Coinbase is one of the most popular cryptocurrency exchanges. Have you ever wondered how they make money? With over 20 million customers, this is how Coinbase makes it's money
The answer is simply exchange fees. When you buy or sell crypto through Coinbase they charge a small fee. The fees vary from country to country but expect to pay around 1.49%. This is a different model to traditional financial products. For example, if you buy stocks you usually pay a flat commission up to a certain amount and then a % fee. The difference on Coinbase is you can buy Bitcoin and other cryptos with as little as $10.
Fees can be higher on Coinbase depending on the payment method. In Australia, users can only buy crypto using a credit card. In this case Coinbase charges a 3.99% fee.
Does Coinbase make money when you send or receive crypto?
No. You'll notice if you send crypto to another wallet that a small transfer fee is added on. This fee is the network fee. Most cryptocurrencies require a network fee to send crypto from one wallet to another. It's how the network operates. Coinbase doesn't profit off this. The fee automatically goes to the miner, or stakers who process the transaction on the blockchain.
Does Coinbase make money when you hodl?
Nope. You can hold you crypto in Coinbase for as long as you want and you won't be charged any fees. There are also no fees to open or close a Coinbase account.
Is Coinbase profitable?
Absolutely! We have no idea just how profitable they are apart from leaked documents which suggest they make over half billion dollars in profit each year. In the grand scheme of things, that's not a lot – but they are still a startup and few startups are profitable let alone this profitable. Which just goes to show how profitable cryptocurrency can be.