Coinbase vs. Coinbase Wallet

Coinbase & Coinbase Wallet are two products from the same company, but what are the differences & which should you use? Learn about Coinbase vs. Coinbase wallet.

Coinbase vs. Coinbase Wallet: What’s the Difference?

The main difference between Coinbase exchange and Coinbase Wallet is that Coinbase is a custodial crypto exchange, while Coinbase Wallet is a non-custodial wallet. While you can conduct similar transactions with both, the purposes they serve to investors are different.

Lost on the difference? The term custodial refers to who holds custody of your crypto (or specifically the private keys for your crypto). When you use a custodial exchange, that exchange holds the custody of your crypto on your behalf. Meanwhile, with non-custodial or self-custodial wallets, you’re in complete control of your crypto and your private keys.  

Coinbase exchange is most commonly used to buy and sell cryptocurrencies with fiat currencies, although investors can also trade crypto, stake crypto, and more on the platform. Meanwhile, Coinbase Wallet is a self-custodial crypto wallet, mostly commonly used to interact with various DeFi apps.

What is Coinbase exchange?

Coinbase was founded in 2012 and is now one of the largest crypto exchanges globally thanks to:

• Support for more than 230 cryptocurrencies and more than 300 trading pairs

• Other products, including staking, NFTs, debit cards, and more.

• Robust security practices including 98% offline storage and protection against theft or loss

• Mobile apps for both iOS and Android to support portfolio management on the go

What is Coinbase Wallet? 

Coinbase Wallet was launched in 2018, as Ethereum began to grow into the huge DeFi ecosystem we know today. While the wallet originally only focused on Ethereum, it’s since expanded features to include:

• Multi-chain support including Ethereum, Bitcoin, Dogecoin, Litecoin, Solana, Ripple, and multiple Ethereum layer-2 networks like BNB Chain, Avalanche C-Chain, Polygon, and more

• Explore DeFi investment opportunities directly in the app

• Mobile apps for both IOS and Android

• Full control over private keys with offline storage compatibility 

• Cloud and recovery phrase back up

• Buy crypto from Coinbase to be deposited directly to your Coinbase Wallet

Is it better to use Coinbase or Coinbase Wallet?

This all depends on the transactions you plan to make, and your preferences when it comes to security and custody. 

Not your keys, not your crypto

You’ve probably heard this phrase uttered a million times if you’re active in the crypto community - but it’s always something to consider so let’s break it down.

Crypto wallets have private and public keys. Your public key is visible to everyone, and you’ll share it anytime you want to receive crypto. Your private key however is just that - it’s the key you use to access your wallet and transact with your crypto. 

For Coinbase Wallet, you’re in complete control of your private keys. This reduces the risk of an exchange hack, collapse, or liquidity run impacting you, something that many of us saw happen to investors using once-popular platforms like FTX, Celsius, and more. 

Coinbase exchange, on the other hand, manages your private keys on your behalf because it manages your wallet on your behalf. Some investors prefer not to use custodial exchanges simply for this reason, even when it comes to an exchange with as stellar a record as Coinbase. However, there are some benefits and risks for both custodial exchanges and self-custodial wallets.

Read next: What's the best way to store your crypto?

What are the advantages and disadvantages of custody vs. self-custody?

The main advantage of a non-custodial wallet is that you have complete control of your private keys. There is no risk of losing your crypto to an exchange hack or collapse. 

However, this main advantage is also a wallet's main disadvantage, because your crypto is only as secure as you are. If you lose your private key and your recovery phrase, that’s it - your crypto is gone. As well as this, if you accidentally share your private keys and your crypto is stolen, nobody is going to compensate you. 

Whereas for Coinbase exchange, if you forget your password, there’s plenty of support to help you get back into your account, and because you don’t manage your private keys, you can’t misplace or lose them. As well as this, one key difference in the event of a hack is that Coinbase exchange has insurance.

Coinbase vs. Coinbase Wallet: Insurance

Coinbase is clear that the platform has crime insurance that protects a significant portion of digital currencies within the platform’s storage against losses from theft, including exchange hacks. 

So to be clear, at the time of writing - if Coinbase is hacked due to a security issue on the platform’s side, there is insurance in place to cover you. Please note, that this would not apply for losses resulting in unauthorized access to just your account.

As well as this, cash on the exchange is held in FDIC-insured banks in pooled custodial accounts, so the per-depositor coverage limit would be up to $250,000 per individual. 

Can you send money from Coinbase to Coinbase Wallet?

No, but you can transfer or directly deposit crypto from Coinbase to Coinbase Wallet easily. As well as this, Coinbase Wallet added a fiat on-ramp for multiple countries including the USA, the UK, Canada, Australia, and more. Please note, that there may be on-ramp limitations depending on your currency and the transaction you’re making. 

Can you send crypto from Coinbase to Coinbase Wallet?

Yes. To move crypto from your Coinbase account to your wallet, just follow these steps: 

1. Open Coinbase wallet and go to the assets tab

2. Tap buy or transfer

3. Tap buy or transfer from Coinbase 

4. Select the crypto you want to transfer or buy

5. Enter an amount

6. Tap continue

7. Tap confirm

How do I convert crypto from Coinbase Wallet to cash?

Coinbase Wallet doesn’t support off-ramp for fiat yet, so the easiest way to sell your crypto for cash from Coinbase Wallet is to transfer your crypto back to Coinbase exchange to sell it for your preferred currency.