5 Reasons Why Coinbase Wallet Is So Expensive

Coinbase is arguably one of the biggest names in cryptocurrency in the United States today. It’s the go-to retail exchange for new cryptocurrency investors, but it’s easy to shy away from the platform due to how expensive the wallet can be. While the crypto ecosystem is not easy to run and maintain, owning a Coinbase wallet might be more expensive than need be. 

Here are some reasons why Coinbase wallet is so expensive:

  1. High buying and selling fees
  2. High bank fees
  3. High withdrawal fees
  4. High trading fees
  5. Insurance 

Fees are commonplace in the cryptocurrency landscape, but Coinbase’s fees are spread over almost every transaction you make, sometimes making the wallet a costly liability. However, it helps to understand why these fees are high. Keep reading to know how these fees make your Coinbase wallet expensive!

1. High Buying and Selling Fees

Buying and selling fees are the most fundamental costs associated with cryptocurrency. The buying and selling process is pretty straightforward, and Coinbase allows you to buy cryptocurrencies with fiat and crypto. The wallet accepts payments from bank accounts, debit and credit cards, wire transfers, and even PayPal.

Like every other exchange, Coinbase charges fees for every cryptocurrency asset you buy on the platform, but its pricing system is a little different. For example, if you choose to use PayPal, you will be charged PayPal’s transaction fees on top of Coinbase’s costs.

When you buy Bitcoin with Coinbase, your costs are subtracted automatically from the total amount of your order. These costs are subject to change, and they may differ based on your region and banking institution.

Depending on the size of the transaction, there may be fixed and variable costs. When you make minor purchases, you will be charged a fixed price.

Here’s a breakdown of the flat fees Coinbase charges when you buy or sell on the platform:

  • The transaction fee is $0.99 for transactions you make that are less than $10.99.
  • The transaction fee is $1.49 for transactions you make that are between $11 and $26.49.
  • The transaction fee is $1.99 for transactions you make between $26.50 and $51.99.
  • The transaction fee is $2.99 for transactions you make that are between $52 and $78.05.

Here’s a breakdown of the variables fees Coinbase charges when you buy or sell on the platform:

  • There’s no flat fee for transactions below $200.
  • The transaction fee is 1.49% for transactions above $201.

Coinbase also charges additional variable fees of 3.99% for withdrawing profits of transactions above $78.06.

Coinbase charges a lot of money in fees. They may add up quickly, especially if you use the service frequently. 

You’ll be charged automatically for any incurred costs whenever you make any transaction with your Coinbase wallet. On the confirmation screen, you’ll get a comprehensive breakdown of your transactions in crypto and fiat and the fees you’re being charged.

Remember that buying using a bank account has a considerably lower cost than buying with a credit card. However, be prudent with your bitcoin purchases and keep track of all your transactions. Make sure you receive the most terrific bargain possible.

2. High Bank Fees

Coinbase users may also incur external fees when using the wallet, including charges from your bank. When using a credit card or debit card, Coinbase consumers are charged a 3% international transaction fee. The 3% conversion fee is standard for foreign conversions, but this number may vary depending on your bank.

These charges may seem unfounded, but the explanation is pretty simple. Coinbase uses a London-based business to process card transactions, and the service charge is passed to Coinbase users.

To be sure you know what to anticipate, check with your financial institution to see whether there are costs you’ll have to deal with when purchasing digital assets and cryptocurrency. 

3. High Withdrawal Fees

There is no direct cost for making a withdrawal on Coinbase. However, when withdrawing, there is a standard “network charge” that changes according to how busy the chosen coin’s network is when you initiate the transaction. As a result, there is no way to avoid paying this fee on Coinbase.

You could avoid this cost in previous years by transferring your cryptocurrency from your standard Coinbase wallet to the more robust Coinbase Pro, but Coinbase altered that recently. The withdrawal fees are normal on most cryptocurrency exchanges.

The fee structures of both Coinbase and Coinbase Pro are different. In addition, the standard Coinbase is more expensive and challenging to comprehend in comparison to Coinbase Pro. 

The standard rate for all buy and sell transactions on Coinbase is 4%, although this might vary depending on your region or payment type.

Of course, there are still several ways to get over these costs. For example, you can use a fast cryptocurrency with low withdrawal costs to ensure you reduce your transaction costs. 

However, keep taxes in mind while trading cryptocurrencies to fiat or other coins. Ensure you carefully consider market volatility and think about retaining your cryptocurrency for a more extended period. Holding can be an excellent strategy to protect a portion of your digital investment. 

4. High Trading Fees

Cryptocurrency transactions have evolved in recent years. Today, you can use a limit purchase to easily buy cryptocurrencies to save money on trading. This feature comes at a cost, and Coinbase charges a fixed or variable fee for your transactions.

Still, although many users still perform their transactions using standard Coinbase, others opt for Coinbase Pro to get better features and sweeter deals. Coinbase Pro’s main advantage is that it offers you more freedom to trade your cryptocurrency on the platform.

Coinbase Pro calculates its trading fees using a standard trading module known as maker-taker. Maker-takers operate in a reasonably simple way.

A Maker order allows you to add liquidity to your account. This process indicates that your order will be entered into the order book as a buy or sell order. Being a maker in a transaction means that you will be creating your offers.

The purchase price you set should be much lower than the current selling price in the limit order. However, these benefits do not come for free, and you need to pay a trading fee. This fee is referred to as a “Maker Fee” on Coinbase.

There are also takers in Coinbase transactions—-referring to when you remove a section of the order book. Hence, you are transacting to trades in the order book.

These trades are made instantaneously, but you will be charged a 0 to 0.5% fee. The trading fees typically depend on the amount you transfer in a period (usually a month). 

5. Insurance 

Coinbase collects its assets and holds them in fiduciary accounts typically made up of bonds, fiat money (usually the US Dollar), and market funds. Coinbase uses this holding because the Securities Investor Protection Corporation (SIPC) or the Federal Deposit Insurance Corporation (FDIC) do not protect cryptocurrency.

However, the platform still offers insurance for the digital assets in your Coinbase wallet. Your digital items are protected by vendor insurance coverage. This coverage means that the service provider (Coinbase) is obligated to repay you if your cryptocurrency is lost due to security breaches on the platform.

Sources

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