Choosing the right online Bitcoin wallet can be difficult.
There are now a ton of online wallets/trading platforms available due to Bitcoin’s exponential growth over the last few months. The problem is finding one that offers ease of use, functionality and a high level of security. Almost all of the online wallets do the same thing (i.e. sending and receiving Bitcoins), but surely some have to be better than others. I have had an account with Coinbase.com for a awhile now and I am offering a review of the site in the form of questions and answers below.
Does Coinbase offer the simplicity I need?
One of The biggest pros for Coinbase is its overall simplicity. This site was designed for the beginner centering around buying and selling Bitcoin. They make it very simple without the trading bells and whistles associated with other trading platforms. You buy an amount of Bitcoin with your linked bank account and either get them in four business days or instantly if you have a linked credit card. When it comes time to sell your Bitcoin, the proceeds of the sale will be transferred back to your bank account. The site was designed to work with (not around) existing money laundering laws. As a result your transactions always leave a bank paper trail.
Why should I use a fully functional online Bitcoin Wallet?
Do you have concerns about your computer crashing or your Bitcoin wallet being erased because you forgot to back it up? They essentially solve this problem by letting you have a fully functional “cloud” or online wallet. The downside of this is that if the website is down, you can’t use your wallet for transactions.
F.Y.I It is probably a good idea to never keep all of your Bitcoins in one place just in case something happens. You can have them in several different wallets and easily move them around as needed.
Do I have to wait for the Bitcoins after my purchase?
Yes. If you don’t link a credit card you have to wait at least four business days. This is one of my least favorite features of the site as my bank account will usually clear a ACH withdrawal the day after it is initiated. Perhaps they will shorten the time of Bitcoin deposits in the future based on when the funds clear.
Can Bitcoins lose or gain value between the time of purchase and when I receive them?
Yes. Once you make your Bitcoin purchase the price is locked in. If the price of Bitcoin goes down during the four business days it takes to complete the transaction you could lose money. The same is also true if the price goes up during the wait. You will end up with more value than you purchased.
I want a way to purchase Bitcoins instantly. Can this be done at Coinbase?
You can purchase up to 10 Bitcoins per week using “Instant Buy” as long as you meet certain verifications. To get access to this service you need to verify your bank account, cell phone number, your identity (takes a minute or two) and link a credit card.
Can I use Coinbase to send money like I do with Paypal?
Yes. You have the option of sending Bitcoins to an email address (generating more of a transaction trail) just like you can with Paypal.
Does Coinbase charge a transaction fee for buying and selling?
Yes, you will have to pay a 1% transaction fee and a $0.15 bank fee per buy and/or sell transaction. I don’t think that most people would find paying a 1% fee a hindrance but it is considered a little in the Bitcoin community. Also, they do not offer a sliding fee scale for heavy users.
Do they offer email notifications when you receive Bitcoins?
Yes. It is fun to see the emails saying that Bitcoin has been received. It works in a similar way as when someone sends you a Paypal payment.
Can I convert my Bitcoin balance to a paper wallet to store in a safety deposit box?
Coinbase does offer a feature to convert some of your Bitcoins into a physical paper wallet and store them offline. You can then give them as gifts or use them to pay for goods and services.
I was looking for a Bitcoin trading site big on security. How does Coinbase stack up?
They offer a way to log into your account by using a pin number that changes every 20 seconds. Someone could be watching you type your login information using a keylogger and it would still be useless to them since the next pin number would already have come around. I found this aspect of their site security to be very impressive.
I also want to buy Litecoin and Namecoin. Can these be purchased at Coinbase?
Right now the only cryptocurrency they deal with is Bitcoin. However, you can use your Bitcoin to trade for others such as Litecoin. You will have to do a Bitcoin transfer to a trading site like BTC-e and swap your Bitcoin for the other cryptocurrency of your choice. You can then either keep the coins on BTC-e (or a similar site) or transfer them to the appropriate wallet of your choosing.
I like to track my Bitcoin transactions. Can Coinbase help with that?
Click on the transaction and then “advanced details” to see an estimated time for the transaction (deposit or withdrawal) to be complete. You can also see in real time how many confirmations have occurred of the transaction across the Bitcoin network.
The same information can also be viewed on Blockchain. Copy and paste one of several transaction identifiers (inputs/outputs/hash) from the Coinbase transaction details to the Blockchain search box.
What if I want to trade large amounts of Bitcoins per day?
Coinbase might not be what you are looking for if you desire a large scale trading platform. The site isn’t really designed around what a Bitcoin power trader would need and there are several trading restrictions. There are many other platforms out there that would be better suited for someone looking for unlimited Bitcoin trading.
The meat of the potatoes
Coinbase might not be perfect, but it does offer an easy and convenient way for someone to jump into the Bitcoin market. To use an analogy, Coinbase is to BTC-e or Mt. Gox similar to what Sharebuilder is to etrade. Sure they are both stock trading platforms, but Sharebuilder (Coinbase) is just not built around what the power user would need. It can meet basic needs of buying and selling, but it certainly will not be for everyone. Although in the end I think most people will be happy with the features that it offers.