Founded in 2012, Coinbase.com quickly rose in popularity among cryptocurrency enthusiasts thanks to the fact the website allows investors to purchase cryptocurrency instantly using a credit card. Seven years later, many are seeking out a Coinbase alternative. The reason for this is although Coinbase is great, it often doesn’t have all of it’s features available for all regions.
In this post, we are going to dive deeper into why that is, and why you yourself should consider doing the same. When you’re through exploring all of your options, it’ll be easy to see that even though Coinbase is one of the industry’s biggest players, it’s far from the only place to buy cryptocurrency.
In Some Countries, Coinbase Limits Features
Coinbase is obviously successful for a reason. They were an early to the cryptocurrency game, and are an easy platform to use for beginners looking to dip their toes into the cryptocurrency waters. During the run up of 2017, Coinbase became one of the most popular apps in the world as investors scrambled to get their hands on some crypto. However, with massive international growth, came scrutiny from international jurisdictions. Many Canadians were shocked to log into Coinbase in 2018 to see that they had disabled crypto selling. Not being able to sell in an extremely volatile market, was certainly un-nerving for the hundreds of thousands of Canadians who had used Coinbase. Thankfully, they re-instated selling features, but they have limited options for buying an selling crypto for Canadians even to this day.
For example, they do not support Interac e-Transfer, which has become the funding method of choice for many cryptocurrency enthusiasts. Interac e-Transfer is quick, secure, and has very low fees compared to credit card and debit card purchases (up to 10%)
The Coinbase/Bitcoin Cash Controversy
Any investor using a trading platform to acquire an asset wants to know that they’re doing so at a fair market price, both in terms of the fees they pay and the cost of the asset itself. Whether or not Coinbase allows its customers to do that came into question in December 2017.
The hoopla started when the company announced it would be making Bitcoin Cash available for purchase via credit card on its platform. Shortly after the news became public and the coin was officially available for trading on the company’s Global Digital Asset Exchange (GDAX), the price of Bitcoin Cash skyrocketed to over $8,500 USD, even though the asset had been trading at just $3,500 USD across all other cryptocurrency exchanges.
While an internal investigation by Coinbase later confirmed that there was no evidence of employees taking advantage of the news and engaging in insider-trading, most crypto enthusiasts and experts remain skeptical. Especially due to the fact that similar pump and dump schemes have occurred throughout the industry across many different types of cryptocurrency projects over the last decade.
Why Keeping Your Cryptocurrency On An Exchange Can Be Problematic
During the 2017 run up of cryptocurrency, millions of beginners flocked to Coinbase and other exchanges to make their first purchase of digital currency. The problem is, many of these beginners don’t know that you can actually withdraw your cryptocurrency from the exchange, for safe keeping.
Of course, when an exchange is holding your cryptocurrency, they are holding your private keys. The famous saying goes, ‘if you don’t own your private keys, then you don’t really own your cryptocurrency.”
Now to be clear a private key is not the same as a Bitcoin wallet address. A private key is a secret number that allows for the transfer of Bitcoins from one user to another. The key is related to every Bitcoin address generated by your wallet, but it is not something you share publicly. Not unless you want to give somebody else control of your digital assets that is. A private key is made up of 256 bits in hexadecimal format, which breaks down to 64 characters, ranging from A-F and 0-9.
The average cryptocurrency user doesn’t need to know these specific characters by heart in order to interact with their wallet or exchange value on the Bitcoin network because private keys are usually protected by a 12 or 24-word verbal password, a string of random words that also shouldn’t be shared publicly. Again, the reason you shouldn’t share it publicly is because any individual or entity that has your private keys can send your cryptocurrency anywhere they choose.
Now of course if you’ve used Coinbase before, you’re probably thinking that you’ve never had to worry about memorizing a long string of characters and your 24-word password is safely written down in a cupboard somewhere, so there’s nothing to fuss about. Most crypto enthusiasts would naturally come to that conclusion.
