With more than 5,500,000 users as of this writing (and growing fast) Coinbase is one of the most widely used Bitcoin wallet services world wide.
With more than 5,500,000 users as of this writing (and growing fast) Coinbase is one of the most widely used Bitcoin wallet services world wide. Its main advantage is it’s simple to understand and therefore easy to use. It has all the necessary services to start your Bitcoin experience: wallet + bitcoin buy and sell services + easy send and receive.
Send and Receive: This is part of the basic Bitcoin network functionality all wallets provide.
Web: Coinbase is also known as the “PayPal of Bitcoin” because their user experience and services are similar, but applied to the digital currency. They strive to provide comprehensive web wallet, buy and sell, and merchant services.
Mobile App: They provide both Android and iPhone apps. All wallet services are included and they are synchronized with the web application meaning whatever you do in the app is immediately reflected on the website.
Key Backup: Since Coinbase hosts your wallet to provide all their services there is no backup functionality.
You Control Keys: As mentioned above, to provide their comprehensive services Coinbase needs to host your Bitcoins, this means your wallet’s public and private keys are kept in their servers and you access the Bitcoin network through them.
Market Information: They provide live price and transaction charts for basic investment and merchant services, but this is limited compared to other specialized websites.
Buy and Sell Bitcoins: They provide exchange services directly from the wallet, but users buy and sell from them since they are not an exchange. Their prices are very competitive and in line with market prices.
Blockchain Explorer: This is the ability to monitor everything that’s happening in the Bitcoin network directly from the source: the block chain. Coinbase does not provide this service although it’s not really necessary for basic wallet, market, and merchant services.
Link Bank Account: This is one of Coinbase’s key services that makes it so convenient especially to start exploring the Bitcoin market. Within the US users can link their bank accounts to their wallets so it’s easy to move money between their bitcoin wallets and their bank accounts. This service will be available in other countries soon.
Pay by Email/SMS: Just like PayPal invented this functionality to move money, Coinbase implemented this service to move Bitcoins around the world by using your email or cellphone. It is also possible to send Bitcoins this way to people who don’t have Coinbase accounts.
Merchant Services: Another of the key services Coinbase provides is the ability for merchants to sell and get paid in bitcoins. Sellers can use their “Pay”, “Subscribe”, and “Donate” buttons as well as implement their gateway with custom design.
With the rising popularity (and market price) of Bitcoin millions of people around the world are exploring which are the best services to start using the digital currency.
The basic functionality needed is a place to store, send, and receive bitcoins, but after that the question everybody asks is : Where do I buy and sell them?
The two most popular digital currency exchanges in the world for trading bitcoins against US dollars are Mt.Gox and Bitstamp.
Japan based Mt.Gox is the historic leader in Bitcoin exchanges although recently it lost market share due to regulatory and compliance issues in the United States.
However, Mt.Gox’s losses have been Slovenia based Bitstamp’s gains in trading volume. Also accounting for its success Bitstamp has a high focus on customer service and efficient back office operations.
How do they compare?
The basic currency exchange functionality is adequately delivered by both companies, but the areas where they differ might be the keys to deciding which one to use.
Buy and Sell: Both services provide a fast execution service when users enter their orders. In both cases adequate speed and liquidity are provided. This is key especially in recent fast moving markets.
Deposit/Withdrawal Efficiency: As mentioned above Mt.Gox has had difficulties with regulators in the US and they even seized funds from their US bank accounts. Due to these issues they haven’t been able to process US dollar deposits and withdrawals within normal time frames in the last few months. Although they have been working diligently to solve these significant delays they are still having some trouble according to customer complaints in different public internet forums. In the case of Bitstamp they have maintained an adequate deposit and withdrawal system with US dollar transfer processing usually taking between 2 to 5 business days.
Price Efficiency: Due to the issues mentioned above Bitcoin pricing against the US dollar has been inefficient on Mt.Gox. This has not affected the normal bid/offer spread, but the absolute price level within the exchange as compared to other markets, including Bitstamp, has been at times significantly higher. This is due to the preference of traders to be able to deposit and withdraw their funds within reasonable time frames in the other markets.
Quotes Charts: Both companies offer their own markets’ current quotes and historical price charts. These tools are important for investors to have a good perspective on Bitcoin price evolution before they trade.
Order Book Table:
This is another important tool for decision making that is provided only by Bitstamp. The first part of the order book table page is a chart that represents all the orders organized by type (bid or offer), price, and volume. It is a very effective way of looking at the market depth and also analyzing the open interest so you can decide how to set and manage your orders. Also, below the chart is their list of all the open orders organized in two columns (bids and offers) with the same data of the chart with respect to volume and price for each order. Mt.Gox doesn’t offer this feature, but like for other relevant exchanges their order book can be seen on independent services like BitcoinWisdom.
