Coinbase vs. Robinhood: which one is the best for investing in cryptocurrency?
Two of the most popular places to trade cryptocurrency are Coinbase and Robinhood, but which one is right for you? The answer depends on your needs, especially the volume of crypto trading you intend to do and the costs you are willing to pay.
Coinbase and Robinhood can appeal to different types of traders, although there is likely a significant overlap. Coinbase is a cryptocurrency exchange that targets traders deep in the world of digital currencies. In contrast, Robinhood is a trading app that allows users to buy and sell stocks, ETFs, options, and certain types of crypto at no cost.
Here’s how Coinbase and Robinhood differ along a few other key dimensions.
The cost structure at Coinbase and Robinhood is very different, and it doesn’t help that Coinbase deliberately hides much of its fee structure from potential customers (although it does disclose them before you actually make a transaction). That said, Robinhood is also not very clear on how he is paid.
The fee structure at Robinhood is simple, compared to that at Coinbase. As per the broker’s “commission-free” model for stocks and options, you will not pay any costs directly out of pocket for buying and selling crypto. Instead, the cost of trading is effectively built into a trade markup. So, you will effectively pay more when you buy and receive less when you sell than if you received the best market price at the time of your transaction.
Coinbase’s fee structure is confusing to say the least. Not only does it charge a variable fee based on how much you buy, but it offers a basic level of service and a professional level, each with different fees. And recently, Coinbase has started to hide the fees for its basic service, making it difficult for potential customers to see how much they are paying (Spoiler alert: prices are high if you buy just a little bit of crypto on the basic level. .)
For smaller transactions, you will pay a margin margin of 0.5% of the value of your transaction, plus a fixed fee depending on the size of your transaction:
|$ 10 or less||$ 0.99|
|Over $ 10 and up to $ 25||$ 1.49|
|Over $ 25 and up to $ 50||$ 1.99|
|Over $ 50 and up to $ 200||$ 2.99|
At the lowest levels, around $ 10, you’ll pay a fee that consumes almost 10% of your purchase. But even at $ 200, you’re still paying a hefty 1.5% or so. And this is in addition to the 0.5 margin that is already factored into the buy or sell price.
For purchase amounts over $ 200, you still pay this 0.5% markup, while a variable fee depends on your source of funds:
|american bank account||1.49 percent|
|Coinbase USD Wallet||1.49 percent|
|Debit card||3.99 percent|
|Instant card withdrawal||Up to 1.5% of any transaction; minimum fee of $ 0.55|
If you choose to use Coinbase Pro, the company’s higher level of service, you will be able to get lower overall fees even if you trade with lower amounts. Coinbase is more clear on these fees, but the structure is suitable and depends on whether you add liquidity (where the commission ranges from 0 to 0.5% of the value of the transaction) or take liquidity (with commissions. ranging from 0.04 to 0.5%).
Advantage: Robinhood, for the simplicity of its pricing structure, although its disclosure is no better than that provided by Coinbase.
Coinbase supports trading in over 90 different cryptocurrencies, including the biggest ones such as Bitcoin, Ethereum, Cardano, Solana, Dogecoin and more. So you are likely to find what you are looking for and even a lot that you are not. Of course, Coinbase doesn’t offer thousands of other much smaller digital currencies, but that won’t matter to almost anyone except niche traders.
In contrast, Robinhood allows users to trade in just seven digital currencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, and Litecoin. However, the app gives traders access to real-time data on these and nine other cryptos. The company said it was working on adding more coins to its platform, but it’s unclear when that could happen.
Advantage: Coinbase, for its much wider range of coins available.
Types of titles
When it comes to the type of securities on offer, Coinbase is fully crypto, all the time. If you want something else – stocks, ETFs, options – you’ll have to find it elsewhere.
In contrast, Robinhood offers a wider range of securities, including stocks, options, ETFs, and cryptocurrencies, although it does not offer bonds or mutual funds. Still, the app will attract many traders with what it offers, so it can appeal to a large audience even with a shallower crypto pool.
Advantage: Robinhood, for its wider range of offerings.
If you are looking to manage the custody of your crypto assets on your own, Coinbase is your choice here. The exchange offers its own wallet, but you can also take custody of the assets yourself through your own wallet. So, you can choose the solution that best suits your needs, whether you are looking for a hardware wallet or a software wallet or just want to leave it with Coinbase for trading.
Robinhood does not offer a wallet, so traders will be required to hold their crypto with the broker, as they would with stocks and other assets. The company said it intended to offer a crypto wallet but did not specify a timeline for doing so.
Advantage: Coinbase has the advantage here of offering more options. However, if you intend to trade, it matters less.
Coinbase and Robinhood also differ significantly when it comes to cryptocurrency staking, a process by which cryptocurrency owners receive income on their mining. Staking is like earning interest on a bank account, but with significant differences and risks.
With Coinbase, users can stake their crypto assets, which are then used to validate transactions on the given currency’s blockchain. Currently, customers can earn staking rewards on a handful of crypto coins, including Ethereum and Tezos. Coinbase takes care of the technical details behind the scenes and you earn extra coins to keep your assets there.
Robinhood does not offer staking, although he has stated that he would like to offer the service soon.
Advantage: Coinbase, for offering wagering rewards, but only on a few coins.
At the end of the line
Which business is best for you ultimately depends on your needs, but it’s fair to say that those with a heavy focus on cryptocurrency or many types of crypto will find Coinbase a better fit. On the flip side, those interested in a few popular crypto coins as part of a larger wallet may prefer Robinhood, and they might even want to check out rival Webull, who also offers cryptocurrency trading. .
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past performance of investment products is not a guarantee of future price appreciation.