Coinbase is a first-rate company with third-rate infrastructure. I generally stayed out of crypto until 2017 due to exchange hacks like Mt Gox, Cryptsy, and others since I would rather miss out on Bitcoin than have my identity/money stolen. After hearing a presentation from the security team at Coinbase, I decided to give them a shot. 3 years later, I haven't had any issues or concerns that my information or crypto has been in the wrong hands. Having said that, I have had concerns that my crypto might not be available, due to Coinbase's history crashing during high-volume trading sessions. Today, I still have Coinbase as my fiat onramp and will show you how I am able to spend the least amount on fees.
No matter what Coinbase says, they are charging a fee when buying, selling, or converting crypto. Let's look at buying Bitcoin using my bank.
Through Coinbase (top screenshot), immediately we can see we're being charged a 1.4% fee for a $1000 purchase. I don't know about you, but I'd rather have $14 extra bitcoin than such a high fee. For the same price on Coinbase Pro (bottom screenshot), we have a $5 fee. Still high compared to others such as Kraken and Binance, but better than buying through Coinbase. We can also see that we are losing out on over 37,000 sats! Is this due to the difference in fees, or is there other factors at play? Let's check.
I have Algo in my Coinbase account (naturally, I am AlgoRhythm after all). When I trade it for bitcoin, I see there is a $0.00 Coinbase fee and I should receive 0.00108971 BTC for my roughly 100 Algo. If I trade the same amount of Algo on Coinbase Pro (screenshot taken 1 second later), I will receive 0.00110694 BTC, a 0.00001723 difference. Which doesn't sound like a lot, but it's essentially a 1.55% fee compared to buying through Coinbase Pro.
So, if you've already KYC'd through Coinbase and still want to use it for either getting money into crypto, or as your go-to exchange, always use Coinbase Pro for any trades. As we've seen above, trading USD-to-crypto or crypto-to-crypto, Coinbase will always charge more than Coinbase Pro. If you are like me and just use it as your on-ramp, buy USDC with your USD.
When you purchase USDC, you are not charged a fee. You are, however, charged a fee when converting your USDC to other cryptocurrencies. After you've bought your USDC, you are able to withdraw that crypto to your exchange/wallet of preference. Practically all exchanges and wallets support USDC, so you are able to turn USD from your bank into USDC in your personal wallet with nothing more than one withdraw gas fee. Now you can use that USDC however you want, embracing the decentralization and lack of oversight that crypto is based on.
If you don't have a Coinbase account yet, you can sign up here and you will receive $10 in BTC when you trade your first $100.