A Brief History of Coinbase
In Bitcoin’s earliest phase (roughly 2009-2012) even a simple exchange of the newly minted currency was a far more daunting task than it is today.
Whilst these digital coins could be mined relatively cheaply compared to the present day, exchanging Bitcoins and buying things with them proved a challenge of its own- with early adopters overcoming this hurdle by means of crude, often unreliable or downright dodgy distribution networks.
Especially in the case of Bitcoin, it wasn’t as easy as delivering your money to the bank to pay for goods or services (as Bitcoin users are their own banks). The trick, therefore, lay in getting more “banks” to open:
And in 2012, Coinbase came up with a solution.
After enrolling themselves in the 2012 Y Combinator Startup Incubator Program (say that three times under your breath with a mouthful of sprouts) Brian Armstrong & Fred Ehrsam, along with their team, launched their services for buying and selling Bitcoin via bank transfers – rapidly securing investments and partnerships (including Dell and Dish Network).
In under a year, Coinbase was selling over 1 million Bitcoin per month. In two years, Coinbase had over 1 million users and had launched a vault system so that users could also secure their Bitcoin through their services. Needless to say, this was a huge step for acceptance of Bitcoin.
Additionally, Coinbase would later open a professional branch of the company to cater towards less casual, more full time investors; named GDAX (the Global Digital Asset Exchange)- though since rebranded to the more predictable name of Coinbase Pro by late-June 2018.
The Pros
Being known as probably the world’s leading Bitcoin exchange, Coinbase now includes services such as Ethereum (and Litecoin) exchange.
Because of its reputation and popularity, beginners are often tempted to buy crypto-assets from their platform right from the get-go, which is just another factor that has led to Coinbase’s exponential rise in popularity (you can also buy Bitcoins using your PayPal and other major credit cards).
It offers benefits and services such as purchase up to $1,000 worth of BTC per week, instant transfers among users, insured deposits, debit cards, well-documented API, and wallet services.
Coinbase can also serve as a digital wallet that aids the process of storing, buying, and selling cryptos, including a feature where you can request money (either in USD or BTC, your choice). The wallet also offers a vault where the Bitcoins are stored, and is convenient and user-friendly, allowing you to easily add funds to your wallet when needed/wanted.
The vault ensures that all funds are stored offline. Drives and backups are placed in deposit boxes and vaults for safe keeping (the bitcoins can directly go the vault, which is secured with a password).
There is also a choice of creating a group vault for those that require such a service, with a maximum of five users per group.
In short; Coinbase’s usability, the high variety of coins serviced and industry leading branding has kept it as one of the most, if not the most, popular Bitcoin exchanges in the Western hemisphere – and perhaps even the world.
The Cons
Although Coinbase is a well-known and reliable company, there are still some flaws in its system.
Customers have been sceptical over its vault feature amongst other properties, as it seems to allow the company a worrying amount of power over their funds (not dissimilar to that of a bank).
Another gripe would be some closed and frozen accounts, again understandably causing many customers to complain about a system which has tried to integrate itself towards more traditional banking law. And, as much as this company receives love, it also receives quite a lot of hate/bad reviews from its customers.
Several complaints have arisen in the past; that this company does not fix bug problems in its core software, that the fees charged have been extortionate or even that they don’t bother to answer some of the questions asked of them despite touting themselves as a user-friendly website (Coinbase’s customer service can truly be random at best sometimes, between you and I).
There was even a time when the company promised to give out rewards to those customers who had referred other customers to their platform, but many of these users never received their coins.
Also, in 2019, Coinbase halted all trading of Ethereum Classic, due to suspicion of an attack known as a “double spend” on the cryptocurrency’s network.
This lead to the controversial decision to acquire Neutrino (a blockchain intelligence platform whose staff members were allegedly part of an infamous hacking team), and who had previously faced scrutiny for providing authoritarian governments with tools for oppressive surveillance within the crypto-asset world.
Coinbase made a statement about their new acquisition and confirmed that the suspected employees would be transitioning out of their company operations as they integrated with new management (though, unfortunately, this did not stop Coinbase from being the target of several high-profile spear-phishing and social engineering attacks in June 2019).
More recently Coinbase has come under fire for a hack. Although it only affected 6000 customers using sms for security, if you are looking for more secure long term storage of crypto you might want to consider the Kraken, or even the Leger X Wallet.