Wallets are one area where these exchanges really differ. Coinify does not have a custodial wallet, which means it does not keep your assets on the exchange. To use Coinify, you’ll need a separate crypto wallet that you link to your account when making the purchase. Coinbase does have a partnership with Ledger, one of the leading hardware wallet providers.
If you’re new to using a virtual currency, setting up a separate wallet may feel a bit daunting. It is pretty easy to do, but you will need to research a little online to understand the steps involved. You can choose a hot wallet (one that’s connected to the internet) such as a Metamask wallet, or a cold wallet or hardware wallet that’s not connected to the internet.
You’ll need to be sure the cryptocurrency wallet supports the crypto you are buying. Some wallets, for example, only support assets built on the Ethereum network. You’ll get a seed phrase, which is usually a series of 12 words. Make sure you keep this somewhere safe. If you lose it, you could lose access to your funds.
In contrast, Coinbase has both a custodial wallet and an external wallet. People who don’t want to worry about managing an external wallet can leave their assets on the exchange. However, many crypto enthusiasts believe you don’t fully own your crypto if it’s in a custodial wallet. If the crypto exchange is hacked you could lose your funds, and the exchange could also freeze access to your account.
Coinbase also has its own non-custodial hot wallet. The Coinbase Wallet is easy to use and connects to your Coinbase account. Coinbase works with other external wallets too, but you may have to pay a withdrawal fee to move your crypto. The Coinbase Wallet is a separate app that’s also available to non-Coinbase customers.
