With nearly 100 million verified users, Coinbase is one of the largest crypto exchanges in the world. But while Coinbase may be best known for its exchange platform, about 54% of Coinbase users currently engage in other crypto activities outside of trading, according to Coinbase CEO Brian Armstrong. In particular, many users take full advantage of the Coinbase Wallet, a self-custody wallet that can be connected to your Coinbase account or a growing ecosystem of decentralized applications.
What is Coinbase Wallet?
Coinbase Wallet provides a generally safe and beginner-friendly way to store your cryptocurrency and explore the ever-expanding crypto universe.
A crypto wallet holds assets off the exchange, which keeps your crypto safe from whatever risks may occur on the exchange, such as hacks, breaches, government actions, coding bugs, or other risks to your crypto.
Following Coinbase’s typical user-friendly approach, Coinbase Wallet targets beginner users, and most features are just a click or two away. However, Coinbase Wallet still includes some advanced features, like access to decentralized exchanges (DEXs), non-fungible tokens (NFTs), and an assortment of DeFi protocols.
Coinbase’s easy-to-use wallet parallels many of the features you’ll get with other well-known wallets, such as Trust Wallet or MetaMask. However, it also adds support for Bitcoin, Litecoin, and other assets that are not natively supported by MetaMask.
How does Coinbase Wallet work?
Coinbase Wallet uses well-tested tech by implementing BIP39-compatible seed phrases to secure the wallet. A seed phrase, also called a mnemonic phrase, is a 12- or 24-word group that is easy to remember and acts as the private key to your wallet.
BIP39, which refers to Bitcoin Improvement Proposal 39, allows cross-wallet compatibility with several other popular crypto wallets. You can use your seed phrase to restore a wallet to Coinbase Wallet, Trust Wallet, Coinomi, Exodus, and other software wallets, as well as secure hardware wallets such as Ledger and Trezor wallets.
Coinbase Wallet can be used as a mobile app on iOS or Android or as a web extension on Google chrome and chromium-based browsers like Brave or Microsoft Edge. For most applications, the mobile app offers more functionality, such as the ability to browse available dApps.
- Ethereum wallet: At the heart of the Coinbase Wallet is an Ethereum wallet with support for ERC-20 tokens used on the Ethereum blockchain or EVM-compatible blockchains.
- Bitcoin wallet: Native support for Bitcoin sets the Coinbase Wallet apart from Ethereum-focused wallets like MetaMask.
- Support for Litecoin and other cryptos: Use your Coinbase Wallet to store LTC, BCH, DOGE, XLM, and XRP. The browser extension adds support for SOL and SPL tokens.
- Swap crypto on 16 trading platforms: Swap Ethereum-based tokens for hard-to-find tokens on Uniswap or other decentralized exchanges.
- Connect to popular DeFi protocols: Earn or borrow using a wide range of DeFi platforms, including Compound, AAVE, and more.
Coinbase Wallet pros and cons
- Easy-to-use NFT and crypto storage
- Compatible with other BIP39 wallets
- Link to Coinbase account or use independently
- Internet-connected hot wallet
- High fees on some trades
- Not open-source
Coinbase Wallet notable features
While Coinbase provides a list of supported dApps and marketplaces, you’ll find the Coinbase Wallet can connect to many other protocols and Web3 properties that aren’t listed. You can also connect to virtual worlds like Cryptovoxels, collect NFTs on OpenSea, or manage your Web3 portfolio with Zapper. The Coinbase Wallet’s notable features include:
Wide integration with dApps
To use crypto applications and marketplaces, you’ll need a wallet that speaks the same language. Most marketplaces and apps support the MetaMask wallet, but you’ll also find wide support for Coinbase Wallet, with options to connect your wallet in just a few clicks.
Many crypto wallets support Bitcoin, Ethereum, Litecoin, or Dogecoin. However, a wallet that supports all these cryptocurrencies at once is more of a rarity — but that’s what the Coinbase Wallet does.
