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Coinbase Vs Robinhood: Which Is A Better Crypto Exchange?

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    For anyone who has newly entered the crypto world, Coinbase and Robinhood are two great options to buy and sell crypto, but the wide range of features in Robinhood and Coinbase can often baffle you.

    Between Coinbase Vs Robinhood, Coinbase has a larger selection of cryptocurrencies, and they're continuously adding more to their list. Robinhood, on the other hand, lets its users invest not only in crypto but also in traditional stocks. However, unlike Coinbase, it has the drawback of not having its own cryptocurrency wallet.

    In this article, we'll look at the differences of buying crypto on Robinhood vs Coinbase, and try to help you decide which among the two is a better choice for you.

    What Is A Cryptocurrency Exchange?

    A platform that allows customers to trade cryptocurrencies (or digital currencies) for other assets, such as fiat currency or other digital currency, is known as a cryptocurrency exchange. A crypto exchange is comparable to a stock exchange, but they are different in various aspects.

    For example, stock markets can only let users with a minimum of $25,000 in their account day trade stocks more than thrice a week. Crypto exchanges are not affected by day trade regulation, which means users with enough funds to cover transaction fees can trade as much and as often as they want.

    Another difference is that cryptocurrency exchanges are open 24/7 whereas stock exchanges trade only when the market is open and a little while before and after the market is open.

    Features To Consider In A Crypto Exchange

    Crypto exchanges, by virtue of being comparatively novel, are generally less regulated and hence, the market is flooded with lots of them. From Coinbase, Kraken, Robinhood, Coinmama to Coinbase Pro, Kraken Pro, and Robinhood Gold- the list goes on and on. Every cryptocurrency exchange is loaded with features, and choosing the right one for yourself can get a little tricky at times. Let's look at the features you must look out for when choosing an exchange:

    Security Features

    It is the most important feature of exchange because it ensures the security of your investments. It is always a good idea to evaluate the safety and security of each exchange and compare it with others before you invest.

    Ease Of Use

    An easy-to-use and minimal user interface will help you track and keep an account of all your activities if you're new to the crypto world.

    Supported Cryptocurrencies

    You should always consider the coins - whether niche coins or mainstream ones- that an exchange supports before you choose it.

    Transaction Fees

    You might have to pay cryptocurrency trading fees for some companies, while others want percentage fees and some simply have extra paid features.

    Payment Method

    There are some crypto exchanges that offer only bank account transfers. On the other hand, some accept Visa or Mastercard, and others only accept crypto.

    Customer Support

    The quality of customer support an exchange has, speaks volumes about the exchange. It is always recommended to consider customer service while looking for a crypto exchange.

    Now let's discuss all these parameters and how they differ when you buy crypto on Robinhood vs Coinbase.

    Coinbase

    Coinbase is a cryptocurrency exchange that wants to promote the conversion of fiat currencies into cryptocurrencies and vice versa, by building an open financial system. From its establishment in 2021, Coinbase has made the exchange of crypto user-friendly. Coinbase allows users a simple way to sign up, connect their financial accounts, and buy or sell crypto via its mobile app.

    Pros Of Coinbase

    • Learn about crypto through educational videos and tutorials as you earn
    • Follows a measured approach in terms of deciding which coins to add to the platforms
    • 50+ cryptocurrencies
    • Multiple options for payment and withdrawal
    • Can be used by both newcomers and advanced crypto-traders

    Cons Of Coinbase

    • Access all features using Coinbase Pro
    • Minimum order of $2
    • Limited options of customer service
    • Inability to deal with web traffic spikes and huge trading volume

    Robinhood

    Trading fees are painfully expensive and small investors find it difficult to bear these costs. Robinhood, an American financial services company, was among the first companies to stop charging trading commissions. Robinhood introduced securities trading to many new investors who were interested in growing their wealth and also provided stocks and cryptocurrency trading.

