Is Coinbase Safe from Hackers?

Dave Miller – Tech Enthusiast & Security Expert – November 13th, 2021

The simple way to buy bitcoin is through Coinbase which is a trading platform and a cryptocurrency broker. From the inception of this platform in San Francisco in 2012, Coinbase has got the biggest growth in the cryptocurrency platform.

Few cryptocurrency platforms are as famous as Coinbase, but similar to other investing and trading places it has risks too. The most noteworthy news, in this case, is 6000 users of Coinbase were hacked and their money is stolen in October 2021. Incidents like this are pretty serious and can shake the trust of users easily.

Also, this raises the question is coinbase safe from hackers? In this article let’s know more about the safety measures of Coinbase and more.

Is Coinbase Safe?

For most users, Coinbase is safe, or it’s safer than other crypto platforms. Although, it has some risks, and for that this platform uses some solid security measures. If you want to create an account, it’s important to enter some basic information just like you do while opening a bank or brokerage account.

For a new user, you need to add a password, your phone number, your legal name, email address, address, date of birth, and the last four digits of your SSN. These are the fair requirements for opening a bank account and for a crypto profile as well.

On the other hand, Coinbase isn’t insured by the SIPC which is the Securities Investor Protection Corporation, while other cryptocurrency platforms fall under this security. However, Coinbase does carry insurance, but people who lost their money due to the hack will not get their credentials covered.

The Risks of Using Coinbase:

Just like any trading platform Coinbase is entitled to face risks. You might want to know the types of risks.

Cybersecurity risks: You can easily be a victim of a cyber security breach or a phishing scam. There’s also a chance that users provide their personal information and that exposes them to a threat.
Queries about the Coinbase regulations: In the USA the rules regarding cryptocurrency are still in the trend. But in some cases, new regulations will be there, and based on that the crypto investors will build their selling and buying strategies.
Getting obsessed: Although Coinbase offers educational material to the traders, it can get into your head and become an obsession within a short time. This is very common in new users of cryptocurrency platforms. To avoid losing a ton of money in crypto, you must take some time to learn the ins and outs of Coinbase or talk to an expert before investing in the platform.
There are risks with cryptocurrencies: Crypto platforms are normally risky, volatile, and speculative. There’s always a chance that your purchased item can take a plunge in the price the next day. This is very essential to remember, mostly for new users.

Can You Get Scammed on Coinbase?

The answer is yes you can get scammed on this platform. As a new user, you always have to assume that there’s a risk in this trading platform. But this is the same with stocks, so other than this there isn’t much risk with Coinbase. Also, it will depend on the credentials you use on your profile.

This is the same thing that happened in the case of the 6000 victims. Hackers used the true systems to do the crime, which is phishing. This lets the cybercriminals exploit the authentication process to get access to the accounts of users.

This type of scam requires the attention of the user, so they can provide their password and username to the hacker, and often the criminals use anonymous or fake emails and messages to spread the trap. It’s a very common scamming type, and with access to the login details of the user, hackers can easily hack into their system and do embezzlement.

After getting access to the profile login details they can transfer the information of the account and this is the most common tactic of scammers in all trading platforms.

However, experts also said that if the users download an authenticator app, and access the two-factor checking system they can increase the security and greatly reduce the chances of getting hacked. But even after that, your account will not be invincible.

The easiest and the best way to secure your account is to use a new email address because here you will be using a username and password that you haven’t utilized before. Also, I suggest not to spread the word about using crypto assets. It’s similar to when you brag about the amount you have in your wallet. Bragging about how much money you have in your crypto accounts will always drag attention and you might become a victim of phishing.

Even after all these precautions if you feel that you are facing any threats you can report to Coinbase customer center directly.

Coinbase's Core Offerings

Coinbase is a type of cryptocurrency exchange and has 3 main variants.

Coinbase services for retail consumers (accepting payments)
Coinbase Pro which is a professional platform for traders
The standard Coinbase Mobile App or web application

The Coinbase platform is well-known among its customers. As it offers an easy computer-based interface, trading notifications, margin trading with 3x leverage, and a real-time updated order ledger. In the case of institutions that have different requirements to investors, Coinbase offers a beta version to adjust the growing demand of their clients, and this makes it easier for people to enter the crypto platform. Various things make Coinbase a safe place to store and trade crypto.

Trustability

In recent days there are different exchanges in the crypto market. It can be different in the case of security. However, Coinbase is the upgraded version other than most platforms.

Although Coinbase is a popular platform for trading Ethereum, its brand awareness is better in other countries as well. Coinbase has 40 licenses for doing business in the USA, and other than that it operates in 31 other countries legally.

Coinbase's Security Measures

There are some main Coinbase security measures. They are useful and offer better security options for new and pro users:

Identification verification: According to the KYC regulations users have to submit the government issues identifications, address proof to do business in this trading platform. This is because your anonymous state will not be accepted on this platform. The right KYC process identifies the honest users and eliminates the fraud. However, the lack of anonymity is problematic for so many people as they do not want to get exposed to the governing bodies and regulations. But there are limits on your spending and withdrawal, and this can be a positive trait for so many users. A very common complaint against Coinbase is the onboarding procedure, which is arduous and lengthy. However, these steps might be lengthy but they will ensure better safety to your account.

Usage of cold storage for security reasons: It’s never a hundred percent safe in the online exchange procedure, but in the case of Coinbase you will get the safest online wallet which will store 98% of your assets the offline storage. This place is inaccessible to scammers. Not only clients can have access to this cold storage option but the platform is also using this option globally. However, this system is only available for people in the United States, also this does not cover crypto amounts. In recent days the platform is considering the regulations of this system in other countries as well, but it will take time.

Wallet security of Coinbase: When you are using the Coinbase wallet for security, it will provide the wallet address, private key features, and other things to keep your amount secure. The data management of Coinbase policy is based on PII which is personally identifiable information. This keeps the sensitive information offline and secure. With this token personal data get encrypted and you will get multiple copies and paper backups. These copies will get stored in several secured locations. The Delaware-based organization utilizes several copies on their website, they also use mobile hashes and apps with passwords to ensure secure purchases.

Final Decision

The first thing is that Coinbase has cold wallet storage, which is USD insured and uses safe transaction methods. The private keys get encrypted and you will get copies in various secure places. Other than these Coinbase has implemented other safety measures for their clients, which offers further security to user accounts.

Employee devices use two-factor authentication and unique passwords
Employees must pass a criminal record exam
Workers must access the hard drives through unique passwords and they have to encrypt the workstation hard drives.

Coinbase will always have the threat of hackers but if you practice good security measures, and have a 2-factor authentication method for logging into your Coinbase account, the chances of getting hacked will be extremely slim.

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Dave Miller

IT Consultant at Online Cloud Security

Dave Miller is an IT Consultant for Online Cloud Security and has over 7 years of experience in the Information Technology space. He also specializes in repairing laptops & computers. In his spare time, he loves to talk about new technologies and hosts monthly IT and Cyber Security meetings in the Houston area.

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