The problem is that while the Bitcoin network cannot be hacked and bitcoins cannot be counterfeited, any website that acts as a focal point for housing wallet addresses or customer information certainly can be.
The idea of hacking an individual website in order to steal customer funds or personal information is nothing new and the concept wasn’t invented in some sort of blockchain-only bubble. In fact, Desjardins, one of the biggest financial institutions in Canada, announced in June that the personal information of over 2.9 million customers was unlawfully shared by a disgruntled employee who accessed the information through unauthorized methods.
These kinds of hacks happen way too often in both the crypto universe and the world of traditional finance. Fortunately, the whole reason Bitcoin exists is to put the power back in the hands of the individual and make you the keeper of your own bank. Bitcoin and other cryptocurrencies afford you the opportunity to take and keep control of your own finances in the most secure way possible. You owe it to yourself to take that opportunity and not allow any central authority or private entity to have agency over your personal information.
How Social Engineering Leads To Stolen Bitcoins
It’s very important to keep your private keys to yourself and avoid pump and dump schemes like the one mentioned above, but steering clear of that won’t necessarily keep your bitcoins from being stolen. Consider a skilled hacker/con artist using social engineering to their advantage to hack into your supposedly safe online wallet.
Social engineering is when a hacker takes information about you found on public websites such as your social media profiles and contacts your cell phone provider posing as you through an online chat. They provide your personal information to the customer service representative chatting on the other end while pretending to be a forgetful consumer who needs their passwords reset. They continue to contact customer service using this method until they find someone absent-minded enough to divulge personal information and change passwords. With your information in hand, the hacker then registers a new Sim card that gives them access to your phone.
How does this help the hacker? Many cryptocurrency exchanges including Coinbase allow you to use your phone in a two-step verification process that sends a text message to your phone when you want to confirm a transaction or change your password. This means if the hacker has access to your phone, they can access your cryptocurrency and send it right into their own pocket before you even realize what’s happening.
That’s why if you’re a crypto lover looking for a Coinbase alternative (no matter what alternative you choose) remember that the best long-term strategy for securing your digital assets is to keep them offline in a hardware cryptocurrency wallet. In the crypto world, keeping your assets offline is otherwise known as keeping them in cold storage.
The Two Most Popular Hardware Bitcoin Wallets
Remember these two brand names: Trezor and Nano Ledger S. Both of these wallets allow you to store digital assets away from the internet. No need to keep your cryptocurrency on a hackable website with a supposedly secure way to verify your transactions through your smartphone.
Both wallets let you check your balances and transfer coins to other wallet addresses through easily downloadable software interfaces. Both provide you with a 12-word password that protects the private keys we talked about earlier and on top of that, both allow you to set up numerical PIN numbers to access the USB key itself.
This means that even if you lost your physical hardware, you could buy another physical key and completely restore your account balances as long as you remembered your 12-word password. Once you’re done interacting with the wallet and make whatever transactions you need to make, you unplug the key from your computer and don’t have to think about anybody hacking into anything.
There are many other wallets you can use besides the Trezor and Nano Ledger S, but regardless of which brand you choose, the few hundred dollars you might spend on a hardware wallet will be worth the peace of mind you get in return knowing that your assets are truly safe.
How Active Bitcoin Traders Should Secure Cryptocurrency
Securing your crypto through a cold-storage friendly hardware key is the best way to keep guard of it whether you’re holding onto your coins for the long term were trying to capitalize off of a quick swing trade. However, even in keeping digital assets on an exchange, there are other measures you can take to lower your level of risk.
First, only put an amount of cryptocurrency on an exchange that you feel comfortable losing. Keep in mind that Bitcoin and many other coins trade to many decimal places, meaning that you don’t need to transfer your entire balance from a hardware key to an online exchange in order to trade assets. Once your trades are complete and you’ve made a profit for the day, you can transfer money back to your hardware key. Yes you will pay a fee to whatever blockchain network your currency uses for transacting back and forth, but the cost will be minimal.
