When it comes to understanding the safest crypto exchange that can provide trustworthy, reliable, and secure crypto trading platforms, Coinbase is an excellent platform for investing in all means of crypto.
You may still be wondering though, how safe is the world’s largest crypto exchange?
Coinbase markets itself as “the most trusted place for people to buy, sell, and manage crypto.” Given its host of cutting-edge security and encryption features, plus it being a publicly-traded, U.S. company, I agree – Coinbase is the safest place to invest in crypto.
You may be wondering, “Is my bitcoin safe” or “how does coinbase work”, here’s everything you need to know about the cryptocurrency exchange platform’s security, regulation, and why it’s the best US crypto exchange for beginners.
About Coinbase
Coinbase is the largest crypto exchange in the United States based on trading volume. It is also the only publicly-traded crypto exchange in the world.
Coinbase was co-founded in 2012 by Brian Armstrong (a former software engineer at Airbnb) and Fred Ehrsam (a former Goldman Sachs trader). In October 2012, the company launched the services necessary to buy and sell bitcoins via bank transfers.
Is Coinbase the Largest Crypto Exchange?
Coinbase was one of the first entities in the crypto space to create a safe haven for storing your crypto assets (Bitcoin, Ethereum, Ripple, and over 250+ crypto currencies), ensuring its title as the best app for crypto consumers.
Fast forward 12 years, Coinbase now boasts:
- More than 100 million users in 100+ countries
- $114 billion in client funds on the platform
- $76 billion per quarter in trade volume
- 248 tradeable cryptocurrencies
The company is now worth $30 billion, and certainly a reason for why it’s the top crypto trading platform in the United States (and around the globe).
Is Coinbase the Safest Crypto Exchange?
Yes, Coinbase is one of the safest crypto exchanges you can use.
It has a wide range of sophisticated technology to protect your user data and your investments from online threats. More on these security feature and tools below.
Furthermore, since it is a publicly-traded company, it is also heavily regulated by the Securities and Exchange Commission (SEC) and is held to a much higher standard of transparency and consumer protection than is standard in the industry.
Get up to $200 free in any crypto when you join Coinbase today
Security
Coinbase is one the oldest crypto exchanges and has been on the bleeding edge of crypto security since its inception.
For starters, Coinbase was built in and operates in the United States. As such, it is subject to U.S. laws and regulations, which creates a necessary emphasis for the platform to offer the most robust security features.
Coinbase also:
- Doesn’t lend or take any action with your assets without your permission (à la FTX)
- Collects only the minimum amount of personal data it needs to operate as a brokerage
- Offers state-of-the-art encryption and security
- Has a host of educational materials and best practices for investing in and managing your crypto
I cover more specifics about its security technology in the ‘How Does Coinbase Protect Your Account’ section below.
Regulation
Coinbase is also a publicly-traded company that offers a wide variety of digital assets on it’s platform.
As a public company, it is subject to a number of additional SEC regulations that other crypto exchanges are not. These regulations require regular reporting which forces Coinbase into a level of transparency which is not matched by its competitors.
Additionally, Coinbase is required by law to be audited annually by an independent third-party.
How Does Coinbase Protect Your Account?
Here’s a list of the majority of protections Coinbase offers to all its users that outline it’s robust security measures:
- Two-factor authentication (2FA) – Sign in with your email and password, then receive a text, call, or email to confirm it’s you trying to access your account.
- Password management – Your account passwords are encrypted and unreadable, and are stored offline.
- Enhanced account protections – Coinbase monitors third-party data breaches and darknet markets for threats. If one is detected, your login credentials are automatically secured.
- Lock My Account – If you notice any suspicious activity, you can lock your account and prevent further activity.
- Coinbase Vault – The Coinbase Vault allows you to receive cryptocurrency like a normal wallet but you can set up optional security steps to prevent stored crypto from being withdrawn.
- Proactive security notifications – For all major security changes, Coinbase will notify you and give you the option to lock your account.
- Behind the scenes – Coinbase deploys machine learning models to evaluate your transactions and will give you the option to cancel a transaction if things don’t look right.
- Security Prompt – Security Prompt is an optional 2FA method which is simpler and faster than other methods.
Cloud Storage Accounts
Coinbase offers a lot of work behind the scenes, so their customer support team is capable of detecting and try to stop SIM-swap (ATO targeting) on all customer accounts.
It’s also best practice to in using a SMS-based two-factor authentication (2FA), which is better than using no 2FA at all!
