Coinbase vs. Coinbase Wallet

Coinbase and Coinbase Wallet share a name and a parent company, but they serve very different purposes.

We’ll cover those differences and help you decide which one you should use.

What is the difference between Coinbase and Coinbase Wallet?

The main difference between Coinbase and Coinbase Wallet is that Coinbase is a custodial crypto exchange, whereas Coinbase Wallet is a non-custodial wallet. They both let you hold and move crypto, but the custody distinction means they serve investors differently.

If you’re new to the terminology, here’s what that means:

• Custodial: References to who holds custody of your crypto (specifically, the private keys for your crypto). When you use a custodial exchange, like Coinbase, they hold the custody of your crypto on your behalf.

• Non-custodial (self-custodial) Wallets: You’re in complete control of your crypto and your private keys. Which means you’re responsible for keeping it safe.

Due to these differences, Coinbase and Coinbase Wallet have different jobs:

• Coinbase Exchange: Used to buy and sell cryptocurrencies with fiat currencies. You can also trade crypto, stake crypto, and more.

• Coinbase Wallet: Most commonly used to interact with various DeFi apps and store assets independently.

What is Coinbase Exchange?

Launched in 2021, Coinbase Exchange is now one of the largest crypto exchanges globally. Its appeal comes from:

• Support for more than 300 cryptocurrencies and more than 400 trading pairs

• Additional products that include staking, NFTs, debit cards, and more

• Industry-leading security practices, including 98% offline storage and protect against theft or loss.

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

What is Coinbase Wallet? 

Coinbase Wallet launched in 2018, built for the growing world of Ethereum and DeFi. Since then, it has expanded its 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 backup

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

Is it better to use Coinbase or Coinbase Wallet?

This really depends on you: What transactions do you plan to make, and what are your security and custody preferences?

• Choose Coinbase if you want simplicity, easy fiat on/off ramps, and a platform-managed security experience.

• Choose Coinbase Wallet if you want privacy, full control of your own assets, and access to the full DeFi ecosystem.

"Not your keys, not your crypto"

If you’re active in the crypto community, you might have heard this phrase uttered a million times — it’s important to take it into consideration here.

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 (think of it like your Venmo username).

The purpose of a private key is also in the name. You keep this key private because you use it to access your wallet and handle your crypto transactions.

For Coinbase Wallet, you’re in complete control of your private keys. This reduces the chance of an exchange hack, collapse, or liquidity run impacting you. However, it puts you in full control of keeping your private keys safe.

With Coinbase Exchange, they manage your private keys and wallet on your behalf. That’s why some investors prefer not to use custodial exchanges, even with as stellar a record as Coinbase’s.

There are obviously benefits and risks to both options.

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

The main advantage of a non-custodial wallet such as Coinbase Wallet is that you have complete control over your private keys. This reduces the risk of losing your crypto to an exchange hack or collapse.

This advantage is also their main disadvantage: Your crypto is only as secure as you are. If you happen to lose your private key and recovery phrase, you’ve lost your crypto. If you share your private key and your crypto is stolen, no one can help you get it back.

If you forgot your password for Coinbase Exchange, there’s plenty of support to help you get back into your account and an insurance policy to help recover your funds if the exchange is hacked.

Coinbase vs. Coinbase Wallet: Insurance

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

If Coinbase is hacked due to a security issue on the platform’s side, there is insurance in place to cover you.

Cash on the exchange is held in FDIC-insured banks in pooled custodial accounts, and the per-depositor coverage limit is up to $250,000 per individual.

Can you send money from Coinbase to Coinbase Wallet?

No, but you can easily transfer or directly deposit crypto from Coinbase to your Coinbase Wallet.

Coinbase Wallet has also added a fiat on-ramp for multiple countries, including the US, UK, Canada, Australia, and more. This may vary depending on your currency and the transaction you’re making.

Can you send crypto from Coinbase to Coinbase Wallet?

Yes! It’s pretty simple, 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?

Unfortunately, Coinbase Wallet doesn’t support off-ramp for fiat yet.

Instead, you can transfer your crypto from Coinbase Wallet to Coinbase Exchange and then sell it for your preferred currency.

How Koinly supports Coinbase and Coinbase Wallet

Whether you’re using Coinbase Exchange or Coinbase Wallet, your crypto transactions may be taxable.

Don’t worry, it doesn’t have to be difficult. Koinly can calculate your gains, losses, income, and more, and provide you with ready-to-submit tax forms.