Coinbase and Coinbase Wallet are two different products created by the same company, yet they serve different purposes. In this article, we’ll look at the differences between Coinbase and Coinbase Wallet and what each product is best at.
Coinbase vs. Coinbase Wallet: What’s the Difference?
Coinbase (the exchange) differs from Coinbase Wallet in several ways. Coinbase exchange is a hub for buying and selling crypto, while Coinbase Wallet is an application designed to allow you to interact with the decentralized web.
Coinbase exchange is a better option if you’re looking to buy, sell, and trade cryptocurrencies. Meanwhile, Coinbase Wallet is a better option if you’re looking to manage your own private keys and interact with DeFi protocols.
What is Coinbase exchange?
Coinbase (established in 2012) remains one of the most notable names in the cryptocurrency world.
Wide Range of Cryptocurrencies: Supports Bitcoin, Ethereum, Litecoin, and more Diverse cryptocurrency selection Secure Storage: 98% of assets stored offline Protection against theft or loss Mobile App: Available for iOS and Android Manage accounts on the go What is Coinbase Wallet?
Coinbase Wallet is a great option for self-custodying your cryptocurrency.
Access to Multiple Cryptocurrencies: Bitcoin, Ethereum, and more supported Centralized management of digital assets Mobile Accessibility: iOS and Android app available Manage crypto on the go Decentralized Storage: Full control over private keys Ability to store crypto offline Is it better to use Coinbase or Coinbase Wallet?
The choice of whether to use Coinbase vs. Coinbase Wallet comes down to what you intend to use it for.
Private Keys and Custody
Above, we mentioned “private keys,” but what exactly are they? Crypto wallets have both private and public keys. The names are important to understand their functions. Public keys are visible to everyone, and you give someone a version of your public key (your wallet address) when you ask them to send you some crypto. Private keys allow you to access that wallet and use your cryptocurrency.
Coinbase exchange doesn’t offer you a private key because it holds onto your wallet on your behalf. Coinbase Wallet, on the other hand, gives you your private keys, which you will need to access the wallet’s coins. Since you are in custody of your wallet, you don’t risk losing your crypto in the case of an exchange hack or bankruptcy!
What are the advantages of a self-custody wallet? A self-custody wallet means that you have access to your private keys. When you store your cryptocurrency in an exchange, you risk losing your crypto to a hack or bankruptcy. Self-custody wallets allow you to interact with the wider DeFi and NFT ecosystem. For example, Coinbase Wallet can be used to buy NFTs on OpenSea or borrow crypto on Compound. Coinbase vs. Coinbase Wallet: Insurance
How can you be sure that the money you have in Coinbase’s exchange wallet doesn’t disappear if Coinbase fails? Virtual currency isn’t secured by deposit insurance, but Coinbase handles this by aggregating their holdings and keeping them in accounts made up of assets, bonds, and fiat (US dollars).
Coinbase Wallet provides peace of mind to its users under the vendor insurance policy. If your funds are lost in a security breach, Coinbase’s insurance will pay you for the value of the lost assets.
Please note that this coverage does not extend to if you are defrauded of funds. Is Coinbase Wallet safe and legit?
Coinbase and Coinbase Wallet both have stellar security features, making them a safe way to hold and spend your crypto assets. The wallet comes with several key features that make it stand out as a legitimate crypto wallet, including:
Cloud Backup: Lost assets can be restored via a cloud backup system built into the wallet. Insurance: Funds stored in the wallet are covered by insurance in the case of theft or loss. Regular Security Audits: Coinbase performs regular audits to ensure that security for the wallet remains robust.
These and other security features on Coinbase Wallet make it a safe and trustworthy application.
Are there any disadvantages to using Coinbase Wallet?
While Coinbase Wallet is an excellent option for users, it suffers from a few shortcomings. Among them are:
Poor Customer Support: Customer support response times are slow. High Transaction Fees: Compared to other wallets, the transaction fees users pay for buying and selling crypto on the Coinbase exchange are extremely high. Limited NFT support: While Coinbase Wallet supports NFTs, it can only send and receive Ethereum and Polygon NFTs. Can you send money from Coinbase to Coinbase Wallet?
moving money from your Coinbase account into Coinbase Wallet is very simple. The steps are as follows: On your Wallet's Assets tab, tap "Buy or Transfer" and select "Buy or Transfer From Coinbase." Select the crypto asset balance you want to move funds from. Enter the amount of the asset you'll be transferring. Hit Continue. Hit Confirm and follow the remaining prompts to complete your transaction. How do I convert crypto from Coinbase Wallet to cash?
Selling crypto into fiat is also relatively easy. Simply follow these steps:
Transfer any crypto you want to liquidate back to your Coinbase Exchange account. Go to Trade in Coinbase Exchange and select the cryptocurrency asset you want to liquidate. Open the details screen for the crypto asset (so, for example, if you’re selling ETH, you click on ETH and open up the graph tracking the ETH price). Select the “Sell” tab on the right side of the graph. There you should see “Sell [asset]:” and right underneath that should be an “Add to:” field. If you have your bank details set up in Coinbase Exchange, it should show up here. Hit the blue “Sell” button at the bottom, and the asset will be sold at the current price, with the proceeds deposited into your bank account.
Linking your bank account to Coinbase exchange can be done in the Payment Methods section of the Settings menu. Once there, you’ll be able to fill out the bank details and complete the verification step. Once you register your bank account with the exchange, you’ll have access to it for all of your transactions.