How to Use Coinbase: A Beginner‘s Complete Step-by-Step Guide

Hey there! If you‘re new to the world of cryptocurrency, welcome. You‘re in for a wild ride!

In this detailed guide, I‘ll be walking you through everything you need to know to get started with Coinbase. I‘ve been using this popular crypto exchange for years, so I‘m sharing all my insider tips and tricks.

By the end, you‘ll be a pro at:

Setting up your Coinbase account
Verifying your identity
Adding payment methods
Making your first crypto purchase
Storing coins securely
Selling and cashing out crypto
Using Coinbase Pro to save on fees
And staying safe with good security practices!

I‘ll also provide relevant statistics, data, sourcing, and analysis to give you good background knowledge. My goal is to empower you to use Coinbase like an expert.

Let‘s dive in!

Why Use Coinbase?

Founded in 2012, Coinbase is one of the longest running and most trusted cryptocurrency exchanges worldwide. Here are some key stats about Coinbase:

73 million verified users worldwide [1]
Supported in 103 countries [2]
Has $255 billion in assets on the platform [3]
Over $327 billion traded on the platform to date [4]

As you can see, Coinbase has a huge global reach and manages enormous crypto asset volumes.

Coinbase owes much of its popularity to its beginner-friendly user experience. The interface is clean and intuitive with educational content built-in.

For example, if you scroll down on the Coinbase homepage, you‘ll find basic explainers on how cryptocurrency and blockchain work. This makes it less intimidating for complete beginners.

The exchange is also fully licensed and compliant with regulations in the jurisdictions it operates in. This gives users peace of mind.

Coinbase prioritizes security by storing 98% of customer funds offline in cold storage. Its USD balances are insured by the FDIC up to $250,000.

For all these reasons, Coinbase is widely considered one of the best exchanges for first-time crypto users.

Ready to get started? Let‘s begin by setting up your Coinbase account.

You have two options for signing up:

Use the Coinbase website – Go to coinbase.com and click "Get started"
Download the Coinbase app – Available on both iOS and Android

I prefer the app since it makes accessing your account on-the-go easy. But you can also use both if you want.

Once you access the signup page, you‘ll need to provide:

Your first and last name
An email address
A strong password

Make sure you use a secure password that‘s unique from any other accounts.

After entering your info, you‘ll get an email verification link. Click it to verify your email.

Almost there! Next, you‘ll need to add a phone number to receive an SMS code. Enter it and you‘ve finished signing up.

Step 2: Identity Verification

Before you can start trading, Coinbase requires all users to complete identity verification for security and compliance.

You‘ll need to provide:

Your legal name
Date of birth
Address
Last 4 digits of your SSN
Phone number
Photo ID (driver‘s license or passport)

Coinbase also performs extensive background checks on all new users:

Public records check – Checks global watchlists and sanctions lists to ensure you don‘t appear.
Blockchain analysis – Analyzes your blockchain transactions to assess risk.
ID document verification – Confirms your ID is authentic using machine learning.

This may feel intrusive, but it‘s required by financial regulators. It keeps nefarious actors off Coinbase and keeps your account secure.

To verify your ID, take a clear photo or scan of your driver‘s license or passport photo page. Make sure there‘s no glare.

You‘ll also need to take a selfie for facial recognition match.

Coinbase will cross-check your selfie and ID photo to confirm they match the same person.

After your identity is verified, you‘ll get full access to buy, sell, and trade crypto.

Step 3: Add a Payment Method

To start purchasing crypto, you need to add a payment method.

Here are the payment methods accepted on Coinbase:

Debit card – Instant but higher fees (~3.99%)
Credit card – Instant but fees are even higher (~3.99% + $0.30 transaction fee)
Wire transfer – Free but slow transfers
Connected bank account – Free ACH transfer, takes 4-5 days
PayPal – Instant, moderate fees (2.30% UK, 3.99% US)
Apple Pay – Convenient but has fees
Google Pay – Same as above

For beginners, I recommend using a debit card for your first purchase since it‘s fast and straightforward.

Here‘s how to add a debit card as your payment method:

On Coinbase, click your profile icon > Settings > Payment methods > Add payment method
Select "Debit card"
Enter your card details – name, card number, expiration date, CVV code
Confirm your billing address

And you‘re all set! Adding a credit card or PayPal account follows the same process.

Pro tip: You can lower fees by linking your bank account and using ACH transfers for larger purchases. Just plan ahead, since transfers take 4-5 business days.

Step 4: Make Your First Crypto Purchase

Now for the best part – buying crypto! Your payment method is loaded and ready to go.

Follow these steps for your first buy:

From your Coinbase homepage or app dashboard, click the "Trade" button.
Click "Buy" under the Buy Cryptocurrency tab.
Select which crypto you want to buy – Bitcoin and Ethereum are good starters.
Enter the amount in dollars that you want to purchase.
Select your linked payment method.
Preview your order details and transaction fees.
Click "Buy now" to complete!

And congratulations, you‘ve officially bought crypto!

It will show up in your Coinbase "Portfolio" shortly. Don‘t panic if the crypto‘s value dips after your purchase. Prices naturally fluctuate all the time in the volatile crypto markets.

For beginning buys, Coinbase sets a $750 weekly limit. But you can quickly raise this by providing more personal details during verification.

Step 5: Store Your Crypto Securely

Now that you‘ve joined the crypto investing revolution, you need to keep your coins safe and secure.

Let‘s explore the best storage options for your crypto held on Coinbase:

A) Coinbase Exchange

Coins held on Coinbase (rather than Coinbase Wallet, see below) are stored online and protected by the company‘s security measures.

Your USD funds up to $250,000 are FDIC insured, which covers fiat money losses from the exchange being hacked.

