What’s the difference between Coinbase and Coinbase Wallet?

One of the best ways to understand crypto is to try it out. The first steps, like buying and holding some Bitcoin or ETH via an exchange like Coinbase, are simple. But if you want to go beyond the basics — and begin exploring technologies like NFTs and decentralized finance — you’re going to need to learn about some core crypto concepts.

In this tutorial we’re going to explore the basics around one very central core concept: the crypto wallet. It can be a slightly confusing topic because the word “wallet” has a bunch of different connotations in crypto depending on what you’re trying to do. 

You might hear about, for instance, custodial wallets (like the wallet that comes with any Coinbase account) or self-custody wallets (like Coinbase Wallet). There are hardware wallets (like Ledger), wallets that work with specific blockchains (like Phantom, which is a Solana wallet), and more. 

In this guide we’re going to focus mostly on self-custody wallets. Self-custody wallets give you maximum control over your crypto, allow you to keep many crypto holdings and NFTs in one place, and are the gateway to the growing universe of crypto apps.  

Got it. So what can a self-custody wallet do?

• Using Coinbase Wallet, you can send, receive, and store crypto. 

• Coinbase Wallet is also your gateway to the vast universe of crypto applications, also called “dapps” (short for “decentralized applications”) — everything from games like Axie Infinity to lending and savings protocols like Aave and Compound.

• You can use funds in a self-custody wallet to trade thousands of cryptocurrencies through decentralized exchanges, including many that aren’t available on centralized exchanges like Coinbase. 

• You can interact with multiple blockchains (including Ethereum, Polygon, Avalanche, and more).

• Coinbase Wallet offers both mobile and desktop/laptop experiences. Just download the app to your smartphone to get started. If you prefer to interact with crypto apps on a computer, Coinbase Wallet has a simple Chrome extension. 

• You can also easily link your Coinbase Wallet to your main Coinbase account, allowing you to fund your wallet and deepen your crypto journey with a few clicks. 

Wait. Coinbase Wallet is a different product than the main Coinbase app?

Yep! If you just want to buy, hold, and sell some crypto, the easiest way to do all of that is to set up an account with a crypto exchange like Coinbase. 

• When you set up a Coinbase account, we provide you with a hosted crypto wallet that safely stores your holdings.

• It’s called a “hosted” wallet because Coinbase holds your crypto on your behalf. With a hosted wallet, you don’t need to manage your own private keys and you can easily make basic crypto transactions via the main Coinbase app or website. 

Got it. So why would I want a self-custody wallet like Coinbase Wallet?

Many crypto users value complete control over their own assets — and a self-custody wallet provides exactly that. Via Coinbase Wallet, you’re responsible for securing your private keys through your recovery phrase (also known as a seed phrase, and which will allow you to recover your wallet, but will also allow anyone who has it to access your crypto, so keep it safe). Coinbase will never know or have access to your private keys or recovery phrase. That also means Coinbase can not help you recover lost or forgotten keys or seed phrases.  

But control of your private keys isn’t the only reason to get a self-custody wallet. Perhaps an even bigger reason is that a self-custody wallet is the gateway to the entire universe of crypto apps that’s emerged over the last several years — in much the same way a web browser is your gateway to the internet.

Coinbase Wallet enables support for over 5,500 assets, and a growing variety of blockchain networks — including Avalanche, Fantom, Polygon, Arbitrum, and Optimism.

Coinbase Wallet’s mobile app also includes an app browser that enables you to explore the growing world of Web3: decentralized finance (or DeFi), NFTs, staking, and much more. 

How do I fund my Coinbase Wallet?

Does Coinbase Wallet involve different fees than I’d encounter via the regular Coinbase app?

Yes — and Coinbase doesn’t pay, set, or control these fees. Any time you make an “on chain” transaction using a self-custody wallet, there’s generally network fees (sometimes called “gas fees”) associated with making the transaction happen. The exact amount varies based on factors like overall network demand and the blockchain being used. Here are some examples:

• When you send an asset like ETH to or from your main account to your Coinbase Wallet, you’ll incur a network fee. These are fees you’re paying miners or other network participants, not Coinbase, for making the transaction happen — and they’re dynamic, meaning they rise and fall based on factors including how busy the network is.

• You’ll also pay transaction fees (or gas) for minting an NFT or lending your crypto (and earning rewards) via a DeFi protocol. 

• One way to minimize fees is to explore crypto apps that run on lower-fee blockchains  like Avalanche and Polygon. 

What is a recovery phrase?

Coinbase Wallet is called a “self-custody wallet” because it’s a category of wallets designed to give you maximum control over your crypto. They also come with added responsibility. If you lose your password for your Coinbase-hosted wallet on the main Coinbase app, Coinbase can help you  recover it.

If you lose the keys to your self-custody Coinbase Wallet, you lose your crypto forever— unless you have your recovery phrase (also known as a seed phrase). Don’t lose your recovery phrase! If you lose your recovery phrase, your crypto will be gone forever. Coinbase will never have access to that seed phrase or your private keys. 

The recovery phrase is a string of 12 simple words that allow you to recreate your wallet on any compatible device. If you get a new device, or want to access your assets on a different device (or even via other popular blockchain wallets), it’s easy to import your recovery phrase. 

To further protect your holdings, you can enable PIN codes and biometric security via the Coinbase Wallet mobile app and passwords via the Chrome extension. 

Can I interact with Coinbase Wallet on my computer?

Yes! This Chrome extension allows you to interact with your Coinbase Wallet via your laptop or desktop computer. 

What are some of the things I can do with Coinbase Wallet?

You can trade thousands of assets via decentralized exchanges and send crypto between blockchains using “bridges” — as well as explore a huge range of other kinds of applications, from games to NFT markets. 

We’ll be rolling out a series of tutorials over the next few months to help you understand how popular apps and protocols work and what you can do with them.