The Coinbase Wallet provides a robust hot wallet option that is suitable for crypto users at all levels. It has a user-friendly interface, connects easily with the Coinbase exchange, and enables token swaps, fiat on-ramping through Coinbase, Ledger hardware wallet integration, and it’s overall a solid product for users who want to interact across the crypto ecosystem, for example with DeFi protocols and NFT marketplaces.
When you first get started with Coinbase, you’ll most likely be using it as a centralized exchange, which means you’ll be holding crypto in your Coinbase account. However, while Coinbase has high security standards, coins held on the platform are not in your direct custody, and to take full ownership of your crypto you’ll need a wallet, in which case you might want to turn to the Coinbase Wallet, which is distinct from holding crypto in a Coinbase account.
In fact, self-custody wallets are a critical component of the broader crypto ecosystem, and Coinbase Wallet is a versatile and user-friendly option for both newcomers and experienced traders. And by making use of Coinbase Wallet you’ll not only be provided with crypto storage, but you’ll also be able to interact on-chain and explore the many crypto protocols and platforms that are out there, and which provide opportunities to profit.
In this guide then, we’ll walk through how to use Coinbase Wallet, covering the necessities when it comes to setup, its useful features, and user best practices, and at the end, we’ll also take a brief look at another product: the Coinbase Smart Wallet.
What Is Coinbase Wallet?
Coinbase Wallet is a self-custodial hot wallet, which means users maintain full control over their funds and private keys, and the wallet is web-connected allowing for interactions with crypto protocols such as, for example, DEXes and NFT marketplaces. It’s available as both a mobile app and a browser extension.
Using Coinbase Wallet contrasts with keeping funds in an account on the Coinbase exchange, in which case the platform is holding coins on your behalf.
How to Set Up Coinbase Wallet
Getting set up with Coinbase Wallet is a straightforward process, and essentially the same as setting up almost any self-custody hot wallet–such as MetaMask or Phantom–so let’s go through the procedure step by step.
Download the App
For the mobile app, you can visit the Apple App Store or Google Play Store and download from there. For the browser extension version on desktop, you can install it from the official website.
Create a New Wallet
When you’ve got the mobile app or browser extension, open it up and select Create new wallet. This will require you to set a password–make it a strong one–and if you prefer to do so, you can also enable biometric authentication on mobile.
Backup Your Recovery Phrase
When you set up a new wallet, you’ll receive a 12-word recovery phrase, also known as a seed phrase. Always keep in mind how important recovery phrases are: they enable you to recover lost wallets, but also, anyone who knows the seed phrase can access the wallet, meaning security is critical. Write down your seed phrase physically–not on a computer or phone–and then keep it in a safe place, and don’t reveal it to anyone. In fact, a useful rule of thumb is that if anyone–online or off–asks for your seed phrase, they are likely attempting to scam you out of your assets.
Remember then: your seed phrase enables you to recover your wallet, and it provides access to your wallet, so keep it safe!
With everything set up, you can link you Coinbase Wallet directly to a Coinbase account–which you can sign up for here–making it very easy to transfer funds between exchange and wallet, or alternatively, you can transfer funds from any other wallets you might already have set up.
Navigating the Coinbase Wallet Interface
The easiest way to navigate the wallet on desktop is to click where it says either NFTs or DeFi in the browser extension, as this will open your wallet interface in a new tab. From here, you can view your assets, including NFTs, and you can also click on the Apps tab to view a list of protocols, including platforms such as the Drift, Uniswap, and Aave.
In the navigation bar on the left, you’ll find buttons to send and receive crypto, and also to buy crypto, a function that will direct you to the Coinbase exchange. Additionally, there is a swap function, allowing you to swap between tokens by going through a choice of DEXes.
