Do You Actually Own Crypto on Coinbase?

Coinbase is one of the largest platforms used to buy and exchange cryptocurrencies. However, many crypto exchanges work as crypto bank accounts and may not allow you to transfer the crypto directly to a private wallet. So, do you really own the crypto on Coinbase? 

You don’t fully own the crypto on the Coinbase exchange platform. Coinbase operates a custodial wallet that indicates a certain amount of crypto in your account. However, since they have the keys to your crypto, it’s not counted as full ownership. 

This article will look at how Coinbase works, what level of ownership you have over the crypto on this platform, and whether it’s safe to store crypto assets on the Coinbase exchange. It will also look at the differences between crypto ownership on the Coinbase app or wallet and the Coinbase exchange platform. 

Do You Own the Crypto You Buy on Coinbase?

Coinbase operates in the same way as a bank account. The bank is legally obliged to provide you with cash upon request if you have funds in your account. However, they also have control over your money when it’s in the digital account. 

Similarly, you don’t fully own the crypto you purchase on Coinbase. Rather, Coinbase will provide you with a digital account indicating the amount of crypto in your ownership. However, they control its ownership until you exchange or withdraw the crypto. 

What you do have on Coinbase is a digital token that indicates a certain amount of crypto under your ownership. You can use this “balance” to exchange different cryptocurrencies within the platform. However, you can’t use the crypto balance on the Coinbase exchange to buy or sell crypto from other platforms. 

How Does Coinbase Work?

Coinbase is a crypto exchange site that allows you to buy, sell and exchange Bitcoin, Ethereum, and other cryptocurrencies. Coinbase supports over 100 cryptocurrencies and allows you to exchange crypto for cash that you can withdraw to your bank account. With over 56 million users, it’s one of the best exchanges for quick liquidation of crypto assets. 

Coinbase is essentially a trading application where you store crypto assets to trade them at a profit. It allows you to trade between different crypto coins seamlessly and supports instant withdrawals for easy liquidation. 

If you’re planning on earning through short to medium-term crypto trades, the Coinbase exchange is ideal. It’s also an excellent platform for crypto miners to convert crypto to cash since you can withdraw your funds directly to your bank account. 

Like Binance and other crypto exchanges, Coinbase uses Bitcoin as the base currency for exchanging altcoins. This means that the value of all the crypto coins will be measured in BTC for withdrawals. 

What Is the Difference Between the Coinbase Exchange and Coinbase Wallet?

Coinbase offers both a crypto exchange and a crypto wallet. The Coinbase crypto wallet is just like any other software wallet where you can store cryptocurrencies. The Coinbase crypto exchange is a platform that offers a virtual wallet used for trading crypto. 

The main difference between the Coinbase crypto exchange and the Coinbase crypto wallet is ownership of the crypto assets. You have full ownership over your crypto with the crypto wallet, while the Coinbase crypto exchange only offers you partial ownership of crypto assets.

As a crypto investor, it’s essential to have both a crypto wallet and an account on a popular crypto exchange. The crypto wallet allows you to store crypto for long-term investment with more privacy and decentralization. The crypto exchange is ideal for liquidating your crypto assets and transferring your earnings to your bank account. 

So, while the Coinbase wallet gives you complete ownership over your crypto assets and complete exchange anonymity, it doesn’t offer easy liquidation. Whether you put more of your crypto assets in an exchange or a wallet will depend on your investing goals and whether you want to store crypto in the long run or keep it for short-term trades. 

Are Crypto Assets Safe on Coinbase?

With recent news on many crypto accounts being compromised on popular crypto exchanges, many people are hesitant to store assets on crypto exchange sites. So, do you risk losing your crypto on Coinbase?

Coinbase is a safe crypto exchange but doesn’t come without risks. You can lose the crypto in your account if third parties compromise your password. However, with strong credentials, you shouldn’t worry about the funds in your Coinbase account. 

While Coinbase is insured against security compromise against the site, individual accounts aren’t covered. If you lose your password to hackers through phishing scams or your account is hacked because of a weak password, you won’t be covered for the losses.

So, while the Coinbase exchange platform is safe, you’re still responsible for protecting your account credentials from being compromised. 

What Are the Benefits of Using Coinbase?

There are several benefits of using Coinbase to store and exchange crypto assets, including better liquidation, transaction speed, crypto availability, and usability. With $278 billion worth of crypto assets on the platform, Coinbase is one of the top international crypto exchanges. 

Let’s look at these factors in detail: 

  • Liquidation: Storing crypto in a hardware or software wallet will keep your crypto safe, but it doesn’t allow you to convert it to cash. Coinbase allows you to transfer your crypto assets directly to cash which you can withdraw to your bank account. 
  • Transaction Speed: Coinbase supports instant transactions in various cryptocurrencies, allowing you to make quick trades with ease. 
  • Crypto Availability: Coinbase supports over 100 cryptocurrencies and is one of the most popular crypto exchanges, so there’s never a shortage of crypto assets to trade. 
  • Usability: One advantage of using a popular crypto exchange site is its better usability. Coinbase is beginner-friendly and has an active support team to assist with any issues. 

What Are the Downsides of Coinbase?

The downsides of Coinbase are potential security risks, partial ownership of assets, and high transaction fees. While Coinbase is one of the top crypto exchanges, it’s not perfect. 

When using Coinbase, you’ll have to deal with: 

  • Security Risks: Experts rate Coinbase as one of the safest crypto exchanges, but it doesn’t come without risks. If your password is hacked, you could lose all your crypto assets. 
  • Partial Ownership: Since you don’t own the private keys to your crypto on Coinbase, you only partially own the crypto. However, this isn’t a major problem unless you value complete privacy.
  • High Transaction Fees: Coinbase charges both buying and selling fees. These fees may range from less than 1% to 5% of the transaction. You may also have to pay bank fees when withdrawing the crypto to your account.  

Final Thoughts

Coinbase is a popular exchange platform that facilitates buying and selling crypto. It provides you with a virtual wallet that allows you to exchange over 100 cryptocurrencies and also supports fiat currency. However, you don’t really own the crypto on Coinbase fully since it doesn’t give you access to the private keys as a regular crypto wallet would. 

Nevertheless, Coinbase is the best platform that helps you liquidate crypto assets, which makes it perfect for trading and short-term investments. It’s also quite popular, which ensures the easy availability of different cryptocurrencies.

Sources 

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