Coinbase Exchange in-depth review – part 2/5
This part of the Coinbase exchange in-depth guide will focus on their wallet types and how they operate.
Coinbase users have the option to create three types of wallets: (regular) wallet, Vault, as well as a multi-sig vault. It also offers a USD wallet as well as a debit card that can access these wallets.
Coinbase (regular) wallet
Coinbase offers the option to create a regular wallet with them. However, the company controls your bitcoins as it holds your keys. Coinbase is a company backed by venture capitalists with over $100 million in funding. Even though the information is not public, it likely has an extremely strong security setup.
However, the whole point of Bitcoin is decentralization, and being in control of your money. Coinbase can shut your account down at any time, which would make you unable to access your funds. Make sure to transfer funds bought on Coinbase to a non-corporate wallet that lets you be in control of your own wallet keys.
Coinbase offers a new and unique solution for securing large amounts of cryptocurrency. It does it in the form of Vault accounts. Bitcoin stored in the Coinbase Vault account will be protected by multiple approvers added by him. Each approver must confirm the withdrawal validity before it processes.
All Vault withdrawals take 48-hours to process. The time delay acts as a safety net. However, the Vault suffers from the same downside as the regular wallet. You must trust Coinbase to secure the Vault funds, which can also be shut down by Coinbase terminating your account.
Coinbase understands that its users want complete control over their funds, which is only natural. Its multi-sig Vault is a so-called “2 of 3” wallet. Coinbase has one key, while the second key is shared. The third key is in the hands of the account holder. Any two keys can spend the account funds. If Coinbase suddenly goes down, you will still have both the shared and the private key. Funds cannot be withheld as the shared key is encrypted with your personal password.
Coinbase USD wallet
Coinbase also offers a USD wallet. A Coinbase USD wallet simply lets its users store dollars in your Coinbase account. This way:
You can store dollars in the Coinbase account, which can be extremely helpful when trying to buy crypto without having to wait on processing time.
You can spend Bitcoin on online purchases without ever exposing yourself to Bitcoin’s volatility.
Coinbase debit card
Though not a wallet per se, this overview wouldn’t be complete without mentioning the Coinbase debit card. Coinbase has recently released a debit card for its UK customers. This debit card connects to your Coinbase account and uses the Coinbase balance. By using the account balance as a source of funds, it allows you to spend Bitcoin at any merchant that accepts Visa.