Private Keys
Coinbase has all of these security features and more, when it comes to maintaining the self-custody of customer’s private keys. All private keys are securely held and hosted via digital wallets (assigned to customers when creating an account on Coinbase). The only difference is whether you choose to use a Coinbase Exchange Account vs. Coinbase Wallet.
When using one of Coinbase’s many products, like the Coinbase Wallet, you are responsible for maintaining your private keys (which mean self-custody).
If you’re wondering, ‘Is Coinbase secure?’ the answer should be simply clear, yes.
Best Practices for Securing Your Digital Assets
Coinbase compiled a list of its top 5 cryptocurrency security tips to protect digital assets in your account.
- Set strong, unique passwords
- Use the most secure version of 2FA available
- Never give anybody access to your computer or share your credentials
- Write down your private keys on a piece of paper and store them in a safe place
- Don’t post about your crypto holdings online or on social media
While the crypto market is fraught with malicious activity, following these 5 steps can greatly reduce your chances of being the victim of a scam or attack.
Frequently asked questions
Can I trust Coinbase?
Yes, you can trust Coinbase.
The cryptocurrency landscape is ripe with fraud, scams, and hacks (not to mention extreme volatility), so you should approach investing in cryptocurrencies with caution. That said, Coinbase has one of the strongest suites of security measures to protect its users, including AES-256 encryption, 2-factor authentication, and even offline storage for asset storage.
Read our Coinbase review to see why they’re one of the top exchanges of 2024 for buying bitcoin and beyond!
Get up to $200 free in any crypto when you join Coinbase today
Is Bitcoin Safe?
As we don’t provide financial advice, we stress more of an importance on understanding how to properly store your crypto investments on some of the top crypto apps, ensuring that any beginner experience with cryptocurrency trading platforms can be easy and seamless to start at any time.
Is Coinbase safe with my bank account?
Yes, Coinbase has a number of robust security measures, to keep your sensitive data safe. For instance, all account and routing numbers are stored using bank-level encryption.
Is my Coinbase Wallet safe?
Coinbase Wallets are safer than the vast majority of other crypto exchange wallets and a number of self-custody wallet providers. If you’re a casual crypto investor and/or don’t have much money on the platform, you may decide its Wallet is safe enough for you.
Read the answer below for more information on how to protect your account further, or if you’re familiar with crypto wallets already, read more on how Robinhood’s Wallet might be a better off choice for you.
Should I keep my money on Coinbase?
Coinbase digital wallets are non-custodial, which means the company can’t access them (unlike what happened at FTX). This type of wallet is safer because only the owner of the wallet has the private keys needed to gain access to it.
Coinbase stores user data, including wallet addresses mobile account name, in offline wallets, which makes them less susceptible to hacks than online wallets. Users’ private keys are secured with bank-level encryption.
That said, because Coinbase holds billions of dollars in crypto and hundreds of millions of users’ data, it is a prime target for hackers. That’s why most savvy crypto investors recommend keeping your crypto in a self-custodied wallet, which adds an additional layer of security, rather than leaving it on the exchange.
Should you stake your crypto on Coinbase?
While Coinbase is probably the safest and most regulated crypto exchange and you’ll more than likely be fine staking your crypto on Coinbase, most crypto experts hold their crypto investments in offline, self-custodied wallets to add an additional layer of protection.
Gemini and KuCoin are popular options for staking crypto.
Is there a downside to Coinbase?
While Coinbase is one of the safest and most-heavily regulated crypto exchanges, as well as being extremely easy to use, it does come with relatively high trading fees when compared to a number of other exchanges (such as eToro and Kraken).
If you’re a beginner, however, it’s probably worth it for you to use Coinbase and pay slightly higher fees because of its robust security features and how user-friendly the platform is.
What is the safest crypto exchange?
Because it is US-based, publicly-traded, and is on the cutting edge of crypto security solutions, Coinbase consistently ranks as the safest crypto exchange in the world. That’s why it’s trusted by more than 100 million crypto investors.
Final word: Is Coinbase Safe?
The crypto landscape is incredibly dynamic and always evolving. New types of cyber attacks are being deployed every hour in attempts to hack wallets and steal money.
While you may not be able to avoid these risks altogether, investing on a secure, reliable, and highly-regulated platform is a great way to mitigate these threats.
To that end, in 2024, you won’t find a better platform than Coinbase.
