If you are a crypto enthusiast wondering whether Coinbase is safe, yours is a genuine concern. After all, you should be putting your money in a safe and secure exchange.
Coinbase is the world’s largest publicly traded crypto exchange. It operates in 100+ countries, allowing users to buy, sell and manage more than 240+ digital currencies.
This post covers whether Coinbase is safe, its top security features, and best practices to secure your Coinbase account.
Is Coinbase Safe and Legit?
Yes, Coinbase is a safe and legit crypto exchange reputed in the crypto space for its industry-standard security features. It is registered with FinCEN as a Money Service Business and has been at the forefront of advocating for crypto regulation.
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Coinbase Exchange Security Measures
Coinbase employs robust security measures to keep hackers at bay and protect users’ assets. Below are Coinbase top security features that make it a safe and secure exchange for digital currencies.
Cold Storage
It keeps 98% of crypto assets in cold wallets. Offline crypto wallets don’t connect to the internet, making them immutable to cyber attacks. So if the exchange is compromised, only about 2% of assets will be at risk.
Check out these trusted crypto wallets to store your crypto assets.
2FA
Unlike most exchanges where 2FA is optional, Coinbases imposes mandatory 2 Factor Authentication. All users must enable 2FA to use the platform.
And, while many exchanges allow you to reset your 2FA via email, you must verify your identity to reset your 2FA on Coinbase.
Address Whitelisting
Coinbase allows you to set up a whitelist of trusted withdrawal addresses. Thus, your withdrawals can only be sent to approved addresses.
Withdrawal alerts
If there’s an attempted withdrawal to a new address, Coinbase pauses it for 48 hours and alerts you via email. You can then respond to confirm the withdrawal or notify them of a possible attack on your account.
Insurance
Coinbase maintains crime insurance to protect digital assets held across its storage systems against theft and cybersecurity breaches.
Cash balances are held in custodial accounts at U.S banks insured by the FDIC. That makes pass-through FDIC insurance available for fiat balances held on Coinbase.
Coinbase Vault
Coinbase Vault is a cold storage option where users can securely store their assets in a secure offline location. Withdrawals from the Vault require multi-email approval and have a 48-hour delay.
It is a great option to store and add an extra security layer to funds you’re not actively trading.
Data Encryption
Coinbase uses SSL encryption, SQL injection filters, and Bcrypt to protect sensitive user information like passwords, Social Security numbers, bank account details, and more.
Plus, such information is stored offline, where it’s hard to leak, steal or compromise.
The Coinbase Wallet app
To give you complete control of your crypto, Coinbase offers the Coinbase Wallet app. It’s a non-custodial, self-custody wallet independent of the Coinbase exchange, and you don’t have to sign up for Coinbase to use it.
Once you download the Coinbase Wallet app, you can link your Coinbase account and easily transfer assets between your custodial wallet and your self-custody Coinbase Wallet.
Biometrics
When using the Coinbase mobile app or the Coinbase Wallet app, additional security options, like fingerprints, facial IDs, passwords, and security locks, are available. That provides you with more ways to keep your crypto safe.
Is Coinbase Insured?
No, Coinbase is not FDIC insured. That means digital assets held on the platform are not insured or guaranteed by the Federal Deposits Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC).
So if Coinbase becomes insolvent, you risk losing your money. To mitigate the risk and protect users, Coinbase maintains its own crime insurance and holds USD balances in FDIC-insured banks.
You should always withdraw huge crypto balances and transfer them to a non-custodial, cold-storage wallet to avoid custodial wallet risks.
How To Secure Your Coinbase Account
There’s no doubt that Coinbase offers industry-standard security features to secure your digital assets. However, these features won’t be helpful unless you take advantage of them.
Below are some of the best Coinbase security practices you can employ to protect your Coinbase account.
- Enable 2FA
- Use unique, strong passwords
- Use biometric features on the Coinbase app and Wallet
- Enable a security passcode and turn on the screen lock on your smartphone
- Monitor transaction history and recent activity on your Coinbase activity page
- Make sure your security software is up to date and clean your devices regularly
- Use Coinbase Vault to store crypto that you’re not trading
- Use the self-custody Coinbase Wallet app to take complete control of your keys.
How To Buy Bitcoin on Coinbase
To buy Bitcoin on Coinbase, you’ll first need to create a Coinbase account, verify your identity, and deposit funds into your Coinbase account.
Then, click the “Buy/Sell” tab at the top of the page and select Bitcoin. On the buy/sell form, enter the amount of BTC you want to buy or the amount of fiat you want to convert to BTC and confirm the purchase.
Is Coinbase Good?
Coinbase is a good crypto exchange for beginners and buy-and-hold crypto investors. The exchange is reputed for its robust security. Despite many hacking attempts, Coinbase has made a name as a safe and secure exchange that has not experienced significant hacks.
Even when Coinbase’s account recovery system was compromised in 2021, the exchange quickly patched the security flaw, and all the affected users were fully reimbursed.
That shows Coinbase’s commitment to maintaining top security standards and protecting users, making it a good and safe exchange.
Is Coinbase Free?
No, Coinbase is not free. You’ll incur trading fees of 0.6% and below when trading crypto on Coinbase Pro (Advanced Trade) and flat fees ($0.99-$2.99), or percentage fees(1.49%) when using Coinbase Simple.
FAQs
Yes, you can trust Coinbase for several reasons. First, Coinbase is a publicly traded crypto exchange registered with FinCEN and regulated by the SEC. Second, Coinbase employs robust security measures to protect user funds.
To get money out of Coinbase, you first need to sell your crypto for fiat. Then, cash out via any of the available withdrawal methods, including a bank account, PayPal, or debit/credit card.
The major downside to Coinbase is its high trading fees of 0.6% on Coinbase Advanced Trade, and a complex fee structure when using Coinbase Simple. Coinbase also has a reputation for providing poor customer service.
You can fund your Coinbase account in Canada via Interac e-transfer, debit card, or PayPal. You can also make a crypto deposit from an external wallet.
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Disclaimer: Cryptocurrency is a volatile and speculative investment. If you decide to invest, we recommend you do your own research and only commit funds you can afford to lose. The author may own one or more of the crypto assets mentioned in this article.
