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Cryptocurrency

Is Coinbase Safe?

As bitcoin crosses the $10,000 mark over a month early that was predicted for the end of 2017, people are scrambling to get setup with the right services to buy and store their newly acquired bitcoin. Coinbase is a company founded in 2012 and based in San Fransisco, CA. According to Wikipedia they’re a digital asset broker which allows users to buy, sell, send, receive, and store three of the largest cryptocurrencies:

  • Bitcoin
  • Ethereum
  • Litecoin

These three are generally considered to be the safest and most likely to appreciate in a stable manner, whereas many of the other cryptocurrencies (known as alternative coins or altcoins), are extremely volatile and can snap up 200% in a day or lose 80% in a day. These altcoins are much more akin to gambling than investing in a currency that will be a part of the future that we’ll be able to use in transactions.

If you’re here, chances are you already know you want to invest in cryptocurrency, likely Bitcoin or Ethereum. The next step is to bridge the gap and learn how to actually get in the market. Coinbase is the most powerful platform on the planet as far as what it allows users to do: buy, sell, send, receive and store bitcoin safely in their Vault. This makes it really attractive especially for first time cryptocurrency investors because they are so easy to use.

So the big question is:

Is Coinbase Safe?

There are three points when it comes to the safety and security of Coinbase:

  • Security
  • Digital currency insurance
  • FDIC insurance

Security Team at Coinbase

Coinbase invests heavily in cybersecurity to prevent hacks on their system. Over the years they’ve built an elite team of cybersecurity experts from Silicon Valley and all around the world to monitor and protect your investments 24/7/365.

Imagine if hundreds of the smartest people in cybersecurity were watching your investment in real time, keeping an eye out for suspicious activity.. pretty comforting right?

Digital Currency Insurance

When you store your digital cryptocurrency on Coinbase, it’s protected by a third-party insurer against theft and hacking. In the event that Coinbase’s elite security team isn’t able to stop a hacking attempt, the third-party insurer will step in and reimburse users for their loss.

FDIC Insurance for USD Deposits

FDIC infographic

With Coinbase it’s possible to deposit and store US Dollars, not just cryptocurrency. When you do that, you’ll be fully insured just like with the digital currency insurance above. But we aren’t just talking any insurance, we’re talking full FDIC backing by the United States Government. This means if your account gets hacked, you aren’t going to rely on some insurance company to field the claims.

You’ll literally have the same FDIC on the dollars you’re storing in Coinbase as you do on your savings account dollars. It’s pretty hard to find fault with that!

So really though, is Coinbase Safe?

Yes. Overall Coinbase is extremely safe. They’ve been vetted the same as other giant US Financial institutions – so if you trust your money sitting in your bank account, then I’d say you’re find with using Coinbase for general purposes. I wouldn’t necessarily recommend you store your cryptocurrency on Coinbase, but it’s a fantastic place to convert USD to bitcoin. For storing bitcoin, I’d recommend checking out hardware wallets like the Ledger Nano S, or take a look at our full review of the best Bitcoin wallets.

 

Get Coinbase <- Get a FREE $10 bonus when you buy $100 of Bitcoin

Coinbase Safety FAQ’s

Is Coinbase the MOST Secure Bitcoin Wallet?

Ehh that’s tricky. For storing your US Dollars, yes. I don’t think I have to explain how secure FDIC is, or that the US Government wouldn’t offer FDIC to an insecure partner to begin with.

For cryptocurrency it’s a bit of a different story though. The most secure way to store your Bitcoin or Ethereum will definitely be with a hardware wallet, such as our favorite, the Ledger Nano S. If you’d like a full review of the different wallets that are available, check out our ultimate guide to cryptocurrency wallets.

Should I set up Two-Factor-Authentication2FA?

YES. This is so easy to do. Please do yourself a favor, download the Google Authenticator App and just do it!! The fastest way to get hacked and lose all of your investment is to not double protect your account. This will make it so you and only you have the code to access your account. Don’t test it!!

What if someone hacks into Coinbase and steals all the dollars I have deposited there?

You will be covered by FDIC for up to $250,000 of deposits, just like your bank does.

What if someone hacks Coinbase and steals all of the Bitcoin, Ethereum, or Litecoin that I have stored there?

Coinbase also has a separate insurance policy to protect against the theft of your digital currencies. It isn’t the FDIC program because FDIC is only valid for US Dollar deposits, which it will no longer be once you purchase bitcoin.

What if I give someone my password and they steal my money from Coinbase?

You will NOT be covered. Before you freak out, this is the same as it is with your bank account. You NEED to be careful with your passwords no matter what financial institution we’re talking about.

If you currently use online banking, then you’re not really taking on any additional risk in this manner. In fact, Coinbase will probably be safer for this because they strongly push for you to set up two-factor-authentication (2FA) with a service like Google’s Authenticator App.

Can I create a bitcoin address with Coinbase?

Yes! Coinbase makes it really easy to generate addresses with one click of a button. No messing around with complicated software or algorithms. For more information about cryptocurrency addresses check out this post.

 

Get Coinbase <- Get a FREE $10 bonus when you buy $100 of Bitcoin

 

About the author

Nick Hastreiter

Shaping the future of your industry? Send pitches to Nick at Future of Everything .io !