Coinbase vs Coinbase Wallet
Coinbase and Coinbase Wallet are two platforms that allow users to buy, sell, and manage cryptocurrency assets. While they are both developed and maintained by Coinbase, a major cryptocurrency exchange, they serve different purposes and are suited for different types of users. In this article, we’ll compare Coinbase and Coinbase Wallet to help you understand the key differences between the two and decide which one is right for you.
Before diving into the comparison, it’s important to understand the concept of custodial and self-custody wallets. A custodial wallet is a type of wallet in which a third party, such as an exchange or a financial institution, holds the user’s private keys and has control over their cryptocurrency assets. A self-custody wallet, on the other hand, is a wallet in which the user holds their own private keys and has full control over their assets. Both Coinbase and Coinbase Wallet offer custodial and self-custody options, so it’s important to understand the differences between the two and how they work.
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What is a Custodial Wallet?
A custodial wallet is a type of cryptocurrency wallet in which a third party, such as an exchange or a financial institution, holds the user’s private keys and has control over their cryptocurrency assets. Custodial wallets are often used by beginners or casual cryptocurrency users who are not comfortable holding their own private keys or are not interested in the technical aspects of managing their own assets.
In a custodial wallet, the user’s assets are stored on the wallet provider’s servers, and the provider is responsible for keeping them secure. When the user wants to make a transaction, they must initiate the request through the wallet provider’s platform, which will then process the transaction using the user’s private keys.
Examples of custodial wallets include Coinbase, Gemini, and Kraken. These platforms allow users to buy, sell, and store cryptocurrency in a secure and convenient manner, but the trade-off is that the user must trust the wallet provider to keep their assets safe and to handle their transactions properly.
What is a Self-Custody Wallet?
A self-custody wallet, also known as a non-custodial wallet, is a type of cryptocurrency wallet in which the user holds their own private keys and has full control over their assets. Self-custody wallets are often preferred by experienced cryptocurrency users who value security and privacy, as they do not need to trust a third party to keep their assets safe.
In a self-custody wallet, the user’s assets are stored on their own device, such as a computer or a mobile phone, and the user is responsible for keeping them secure. When the user wants to make a transaction, they initiate the request using their private keys and the transaction is processed directly on the blockchain.
There are several examples of self-custody wallets available, including Coinbase Wallet and MetaMask. Coinbase Wallet is a standalone mobile app that allows users to manage their cryptocurrency assets and interact with decentralized applications (dApps) on multiple blockchain networks, including Ethereum, Bitcoin, and Litecoin. MetaMask is a browser extension that allows users to interact with the Ethereum blockchain from their web browser and manage their Ethereum accounts and assets. Both Coinbase Wallet and MetaMask are good choices for those who want to take control of their own cryptocurrency assets and have full control over their transactions.
Coinbase vs. Coinbase Wallet
Here are some of the main differences between Coinbase and Coinbase Wallet:
Custodial vs self-custody:
Coinbase is primarily a custodial platform, allowing users to buy, sell, and store cryptocurrency in a secure and convenient manner. Coinbase Wallet, on the other hand, is primarily a self-custody platform, enabling users to manage their own cryptocurrency assets and interact with decentralized applications (dApps) on multiple blockchain networks.
Supported digital assets:
Both Coinbase and Coinbase Wallet support a wide range of digital assets, but they differ in the specific assets they offer. Coinbase supports a large selection of cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and several other well known cryptocurrencies. Coinbase Wallet chrome extension, on the other hand, supports any ERC20 token or asset and also enables users to interact with dApps on the Ethereum network. Taking it even further – the Coinbase Wallet mobile app adds support for other major cryptocurrencies such as Bitcoin, and Litecoin.
Coinbase and Coinbase Wallet have different fee structures, with Coinbase generally having higher fees than Coinbase Wallet. Coinbase charges fees for buying and selling cryptocurrency, as well as for making transactions on the platform. Coinbase Wallet charges lower fees for most transactions, but users may incur fees when interacting with certain dApps or making transactions on the Ethereum network.
Both Coinbase and Coinbase Wallet prioritize security, but they have different approaches to protecting user assets. Coinbase uses a combination of cold storage, two-factor authentication, and other security measures to protect user assets. Coinbase Wallet relies on the user to keep their device and private keys secure by offering iCloud and Google Drive backups.
Coinbase offers insurance for user assets that are stored on the platform, covering losses in the event of a hack or other security breach. Coinbase Wallet does not offer insurance for user assets.
When choosing between Coinbase and Coinbase Wallet, it’s important to consider your specific needs and preferences. If you’re new to cryptocurrency and want a simple and secure platform for buying and selling assets, Coinbase may be the right choice for you. On the other hand, if you’re an experienced cryptocurrency user who values privacy and control, Coinbase Wallet may be a better option.
Ultimately, the right wallet for you will depend on your goals and how you want to use cryptocurrency. Both Coinbase and Coinbase Wallet offer a range of services and features that can be useful for different types of users, so it’s worth considering both options and deciding which one is the best fit for your needs.