Another thing you can do if you want to hold your trades for more than a few hours or more than a day is install the appropriate crypto wallets onto your hardware key. Wallets like the Trezor and Nano Ledger S don’t just allow you to hold onto Bitcoin, you can keep multiple altcoins on those devices as well. This means you can almost instantly put your coins back into cold storage after you make a trade, watch the price move up and down, and when you’re ready to get back into the market put the coins back on the exchange and trade them appropriately.
So What Is the Best Alternative?
Defining the best alternative method for buying Bitcoin or any other cryptocurrency depends on what your priorities are. I’ll review a few options here briefly but you can also click the hyperlink above for a more thorough breakdown.
ATMs: The Fastest Way to Buy Bitcoin
If you’re looking to acquire Bitcoin or other cryptocurrencies as quickly as possible because you notice prices are skyrocketing, taking 5 to 7 business days to register your bank account for a direct deposit option probably isn’t what you’re looking for.
The fastest possible way I can think of to get your hands on cryptocurrency’s to Google search Bitcoin ATM machines in your local area. If you tried to do this back in 2008 or 2009, you likely would’ve had to travel outside of your city to find a machine. The good news is in 2019 you can probably Google search 30 different machines within 10 miles of your house if you live in a major city or neighboring suburb. You can literally complete the whole process in four steps and it will take you less than five minutes:
- Find a Bitcoin ATM machine
- Put money in it
- Pick your cryptocurrency of choice
- Send the crypto to your wallet address by scanning the QR code attached to it
That’s it! But wait. There’s a downside. The downside is that you probably won’t get the best rate on fees in exchange for the convenience and you won’t be able to pick from thousands of cryptocurrencies and will likely be relegated to just Bitcoin, Ethereum or Litecoin in most cases.
Buying Bitcoin “Off the Map”
If you hang around the blockchain scene long enough, you’ll eventually meet people who despise government control enough to not only invest in cryptocurrencies and extol the virtues of their use, but who also love it enough to ensure that all of their transactions occur without the need for verifying identity.
LocalBitcoins.com is an online marketplace where you can connect with other users and agree to meet them in person to make an exchange for cryptocurrency. The plus side of this is that you get to limit anyone’s ability to track your purchases. The downside is you could be buying from shady people and not even know it. You might even risk putting yourself in immediate danger if you run into the wrong person, and odds are that person isn’t going to have a portfolio of 2,000 different cryptocurrencies to offer you.
If buying Bitcoin from some strange guy in a trench coat on the street or getting it from an ATM machine with limited options doesn’t tickle your fancy, the best, safest and most legitimate way to buy crypto is through an online exchange.
Bitbuy sells Bitcoin and many other cryptocurrencies at fair market prices. Signing up for an account is easy and you can trade for low fees and withdraw funds in Canadian dollars. That’s one thing Coinbase definitely can’t do. Bitbuy is the number one choice for Canadians, but what if you aren’t from the great white north?
Top Regional Exchanges
If you are looking for more of a full fledged exchange, here are 10 international exchanges we recommend that will work as a Coinbase alternative.
As a reminder, it’s always easiest to use an exchange based in the country you live in, so that you know they are likely compatible with your bank and local regulations.
1) Bitbuy (Canada)
2) Kraken (USA)
3) Coinfloor (UK)
4) BitFlyer (Europe)
5) Coinjar (UK/Australia)
6) Bitbank (Japan)
7) BitOasis (United Arab Emirates)
8) Buda (South America)
9) Kiwi Coin (New Zealand)
10) Luno (Africa)
Bitcoin.org features a great list of vetted international exchanges to use as a Coinbase alternative. No matter what method you choose, remember this. There are many different options for buying and trading cryptocurrencies and you should never put all of your eggs in one basket.