Coinbase offers off-exchange storage for:
- Ethereum-based (ERC-20) tokens
- Bitcoin Cash
- Stellar Lumens
Integration with Coinbase
Although you can use Coinbase Wallet as a standalone app — or even import other wallets — much of the appeal is that Coinbase Wallet can integrate with the Coinbase exchange. This integration provides the ability to buy on Coinbase and also offers access to other trading platforms, like Uniswap, through your wallet. In total, you’ll have access to countless coins and tokens, including many that you can’t buy on Coinbase’s exchange.
Coinbase Wallet potential drawbacks
No crypto wallet is a perfect fit for every use case, and even the venerable Coinbase Wallet suffers a few potential drawbacks. These include:
Limited coin support
Coinbase Wallet offers native support for more blockchains than some popular wallets, like MetaMask. However, this wallet supports fewer blockchains than many of the competitor wallets, such as Trust Wallet and Exodus.
That said, there’s a workaround for the limited coin support. All you need to do is restore your Coinbase Wallet to Binance’s Trust Wallet, Exodus Wallet, and Crypto.com’s DeFi Wallet using the multi-coin wallet setting and your 12-word seed phrase.
This option lets you store and access more types of crypto while also giving you access to quick-connect dApps designed to work with the Coinbase Wallet and Ethereum-based assets. Just choose the wallet you need for the task at hand; each can access the same assets if supported.
Limited marketplace options
If you’ve used Trust Wallet or Crypto.com’s DeFi Wallet, you might find the selection of dApps listed on Coinbase lacking by comparison. However, you have access to more dApps than you see listed on Coinbase. Connection options for apps and marketplaces often include MetaMask, Coinbase Wallet, or WalletConnect-compatible wallets, which include Trust Wallet and Crypto.com’s DeFi Wallet.
The term hot wallet refers to a crypto wallet that’s connected to the internet. Connectivity comes with risks. Apps or protocols may have bugs or security concerns that create a potential for losses.
However, recently added support for Ledger hardware wallets builds in an extra layer of security for the Coinbase Wallet when you’re using the Chrome extension. You can connect your Ledger Nano using the Chrome extension to put your crypto assets under lock and key.
How to set up your Coinbase Wallet
1. Install the app or browser extension
To install the Coinbase Wallet browser extension, use the download link on Coinbase.com. If installing the mobile app, search Coinbase Wallet in the iOS App Store or Google’s Play Store to find the official app.
2. Start a new wallet or import a wallet
Your Coinbase Wallet is secured by a private key, but rather than working with a difficult-to-remember string of letters and numbers, you’ll use a 12-word seed phrase instead.
If you’re starting a new wallet, Coinbase Wallet will assign a seed phase. Write this down on paper and keep it in a secure place. You should not screenshot the seed phrase or store it digitally, as that can put you at risk of hackers accessing it.
You can also import an existing wallet. However, it’s important to be aware that not all wallets are compatible, and in some cases, you won’t see all your crypto if the wallet you’re importing to does not support that type of crypto.
3. Fund your Coinbase Wallet
Because Coinbase Wallet connects to the Coinbase exchange, funding your wallet is a breeze. You can simply transfer some of your crypto to the wallet.
You can also send crypto from another wallet you own or purchase crypto from within the wallet if you’ve connected your Coinbase account.
Coinbase Wallet provides transparency on network fees and advises you when network costs may be higher than usual.
4. Connect to dApps
As a basic function, the Coinbase Wallet keeps your crypto safe from risks associated with keeping assets on an exchange. But for many crypto investors, a large part of the appeal is the new opportunities that cryptocurrencies can bring, including NFTs, DeFi borrowing and lending, staking, and swapping for up-and-coming tokens. Bookmark your favorite dApps for easy access.
Final thoughts on Coinbase Wallet
Coinbase Wallet is a beginner-friendly wallet option that offers an impressive set of features to help you get started quickly. Power users may miss some features offered by advanced wallets, such as MetaMask, but Coinbase Wallet fits the bill for many users while adding support for additional cryptocurrencies such as Bitcoin, Litecoin, and XRP.
When using the Coinbase Wallet or any other hot wallet connected to the internet, you may want to consider adding a hardware wallet, like the Ledger Nano, to the mix for an extra layer of security.