At this point, Bitcoin should need no introduction. The cryptocurrency’s price skyrocketed through the end of 2017, turning Bitcoin into a household name. Many people are interested in getting a piece of the action, motivated by dreams of financial gains or simple curiosity sparked by conversations over Christmas dinner. Cryptocurrency claims to be an unavoidable part of the future, revolutionizing the way we interact with money. However, it is currently complicated and difficult for most of us to use – just like the internet in its early days. Luckily there is one great simple option for buying and selling cryptocurrency. If you are trying to get a piece of the action with minimum hassle and technical understanding, look no further than Coinbase.

Coinbase is “a secure online platform for buying, selling, transferring, and storing digital currency”– basically, they let you trade fiat money for cryptocurrency. “Fiat money” refers to standard government-issued money, like your US dollars. Your Coinbase account will allow you to buy, store, and sell Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. All the complications of initiating digital transactions, keeping track of your blockchain addresses, and securely storing your cryptocurrency are handled by Coinbase behind the scenes, making your experience simple and seamless.

Setting up your Coinbase Account

Setting up a Coinbase account is pretty much like setting up any other online account, with just a few differences. Because this account will potentially deal with a lot of your money, you will need to give some more information than you did for, say, your email or Tumblr account.

First, you will need to give Coinbase your phone number. This is to allow for two-factor authentication (2FA). 2FA is a method to ensure that you are the one logging into your account – you may have already seen this in other apps. When you try to log in or make a transaction on Coinbase, you will have a number texted to your phone. By entering this number on the website, you will approve the login/transaction. Coinbase does not send any other texts or spam, so giving your phone number is safe and extremely useful.

Secondly, you will need to give Coinbase either your credit card or bank account info. Obviously, you are trying to buy and sell stuff, so you need a payment method. There are some things to consider when choosing your payment method, as your choice can affect your fees, transaction confirmation time, and weekly transaction limit.

A credit card is the fastest way to get started. Adding a credit card enables a feature called “Instant Buy”. As you may have guessed, this allows you to instantly receive cryptocurrency upon the time of purchase, but it does incur a typical credit card usage fee of 3.99%. Purchases with credit cards have the lowest weekly purchase limit. From an investing standpoint, starting off 4% in the hole is a bad move, but “Instant Buy” is a great option to get your feet wet.

Linking Coinbase to a bank account will allow you to purchase cryptocurrency with a lower fee of 1.49%. Your purchasing limit with a bank account is much higher than that with a credit card. The drawback is transaction time – making a purchase will typically take 3-4 days to be processed. Despite the delay in processing, the price you pay is locked at the time you made the transaction (for better or for worse). For example, say you buy 1 Bitcoin today for $10,000. Your transfer is processed in 3 days, at which point 1 Bitcoin is worth $20,000. You still get the 1 Bitcoin at the price that you paid 3 days earlier, it just took time to be credited to your account.

Regardless of which payment method you use moving forward, you can raise your weekly limit by providing Coinbase with more proof of identification. This is common practice with any financial business known as Know Your Customer (KYC). Coinbase KYC has two parts – first, adding a bank account (if you haven’t already) and second, taking a picture of your driver’s license. Each of these steps should raise your weekly purchase limit.

Buying and Selling Cryptocurrency on Coinbase

Once your account is set up to your liking, the actual process of purchasing cryptocurrency is simple. The “Buy/Sell” tab at the top of the page will allow you to select your desired cryptocurrency, payment method, and purchase amount. Your purchase amount can be determined in terms of fiat or crypto amount – typing in one field will automatically fill the corresponding amount in the other field. It is important to note that unlike fiat money, you can buy/sell any fraction of cryptocurrency you want (as long as it is not worth less than the transaction fee). Personally, my first purchase was for 0.001 BTC. The final option is to schedule repeat buys, with frequency ranging from daily to monthly. This is interesting to investors who like dollar-cost averaging as a strategy to temper the volatility of cryptocurrency investing.

If you decide to sell your cryptocurrency holdings on Coinbase, you can use the “Sell” option under the “Buy/Sell” tab. This works almost exactly like the “Buy” option described above. The proceeds from any sale of cryptocurrency can be deposited either to your “USD Wallet”, a PayPal account, or to a linked bank account. This “USD Wallet” is a balance attributed to your account but held by Coinbase. This option has no delays and makes it easy to purchase from Coinbase again. If you are swapping your holding to another cryptocurrency or planning on buying again later the USD Wallet is a good option. If you want to withdraw your money completely to your bank account, you can select that as the deposit option. Just know that you will not see your funds for some days, and the sale price is locked at the price at the time of sale. Finally, withdrawals can also be made to a PayPal account. This withdrawal option allows you to access your funds instantly but carries a transaction fee of 3.75%. PayPal withdrawals are mostly used for investors who have opted not to link their bank account to Coinbase, as the 3.75% fee is usually not worth the convenience of receiving funds a few days early.

You may notice that your overall weekly purchasing limit is much higher than the total weekly limit for all your payment methods. This is to account for a third way of moving funds to your Coinbase account – via wire transfer, which has no limit. Wire transfers incur a $10 fee for deposits, a $25 fee for withdrawals, and may take many business days to be processed. Wire transfers only deposit fiat money into the “USD Wallet” of your Coinbase account and cannot be used to lock-in a purchase of cryptocurrency at the current price. Once your wire transfer goes through you will need to make a purchase and select the “USD Wallet” as your payment method. The wire transfer option is intended for large sums and carries some more requirements to use properly.

The Drawbacks of Using Coinbase

Coinbase has made a point to simplify the crypto user experience as much as possible. While this approach has brought invaluable access to many investors, it does come with a few costs. At the time of this article, Coinbase supports purchase and sale of Bitcoin, Bitcoin Cash, Ethereum, and Litecoin – a mere 4 out of roughly 1500 current cryptocurrencies. Coinbase only supports coins they have deemed as the most tenured and relevant to novice investors, preventing access to the highest volatility in the market. Depending on your goals, this could be considered a shortcoming or a feature. Another drawback in many investor’s eyes is the fact that your funds are held by Coinbase. Cryptocurrency is lauded for enabling trustless and decentralized financial transactions, whereas Coinbase is a single company which many people trust to keep their money safe. Technically Coinbase could go under and take all your cryptocurrency with it since you do not hold your funds with your own private key. One reassuring advantage that Coinbase has over most other exchanges is FDIC insurance. All Coinbase customer accounts are FDIC insured for funds held as either cryptocurrency or fiat in your “USD wallet” up to $250,000. While many dream of a fully decentralized financial utopia, the security blanket provided by existing financial systems is nice to have today.

For those looking to buy their first Bitcoin, there is simply no better option than Coinbase. Its unparalleled simplicity and user-friendliness give investors an easy gateway to the world of cryptocurrency. The success of the platform can easily be seen in their user growth – the site already had more users than Charles Schwab in November 2017. While a more seasoned cryptocurrency investor will want to expand to other exchanges, altcoin investing, or moving cryptocurrency to their own private keys, most newcomers to crypto will love the convenience and familiarity of Coinbase.