THOMAS BLECHSCHMIDT

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THOMAS BLECHSCHMIDT

Do you recommend Coinbase and Coinbase wallet for my Bitcoin purchases 

BAM
23 Jan 2024

Coinbase is a publicly traded company that has pioneered the Cryptocurrency space. Some of the biggest financial firms offering Bitcoin ETFs use Coinbase to custody their Bitcoin. Namely, the largest money manager in the world, Blackrock, presents its Bitcoin ETF with the ticker IBIT. 

Because of Government SEC regulations, Blackrock is required to store their coins with a registered custodian. This is different than a personal buyer of Bitcoin. 

As with any company offering a Bitcoin Wallet for personal Bitcoin storage, if the wallet they are presenting you does not come with a Bitcoin key (12 or 24 words) that you generate upon initiation, they have custody of your Bitcoin. You are trusting them to secure your Bitcoin. This is not a recommended practice. 

If you are presented with the 12 or 24 words, which are your keys that unlock your Bitcoin on the blockchain, then you are in custody of your Bitcoin. At this point, there is no trust relationship between you and Coinbase. They are merely providing you with a wallet that you control. This is a best practice. 

Remember that Coinbase or any wallet that generates your keys has no access to these keys. They are private and must be stored safely by you. They have no access to your keys in the event you lose them. 

If Coinbase offers you a wallet that you can use to control your keys, then I can recommend them. 

I can recommend them as a platform for buying Bitcoin if you remove them from Coinbase and take custody of them in a wallet to which you control the keys. Coinbase has been notorious for charging higher fees when purchasing than other platforms, so do your homework on fee structures. 

“Not your keys, not your coins.”

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