A second look at Coinbase

As mentioned in a previous post, I had reservations about buying from Coinbase. It is not an exchange but a Bitcoin wallet service that also sells Bitcoin to their clients. I had created trading accounts at a number of exchanges, but could not find one that wasn’t afraid of doing business with me – thanks to FINCEN.

The exchanges are scared stiff that they will be charged with money laundering and so, demand more information than is prudent to surrender to strangers. I cautiously gave this information to Bitstamp, but they refused to grant me the “privilege” of trading because my identification (recognized in my home state) was not to their liking.  I was rejected.

Feeling nearly defeated, I attempted to get verified at Coinbase. Strangely enough, they understood the documentation I submitted and I was “verified.” As confused as I was about this sudden acceptance, I compared Coinbase pricing with the two major exchanges.

To my delight, the Coinbase price was better than the price offered by exchanges such as Mt. Gox (I’m glad they rejected me too) which was always much higher than the others, and Bitstamp. I had also created an account at Atlanta Georgia based Camp BX and found the Coinbase quote to be as much as $50 less. In all fairness, it should be said that this was prior to the Mt. Gox meltdown. Post event, the Camp BX quote has been almost on par with the Coinbase quote.

What I liked better yet about Coinbase, is that I could buy BTC from them directly at a rate at or near par with the Bitstamp quote, by simply sending them cash directly from my bank account. Camp BX required me to send a Postal Money Order through the USPS. This took time and the possibility of missed opportunity while waiting for the account to be credited didn’t sit well with me.

Another upside of dealing with Coinbase is that they are located in the USA. Their office in San Francisco is about 6 hours away – close enough for me to visit them with a pitchfork, a board with a rusty nail, or torch if they pull a Mt. Gox maneuver. I could file a lawsuit at the very least.

The disadvantage of Coinbase not being a real “exchange” is not insurmountable. Although one can send cash to Camp BX only through a long and laborious process, transferring Bitcoins to the account for sale is quick and easy. Once the Bitcoin is sold on that exchange, the cash is on account and ready for trading. Once I am ready to cash out, I simply send the BTC to Coinbase who will make a deposit into my bank. In addition, I do like the Coinbase BTCQuote widget because it gives me an idea of the current Coinbase price.

One caveat: the information presented here is reliable when published. In a constantly changing environment such as the one in which Bitcoin exists, what was once true cannot always be said to be so today. People have made millions of dollars trading at the Mt. Gox exchange which was only 30 days ago, the worlds top BTC exchange. Today, it sits in ruin.

There is still money to be made in Bitcoin for those stout of countenance. Be brave my fellow Bitcoin comrade in arms – the battle yet rages.

© 2014 Bitcoin Bob