Let me start this by saying that I currently use Coinbase.com and have recommended it to others because it is easy to use. But it has serious problems that other companies would not get away with, one of which could be considered a UDAAP violation if Coinbase.com were a regulated institution.
Let me know your thoughts and experience or feel free to disagree with me. And if you know of an easier to use, more fair service than Coinbase.com, PLEASE tell me so I can refer people there instead.
Exchange rate to buy is higher than exchange rate to sell – Right now (12/20/17 at 6:17 AM), if I buy $1,000 worth of Ether, I will receive 1.18838 Ether. If I immediately switch to sell $1,000 of Ether, I will be selling 1.21669. That does not seem to be due to a fee or any other reason like price changes. It is pretty consistent that your exchange rate is always in Coinbase.com’s favor.
The fees are horrible – If you buy $1,000 of a currency and have it ACH debited from your account, you will pay $14.00. Credit card would cost you $38.00. When you sell, it will cost you another $14.00 to move the money back to your checking account. Companies pay a fee for processing credit card (2% to 3%), the fee to process an ACH debit is less than $1.00. So if you buy and sell the same $1,000 worth of cryptocurrency, you will pay $28 to $52 in fees. This, in addition to the exchange rate issue in #1 above means that you’re really losing a lot of money.
Currency takes too long to credit – When you buy a currency and select ACH Debit, it takes about a week before the funds will show up in your coinbase account to be used. But it looks like they are using same day ACH debits to withdraw the funds from your checking account. This means they are taking $1,000 today and have access to those funds, but you cannot actually access the associated cryptocurrency for a week.
You can’t exchange between currencies – If you hold Ether on Coinbase and want Bitcoin instead, you can’t just switch within Coinbase. Instead, you have to sell your Ether (at a worse exchange rate and a large fee), wait a few days for the $ to arrive in your checking account, then buy Bitcoin (and pay another fee), and wait a week for the Bitcoin to be available.
They do not have enough support – If you have an issue and cannot find help in the help section, you can email Coinbase. I did this for an issue that was not in the help section (for full disclosure, it turned out that I was mistaken and there was no issue). A few days after the email, I received another email that basically said sorry for the slow response but we’re understaffed. If this is a legitimate issue, please respond to this email and we’ll look into it.
Overall Coinbase.com is still one of the most simple ways for a normal person to buy cryptocurrencies, but I am hopeful that these issues are addressed or a better alternative becomes available.
Comments and thought are more than welcome! Let me know if you disagree.