Coinbase Wallet Utility
You can simply use your wallet to self-custody coins, although keep in mind that this is a web-connected hot wallet, and if you’re planning on holding large balances for a long time, it’s worth making use of a hardware wallet, something we’ll cover below when we talk about Ledger connections. Additionally though, there are some other key Coinbase Wallet utilities, including the following:
Access DeFi Protocols
You can use your Coinbase Wallet to interact with DeFi platforms, allowing you to generate crypto income from your assets through strategies such as yield farming, lending, and liquidity provision. DeFi is a huge sector to explore, and there are new profit opportunities arising all the time, although you should always be mindful of the risks too.
Display NFTs
Using Coinbase Wallet you can connect to NFT marketplaces such as Magic Eden, Blur, and OpenSea, and if you’re trading or collecting NFTs, you’ll be able to view them directly in your wallet, making it easy to keep track of your holdings.
Ledger Integration
The most secure way to manage crypto is with a cold storage wallet, and the good news is that Coinbase Wallet can be integrated with a Ledger hardware device. However, be aware that this integration needs to be done when setting up a new Coinbase Wallet, when you can import the seed phrase from a Ledger device.
Gas Fee Customization
Coinbase Wallet allows you to adjust the gas fees for Ethereum transactions. This requires some technical knowledge, but is useful for experienced users who can prioritize speed when required, or save on costs at other times, by customizing fee levels.
Layer 2 Support
Coinbase Wallet supports Ethereum Layer 2 solutions such as Optimism, Arbitrum, and of course, the Coinbase-backed Base. Compared with Ethereum itself,these networks offer faster and–very importantly–much cheaper transactions.
Security Best Practices
As outlined above, using a self-custody wallet means you’re fully responsible for your own assets, so it’s vital that you always follow security best practices, meaning you should:
- Protect your recovery phrase: store your recovery phrase offline in a secure location, and to ensure no-one can access your funds, avoid sharing it.
- Perform regular updates: Keep your Coinbase Wallet updated regularly to ensure access to the latest features, and to make sure you’re protected by all required security patches.
- Beware of scams: Only connect to platforms that you trust, and always make sure that you’re actually visiting the authentic app. Be careful also of social engineering and phishing attacks–never share your wallet details with anyone!
- Keep on top of new developments: The more in touch with the crypto world you are, the more security-conscious you’ll become, and you’re likely to be better informed about the kinds of dangers that exist, meaning you’ll naturally avoid risky actions.
What Is Coinbase Smart Wallet?
Separately from the Coinbase Wallet we’ve covered so far, Coinbase also this year introduced the Coinbase Smart Wallet, which is also a product to be aware of. It’s an advanced wallet solution that can be easily integrated by developers, doesn’t require either a browser extension or app to be downloaded, and doesn’t use seed phrases.
The Coinbase Smart Wallet is all about onboarding newcomers and making it easy to interact with Web3 features even without much knowledge of crypto, and without needing to have a wallet set up in advance. This would mean, for example, that a platform could offer NFTs, utilizing the Smart Wallet as a way for users to take custody of items even if they don’t have prior crypto experience.
Comparing products, the Coinbase Smart Wallet is designed for instant Web3 interactivity, while the regular Coinbase Wallet that we’re focused on here caters to crypto holders looking to trade and transact on-chain, connect with DeFi protocols, and who can benefit from having a connection to the Coinbase exchange, and also to a Ledger hardware wallet if required.
Robust and Integrated for All Levels
Overall then, Coinbase Wallet is a robust tool for anyone looking to take full control of their crypto portfolio. It’s a self-custodial product with multi-chain support, and it allows users to explore the full crypto ecosystem across blockchains and at all levels, from beginner to expert.
As mentioned, Coinbase Wallet is a hot wallet, but importantly, it allows for hardware wallet integration in order that users can prioritize security. Additionally though, users should always follow best practices to keep their portfolios secure, and should be aware of the risks inherent in crypto, including smart contract vulnerabilities and market volatility.
Coinbase Wallet can be used by anyone and it’s very user-friendly, but it especially makes sense as a wallet option for existing Coinbase users, since it’s closely integrated with the Coinbase platform, and enables connectivity between exchange and wallet.