Instant Orders: If you want to buy or sell bitcoins at the current market price you can enter what they call instant orders. They will execute your order at the best price on the exchange immediately and both services provide this.
Limit Orders: Also provided by both exchanges, if you want to buy or sell bitcoins at a specific price then you can enter the order at that level and they will publish it on their market and execute it when someone else wants to buy or sell at that price.
Multicurrency: Bitstamp trading is limited to bitcoins against US dollars only. In the case of Mt.Gox it has adequate liquidity for trading between Bitcoin and other currencies including Japanese yens, euros, British pounds, and Australian dollars. They also support other currencies, but with less depth so in general these are better traded on other exchanges.
Account Summary: As with every type of financial institution an account summary page is always useful to be able to check balances, transaction activity, open orders, profile settings, and other details. Bitstamp has a well designed and easy to use “Account” section with all these features and more. In the case of Mt.Gox there is no centralized section within their website that offers this information in a simple and orderly fashion. They provide all the information, but it is separated in different sections and users need to find their data in a rather cumbersome way.
Link Bank Account: This is the functionality of linking your bank account so that money transfers can be made automatically between your bank and your Bitcoin exchange accounts. Both Bitstamp and Mt.Gox operate with wire transfers so this service is not offered by either company. To their credit though, this is a difficult task considering they operate globally with customers in diverse money systems. Within the US the only service that provides this convenient functionality is San Francisco based Coinbase.
Wallet Services: A proper wallet service is one that supports storage and simple “send and receive” functionality with Bitcoin addresses and QR codes so users can pay and get paid easily. Bitstamp and Mt.Gox are both set up to provide trading services, but their accounts cannot be considered Bitcoin wallets and it is not advisable to use them as such.
Like all exchanges both companies charge trading commissions. In the case of Bitstamp they have a fee schedule that goes from 0.50% to 0.20% depending on the user’s monthly trading volume.
In the case of Mt.Gox their scale is also based on volume, but on a moving 30 day basis that goes from 0.60% to 0.25%.
Which one should I use?
Based on the negative publicity they suffered when US regulators seized their bank accounts and its effect on actual delays in deposits and withdrawals and the subsequent price premium of Bitcoin against the US dollar it seems natural to discard this option for traders and investors who want to base their transactions in this currency. However for traders who need market depth and efficiency in other currencies Mt.Gox may be the better alternative.
For Bitcoin/US dollar trading, good customer service, and normal lead times in US dollar deposits and withdrawals Bitstamp is the place to go.
With Bitcoin’s popularity on the rise more and more people around the world are asking how to start using it and what are the best tools available.
The basic features with many services are the abilities to store, send, and receive bitcoins, but once this is solved the next natural step is to find a place to buy and sell the digital currency.
Coinbase and Bitstamp are two of the most popular exchange services especially among American users.
San Francisco based Coinbase is known as “the PayPal” of Bitcoin and its main focus is to provide easy access through simple and intuitive services for individuals, merchants, and investors.
Bitstamp is located in Slovenia and its mission is to be an efficient Bitcoin exchange solution with robust trading services and easy deposit and withdrawal of traditional currencies.
How do they compare?
Buy and Sell: Both services provide bitcoin/US dollar exchange services, but they differ in their style. Coinbase users buy and sell bitcoins directly from the company. They publish their bid and ask prices on their service and users can go to the “buy/sell” page to enter their orders. In the case of Bitstamp the company acts as an exchange where users buy and sell between themselves at the best prices offered on the system.
Link Bank Account: On Coinbase US customers can link their bank accounts to move dollars between their financial institutions and Coinbase. Once this is done the deposits and withdrawals are automatic each time they buy and sell Bitcoins. On Bitstamp this service is available for EU customers, US users can deposit and withdraw dollars by wire transfer.
Instant Orders: Once the accounts are setup and funds deposited users of both services can buy and sell bitcoins and both companies offer Instant Orders. This means that when users enter their buy and sell orders they are executed immediately at the best price available at that time.
Limit Orders: These orders consist of buying and selling at specific prices indicated by the users. Coinbase doesn’t support this type of order. On Bitstamp users can enter limit orders that stay open until they are either cancelled by the client or executed in the market.
An order book is a screen where all the bid and ask orders are published with the price and volume information so all buyers and sellers can see the depth and breath of the market. Bitstamp offers this feature in a chart and in list format. Because Coinbase doesn’t handle customer orders they only publish their own bid and ask prices with no volume information.
Holds Bitcoins: This is the ability to store and hold users’ bitcoins in their service. On both Coinbase and Bitstamp they hold and store Bitcoins for their customers. Users can also check their balances and account activities on both services.
