Why Does It Cost More to Buy Bitcoin on Coinbase?

It’s all for convenience.

Getty Images / Dan Kitwood

Coinbase, the most popular cryptocurrency marketplace, has just under 12 million users buying and selling their digital currencies of choice. This website has made it exceedingly simple for novices to sign up and begin trading digital currency.

But this simplicity comes at a price. If you’re one of the millions of crypto-enthusiasts that do business on Coinbase you might have noticed this already.

A few months ago, reddit-user zhaoshike pointed out that when he logged in to make a transaction, Coinbase was charging him more than the price that the ticker was displaying. “Is this normal?” they wondered.

The answer is yes, because Coinbase is charging you for the service of how darn convenient they’ve made buying cryptocurrency on their site. When you purchase Bitcoin from Coinbase you aren’t buying it from a person, you’re buying it from a middleman whose whole purpose is make it really easy for cryptocurrency novices. But that comes at a price.

Reddit user zhaoshike's screenshots from earlier this year of the price they paid for bitcoin...


“We charge fees (“Conversion Fees”) to use the Conversion Service, which vary based on your location, payment method, and other circumstances,” states the Coinbase support page. “In some cases we may charge an additional fee on transfers to and from your bank account.

...versus the cost before fees.


Prices vary by country and by the method you choose to pay. Usually making a purchase with your credit or debit card will lead to a 4 percent fee, which can be pretty substantial if you’re dealing with thousands of dollars.

So Coinbase is making their money by finding people that want to buy the bitcoins you’re selling and charging your for it. Which is understandable, like any company they’re providing a service which they then charge consumers for.

If you’re not a fan of these fees, Coinbase has a way that you can keep trading cryptocurrencies without them. It’s going to be a little bit more complicated on the user’s side, but only a little bit.

Coinbase also owns a full-fledged cryptocurrency exchange, named Global Digital Asset Exchange (GDAX). This interface lets users trade bitcoin, Ether, Litecoin, and even fiat currencies amongst themselves. Of course, isn’t as immediately user-friendly as Coinbase.

You can’t use your credit or debit card to make purchases on GDAX, only bank transfers or cryptocurrencies. This means you have to convert your fiat currency into bitcoin instead of having Coinbase do it for you. Some fees still apply (.25% or less) but they’re nowhere near as bad as using their conversion service.

GDAX might seem intimidating if you’re just getting into cryptocurrencies. But once you’ve gotten a hang of the basics learning how to use this more sophisticated exchange will give you a better understanding of how this sector operators. Plus it’s a breeze to transfer the funds you have in Coinbase to GDAX.

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