Disclaimer:
This is not financial advice. These are opinions based on my own experience buying cryptocurrencies through the platforms mentioned in this blog post. You should always conduct your own due diligence when you make a decision to buy cryptocurrencies. Always read the white paper of each coin or token before you buy, to understand its utility and ensure you truly believe in the project.
Index
I've been buying cryptocurrency for a while now, more specifically since March 2018. I've been interested in the cryptocurrency market since I found out about Bitcoin in 2010, however, I never took any action to buy, because the whole process was not as easy then as it is nowadays.
I'm kicking myself now for not trying hard enough, but then again I was a broke student with a basic laptop, and smartphones had nowhere near the capability they do now. Hey... that's life. I've been asked by people close to me, how to go about buying cryptos, and the answer is there are many platforms and avenues you can use.
For this blog series, I have only reviewed the platforms that I have used to buy cryptocurrencies with a short review of each one.
Coinbase Review
My experience:
Coinbase is how I got started buying cryptocurrencies back in 2018. It seemed to be the easiest way I could get my hands on some Bitcoin and track the market. However today I do not keep all my crypto on Coinbase for reasons outlined in the cons section.
About the company:
Coinbase was founded in 2012 by Brian Armstong and Fred Ehrsam with the aim to allow everyday people to send and receive Bitcoin securely. Today Coinbase now offer a range of different cryptocurrencies that are available to buy on its exchange.
Coinbase went public in April 2021, allowing anyone who believes in the company and its mission to invest in it.
Set-Up Process:
To set up an account you will need to be over 18 years old, and prove that you are by scanning a government-issued photo ID such as a drivers license or passport. The Coinbase app will allow you to scan your photo ID.
You will have to provide personal details such as your full name, date of birth and full address. Coinbase is technically a financial institution and therefore will conduct its own due diligence on you. They will also ask "What do you use Coinbase for?", "What is your source of funds?", "Current Occupation" "Employer".
I know this seems intrusive, but again as a financial institution, they have to conduct their own due diligence to ensure you will not be using or buying cryptocurrencies for malicious purposes.
You'll also be asked to do the usual like verifying your email address and mobile phone number in order to complete your account set-up.
Once you have set up your payment method your account set up is complete. You can link a debit card or credit card to your account. If you prefer you can opt to fund your Coinbase account via bank transfer.
Buying Crypto Through Coinbase Guide
Once your account is set up and your payment methods are verified, buying cryptocurrency is literally 3 clicks away. I usually buy cryptocurrencies via their app which is quite intuitive.
1. Click on the cryptocurrency you want to buy from the "Prices" list, in this example, I am using Bitcoin.
2. Three options will appear, "Buy", "Sell" and "Convert".
3. Select the "Buy" option.
4. How much crypto do you want to buy? You can enter your own amount if you don't want to choose the pre-defined options. You may have noticed where it says, "One Time Purchase". This is because Coinbase offers a reoccurring purchase for example if you want to make an automatic payment every week or month etc. For now, I will leave it as a "One Time Purchase" for this walk-through.
5. You will be taken to an "Order Preview" screen. Which shows you how much cryptocurrency your fiat money will get you. In this case, £9.01 will allow me to purchase 0.00036332 Bitcoin (BTC). Coinbase does unfortunately charge transaction fees. As you can see from the below example this fee is £0.99. For more information on fees click here or scroll down to the "cons" section.
Coinbase Benefits
Coinbase aims to be a hub for cryptocurrency education. There are articles and videos to help you understand the coins that are available to buy and sell on their platform. For example, you can earn cryptocurrency for free just by watching educational videos about certain coins and answering a short quiz on the video you just watched (see screenshot below).
Another benefit of Coinbase is that you can buy small amounts of cryptocurrency. As you can see from the example above you can spend as little as £10.00 if you are just getting started and don't want to commit large amounts.
Coinbase Cons
The fees. Yes, those annoying transaction fees to buy and sell cryptocurrency. Coinbase charges a flat fee for buying and selling cryptocurrencies. They may also charge a spread fee (the price at which you can buy and sell). The spread can vary and is dependent on the country/ region you live in, fluctuations in price.
Not all cryptocurrency coins and tokens are available. Another downside is that not all coins and tokens are available to buy and sell. You will have to check on the "Tradable" tab on the "Prices" Page.
Server crashes: I think for the most part this issue has been fixed, however there have been issues where the server has crashed, especially at times where the price of a popular coin has risen in price. In this scenario the crash is due to people trying to "cash out" and take their gains at the same time.
Hacking: Unfortunately this is the case with most virtual wallets where your private keys are managed for you. Coinbase is no exception and has been subject to hacking scandals. If you choose to use any virtual wallet where you don't own or manage your private keys yourself then you should always take extra security measures and be aware of any attempts to hack your account e.g. spam emails.
Coinbase Financial Protections
Investing in cryptocurrencies can be risky and it's important to understand which platforms are licensed and how you are protected.
In the United Kingdom at the time of writing this article, Coinbase is registered as, CB Payments Limited and is authorised by the Financial Conduct Authority under the Electronic Regulations 2011 for the issuing of electronic money.
In the United States at the time of writing this article, Coinbase is registered as Coinbase Inc (Coinbase and Coinbase Pro) and is licensed to engage in money transmission in most US jurisdictions. Coinbase is registered as a Money Services Business with FinCEN. FinCen is a bureau of the US Department of the Treasury aiming to safeguard the US financial system from being abused, combat money laundering, and other things. Basically, by registering with FinCen, Coinbase is trying to show that it has nothing to hide and is doing the necessary due diligence to combat issues such as money laundering and other unsavory financial acts.
As stated on the Coinbase website:
"Coinbase is required to comply with many financial services and consumer protection laws, including:
The Bank Secrecy Act, which requires Coinbase to verify customer identities, maintain records of currency transactions for up to 5 years, and report certain transactions
The USA Patriot Act, which requires Coinbase to designate a compliance officer to ensure compliance with all applicable laws, create procedures and controls to ensure compliance, conduct training, and periodically review the compliance program
Most states’ money transmission laws and corresponding regulations" (www.coinbase.com).
