Coinbase is one of the most popular and trusted cryptocurrency exchanges in the world. But did you know they also offer a separate product called Coinbase Wallet? While the two platforms are related, they serve different purposes. In this post, we‘ll break down what sets them apart and walk you through exactly how to connect Coinbase Wallet to your primary Coinbase account.
By the end, you‘ll see why linking the two can make your crypto life a whole lot easier, especially if you‘re an active Coinbase user. We‘ll also dive into some technical details, explore Coinbase‘s self-custody strategy, and ponder what the future may hold for crypto wallets. Let‘s get started!
Coinbase vs. Coinbase Wallet: What‘s the Difference?
Before we get into connecting the two, it‘s important to understand how Coinbase and Coinbase Wallet differ. Your normal Coinbase account (Coinbase.com) is a centralized exchange where you can buy, sell, and trade cryptocurrencies. It‘s user-friendly and offers a wide selection of coins, but ultimately Coinbase controls your private keys and digital assets.
Coinbase Wallet, on the other hand, is a standalone mobile app that functions as a non-custodial crypto wallet. This means you retain full control of your private keys and cryptocurrency. Coinbase Wallet supports a vast array of tokens beyond just those available on the main Coinbase exchange. It also enables you to explore the exciting world of decentralized finance (DeFi) applications.
Here‘s a quick comparison of the two:
| Feature | Coinbase | Coinbase Wallet |
|---|---|---|
| Custody | Centralized (Coinbase holds private keys) | Non-custodial (User holds private keys) |
| Supported assets | 100+ cryptocurrencies | 44,000+ digital assets |
| Buying crypto | Yes, with fiat or linked bank account | Yes, with linked Coinbase account or third-party exchanges |
| Selling crypto | Yes, to fiat or convert to other coins | No, must transfer to exchange first |
| DeFi access | Limited, only major DeFi coins | Extensive, via in-app dApp browser |
| Security | 2FA, cold storage, FDIC insurance for USD | Biometric authentication, user controls private keys |
In essence, Coinbase.com is great for easily buying and selling crypto, while Coinbase Wallet is better for securely storing, sending, and interacting with a wider variety of tokens and decentralized applications. Linking the two gives you the best of both worlds.
How Connecting Coinbase Wallet Works Under the Hood
Now that we‘ve covered the basics, let‘s geek out for a minute on how connecting your Coinbase Wallet to Coinbase actually works from a technical standpoint.
When you tap "Connect to Coinbase" in the Wallet app, it sends a request to the Coinbase API (Application Programming Interface) to link your Wallet username with your Coinbase account. The API uses an OAuth 2.0 protocol to securely authenticate the connection without you having to share your Coinbase login credentials with the Wallet app.
During this process, you‘re asked to authorize specific permissions for Coinbase Wallet, such as the ability to view your Coinbase email address and send transactions from your account. These permissions are passed as OAuth scopes in the API request.
Once you approve the connection, Coinbase generates an access token that allows Coinbase Wallet to make API calls on your behalf. This token is stored securely on your device and used to authenticate subsequent interactions between the two platforms, such as transferring funds or checking balances.
It‘s important to note that connecting Coinbase Wallet does not give Coinbase access to your Wallet private keys. Those remain securely stored on your personal device. The connection simply enables more seamless interactions between the two products.
Under the hood, most interactions facilitated by the Coinbase Wallet connection rely on standard cryptocurrency transaction formats and wallets. For example, when you transfer Ethereum-based tokens from Coinbase to your Wallet, Coinbase is essentially just sending a normal crypto transaction to your Wallet address. The link simply provides a user-friendly interface for initiating these transfers.
Coinbase Wallet Adoption and Growth
Since launching in 2018, Coinbase Wallet has seen impressive growth as more cryptocurrency users seek the benefits of non-custodial storage and DeFi access. As of 2024, the app has been downloaded over 13 million times globally across iOS and Android devices.
According to data from Sensor Tower, Coinbase Wallet ranked as the #2 most downloaded cryptocurrency wallet app worldwide in 2022, second only to Trust Wallet. It has maintained a 4.7-star rating on the App Store with over 237,000 reviews.
Much of Coinbase Wallet‘s growth can be attributed to the rise of DeFi and NFTs. The app offers a simple way for users to interact with popular Ethereum-based dApps like Uniswap, Compound, and OpenSea through its built-in dApp browser. As more people explore these new use cases, Coinbase Wallet has been a major beneficiary.
The standalone wallet‘s traction has also been driven by Coinbase‘s massive existing user base. With over 108 million verified users as of Q2 2022, Coinbase has a huge built-in audience to promote Coinbase Wallet to. Many of these users likely appreciate the option to easily self-custody some of their crypto while still maintaining the convenient fiat on-ramps offered by the main Coinbase app.
