How to earn crypto with COINBASE in 2022

Coinbase is the platform that most beginners choose to start trading cryptocurrencies.

This is because Coinbase is one of the most known and easy-to-use cryptocurrency exchanges.

On this page, we are going to describe how Coinbase users can earn their first crypto, create their first crypto wallet, and how they can use this platform to generate yield and buy, sell and convert cryptocurrencies.

This article is mostly oriented to those users who have little or no experience with cryptocurrencies. But even more, experienced investors may benefit to go through this article and find out if they are using Coinbase to its maximum potential.

But before we start, you need to be aware that higher rewards have a higher risk.

Coinbase is not an exception and keeping your digital assets in Coinbase for an extended period of time does have some risks that we will explain on this page.

The safest would be to store your digital assets on a cold wallet, but even a cold wallet has the risk of being lost or stolen.

There are no risk-free options and the more you learn, experience, and research, the better you will be prepared to understand the risks and avoid or minimize their impact.

Do your own research

Our content is intended to be used and must be used for informational purposes only and it is not intended to provide investment, financial, accounting, legal, tax, or other professional advice.

It is very important to do your own research and verify any information you find on this website, or take independent financial advice before making any investment based on your own personal circumstances.

TABLE OF CONTENTS – QUICK NAVIGATION

1. What is Coinbase

1.1. HOW TO EARN CRYPTO BY ‘EARN AND LEARN’

1.2. HOW TO EARN YIELD ON CRYPTO ASSETS

2. Is Coinbase safe?

2.1. Learning from the past

2.2. Lessons learnt

3. How to use Coinbase

3.1. Coinbase Pro Vs Coinbase

3.2. How to open a Coinbase account

3.3. How to deposit funds

3.4. How to buy, sell and swap

3.5. How to withdraw

3.6. Additional benefits

3.7. Coinbase KYC

4. Coinbase and tax obligations

4.1. Koinly tax calculator and tax report

4.2. A note for beginners

What is Coinbase and how to earn crypto?

Coinbase is a cryptocurrency trading and investing platform that was founded in 2012.

Coinbase operates in more than 100 countries and has over 2,000 employees distributed worldwide.

Apart from being able to trade cryptocurrencies, in Coinbase there are two ways to earn crypto.

HOW TO EARN CRYPTO BY 'LEARN AND EARN'

Every so often Coinbase promotes a cryptocurrency and offers a ‘learn and earn’ opportunity to all Coinbase users.

At the time we are writing this article, Coinbase is promoting two cryptocurrencies:

– AMP by offering 3 USD in AMP tokens to those who complete the three introduction sessions to AMP. It takes around 1 minute to complete each session.

– Fetch.ai by offering 3 USD in FET tokens to those who complete the three introduction sessions to FET. It takes around 1 minute to complete each session.

And Coinbase is also promoting its own self-custody wallet and offering 4 USD in Ethereum to those who download the Coinbase wallet to their mobile phones and connect the wallet to their Coinbase accounts.

A few USD worth of crypto may not seem a lot, but over the years there have been dozens of ‘earn and learn opportunities. And most probably Coinbase will offer more ‘learn and earn opportunities.

– The Coinbase users can learn about many cryptocurrencies, their economics, and use cases

– Also, Coinbase users can earn some easy crypto that can be kept, sold or converted. Which, for beginners, it is a great way to start getting familiar with crypto trading.

It takes literally less than 5 minutes to complete the lessons and the quizzes for each token. At after those 5 minutes, the Coinbase users will have a high-level understanding of the token basics and a few USD worths of the token in their accounts.

As can be appreciated in the picture below, this user has earned AMP, FET, and ETH. They are stored on his Coinbase account and the assets can be kept, sold, converted, or transferred.

HOW TO EARN YIELD ON CRYPTO ASSETS

In Coinbase it is possible to earn a yield on some assets by just holding them:

– Ethereum, 4.5% APR

– Dai, 2.35% APR

– Tezos, 4.63% APR

– Algorand, 4% APR

– Cosmos, 5% APR

The lifetime yield for each individual asset, and the APY, can easily be tracked on the Coinbase user account yield page.

For more details about the reward types and payout timing, check the Coinbase rewards payouts page.

Is Coinbase safe?

Learning from the past

If you have a Coinbase account or you are considering opening one, you must realize that you are trusting your digital assets to Coinbase.

If Coinbase goes bankrupt or has major problems, like hacking, you may lose part of the full amount of the assets you have deposited.

As an example, Mt. Gox was a bitcoin exchange that at the time was handling 70% of all Bitcoin transactions worldwide and was the largest bitcoin intermediary and the world’s leading Bitcoin exchange.

And then, in February 2014 Mt. Gox suspended trading, closed the website, and filed for bankruptcy.

Approximately 850,000 Bitcoins in custody by Mt. Gox went missing and it has been a long process for the owners to try to recover even a part of those missing Bitcoins.

Please, now go ahead and do your own research about Mt.Gox, similar cases or the so-called ‘rug pulls’ in the crypto world.

Lessons learned

Once you send your digital assets to a third party like Coinbase, you must realize that:

– By sending your digital assets to a third party, your control over them is decreased

– Therefore the risk of losing your digital assets does increase.

But even having full control of your digital assets by having them stored at home in a cold wallet is also at risk.

