How Does Coinbase Work?

As of 2024, Coinbase has solidified its position as the largest U.S.-based cryptocurrency exchange and the world’s biggest bitcoin custodian. With over 100 million users globally and more than $400 billion in assets under custody, Coinbase controls nearly 12% of all bitcoin in existence and 11% of all staked Ether, highlighting its significant role in the crypto ecosystem.

Whether you're new to Coinbase or have been using it for a while, this article aims to provide an updated and detailed breakdown of how Coinbase works in 2025, including its features, trading options, fees, and security practices.

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New to crypto? Check out our updated Coinbase tutorial below for beginners:

What Is Coinbase?

Coinbase is a leading cryptocurrency exchange platform founded in 2012 and headquartered in the U.S. It offers users across more than 100 countries a simple, secure way to buy, sell, transfer, and store a wide range of cryptocurrencies.

Coinbase supports over 260 cryptocurrencies as of 2024, far exceeding the earlier 25 coins available. Popular notable assets include Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Solana (SOL), Polygon (MATIC), and many others. While the Coinbase Wallet app recently removed support for some coins such as Bitcoin Cash (BCH), Ethereum Classic (ETC), Stellar Lumens (XLM), and XRP in 2023 due to low user interest, these coins remain tradeable on the main Coinbase exchange platform.

Beyond retail investors, Coinbase offers advanced trading services for institutional clients through Coinbase Exchange, including deep liquidity, a dynamic fee structure for high-volume trades, and futures markets following its acquisition of LMX Labs. As of June 2022, Coinbase Pro was sunset and replaced by Coinbase Advanced Trade, consolidating sophisticated trading features within the main platform to simplify user experience.

How Do I Trade on Coinbase?

Coinbase’s user interface remains sleek and intuitive across web, Android, and iOS platforms. Upon logging in, your portfolio balance is displayed along with your watchlist coins and their daily performance. Navigating is simple with a bottom ribbon where you can access your portfolio, trade, check prices, or update settings.

To trade, tap the central icon in the ribbon and choose whether you want to buy, sell, convert, send, receive, or move funds.

For example, when buying Bitcoin, select 'Buy,' pick your coin, and enter the dollar amount you wish to spend (minimum purchase amount varies by region). Clicking 'Preview Buy' displays an upfront breakdown of fees and estimated settlement timings. Confirm the purchase by selecting 'Buy Now.' Selling, converting, and transferring cryptocurrencies follow similar streamlined steps.

Coinbase Advanced Trade merges advanced order types and charting tools but remains accessible to users familiar with basic trading.

How Does Coinbase Store My Coins?

Coinbase offers two main applications addressing different user needs:

• The Coinbase app: A custodial brokerage platform that safely holds your crypto and allows seamless buying, selling, and exchanging.
• The Coinbase Wallet app: A non-custodial wallet providing users full control over their private keys and assets. This means Coinbase does not store your passcodes or private keys—users bear sole responsibility for safeguarding access.

For enhanced security, experts recommend that users who plan to hold cryptocurrencies long-term consider storing their assets in non-custodial wallets such as Coinbase Wallet or hardware wallets, instead of keeping them on the exchange where vulnerabilities might exist.

What Does Coinbase Charge in Fees?

Coinbase does not charge fees for storing cryptocurrencies or for transferring coins to external wallets. However, transaction fees apply as follows for U.S.-based users (fees may vary internationally):

• A spread of approximately 0.5% is applied to cryptocurrency purchases and sales.
• Variable fees depend on the payment method:
  • 1.49% for bank account and Coinbase USD Wallet purchases
  • 3.99% for debit or credit card purchases
  • Up to 1.5% for instant card withdrawals

Coinbase displays all fees transparently upfront before transaction confirmation, enabling informed decisions. Despite this transparency, Coinbase's fees remain relatively high compared to many competitors.

For detailed, region-specific fee information, please visit Coinbase’s official fee page.

How Does Coinbase Work: Final Thoughts

Coinbase provides a comprehensive and user-friendly platform with a broad selection of cryptocurrencies and advanced trading features suitable for both newcomers and institutional investors. Its mission to make crypto easily accessible globally continues through support for developers with APIs and merchant tools.

Key takeaways about Coinbase in 2025:

• User base and scale: Over 100 million users and custodian of $400 billion+ in assets.
• Crypto offerings: More than 260 coins available for trading with ongoing updates.
• Platform evolution: Coinbase Advanced Trade replaces Coinbase Pro for streamlined advanced trading.
• Security: Distinction between custodial brokerage and non-custodial wallet empowering users with key ownership.
• Fees: Transparent but higher-than-average fees; payment method affects costs.
• Recommendations: Use non-custodial wallets for long-term storage and always stay informed on fees and market conditions.

As with any investment, cryptocurrency involves risk and volatility. Consider consulting with a financial advisor to ensure crypto fits your personal financial goals and risk tolerance.