But your crypto isn‘t insured directly by the FDIC. You‘re ultimately trusting Coinbase‘s security systems.

According to Coinbase, less than 2% of their customer funds are held online with the rest stored offline in cold storage. This greatly reduces their risk exposure to hacking.

So overall, reasonably safe for moderate holdings. But more serious crypto investors use additional storage options.

B) Coinbase Vault

For enhanced security, you can transfer your crypto to Coinbase Vault for long-term storage. This provides time-delayed withdrawals to protect against security breaches.

If your account was compromised, the attacker wouldn‘t be able to immediately withdraw your funds. You could regain control of your account in the 48 hour delay window and stop the transfers.

The downside is it takes 48 hours to withdraw funds yourself from the Vault. So not ideal if you need to frequently access your holdings.

C) Coinbase Wallet App

For more advanced users, the Coinbase Wallet app offers private key storage and decentralized DeFi features.

When you transfer crypto from regular Coinbase to Coinbase Wallet, the coins are stored on the blockchain rather than by the exchange. This gives you full control.

The private keys that control the crypto are encrypted and stored only on your device. So you don‘t have to trust Coinbase‘s custody.

Just make sure you safely back up your recovery phrase! If you lose your phone, you can use the phrase to restore your wallet.

The Coinbase Wallet also lets you access decentralized finance (DeFi) apps to earn interest and rewards. Pretty neat!

D) External Crypto Wallet

The most secure option outside of cold storage is storing your crypto in an external wallet where you control the private keys.

Popular options include Trezor and Ledger hardware wallets or software wallets like Exodus.

I like Ledger‘s nano devices because the private keys are stored offline on the physical USB drive. Super secure against hacking.

When you own the private keys, you don‘t have to worry about exchange outages or security breaches affecting your holdings.

Just be extremely careful not to lose your wallet recovery phrase – this is your last line of defense for restoring lost or damaged devices.

Step 6: Sell Your Crypto

Selling crypto on Coinbase follows a similar process to purchasing:

Go to your Portfolio and click the asset you want to sell
Enter the $ amount or quantity you want to sell
Select which account you want the funds deposited to
Preview and confirm the transaction

Easy enough, right? But here are some important selling tips:

You can only withdraw back to PayPal or your bank account, not the original payment card.
Debit/credit card withdrawals aren‘t supported.
Selling crypto is a taxable event. You may owe capital gains tax on any investment profits.
Try trading on Coinbase Pro instead for lower fees (0.5% or less vs. ~1.5% on regular Coinbase).

Don‘t forget to thoroughly review your selling transaction details before confirming to avoid costly mistakes!

Step 7: Use Coinbase Pro for Lower Fees

Once you‘ve gotten comfortable using regular Coinbase, I highly recommend checking out Coinbase Pro.

Coinbase Pro is an exchange built for advanced crypto traders that was also created by Coinbase.

It has much lower trading fees, more options, and better prices. Here‘s a comparison:

Coinbase

Designed for beginners
Simple, easy to use interface
Higher trading fees (up to ~3.99%)

Coinbase Pro

Built for active traders
Advanced trading interface
Lower fees (0% – 0.5% maker/taker)

You can easily transfer your crypto and cash between Coinbase and Coinbase Pro quickly and for free.

The process only takes a few clicks:

In Coinbase Pro, deposit the funds you want to transfer
Go to Coinbase and select “Send” or “Deposit” for the transfer
Choose the Coinbase Pro account as the recipient
Confirm and complete the transfer

Once your funds hit Coinbase Pro, you can trade at much lower cost. The advanced charting and trading options take some learning but can give you an edge.

Give Pro a try to step up your Coinbase game! The savings on fees are massive.

Follow Good Security Practices

Crypto security should always be a top priority when using Coinbase or any exchange. Follow these best practices to stay secure:

Use a super strong and unique password
Enable 2-factor authentication (2FA) for account login. This adds an extra verification layer using your mobile phone.
Whitelist crypto addresses you trust for withdrawals. This prevents funds from being sent to scam addresses.
Beware of phishing! Never input your Coinbase credentials on another website. Coinbase will never ask for your password.
Use a secure email provider and require 2FA sign-in for it too. A compromised email could lead to a stolen Coinbase account.
For large holdings, use a hardware wallet. Your crypto is much safer in cold storage where it can‘t be remotely hacked.
Backup your account recovery phrase securely in case you lose login access. This gives you a backup way to regain account control.
Never share your 12-word recovery phrase with anyone! Not even Coinbase support.

That covers the critical security advice. Stay vigilant and your crypto will stay safe from cybercriminals.

Congrats, You‘re a Coinbase Expert!

And that‘s a wrap! You‘ve learned everything you need to start your crypto journey on Coinbase.

Here‘s a quick recap of all the steps we covered:

Sign up for a Coinbase account
Complete identity verification
Add a payment method
Make your first crypto purchase
Withdraw to a secure wallet
Sell crypto and cash out
Use Coinbase Pro to save on trading fees
Enable security protections

See – you‘ve got this! I‘m excited for you to explore the transformative world of crypto.

Just take your time, do your own research, and start small. With Coinbase‘s beginner-friendly platform, you have all the tools to trade crypto like a pro.

Here‘s to growing your crypto knowledge, skill, and wealth! Let me know if you have any other questions.

Happy Coinbase trading!

[1] https://www.coinbase.com/about
[2] https://help.coinbase.com/en/coinbase/getting-started/getting-started-with-coinbase/supported-countries
[3] https://www.macrotrends.net/assets/cryptocurrency/coinbase/market-cap
[4] https://www.aicoin.io/coinbase-trading-volume-and-market-listings/