Is Trading Crypto Profitable with Coinbase Exchange?
Recently I ran a series of experiments trading digital currencies and investing in crypto using Coinbase. As a beginner to digital currencies and Bitcoin, I bought several cryptocurrencies through Coinbase as well as several other similar sites and crypto-wallets. My goal was to determine how accessible trading crypto was for beginners and small investors looking to build a personal portfolio and earn some interest.
Crypto Transfer and Transaction Fees
The first thing I noticed during my experiments was the significant fees at every single level. When you first buy Bitcoin there is a Coinbase fee at the time of the transaction on top of the transaction fee from your bank and exchange rates if you are converting from US dollars. Then I needed to move it from the exchange to my Coinbase Wallet, which again had a small Mining Fee even though it was transferring within the same service. Next, I wanted to use an App called Compound to earn interest on the crypto-investment, this was the original experiment I was trying test. To my surprise, the fee to transfer to Compound was actually more than my initial Bitcoin purchase. After sifting through documentation and forum posts I finally decided to scrap the idea of Coinbase and Compound to move the currency I purchased to Uphold (which I used previously), only to discover another large mining fee for each digital currency I wanted to transfer. By the time I moved the Bitcoin and Ethereum to Uphold almost 50% of my initial Crypto investment was lost on fees. Since I transferred it to another service I was not able to see what it would have costed me to withdraw they Crypto back to a bank account, but I suspect the results would have been similar.
Crypto Trading Fees
In this process I also found there were more trading fees, the exchanges want a cut each time you jump in and out of any digital currency. Which leads me to wonder if Coinbase and these other services are really building the future of Crypto with expectations of it being successful or simply cashing in on anyone naive enough to dabble in it.
My conclusion, unfortunately, is that unless you are trading huge dollar values or speculating on certain Crypto going up 10x, I cannot see how Coinbase expects to be a viable platform long term. From reviews, I read online Coinbase fees were usually the first issue to come up when comparing exchanges. The other take away from my Coinbase experience is that most Crypto is not ready to be a currency as we currently understand money, instead of simply exchanging fiat currency for digital coins, there is a whole system of opportunistic middlemen looking to skim off the top.