It’s a question that’s been asked countless times by would-be Bitcoin sellers on Coinbase: “Why can’t I sell my Bitcoin?” The answer, unfortunately, is not a simple one. In order to understand why you can’t sell Bitcoin on Coinbase, we’ll need to take a look at how Coinbase operates, and how it differs from other exchanges.
Coinbase is first and foremost a wallet provider. This means that their primary focus is on providing a safe and secure place for users to store their Bitcoin.
In order to do this, Coinbase employs a number of security measures, including 2-factor authentication and keeping the vast majority of user’s Bitcoin offline in what’s known as “cold storage”.
While these security measures are necessary and commendable, they also make it very difficult for Coinbase to offer the same level of service as other exchanges. Other exchanges, such as Bitstamp or Kraken, offer what’s known as an “order book”. This is a list of all the buy and sell orders that have been placed by users on the exchange.
When you place an order on an exchange like Bitstamp, your order is matched with another user who has placed a corresponding order. For example, if you place a buy order for 1 Bitcoin at $500, and someone else has placed a sell order for 1 Bitcoin at $500, then your orders will be matched and the trade will be executed.
Coinbase does not have an order book. This is because they don’t want to risk losing any of their user’s Bitcoin in the event of a hack or attack. Instead, Coinbase relies on what’s known as the “maker-taker” model. The maker is the person who places the buy or sell order first.
The taker is the person who matches their order with another user. The maker always pays a higher fee than the taker (usually 0.25% vs 0.1%), but this is still much lower than the fees charged by traditional brokers (which can be upwards of 3%).
So why can’t you sell your Bitcoin on Coinbase? Because there’s no one to buy it from you! If you want to sell your Bitcoin, you’ll need to find someone who’s willing to buy it from you at the price that you’re asking. This can be done via online forums such as LocalBitcoins, or in person via meetUPS or other events.