Most people's crypto life starts on an exchange, and the step to self-custody is where the majority stop. Coinbase Wallet exists to make that step small: transfers from the exchange account are seamless, the interface is familiar, and the warnings catch common mistakes.
The cloud backup question
The wallet offers to back up an encrypted copy of your recovery phrase to your Google Drive or iCloud account, protected by a password you set. That is genuinely useful for people who would otherwise lose a written phrase, and it changes the threat model: your crypto is now protected by your cloud account security and your password rather than by physical possession alone. Choose it deliberately, use a strong unique password, and enable strong authentication on the cloud account — or decline it and write the phrase down.
What it does well
Phishing and scam-site detection, clear transaction previews, good coverage of Base and other L2s, dapp browser, and hardware wallet support. It is a competent wallet independent of the exchange relationship.
Limitations
The client is not fully open source, and built-in swaps and bridges carry fees higher than routing directly. As with any exchange-affiliated product, keep clear which balances are custodial and which are not.
Who should use it
Coinbase users taking their first step into self-custody, and Base users generally. Once comfortable, moving to Rabby with a hardware wallet is the natural progression.