Coinbase has been one of the crypto space’s greatest success stories- Coinbase has grown its platform to over 200 million users and is publicly traded on the Nasdaq. The platform has a super easy intuitive interface and has done a great job of making crypto trading less scary for first-time investors. This is important for the growth and adoption of crypto. It needs to be easily available to more people.
The drawbacks of Coinbase? Astronomically high fees. For day traders and active investors, this is kryptonite- it slowly eats away at returns. Larger institutions and high-net-worth individuals are often fearful of cryptocurrency exchange hacks. Coinbase’s customer support services are still experiencing growing pains.
Enter Coinbase One- a service that costs $30/month, or $360/year. Here are the benefits:
- No fees
- Account protection up to $1M
- Preferred customer support 24/7
- Pre-filled tax form
Let’s break down some of these benefits.
The biggest benefit is going to be for people who trade large amounts since fees are a fixed percentage of trades on Coinbase. If we assumed these people are already using Coinbase Pro (which has way lower fees than Coinbase regular), they’d need to be doing some big volume trading.
Let’s say you’re an institutional trader making trades greater than $100k, you’d be paying an average of a 0.15% fee on your trades. To offset the cost of the $30/month membership, you’d need to do ($30 = x*0.0015) x= $20,000 in trades. If you’re doing trades less than $100k, you’d have to be doing a total monthly volume of $30,000-$50,000 to offset these fees on Coinbase Pro. If you’re a user of regular Coinbase, it would take far less to offset the lower trading fees.
Account protection up to $1M
This again appeals to users with higher amounts of assets in their accounts. Many are fearful of losing their crypto in an exchange hack. This is because when you buy crypto on an exchange, you don’t hold custody of the asset unless you move it to one of your software or hardware wallets. All you really have is an ‘I owe you’ from Coinbase for that coin. On its website, Coinbase already claims that it has theft protection insurance for assets on its servers.
The only additional benefit I can see here is that if you lost your assets due to your malfeasance (you gave away your login credentials and 2FA info), Coinbase might step in and protect you. If you practice good security hygiene, I don’t see this ‘account protection’ as necessary. It’s just some more high-margin bullshit that Coinbase is using to make even more money.
For some, this benefit still makes sense- because it can provide the psychological safety some people need to get into the crypto space. I’m all for growing the cryptocurrency space by all means necessary- even if that means offering redundant insurance to the weary.
Preferred Customer Support
Coinbase offers priority phone support 24/7 to Coinbase One users. This could prove very helpful for crypto newcomers who are confused about the platform and just need to have another human being on the line to help them. I understand this. I would never do it. Coinbase is easy enough to use, and every single thing imaginable can be entered in a Google search and answered. People like me have written scores of things on how to
Pre-filled tax form
Coinbase composes this form for those with Coinbase One automatically using a highest in, first-out approach. This approach is legal in the US tax code, but you don’t need Coinbase to fill out your form for you to be able to do this kind of cost accounting. You’d be better off using crypto tax software or just looking at your trade history and calculating it yourself. Coinbase already does provide end-of-year tax forms to all its users.
Some people might want this to be done for them, and I can understand why they’d want the convenience. Tax codes in most countries are notoriously complicated. If you don’t want to do the calculating by yourself or with tax software, this could be a good option.
On the surface, Coinbase One looks great.
But shouldn’t all of these features be available for free? So many other non-crypto trading platforms like E*Trade, Charles Schwab, and TD Ameritrade have all these features at no cost. No fees, great customer service, and filled out tax forms for you. If we in crypto claim that things are better on the blockchain, how come we rely on platforms like Coinbase that charge us such high fees and make you pay for what should be normal customer service?
Companies that use revenue subscription models are valued far higher than those without. People sign up for the sub, then as time flies by they don’t realize how much they’ve been paying ($360/year in this case) for something they never use. Earlier this year I canceled a ton of my subscriptions to streaming platforms and online services I never really used. It made a huge difference in my budget.
Why do so many people fall for the subscription model? It’s because humans aren’t good at realizing how fast time flies, and they often don’t see how little they might end up using something. I know for me that I’d be better off without Coinbase One. If you’re not already, you definitely need to be using Coinbase Pro instead of regular Coinbase. Coinbase Pro’s fees are a fraction of those on Coinbase, and it has all the same features. If you already have a Coinbase account, you can use your same bank and sign-on credentials for a pro account. It’s easy! Use that $30/month where you need it more, like the grocery store.