Coinbase is one of the most popular cryptocurrency exchanges in the world, with over 56 million verified users as of 2021. While the platform has established a reputation for its user-friendly interface and wide range of supported cryptocurrencies, the question of safety remains a top concern for many investors.
So, is Coinbase safe? Let’s take a closer look at the platform’s security measures.
- Regulatory compliance
Coinbase is one of the few cryptocurrency exchanges that is regulated in the United States. The platform is registered as a Money Services Business with the Financial Crimes Enforcement Network (FinCEN) and is licensed to operate in 48 states.
- Insurance
Coinbase holds a $255 million insurance policy that covers any cryptocurrency held in its online hot wallets. This insurance policy is provided by Lloyd’s of London and covers losses resulting from theft or hacking of Coinbase’s online storage.
- Two-factor authentication
Coinbase requires users to enable two-factor authentication (2FA) on their accounts. This adds an extra layer of security by requiring a second factor, such as a text message or authentication app, in addition to the user’s password.
- Cold storage
Coinbase stores 98% of its customers’ funds in cold storage, which means that the funds are stored offline on secure hardware devices that are not connected to the internet. This greatly reduces the risk of theft or hacking.
- Background checks
Coinbase conducts background checks on all employees and implements strict security protocols to ensure that customer data is protected.
While Coinbase has implemented a number of security measures to protect its users, it is important to note that no exchange is completely immune to security breaches. In 2019, Coinbase suffered a data breach that resulted in the exposure of over 3,000 customers’ personal data.
In conclusion, Coinbase is generally considered to be a safe and secure platform for buying, selling, and storing cryptocurrencies. However, investors should still take precautions, such as enabling 2FA, storing their cryptocurrencies in a personal wallet, and only investing what they can afford to lose.