Holds Dollars: This is the ability to store and hold customers’ dollars in their accounts. In the case of Bitstamp customers can deposit, store, and withdraw US dollars whenever they want. Because of compliance reasons Coinbase doesn’t yet hold dollars on their customer accounts. Each time users buy and sell bitcoins the dollars are deposited and withdrawn from their clients’ accounts in their financial institutions using the ACH automatic transfer system.
Other Currencies: For deposits and withdrawals Bitstamp supports US dollars, British pounds, and Swiss francs. In the case of Coinbase for now they only support US dollars within the United States.
Coinbase offers full wallet services that include the ability to send and receive bitcoins by email and SMS. In the case of Bitstamp users need to get wallet services from 3rd parties, but they can link them to their Bitstamp investing accounts.
Which one should I use?
If you live in the US and prefer an easy to use service with the ability to buy and sell bitcoins then Coinbase is your best option.
If you are seeking more advanced trading services with the ability to deposit and withdraw in other currencies as well then Bitstamp is your best alternative.
Slovenia based Bitstamp is one of the world’s top Bitcoin exchanges ranking 3rd in volume as of this writing after Chinese exchange BTC China, the Japanese Mt.Gox, and above Russian exchange BTC-e.
Individuals and institutions can open accounts to buy and sell Bitcoins on Bitstamp provided they verify their identity according to company and European compliance standards.
Bitstamp in general has a very good and responsive customer service and the deposit and withdrawal times are generally within normal parameters of between 2 and 5 business days for dollars, euros, British pounds, and Swiss francs.
Bitcoin vs US Dollar Trading
For now the service only provides trading of bitcoins against US dollars.
Verify Account: To use the account in any way it needs to be verified. The process is very simple and consists of entering additional identity information including full name, address, date of birth, and scanned copies of your government issued ID and proof of residence.
Send Money: Once your account is verified you can send Bitcoins, euros, dollars, Swiss francs, or British pounds. The Bitstamp account supports dollars and Bitcoins so if you send any of the other currencies they will be exchanged into dollars at no extra charge. The methods to deposit are:
Bitcoin: Transfer to the Bitcoin address they provide for your account. No fees charged.
Euros: Transfer through the SEPA system to the account number they provide. No fees charged and they are credited in 1 to 3 business days.
US dollars, British pounds, and Swiss francs: Wire transfer to their account and then they convert to US dollars if applicable and deposit to your Bitstamp account. They charge in all cases a 0.1% deposit fee on their side with a minimum of $15 and funds are credited within 2 to 5 business days.
Buy and Sell:
Once your money is credited you can start trading bitcoins immediately. The exchange operates 24 hours a day 7 days a week. You can buy and sell to the limit of your account value.
Instant Orders: If you want to buy or sell bitcoins at the current market price you can enter what they call instant orders. They will execute your order at the best price on the exchange.
Limit Orders: If you want to buy or sell bitcoins at a specific price then you can enter the order at that level and they will publish it on the order book and execute it when someone else wants to buy or sell at that price.
Commissions: They charge between 0.50% and 0.20% per trade depending on your monthly volume.
The order book is a great feature because it’s where the exchange shows all the open orders it has from its clients.
The first part of the order book is a chart that represents all the orders organized by type (bid or offer), price, and volume. This is a very efficient way of looking at the market depth and also analyzing the open interest so you can decide how to set and manage your orders.
Also, below the chart is their list of all the open orders organized in two columns (bids and offers) with the same data of the chart with respect to volume and price for each order.
Withdrawals: To withdraw money is as easy as to deposit. You can draw your money in Bitcoins, euros, dollars, Swiss francs, or British pounds:
Bitcoin: You can enter your private Bitcoin wallet address and withdraw your bitcoins from your Bitstamp account at no charge.
Euros: To withdraw euros your dollars will be exchanged into euros and then they will charge 0.90 euros for your SEPA transfer. It takes from 1 to 3 business days and the minimum is $10.
US dollars, British pounds, and Swiss francs: They will exchange your dollars to the destination currency if applicable and charge a 0.09% transfer fee with a minimum of $15. It takes from 2 to 5 business days and the minimum is $50.
Bitstamp is a well known and reputable Bitcoin exchange. Its efficiency and excellent customer service has won the business not only of individual and institutional traders and investors, but also of many Bitcoin startups and companies that use it as their default exchange partner. This has helped the company grow in volume and share within the market.
If you are looking for an easy to use and professional service to start buying and selling Bitcoins then Bitstamp is an excellent option.
Millions of people around the world have heard and are curious about Bitcoin. Many are already using the digital currency and many more are planning to start using it in the near future. But the question everybody asks is:
What Bitcoin wallet should I use?
There are several solutions in the market, but currently there are two leading the way with value added services on top of the base Bitcoin protocol.
These two services are Coinbase currently serving 329,000 wallet users and Blockchain.Info which just in the last few days surpassed 500,000 wallet users.