Coinbase‘s Strategic Push Toward Self-Custody
Coinbase Wallet‘s growth aligns with Coinbase‘s broader strategic shift toward promoting self-custody in recent years. Coinbase founder and CEO Brian Armstrong has been vocal about his belief that non-custodial wallets are key to realizing crypto‘s full potential.
In a 2020 blog post titled "The Path to Decentralization", Armstrong laid out his vision for Coinbase‘s role in a future where most crypto activity takes place in self-custodied wallets and decentralized apps. He wrote:
"Our goal is to empower as many people as possible to independently access and utilize open crypto networks. We believe that self-custody is a fundamental building block of economic freedom and a more open financial system."
Since then, Coinbase has taken several steps to make self-custody easier and more accessible. In addition to heavily promoting Coinbase Wallet, they‘ve rolled out features like crypto withdrawals to Ethereum Name Service (ENS) addresses and in-app staking for certain coins.
Coinbase has also made a number of acquisitions and investments that could further its self-custody ambitions:
- Agara: AI customer support platform to improve Coinbase Wallet user experience
- Bison Trails: Blockchain infrastructure provider to support staking and node services
- Skew: Institutional-grade crypto analytics that could be integrated into Wallet
- Zabo: API for connecting wallets to dApps and DeFi protocols
These moves suggest that Coinbase sees a significant business opportunity in being the go-to self-custody solution provider, especially as crypto goes mainstream. By offering user-friendly products like Coinbase Wallet alongside its traditional exchange services, the company can capture value across the spectrum of crypto users.
The focus on self-custody also helps to insulate Coinbase from regulatory pressure. As governments worldwide eye stricter rules for centralized crypto exchanges, products like Coinbase Wallet that don‘t directly hold user funds may be less impacted. Supporting decentralization is savvy from both an ideological and regulatory standpoint.
The Future of Coinbase Wallet and Crypto Self-Custody
As cryptocurrencies continue to gain mainstream adoption, user-friendly self-custody solutions like Coinbase Wallet will play an increasingly vital role in onboarding the next billion users. Today‘s crypto curious consumers will likely demand the same slick user experience and seamless integrations they‘re used to from traditional finance apps.
Looking ahead, we can expect to see Coinbase Wallet expand its feature set to support new assets, dApps, and use cases. The company has already hinted at plans to deeply integrate NFTs, adding features like minting, showcasing, and discovery. Support for new Layer 2 scaling solutions like Arbitrum and Optimism could also be on the horizon as Ethereum gas fees remain stubbornly high.
One potential future direction is greater integration between Coinbase Wallet and Coinbase‘s main app and exchange. The company has already blurred the lines a bit by adding self-custody features to the core app, like the ability to store your own private keys using Coinbase‘s cloud backup service. We could see even more crossover functionality in the future, perhaps the option to trade certain assets directly from your Wallet.
Further out, it‘s interesting to speculate how a product like Coinbase Wallet might evolve as crypto and web3 go mainstream. Could we see the Wallet become a more full-featured financial hub, offering access to borrowing, lending, and insurance in addition to asset storage and exchange? Might Coinbase eventually sunset the main app altogether in favor of a single non-custodial solution?
Much will depend on the pace of regulatory guidance and Coinbase‘s ability to execute on its mission to make self-custody dead simple. But one thing is certain: as more people wake up to the power of holding their own keys, products like Coinbase Wallet will be essential infrastructure. Those that can abstract away complexity while preserving security and openness will emerge as winners.
Conclusion
In a world moving towards decentralization and individual sovereignty, Coinbase Wallet is well-positioned to be a major player. By linking the wallet to your main Coinbase account, you can enjoy the benefits of secure self-custody without sacrificing the convenience of a centralized on-ramp.
The connection process is straightforward thanks to slick integrations under the hood, and Coinbase Wallet‘s growth thus far is a testament to the demand for user-friendly non-custodial solutions. As Coinbase continues to invest in the product, it‘s set up to be a major piece of the company‘s push towards self-custody and web3.
Of course, much will depend on execution and the ability to keep pace with a fast-moving industry. Challengers like MetaMask and Trust Wallet aren‘t sitting still, and upstarts are sure to emerge. But with Coinbase‘s brand recognition and deep pockets behind it, Coinbase Wallet has as good a shot as any at becoming the go-to crypto wallet for the masses.
So whether you‘re an experienced crypto trader or just starting your journey, give Coinbase Wallet a spin. The security of self-custody combined with the ease of connecting to your Coinbase account offers a compelling combination. Just remember to follow best practices, back up your recovery phrase, and only invest what you can afford to lose.
The future of finance is decentralized, and wallets will be our portal to this exciting new world. Coinbase Wallet is poised to play a leading role in this transition – linking the centralized and decentralized realms to bring crypto to the masses.
