Coinbase has a new crypto wallet which is incredibly easy to use but also very powerful. And it has security features backed up by a consortium of some of the greatest security engineers on the planet. The result is an easy to use crypto financial tool that provides powerful capabilities to anyone with a smartphone or modern computer with a browser.  

The capability is called the Coinbase Smart Wallet. 

It is a third “wallet” provided by Coinbase.

For context, here are the differences in the three Coinbase wallets: 

The first Coinbase wallet is the one built into the primary capability of Coinbase itself. Coinbase is available as both a web and mobile application, and offers functionality you expect from a crypto exchange. There are over 110 million Coinbase users. For those who only want to buy, sell, trade or hold small amounts of crypto it may be that Coinbase and its native wallet is all you will ever need. It has many strong security measures you can configure and use. A concern is that the architecture is one where Coinbase manages the private keys. There is an old saying in the cryptocurrency world… Not your keys, not your crypto.  Coinbase is a trusted, publicly traded corporation, but you must trust them if you are going to use them. They are in total control of the portfolio you have with them and there is real risk in this. Additionally, using Coinbase adds friction and sometimes unneeded expense in interacting with many on chain distributed applications (Dapps). 

The second Coinbase wallet is called the “Coinbase Wallet.”  It is a mobile app which can also be used via browser extensions. It is designed to give users full control over their private keys. It is for more advanced users, but enables people who love to learn new things to more easily and economically interact with many advanced crypto/blockchain based apps. You control your own keys, which introduces new issues. You must be responsible for protecting your seed phrase. Anyone who gets that can take over your wallet and spend your money. And if you loose that you can loose access to all your crypto in that wallet. Some of the benefits of the Coinbase Wallet include ease of use and the ability to import and use other wallets. Even better, it makes it so simple to interact with web3 enabled decentralized applications (Daaps) for things like art and finance. 

The newest wallet is their third one, the “Coinbase Smart Wallet”.  This one leverages a new security architecture which is being provided by the big IT companies and an industry security consortium called the FIDO alliance. This capability is called Passkeys. Coinbase leverages this architecture to enable very user friendly features and very strong security. 

A word on Passkeys:  This is such a good technology it is already being used by over a billion people. It is integrated into the security architectures of Apple (including their devices and iCloud), Google (including cloud services and Android), Microsoft and every other major IT company. Passkeys replace the need for passwords. They work because the device they are being used on is known and the user is known due to biometrics (facial recognition or fingerprint), and, when used in a smartly managed secure cloud environment (like the iCloud Keychain or Google Password Manager) these keys are usable across multiple devices and are backed up in case a device is lost or stolen. The result: When an app like the Coinbase Smart Wallet leverages Passkeys it makes it easy for users to interact with using security mechanisms they are already used to. In the case of an iPhone, for example, a user can open their smart wallet by using facial ID. Or a Mac user can just just their touch ID. 

Passkeys are an enabler of ease of use and security, but from there, the Coinbase developer team built a well integrated application with many easy to use features, including:

• An ability to get onchain faster and easier to quickly do what you want to do. Can do everything by visiting wallet.coinbase.com
• Store, swap, mint and more with just a fingerprint or face ID. No password or seed phrase or secret code. 
• No need for a mobile app, no extensions for your brower. 
• Integrates with Coinbase so Coinbase balance can be spent if desired
• Integrates with multiple chains (Ethereum, Base, Solana and EVM-compatible networks like Arbitrum, Optimism and more).
• Integrates with a growing number of popular apps. 
• Get views into all your crypto, NFTs and DeFi positions at once. No more wallet switching. 
• Connect all your wallets to this one and see all assets on one screen
• Take advantage of gasless transactions (depending on the apps being used)
• Gives developers of blockchain enabled apps a way to quickly onboard users

Bottom line here: The new Coinbase Smart Wallet has a combination of ease of use, advanced features and strong security. This wallet is so easy to learn and use it will no doubt result not only in more Coinbase users using distributed apps but will attract new users into the ecosystem. This may set up a virtuous cycle where more users attract more developers which attract more users etc. 

Here is how to set up and use the Coinbase Smart Wallet:

Start by visiting the official link:  https://wallet.coinbase.com

You can visit that from your phone or web browser on a desktop. I opened it from a Brave browser on a mac. 

You want to scroll down to where it says “create smart wallet”

Click there and follow the easy instructions to create a wallet and a passkey. If you are on an Apple device you will see how to do that with iCloud keychain. If you are on a Google device or in Chrome you will see choices for using the Google password manager.

You are asked if you want to fund your wallet. You do not have to yet, you can kick the tires with no funds in the wallet and transfer some from your bank or from coinbase later if you desire. 

Once your wallet is created (you have set and saved your passkeys) you can now log in from your device using just your face ID or biometric. If you are in the Apple ecosystem and use iCloud, you can access the smart wallet from every devices registered to this account. If you are a Google users you can use Chrome or Android to do the same thing. 

From there you will see a simple interface with a side bar that reads:

• Assets
• Dapps
• Settings

Under Assets you can buy, send or swap cryptocurrency assets/coins or NFTs and can see your portfolio.   Under Dapps you will see a list of distributed applications you can interact with. There are many, so, fortunately, you can sort and search based on what you want to do. 

What can you do with those many apps? If you are new to the crypto world the first thing to do is to explore! 

You will find apps that will let you collect or create online art. There are also online games and social media accounts enabled by crypto you can easily access here. 

For those who want to learn about the world of crypto finance and investing, you can use Daaps here to lend crypto for a return, stake crypto for a return, or fund liquidity pools to make it easier for others to trade crypto (while earning a return). This is all risky stuff, but I have found it to be a good way to learn. A good rule of thumb is to never risk money here that would hurt you to lose. Things can go wrong. Just invest enough for you to learn from. 

As you explore, be aware of what blockchain you are on. You will see a button called “network”.  If you are not familiar with the networks listed there, my strongest recommendation is to use Base. This has increadibly low fees (this was also created by Coinbase, but it is part of the Ethereum ecosystem (a “Layer 2” or “L2” to the Ethereum chain). 

How do you get money converted into crypto in this smart wallet? If you have a Coinbase account you can connect it. Or you can use a debt card to transfer some in. Just hit the buy button and it will walk you through how to do that. 

Concluding Thoughts:

The new Coinbase Smart Wallet is a game changer. It will make it easier for us all to use new blockchain enabled capabilities. It is so easy to learn and use that it will cause more to come into the  community, and that will encourage more developers to build more capabilities, setting off a virtuous spiral. 

Early adopters can help accelerate this by learning how to use this smart wallet and teaching others. 

This should be thought of as a wallet. Not a place to hold your treasure, but a place to hold a little bit of walking around spending money.