I dived into Coinbase Earn and I would like to share our findings. First of all:
Better take the attitude, that your first benefit is to learn about some new coins by watching videos, and consider it a game, thus making the wait more bearable, because: It seems random when the next available rewards appear, and sometimes they disappear within less than 18 hours. So be patient and maybe turn notifications on / subscribe to the newsletter to react more quickly. For the moment we have to wait.
You should click through the listed coins in Coinbase/Earn to enroll in every available waiting list. (For some coins there won't be one, because it's unclear if the offer will return.)
Wether your reward opportunities are unlocked or not, seems not to depend of your trade volume. [Some say it is so, but one of us never sent anything and still was unlocked for Earnings.] But again, you have to be patient.
So far there will be two kinds of rewards:
A.) in the amount of 6 USD,
B.) with more than 6 USD.
@A.) The first are easy to explain: Watch the video (2-3 minutes) – take the quiz – it's almost impossible to choose a wrong answer, the answers are mostly obvious: three quizzes at 2 USD each make 6 USD.
@B.) Considering the latter, it's trickier: If you scroll through the list items you will at the end see referral links: For every registered person with unlocked rewards of the corresponding coin who clicks on your link and then takes the very first quiz of his for this coin, you will get the bonus of 10 USD in the corresponding coin. IMPORTANT: Also, if you're doing a team of two, it's possible that you and your partner will get the referral reward. You just have to send your link, your partner sends his link, you both do the very first quiz for the coin, an both get the reward for the referral. It's important that you didn't do any quiz of this coin before.
Unfortunately, then a kind of Ponzi scheme begins: When you form a team of several people, the even benefit is gone. You will be able to earn only a single referral for one teammate, but for your greatest profit you will need four teammates that do the first quiz after your referral. Of course it's no Ponzi scheme because everybody only invests time and no money is involved.
No matter, make your team anyway. You will at least get both an Earn and if your amount is too low to deposit at Coinbase Pro, you may use the free transfer from one Coinbase account to another - via email-adress used for registration or the explicit wallet address and then let only one person do the deposit and conversion. How you regulate this in detail is a matter of negotiation ;) but you don't have to sit sadly on your rewards.
I am writing this article also to compensate the effort of my team mates: We all want the maximum profit and I kindly ask you to do the quizzes following our referral links, after the fourth successfull redeem, I will exchange the link. If I don't have any more - feel free to post your link in the comment section, I am not a waster and will insert it here.
COMP-Quiz: https://coinbase.com/earn/comp/invite/9qc6hdt7
XLM-Quiz: https://coinbase.com/earn/xlm/invite/dvsfn5bq
EOS-Quiz: https://coinbase.com/earn/eos/invite/hstqr7d1
I appreciate the Coinbase earning by learning programm and I got to know some coins better I would never had read about else, especially EOS, which I since then use for transactions between crypto exchanges because no transaction fees apply on the part of the coin.
V.) Security
Coinbase claims to be the "most trusted platform for trading cryptocurrency" and it seems – if the information provided is correct – that they are indeed the most secure, insurance backed platform I ever came across. What they state:
Cash Balances
Cash balances, such as U.S. Dollars, British Pounds, Euros, customers store with Coinbase are held as a balance in your Coinbase or Coinbase Pro account(s). For U.S. customers, Coinbase combines your balance with the balances of other customers and holds those funds in custodial accounts at U.S. banks and/or invests those funds in liquid U.S. Treasuries in accordance with state money transmitter laws. For non-U.S. customers, funds are held as cash in dedicated custodial accounts. All custodial pooled amounts are held separate from Coinbase funds, and Coinbase will neither use these funds for its operating expenses or any other corporate purposes.
To the extent U.S. customer funds are held as cash, they are maintained in pooled custodial accounts at one or more banks insured by the FDIC. Our custodial accounts have been established in a manner to make available pass-through FDIC insurance up to the per-depositor coverage limit then in place (currently $250,000 per individual). FDIC pass-through insurance protects funds held on behalf of a Coinbase customer against the risk of loss should any FDIC-insured bank(s) where we maintain custodial accounts fail. FDIC insurance coverage is contingent upon Coinbase maintaining accurate records and on determinations of the FDIC as receiver at the time of a receivership of a bank holding a custodial account.
Digital Currency Balances
Coinbase secures customer digital currency through a combination of secure, online servers and offline (“cold”) storage. Coinbase maintains 98% or more of customer digital currency in cold storage, with the remainder in secure online servers as necessary to serve the liquidity needs of our customers.
Coinbase maintains commercial criminal insurance in an aggregate amount that is greater than the value of digital currency we maintain in online storage. Our insurance policy is made available through a combination of third-party insurance underwriters and Coinbase, who is a co-insurer under the policy.
The policy insures against theft of digital currency that results from a security breach or hack, employee theft, or fraudulent transfer.
Our policy does not cover any losses resulting from unauthorized access to your personal Coinbase or Coinbase Pro account(s). It is your responsibility to use a strong password and maintain control of all login credentials you use to access Coinbase and Coinbase Pro. Digital currency is not legal tender and is not backed by the government. Digital currency, such as Bitcoin, Litecoin, and Ethereum, is not subject to Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation protections.
A final fun fact: The thumbnail of this article is from Transparency at Coinbase, the first Transparency Report from a crypto exchange I have ever seen. The report summarizes government requests that Coinbase received for customer account information during the first half of 2020. Of the 38 million customers worldwide 1,914 were examined. Somehow I would like to get to know the 18 investigated people from Austria, somehow I would not. I would be very interested in what such a report from Binance would look like!
VI.) >>> Conclusion:
Coinbase turns out to be better than it seemed at first glance.
As far as the Earn Program is concerned: It is quite an enrichment – both for pocket money and for knowledge. I got so far some 90 EUR from it.
The broker disappoints in general.
Coinbase Pro is ok to realize your earnings and outstanding under a security aspect. Definitely if you are looking for an insured and cash backed place to store your assets: Coinbase / Coinbase Pro is the place to go.
____________________________________________________________________________
If you would be so kind to consider registering via my referral link:
Coinbase Registration to our mutual benefit
After registration and if there are rewards available for your account please use the link from me or respectively from my team mates just before starting the first quiz of each coin:
COMP-Quiz: https://coinbase.com/earn/comp/invite/9qc6hdt7
XLM-Quiz: https://coinbase.com/earn/xlm/invite/dvsfn5bq
EOS-Quiz: https://coinbase.com/earn/eos/invite/hstqr7d1
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This article was first published on publish0x.com:
https://www.publish0x.com/investing-saving-earning-delighting/a-coinbase-pro-review-and-the-difference-between-broker-and-xolvzeg?a=MYer00kBbO