    Pros Of Robinhood

    • Ability to trade traditional stocks
    • Offers commission-free trading
    • Available on web and mobile (iOS and Android)
    • Easy-to-use interface
    • Low interest of 2.5% for margin trading
    • No minimum deposit

    Cons Of Robinhood

    • Cannot purchase cryptocurrency using borrowed funds
    • Only have 7 cryptocurrencies
    • Limited altcoin options
    • Cannot withdraw your crypto holdings from the exchange

    Coinbase Vs Robinhood: A Comparison

    Both Coinbase and Robinhood are extremely popular among crypto users as they offer them just the right amount of features. Apart from the large popularity and ease of use of software, there are many differences between Coinbase and Robinhood. The primary point of difference is that Coinbase is a crypto exchange that can be accessed by 100+ countries, whereas Robinhood is an online brokerage for 47 states in the United States.

    The investors in Coinbase can access the following features:

    • Buy cryptocurrency using a credit/debit card
    • Online newsfeed helps you track trends
    • Get notifications on your app or smartphone according to preset price alerts for crypto
    • Withdrawal of money to your hot wallet or PayPal account
    • Ability to use Coinbase wallet with or without trading on the exchange

     

    What are the potential advantages of Robinhood?

    • Legal in 47 states
    • Shows real-time market data for Bitcoin Gold (BTG), Dash (DASH), Lisk (LSK), Monero (XMR), NEO (NEO), OmiseGO (OMG), Qtum (QTUM), Ripple (XRP), Stellar (XLM), and Zcash (ZEC) on their platform
    • Can purchase exchange-traded funds (ETFs) using your coins
    • Accepts limit orders

     

    Now that we know about both the exchanges, let's compare buying crypto on Robinhood vs Coinbase and the various features that they offer.

    Coinbase Vs Robinhood: Security

    Coinbase and Robinhood, both offer robust security features to their users. Both these companies offer two-factor (2F) authentication and are FDIC insured (Federal Deposit Insurance Corporation) on USD balances. Coinbase offers its users a Coinbase wallet, which is a password-protected wallet that uses an encrypted 12-word recovery phase. This allows users to withdraw their cryptocurrency from Coinbase. Coinbase users can also store and trade their crypto on decentralized exchanges. Robinhood on the other hand stores most of its cryptocurrency online.

    Coinbase Vs Robinhood: Ease Of Use

    Both Coinbase and Robinhood offer their users an easy-to-use interface. For Coinbase, all you need to do is register using an email address and once you verify your identity, you can connect your bank account or credit card to begin your buying and selling.

    For Robinhood, you can create a free account using your email address and a password. After verification of your email address, you can secure your account with two-factor authentication. To deposit funds, simply connect to a bank account and transfer funds. Up to $1,000 is instantly available for purchasing cryptocurrency.

    While Coinbase is a better option for someone who wants to dig deeper into the world of cryptocurrency, Robinhood can be seen as the best platform for first-time investors.

    Coinbase Vs Robinhood: Supported Coins

    Coinbase not only has six times the cryptocurrencies available to trade than Robinhood, but they're always adding more to their list. Coinbase supports all the cryptos that Robinhood supports (total of 7 cryptos supported), except for Dogecoin. Also, Bitcoin SV is available on Robinhood but not on Coinbase.

    Even though both the exchanges let you buy coin fractions, Coinbase supports USD, EUR, and GBP whereas Robinhood accepts only USD fiat currency.

    Coinbase Vs Robinhood: Fees

    Robinhood claims commission-free trading. But on a closer look commission-free doesn't mean zero cost. So how does Robinhood gain its profit? Through payment for order flow. Robinhood uses a controversial strategy called payment for order flow, which is its highest revenue source. In this process, all crypto trades are brought to market makers to execute the trade, who pay Robinhood a percentage of the trade.

    Coinbase, on the contrary, charges a flat fee of 0.50% for transactions and 4% per trade, which is one of the highest rates for crypto exchanges. But the good thing is that using Coinbase Pro you'll not have to pay any additional cost and benefit from slightly lower prices.

