Is Coinbase Safe? An In-Depth Look at their Security Measures

Coinbase is one of the most famous cryptocurrency exchanges. Since its inception in June 2012, Coinbase exchange has garnered more than 10 million users and has traded more than $50 billion. This exchange is located in San Francisco, California, which implies Coinbase operates in full compliance of U.S regulations. As such, Coinbase gives some extra security measures and protections that can’t be found on other exchanges.

Here is exclusively all you need to know about Coinbase’s security.

What Security Measures Does Coinbase Have in Place?

Besides other security measures, Coinbase stores 98 percent of clients funds in cold storage offline, to prevent loss or theft. Not only are the coins offline, but Coinbase scatters its Bitcoins in vaults and safe deposit boxes around the world.

Regarding data security, the company takes various steps to implement protection. Instead of keeping sensitive data on servers, Coinbase has that data disengaged from the Internet, so it is not as easy to hack. For further security, the information is split into redundancy and encrypted with AES-256 before being copied onto paper backups and FIPS-140 USB drives. Those paper backups and USB drives, just like the funds, are also geographically dispersed in vaults and safe deposit boxes around the world.

Also, unlike most exchanges, Coinbase demands all user accounts have two-step verification. This additional requirement makes it almost impossible that an account will be hacked.

To round out the security, the company uses best systems for the payment activity, including running all website traffic over https encrypted SSL. Also, all wallets and private keys have AES-256 encryption.

Security Measures as an Organization

Apart from security standards for funds and the website itself, Coinbase has added precautions in place concerning employees and the whole organization. Coinbase uses different passwords alongside two-step verification for all service and device.

What Security Steps Does Coinbase Have in Its Application?

In a move to prevent CSRF attacks, Coinbase uses SQL injection filters for validating POST, DELETE, and PUT requests’ authenticity. It also restricts the rate for some actions on the website, such as login attempts. Coinbase also whitelists attributes across models, to prevent mass-assignment vulnerabilities.

What Does Additional Authentication Security Measures Coinbase Use?

For authentication processes security, Coinbase encrypts passwords in its database, with the help of bcrypt alongside a 12-cost factor. Coinbase checks for strong passwords, when a user creates an account or resets their password. Finally, it stores application credentials independently from the code base and database.

Coinbase Custody

Coinbase is so sure of its security it lately started offering a custody service for companies. This is an offering which charges a setup fee of $100,000 and a minimum holding of $10million, so it’s obvious it is intended at hedge funds, banks, and other financial institutions which might take advantage of their services.

Coinbase Bug Bounty Program

The newly launched Coinbase Bug Bounty Program is yet another tactic the company uses to keep its clients safe. It compensates developers for discovering bugs related to software securities. This program inspires developers to test the software frequently to ensure protection is up-to-date without having to use expensive internal resources.

What Insurance Does Coinbase Offer?

All the Cryptocurrencies Coinbase stores online are covered by insurance. In case of any hacking that tampers with the online storage, the insurance would cover lost client funds. As an extra precaution, as said earlier, less than 2% of all client funds are online. The insurance policy includes Cybersecurity, physical security, and employee theft.

Since cryptocurrency is not a legal tender, it is not included in protections from the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. However, the cash balances are. This implies that United States residents have coverage from FDIC insurance for their Coinbase Wallet of up to 250,000 USD.

How Does Coinbase’s Regulation Improve Security?

Coinbase is regulated and adhere to all the laws and regulations within each jurisdiction it works in. It has a license for the transmission of money in most of United States jurisdictions. It is also registered as a Money Services Business with FinCEN.

How Can You Protect Yourself While Using Coinbase?

To secure your account when using Coinbase, ensure you never disclose your password, login credentials, or two-factor authentication codes to a third party. Any Coinbase staff or Customer support representative will never ask for this information. Additionally, ensure you contact Coinbase customer support only through the contact information on its website.

Regarding your password, create a relatively complex and unique password, unlike the ones you use on other platforms. You should not forget to change the password every three months for added security. Endeavor to enjoy the full benefit of Coinbase’s two-factor authentication, and also add it for sending money.


Overall, one can easily say that Coinbase is a pretty safe platform. Just bear in mind that it’s best for you not to store your cryptocurrency on Coinbase, as this is not the purpose of the platform’s design. As a crypto investor, your best option is to bring your digital coins onto platforms like Coinbase just for trading and store them in a safe hardware wallet offline.

While trading, however, you can be guaranteed that Coinbase is one of the safest crypto-exchanges out there at the moment, they have never experienced a hack and are ahead of the industry in security measures.

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