What's the Deal with Coinbase and Coinbase Pro?

Another Option for Investors is Coinbase Pro

Image by J.R. Bee © The Balance 2019 

In June of 2012, a small start-up company by the name of Coinbase had raised slightly over $160,000 in funding with the intention of making it easy for non-technical people to use Bitcoin. 

In 2015, the company launched a trading platform for professional or advanced traders called the Global Digital Asset Exchange (GDAX). In 2018, Coinbase rebranded and redesigned GDAX as the company realized that there was a need

for a dedicated platform with more options for crypto traders, now called Coinbase Pro.

Coinbase Pro is a platform in which a trader can view—in real-time—market size, prices and other information on a large number of bitcoin currencies.

Coinbase Was the First Licensed U.S. Bitcoin Exchange

Coinbase is not a bitcoin currency—rather, it is an exchange platform that allows traders to conduct transactions in the different types of digital currencies and store them in wallets. The currencies traded on the platform include ethereum, bitcoin, and litecoin.

In mid-2013, Coinbase became the highest funded Bitcoin startup when it gained a $5 million investment from Union Square Ventures. During that period, Bitcoin had fluctuated between a high of $266 in April of 2013 to about $108 when the investment was announced.

The most compelling aspect of this effort was not only the amount raised but the fact that the investors were banks and the New York Stock Exchange. It was clear that Coinbase’s interest in building a strong and open relationship with regulators helped to forge this investment.

Coinbase became the first licensed U.S. Bitcoin exchange.

The Birth of GDAX

Coinbase recognized that the capabilities for their exchange extended beyond what was needed for the casual individual trader of Bitcoin, so they decided to rebrand the Exchange as the Global Digital Asset Exchange (GDAX)—not only to highlight the added capabilities but the worldwide focus that the exchange provided to traders. They also provided access to Ethereum through this exchange to satisfy growing demand.

Coinbase built GDAX from the ground up. Mid-year of 2016, the company decided to rebrand the Coinbase Exchange as part of its business quest to be the world’s largest exchange and expand its international footprint

Why GDAX Became Coinbase Pro

Coinbase made a few major decisions to address the security and professional interests regarding Bitcoin. Security of a client’s Bitcoin holdings had become an issue—the company then implemented an easy way to store Bitcoin balances, known as “cold storage”, and put it in the Pro platform. 

This approach essentially takes a client’s private keys off of the network and stores them in physical form (USB drives, paper, etc.). Coinbase began to store them in vaults (which is what they actually named the account) and safety deposit boxes at various locations around the world.

Cold storage is used to deter theft by hackers or malware, throughout the bitcoin industry.

Another decision the company made was to model their service for professional traders by redesigning the platform to give investors the information and services they needed. Available to Pro users is a mobile application, lower fees, multi-country support, and insurance.

Coinbase Market Information

Coinbase provides information on the digital currency markets you are able to access. There are over 50 markets available, such as Bitcoin U.S. Dollar (BTC-USD), Ethereum U.S. Dollar (ETH-USD) or Bitcoin Cash U.S. Dollar (BCH-USD). Each of these markets is based on the underlying coin—bitcoin, ethereum, or bitcoin cash, for example.

Each market has a minimum and maximum order, which means investors will be required to buy the minimum and no more than the maximum per order. Tick size is listed as well. Keep in mind a standard tick is $10, so a tick size of .01 is equal to $.1.

Tick size refers to the minimum price movement on an investment instrument.

Coinbase Pro Exchange Interface

Coinbase Pro has an intuitive interface where a trader can view their selected currency in real-time. There is an order book, which shows market size and prices as trades are being conducted. The real-time bid-ask spread is shown (the profit the platform receives) per trade, along with a price and depth (number of open buy and sell orders) charts you can toggle between.

Along the left side of the page, you are able to select buy and sell forms, place limits and stops on your orders, and then place your buy and sell orders.