How to Use Coinbase to Make Money

Back in April, I was somewhere in Arizona when I decided to download the Coinbase app. I had no idea what it really did or what using it entailed, but I was curious and wanted to find out.

Since then I’ve converted $1,250 USD into different crypto assets. There have been a few ebbs and flows in the market but I’ve still come out ahead. If I liquidated my crypto assets today I’d have more cash than I started with and I have an NFT to boot.

In this article, I’m going to show you how to get started and how to use Coinbase to make money.

Affiliate Disclosure: MBNY participates in many affiliate programs. Some of the links below are affiliate links and MBNY may be compensated for any purchases made through those links. You can read more about that here.

What is Coinbase

Coinbase is an exchange that allows average folks like you and me to buy, sell, and hold cryptocurrencies. I call Coinbase a “custodian” platform because you don’t have to have your own crypto wallet use it. The main benefit of this is that you won’t have to worry about protecting your seed phrase. 

Coinbase makes money by charging fees for trades made on the platform. These fees are similar to what brokerage firms used to charge before Robinhood did away with trade fees. When I made my first Ethereum purchase back in April I paid a 1.5% fee that was deducted from my purchase. That means I transferred $1,000 USD from my bank account but only had $985 with which I could purchase Ethereum. 

There are different types of accounts you can have on Coinbase: a normal individual account, a business account, and a Coinbase Pro account. Like most financial institutions, the fee structure varies based on how you plan to use the platform. You can read about the fees Coinbase charges for individual accounts and retail products here.

Obviously Coinbase is a company — a publicly traded one at that — and has to generate a profit. The fees you pay support their business model while also supporting the blockchain infrastructure itself. When you execute a transaction on the blockchain you have to pay a fee called gas which covers the cost of processing your transaction. This type of fee is similar to transactional fees you pay for real world municipal services like getting a marriage license or registering your car with the DMV. Because Coinbase is an exchange, not a decentralized wallet, you aren’t directly paying the gas fees — Coinbase is.

• Read More: Alternative investment ideas to try this year

How to Set Up an Account on Coinbase

Getting started on Coinbase is easy. I did it within a few minutes from my Google Pixel while living in my car. You’ll need to follow these steps to get started: 

1. Download the app

2. Create an account

3. Verify your identity

4. Connect your bank account to add funds

5. Start buying crypto 

Coinbase created a step-by-step guide you can also find here.

One thing you might be wondering about is the relationship between your Coinbase account and your regular bank account. To make your first crypto purchase you’ll have to use cash — or fiat currency — from your bank account. Once you make your first purchase you can either continue converting cash into crypto or you can convert existing crypto into other crypto coins.

Likewise, to cash out any crypto earnings, you’ll need to have a bank account from which you can withdraw money. Coinbase did create its own debit card to help you spend easier but before you sign up I’d recommend reading the terms of service. I opted to not get their debit card after I reviewed the fee structure and saw they charge a 2.49% fee for purchases made with crypto (although they don’t charge any fees when you use U.S. dollars stored on Coinbase).

I wanted to share this because there is a belief that decentralized finance is an alternative to the banking system. While that is true to some extent, you will still need to use the existing banking infrastructure to get initial access to crypto markets.

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