It may happen that the house may burn down, or someone may break into it and steal your wallet or seeds, or a natural disaster may destroy your wallet and seeds, or someone may find out your wallet seeds, …

Even having your assets stored in a cold wallet in a bank safe box has its risks. Probably the risk is low, but there is always the risk that for whatever reason the bank decides to limit your access to your safe box.

So, having a part of your digital assets stored in Coinbase may be a good way to manage risk, by not having all your digital assets in one single place and exposed to a single point of failure.

And if this is the case, having part of the digital assets in Coinbase has the advantage of being able to earn yield.

In the end, each person must decide if having the digital assets in the custody of a third party is worth the risk or not.

You must ask yourself:

– Are my digital assets safely stored? Or, is it safe to keep all my digital assets in one single location?

– As an alternative to keeping my assets in one single location, do I have easy and cheap access to a bank safe box and, if so, is it a bank that I trust?

– Do I trust Coinbase?*

– Are there any other companies that provide the same or similar service and that are safer than Coinbase?*

*And here comes into play the additional research that you are going to do into Coinbase and some alternative platforms like Blockfi, Nexo,…

All in all, you are the only person who can decide if your digital assets are safe in Coinbase.

How to use Coinbase

Coinbase Pro Vs Coinbase

Coinbase has two platforms:

– Coinbase is a very user-friendly platform but has higher fees

– Coinbase Pro which is intended for the more knowledgeable traders may be rather difficult to use for beginners but it has lower fees.

For beginners, it would be recommendable to start with Coinbase and with time and additional knowledge to progress to Pro Coinbase.

For more knowledgeable traders, who have experience with stocks or bonds, or funds trading platforms, the Pro Coinbase platform will look familiar and it may be a better choice than Coinbase because of the lower fees.

In any case, one single Coinbase user account can be used for both Coinbase Pro and Coinbase platforms.

How to open a Coinbase account

To open an account with Blockfi is quite a straightforward process.

Just make sure that you use a safe email address and a very safe password that you are not using anywhere else.

If you use our referral link you may be eligible to get 10 USD in BTC if you buy or sell more than 100 USD or the equivalent of your domestic currency.

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How to deposit funds

It is possible to fund a Coinbase account in USD, GBP, or EUR.

– See here funding methods for United Kingdom customers

– See here funding methods for US customers

– See here funding methods for European customers

Note that if, for example, you are connecting to your Coinbase account from a European country, funding your account with GBP or USD will not be possible. The same situation applies if you connect from US or UK.

Note that are some fees for fiat deposits. While there are no fees for GBP deposits and they are nearly negligible for EUR deposits, they are to be taken into account for US deposits.

How to buy, sell and swap

Once you have fiat or a cryptocurrency in your Coinbase account, it is quite simple to buy, sell or swap assets.

Just note that there are fees applicable to any transaction and those fees have quite a large impact on small transactions.

As an example, on a 2,66 EUR sell of 92 AMP to EUR, this user has been charged 0.99 EUR on fees and has received 1.67 EUR.

The bottom point is, small or frequent transactions are not ideal because the transaction fees do have a big impact.

The Coinbase PRO transactions are lower and that is why many Coinbase users do migrate to Coinbase PRO once they become familiar enough with trading into the more technically challenging Coinase Pro user interface.

How to transfer and withdraw

To transfer or withdraw funds or crypto assets is also a very simple process but once again the fees must be taken into account.

Rather than giving long explanations about transferring or withdrawing assets, for any new crypto user, it may be a good idea to practice with the ‘learn and earn’ coins and get familiar with the process.

As the withdrawal fees may change over time, we encourage anyone reading this article to research the topic. The picture below shows the fees applicable to cash deposit and withdrawals at the time this article is written in February 2022.

Coinbase and KYC

KYC stands for Know Your Customer.

KYC is standard practice for companies that offer financial services and it is used to prevent money laundering and eliminate bad actors.

Most, if not all, of the reputable crypto exchange platforms, have KYC, and Coinbase is no different.

The Coinbase user verification web page does explain why the verification is important and answers most of the common questions from the users.

Without account verification, there are some limits so it may be advisable to complete the Coinbase KYC as soon as possible.

Coinbase and tax obligations

Most of us have to declare capital gains on our cryptocurrency holdings.

And most of us have to use a cryptocurrency tax calculator to be able to calculate our cryptocurrency taxes.

For Coinbase, when it comes to tax declaration, there are a few points that the users need to take into account:

– In Coinbase, the interests on yield are paid daily so there is one transaction per asset per day. And for someone with three or more assets that may mean over 1000 transactions per year. That volume of transactions may complicate a bit the tax calculation.

– Some tax calculation services have plan levels linked to the number of transactions per year. The Coinbase daily interest payment transactions could make the tax calculation more costly.

– Coinbase allows the users to export and downloads the transactions history in CSV and PDF formats.

Koinly tax calculator and tax report

Koinly is a tax calculation and tax report service that allows the user to keep track of capital gains, income, …

The main advantage is that with Koinly the user is able to very easily keep track of the portfolio total value, the cost basis, and the realized and unrealized gains.

Koinly also keeps track of important information like expenses and trading fees that they are tax deductible in some countries.

Note that opening a Koinly account and keeping track of the portfolio is a free service.

But the most important part is that Koinly can generate a yearly tax plan that can be presented as part of the tax declaration.

Note that while keeping track of the portfolio is a free service, the tax plan is a paid service.

As an example, as shown in the picture above, this user had over 3000 transactions in 2021 so that means that to get the tax plan prepared by Koinly, the user needs to choose the ‘Trader’ plan.