Investing in crypto can be simple, yet with investment tools and exchanges, it can be difficult to know what’s what. Two popular names in the crypto world are Coinbase and Coinbase Wallet. While they may sound similar, they serve different purposes.
When it comes to Coinbase vs Coinbase Wallet, they are both legal and safe services. Still, before you opt for either service, you will need to know what services they offer and how they secure your transactions.
Keep reading to learn about the differences between these offerings so you can use them effortlessly.
Is Coinbase Exchange App and Coinbase Wallet the Same?
These are actually two different services from the same company: Coinbase. In fact, reports list this company in the top 5 crypto trade platforms. Both of these services offer cloud backup, get insurance coverage and undergo regular security audits. You can also link them or make transfers between the two. However, they operate independently of each other.
Coinbase Exchange is a service or platform that allows you to sell, buy, or otherwise trade in cryptocurrencies such as Bitcoin and Ethereum. It has been available since 2012 and has an increasing number of cryptocurrencies. When you use this service, the company hosts a wallet through which you make transactions.
On the other hand, Coinbase Wallet offers you self-custody of your crypto assets. This means that your cryptocurrency wallet is fully under your control, and the company cannot access or identify your ‘private key’ or password. Through this wallet, you can make transactions widely.
The Difference between Coinbase Exchange and Coinbase Wallet
Now that you understand these services broadly, let us dive deeper into their differences.
Type of Trades
According to reports, Coinbase had the 14th largest volume of trade. However, when you look at Coinbase Wallet vs Coinbase, these trades happen in different ways. Typically, Coinbase Exchange mostly deals with crypto currencies.
In comparison, Coinbase Wallet offers the following trades:
- Decentralised finance: It allows you to trade using a secure yet distributed ledger outside of the traditional banking systems. Therefore, you can transact with others directly using technology such as blockchain.
- Non-fungible tokens: With this wallet, you can trade digital assets with a unique identifier that authenticates you as their owner.
- Cryptocurrency: With this wallet, you can trade in a variety of encrypted digital currencies.
Security Measures
Protecting your portfolio is a crucial feature of these services. Otherwise, your investment could be at risk. For instance, reports demonstrate how the crypto platform FTX lost $400 million in a hack.
As much as both of these services are safe, the way Coinbase safeguards them is different. To exemplify, Coinbase Exchange keeps 98% of its assets offline to ensure they are secure. They can also help you retrieve your private keys and verify your identity.
Similarly, Coinbase is a safe wallet. The way it differs is that it requires you to safeguard your own private keys. So, in the event of a Coinbase hack or bankruptcy, your private keys will remain safe. Beyond the standard recovery or ‘seed’ phrase of 12 words, you will also have access to PIN codes and biometric security measures.
Insurance Coverage
A major difference between Coinbase vs Coinbase Wallet is the insurance coverage. Coinbase Exchange ensures you retain access to your assets by safeguarding them and using bonds and fiat currencies.
Though Coinbase Wallet does not offer the same insurance coverage, it does have a vendor insurance policy. They will also reimburse you for losses incurred due to a security breach of Coinbase. One notable disadvantage is that their insurance will not cover you if someone defrauds you or otherwise gains access to your private keys.
Fee Structure
Lastly, the difference between these services is the crypto vs Coinbase fee structure. Coinbase Exchange uses the Coinbase standard fees. These fees tend to be lower than Coinbase Wallet’s crypto fees. This is because Coinbase Wallet fees go directly to all involved in the transaction. Moreover, these fees are dynamic and can be expensive.
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Final Thoughts
Now you know that the main difference between Coinbase vs Coinbase Wallet is who is responsible for them and their types of trades. Through the wallet provided and hosted by the platform, Coinbase Exchange will let you trade in multiple crypto currencies. Conversely, you fully control your Coinbase Wallet, which gives you access to decentralised finance, non-fungible token transactions, and cryptocurrencies. However, Coinbase Wallet has no insurance coverage for fraud, and the fees can be steep. Still, this option is popular because of the security and freedom it offers.
Though Coinbase can be difficult to understand and use, you can use platforms such as CryptoCracker to manage your digital assets. We will even offer advice tailored to your portfolio, allowing you to make the most of your investments.
Frequently Asked Questions
Is it better to use Coinbase or Coinbase Wallet?
Whether you should use Coinbase Exchange or Coinbase Wallet depends on your needs and comfort level with crypto trading. Coinbase Exchange is better for beginners who want to trade only in the most popular cryptocurrencies. Meanwhile, Coinbase Wallet will suit those who want more security, transaction options, and responsibility.
What are the disadvantages of Coinbase Wallet?
The disadvantages of Coinbase Wallet are that it has less customer care than Coinbase Exchange, and it can be expensive. Furthermore, if you lose your private keys, you will have no access to your wallet. Similarly, if you lose crypto assets through fraud, the platform will not reimburse you.
Can you withdraw from a Coinbase Wallet?
Yes, you can withdraw from a Coinbase Wallet in most countries. In the European Union, you can withdraw from this wallet through Coinbase.com. This transaction has a 2% – 3% fee based on market trends, so it may change.