Coinbase is a private company based in San Francisco, California, that provides web and mobile Bitcoin services. Their mission is to provide Bitcoin value added products for consumers and merchants. Coinbase is recognized as “the PayPal” of the Bitcoin Network.
Blockchain.Info is also a private company, but based in York, United Kingdom. The company provides full Bitcoin market and block chain exploring information and wallet services. It is recognized as one of the first information and wallet services in the Bitcoin network and very well respected in the community.
How do they compare?
As shown in the comparison chart above there are several things to take into account when deciding what solution to use. It all boils down to your personal needs and your security preferences. These are the descriptions for each feature:
Send and Receive: The first thing you do when you get a Bitcoin wallet is to acquire your first bitcoins by selling products and services or by buying them. After that you need to be able to transfer them to pay for things or sell them. For this the features of Send and Receive are needed and the two solutions mentioned above provide this. They also have the Address Book functionality that lets you store names and Bitcoin addresses so it’s easier to manage your transfers.
Buy and Sell: If you need to buy and sell bitcoins as an investment or for payment purposes you can use Bitcoin exchanges. For this you need to transfer back and forth bitcoins to and from your exchange accounts. In the case of Coinbase it has this service integrated into its wallet and merchant products. On Coinbase you can easily buy and sell bitcoins directly from your account without having to move them elsewhere. Blockchain doesn’t offer this service, but they do provide links to their partner exchanges.
Link Bank Account: When you link your US dollar bank account with your Bitcoin account you can easily move money between them. Coinbase provides this feature. In the case of the Blockchain Wallet you need to handle the dollar transfers and payments separately from your bitcoin movements.
Pay by Email: PayPal pioneered the ability to send and receive money using your email account. Coinbase is emulating this by providing the same functionality but with your Bitcoin account. By entering an email address you can send Bitcoins to anyone and anyone can send Bitcoins to you using your email address. On the Blockchain Wallet you need to use the 30 character Bitcoin address instead.
Merchant Services: If you use the Blockchain Wallet you can get paid when you sell products and services by providing your Bitcoin address. This is a 30 character code that anyone can use to transfer the digital currency to your account. In the case of Coinbase they have taken this further by providing “Buy”, “Subscribe”, and “Donate” buttons that are linked to your account. These buttons can be installed in your website so your clients can pay just like they would by clicking your PayPal or other payment buttons.
Web: Both services have web based services. This means you can open your Bitcoin wallet and fully manage it and use all their services on their website.
Mobile: Both Coinbase and Blockchain have full service mobile apps that work on Android and iPhone and synchronize with their web services.
Wallet Backup: Only Blockchain lets you download, store on your DropBox or Google Drive, send by email, or print on paper your Bitcoin wallet private and public keys. In the case of Coinbase they host your keys in their servers.
Block Chain Explorer: This is the reason Blockchain.Info gave itself this name. They provide a full view of all the transactions and analytic data of what is happening in the Bitcoin network.
You Control Private Key: To be able to transfer bitcoins in the network you need your public Bitcoin address and your private key which is secret. On Blockchain.Info they generate and keep an encrypted copy of your keys on their servers, but as mentioned above, you also have full access to download or back them up therefore you have control of your keys.
They Control Private Key: In the case of Coinbase they control your private keys. This is because it is the only way they can serve as a gateway to the Bitcoin ecosystem and provide their value added services. It is more or less like a bank account: When you have dollar bills in your wallet you have full control of your money, but when you deposit them in the bank they have control of your money.
Since storing and holding Bitcoins in the network is done through 2 security keys, one public and one private for each wallet, then the question of who holds the keys becomes the main safety issue.
Blockchain.Info: They generate this pair of keys when you open your wallet, but they keep the “custody” of the keys. The advantage they provide though is that you can download, export, or print your keys if you wish to back them up in an external place outside of their servers. This provides an additional level of security because if the company disappears you still have access to your Bitcoins by having your public and private keys. You just need to download or go to another wallet service and import your existing keys there to access your money again.
Coinbase: As mentioned before, because they provide additional services for users and merchants, on Coinbase your wallet is as secure as the company and its technology are. Because users interact with Coinbase and thus indirectly with the network, they need to entrust their security keys to the company just like they would their money with PayPal or with a bank. Because Coinbase is compliant with federal and state regulations and counts with the support of important investors it is considered to be a safe Bitcoin service provider.
For a simple and full service experience Coinbase offers the best alternative. If you want to easily open a Bitcoin account, use it on the web and on your mobile device, and maybe even sell your products and get paid in Bitcoins then the Coinbase Wallet is the best way to start.
For more advanced users who wish more control and flexibility then Blockchain.Info is the best option. Although it doesn’t offer merchant or trading services, its open model permits the Blockchain Wallet to easily interact with third party providers like Bitcoin exchanges and other services.