Originally released as Toshi, the Coinbase Wallet is a non-custodial wallet developed by Coinbase where the private keys are stored directly on your device rather than on centralized exchanges.
We’d like to note that it’s common to confuse the Coinbase Wallet with the normal Coinbase application (also known as Coinbase Consumer). For most, Coinbase Consumer acts as the primary fiat on and off-ramp to purchase digital assets. While users can store their crypto holdings on the Coinbase Consumer application, in reality, they are not actually holding the assets themselves. Instead, Coinbase acts as the primary custodian. In other words, Coinbase Consumer users have to trust Coinbase to hold their private keys. This can obviously be an issue as this reliance on trust largely goes against the ethos of decentralized networks and the notion of being your own bank. As the famous saying goes: “Not your keys, not your Bitcoin”.
With that being said, the Coinbase team understood this dilemma and developed a non-custodial wallet for users to safely store their own private keys.
The Coinbase wallet is currently available on the iOS and Android app stores, averaging a 4.6-star rating with over 1,870 ratings on iOS. This is slightly below par with competitors, like Binance’s Trust wallet (3,690 ratings, 5-star rating) and the Blockchain Wallet (34,000 ratings, 4.8-star rating). Regardless, Coinbase has done a respectable job at developing an intuitive non-custodial wallet for the broader crypto community.
With the Coinbase Wallet, users have access to a wide range of decentralized innovations, including buying and storing Bitcoin, Ether, ERC-20 tokens and other crypto assets, collect rare digital collectibles, and access emerging web3 applications.
Coinbase Wallet supports an expansive list of digital assets. As of writing, the wallet currently allows users to store, send, and receive the following assets:
- Bitcoin (BTC)
- Ether (ETH)
- Bitcoin Cash (BCH)
- Ether Classic (ETC)
- Litecoin (LTC)
- Ripple (XRP)
- Stellar Lumens (XLM)
- Ethereum-based ERC-20 tokens
- Ethereum-based ERC-721 tokens
Coinbase Wallet also has a dApp browser where users can directly interact with new and emerging web3 applications. The browser is almost identical to traditional web browsers, however, when interacting with a decentralized application like Compound, you no longer have to authorize Metamask or similar wallets. Instead, Compound is automatically authorized to your wallet and you can easily borrow or lend funds directly from your Coinbase Wallet.
Username Send & Receive
One intriguing feature with the Coinbase Wallet is the ability to send and receive crypto assets with a username rather than a traditional public wallet address. For most, the cryptic nature of public addresses can be highly confusing and worrisome when using them for the first time. The number of times people will double, triple and quadruple check that the public address matches is a massive barrier to entry for new users. With usernames, this drastically reduces the complexities as it mimics Venmo and other existing payment solutions.
Integration with Coinbase Consumer
Lastly, Coinbase Consumer users can easily link their accounts to their Coinbase Wallet. With this, you can enjoy seamless transfers between applications, leverage the on and off-ramps that Coinbase Consumer offers while being able to migrate your money to a secure, non-custodial wallet where you (and only you) have access to your private keys.
While the Coinbase Wallet has emphasized security, ease-of-use, and accessibility, it still lags behind other non-custodial counterparts in terms of DeFi integrations.
As an example, Argent is a non-custodial smart contract wallet with similar features to the Coinbase Wallet. However, Argent has put a strong emphasis on integrating DeFi applications and similar features. With Argent, users can easily buy or sell ERC-20 tokens through Kyber, lend out capital on Compound, or open a Maker CDP with as little as a few clicks. While Coinbase has an enabled dApp browser, it severely pales in comparison to Argent in terms of usability. In my mind, this is something that Coinbase should look to improve in the coming months if they want to stay competitive in the evolving crypto-asset landscape.
In addition, the Coinbase Wallet currently lacks trading digital assets directly from the Coinbase Wallet. With this, the wallet will rely on you to use the Coinbase Consumer application in order to buy, sell, and trade digital assets through a centralized exchange where KYC/AML standards are required as well as incur extremely high transaction fees. Close competitors like Binance’s Trust Wallet or the Argent Wallet have native integrations with decentralized exchanges (DEXs) where users can easily trade assets with minimal transaction fees and no KYC/AML.
Nonetheless, Coinbase Wallet is drastically better than older non-custodial wallets, like MyEtherWallet, where user experience had low standards. Coinbase has done a respectable job at creating an intuitive wallet, however, they do lack some core features that are prevalent in other non-custodial wallets.
The Coinbase Wallet allows users to custody their own funds and aligns with the ethos of crypto and decentralized networks. This is important for new users to understand as many store their assets on the Coinbase Consumer application where they’re ultimately vulnerable to centralization risks.
If Coinbase is ever shut down by the US government, or a hacker gets access to your account, you’ll likely lose your investment with no recourse. While many think that Coinbase Consumer is FDIC insured, it is only in the case that the entire exchange gets hacked and not if an individual account gets hacked. With that being said, the Coinbase Wallet and similar non-custodial wallets don’t have any FDIC insurance to any degree, which leads us to the importance of wallet insurance in the coming future.
The wallet space is constantly innovating. We’ve already made drastic improvements in the past three years since 2017 towards creating intuitive and usable wallets. It will be no surprise if the next three years have the same level of innovation, if not more. Ultimately, the crypto wallet space is highly competitive and Coinbase will have to continue to improve alongside its competitors in order to stay relevant.
In summary, the Coinbase Wallet provides a solid foundation for users to be introduced into non-custodial wallets while supporting a wide array of assets, better usability features, and even a native dApp browser.