Just because something is popular doesn’t make it the best.
Coinbase is the large, publicly-traded, heavily regulated US crypto company that went public earlier this year to the tune of many billions of dollars. This crypto exchange platform serves as a highly accessible trading hub for a number of people who might otherwise not be involved in the cryptocurrency space. In the noisy, technical, and confusing world of crypto, Coinbase presents itself as friendly and easy to understand — your mom and dad could figure out how to use it and start trading crypto.
While the company has done a great job of asserting itself as the most mainstream, palatable crypto gateway for the American masses, it’s not all sunshine and rainbows for the nine-year-old exchange. Let’s go over three unignorable reasons that should give you pause before jumping in with the biggest American exchange.
Regulatory uncertainty is real.
US fintech regulation stands alone by comparison to the rest of the world. China, for example, innovates upfront and regulates after the fact. The European Union tends to regulate first with the innovators only coming into the picture later. The US is a bit of a hybrid system with entrepreneurs and regulators both making their moves in real-time. It’s a much more dynamic landscape, and that can spell trouble for businesses here. You can’t compete with regulators — they’re the referees of the game.
Coinbase has managed to thrive in this weird system where the rules can change at the drop of a hat, but there’s exactly zero guarantee that they can continue to do so. What happens if those referees change the rules to the point that it poses a threat to the way the company operates?
This is actually happening right now. You don’t have to Google too hard to uncover recent news that the SEC is threatening to sue Coinbase if it launches a new lending product. No amount of self-righteous bloviating on Twitter is going to keep the SEC off your back
Not your keys, not your coins.
Coinbase is a custodial exchange, meaning it takes custody of your crypto assets quite like a bank holds your cash for you. While you theoretically have total access to your assets, you don’t actually retain them or control them — it’s up to a third party (Coinbase) to operate in such a way that you can buy, sell, and exchange crypto as if you had this control. But this control is ultimately an illusion!
The brave new cryptocurrency paradigm we live in today calls for individuals to be their own banks. That means it’s up to you — not a large, publicly-traded company — to take charge of your own security and monitor your own transactions. If you don’t actually hold the private keys to your crypto wallet, then you don’t actually control what happens with it.
There are too many good options beyond this one.
Where so much of cryptocurrency technology is about eliminating the middlemen from your transactions, Coinbase is a for-profit business taking its cut of everything you do on its platform. It might be the biggest, easiest-to-use, most well-known American exchange, but it’s just one option in a room full of worthy choices. You can do better!
Find yourself a non-custodial exchange that isn’t afraid to give you your own private keys and let you control your own financial destiny. If you want to seize maximum control, then the combination of Metamask and SushiSwap will fill just about any crypto trading need you will have, without any concern for what individual cryptos a large centralized exchange like Coinbase decides to support.
Coinbase makes a very good crypto on-ramp for lots of people. But the important question to ask yourself is: where does that on-ramp take you afterwards?