    Fees Coinbase Robinhood
    Bank account 1.49% 0%
    Digital wallet 1.49% Not available
    Credit/debit cards 3.99% Not available
    Crypto conversions 0.50 to 2% Not available
    ACH transfer Free Free
    Wire transfer $10 deposit, $25 withdrawal Not available

    Coinbase Vs Robinhood: Technical Reliability

    When trading volume spikes, both Coinbase and Robinhood struggle. According to a report by Downdetector, Robinhood has had 49 reported outages in 2021, whereas Coinbase has had 28. This gives Coinbase a slight edge by this metric.

    Coinbase Vs Robinhood: Summarized

    Coinbase Robinhood
    Main platform features
  1. User-friendly apps
  2. Can be accessed in 100+ countries
  3. Can withdraw crypto to PayPal or a digital wallet
  4. Choose from a variety of coins
  5. Commission-free trades
  6. Simple user interface
  7. Both crypto and stock trading
  8. Security
  9. 2FA verification
  10. Cold storage
  11. Biometric logins
  12. FDIC-insured USD balances
  13. AES-256 encryption for Coinbase wallet
  14. 2FA verification, FDIC-insured USD balances
  15. Cold storage
  16. SIPC coverage for bitcoin, cash, and ETFs
  17. Insurance against crypto platform breaches
  18. Fees
  19. Per trade cost 0.50%
  20. Extra 1.49% for bank account or Coinbase
  21. wallet purchases
  22. Extra3.99% for credit/ debit card purchases
  23. $10 deposit
  24. $25 withdrawal fee for wire transfers
  25. Payment for order flow varies by trade
  26. Supported cryptocurrencies 51 7
    Supported transactions Buy, sell, send, receive, and exchange Limit orders, buy and sell
    Trading limit Trading limits may vary depending on your payment method and region No limits as such, but have to wait for ACH funds to clear

    Robinhood Vs Coinbase: Which Is A Better Choice?

    Now you might be asking the most obvious question- Which is a better choice between Robinhood Vs Coinbase? Well, the answer depends on your strategy and objectives.

    From this in-depth analysis of Robinhood Vs Coinbase, we've concluded that there are many similarities between the two platforms. These similarities include- robust security features, a user-friendly interface, and access to Bitcoin. But the differences between these platforms will help you make a concrete choice, depending on the purpose of your investment.

    If you plan to trade well-known cryptocurrencies such as Ethereum or Bitcoin and transact in US dollars, Robinhood is the best option for you. But if you want to see a detailed analysis of your orders and trade activity and wish to trade in a volume that qualifies you for a lower fee tier, then Coinbase Pro is the preferable option. Whichever platform you choose, you must understand that investing in cryptocurrencies is extremely risky.

    Coinbase Vs Robinhood FAQs

    1. Is Robinhood better than Coinbase?

    Both Coinbase and Robinhood are extremely popular among crypto users as they offer just the right amount of features. Apart from the large popularity and ease of use of software, there are many differences between Coinbase and Robinhood. Between Coinbase vs Robinhood, Coinbase is a crypto exchange that can be accessed by 100+ countries, whereas Robinhood is an online brokerage for 47 states in the United States.

    2. Why shouldn't you buy Bitcoin on Robinhood?

    Robinhood offers crypto trading that is too game-like and encourages volatility through active trading, rather than focusing on long-term investment growth. Coinbase supported all the cryptos that Robinhood supports (total 7 cryptos supported), except for Dogecoin. Also, Bitcoin SV is available on Robinhood but not on Coinbase

    3. Why are Coinbase and Robinhood prices different?

    Robinhood uses a controversial strategy called payment for order flow, which is its highest revenue source. In this process, all crypto trades are brought to market makers to execute the trade, who pay Robinhood a percentage of the trade. Coinbase, on the contrary, charges a flat fee of 0.50% for transactions and 4% per trade, which is one of the highest rates for crypto exchanges

    4. Can I transfer from Coinbase to Robinhood?

    One drawback of using Robinhood is that coins cannot be transferred into or out of the Robinhood crypto exchange. In order to use Robinhood, you must purchase crypto using the USD fiat currency via a connected bank account. You will be unable to move your coins unless you sell them for cash.


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