Coinbase vs Robinhood: Which is the best crypto brokerage?

A good comparison between Coinbase and Robinhood depends on the service you are looking for. Robinhood follows the playbook of a traditional stockbroker. Through the app, you can buy stocks and exchange-traded funds on the stock market, but it also offers a limited menu of cryptocurrencies.

Coinbase, on the other hand, only offers cryptocurrencies (no stocks or ETFs here), And much more. Additionally, Coinbase has capabilities that could be considered essential when buying crypto – abilities that Robinhood does not currently have.

Cost

One of Robinhood's advantages over Coinbase is the cost of buying cryptocurrencies. On Robinhood, it's free. You can buy and sell cryptos as often as you want without any fees (and the pattern day trading rules that exist for stocks do not currently exist for cryptos). You will always have to pay the spread (the difference between the bid price and the ask price).

It should be noted that in 2020, a Securities and Exchange Commission order revealed that Robinhood was offering “lower trade prices“, costing customers 34,1 million. The SEC investigation focused on the marketing and execution of Robinhood in general and not on crypto transactions specifically. Robinhood has agreed to pay $65 million to settle the charges.

On Coinbase, it's not that simple. Coinbase has a very variable fee structure, depending on how much you buy in US dollars and how you pay it. For example, if you buy $ 100 in bitcoins with a debit card, you will pay a fee of 3,99% or, $ 3,99.

If you pay with a linked bank account, this fee would be $ 2,99. Coinbase also charges a spread of approximately 0,5% for sales and purchases of cryptocurrencies; this spread may change depending on market fluctuations.

Overall, the fees at Coinbase can get confusing, and frankly, it seems a bit outdated to pay per transaction when other brokerages have been moving away from it for years.

However, in early 2022, Coinbase rolled out a direct deposit feature that allows users to allocate a portion of their paycheck (either in USD or the crypto of their choice) to land on their Coinbase account every pay period.

This service is completely free, and users can set how much of their paycheck they want to distribute to Coinbase, either in dollars or as a percentage.

Selection of cryptocurrency

This is where cryptocurrency seems more like an afterthought for Robinhood, but it's Coinbase's bread and butter. On Coinbase, there are dozens of tradable cryptocurrencies, and even more that can be added to price watch lists. And, Coinbase adds new tradable cryptocurrencies quite often. Robinhood, on the other hand, currently lists seven.

Encryption capabilities

This is another category that Coinbase should win by default: Robinhood is a stockbroker that dabbles in converting USD to cryptocurrency, while Coinbase is a cryptocurrency brokerage and exchange that also offers a hosted wallet, as well as a personal wallet if you like. wish.

What does that mean ?

With Coinbase, you have the ability to buy crypto with cash and then store those coins on Coinbase's hosted wallet. Or you can send these coins to your own Coinbase wallet, which is completely separate from the Coinbase app.

There is also free exchange Coinbase Pro, where you can easily deposit coins from your hosted or personal Coinbase wallet and then redeem them for much lower fees.

In short, Coinbase is a very good on-ramp for new crypto users, providing users with many of the features that cryptocurrencies were created for in the first place.

With Robinhood, many users cannot send coins outside of the app, or receive them from an outside wallet. Robinhood is in the process of rolling out a wallet feature and in April 2022 introduced the service for more than 2 million users.

For those outside of this group, your only option right now is to convert your USD to crypto and then convert it back to USD if you want to benefit from higher prices.

Ease of use

Both apps are incredibly intuitive, fast, clean, and easy to use, and it makes sense: both companies derive a large portion of their revenue from trading volume.

The more people buy and sell, the more money they make. It is therefore in their interest to create a product that incentivizes buying and selling, even in small quantities, and to reduce all the friction that exists in the way of pressing the button “the purchase".

The end result is an excellent product for beginners in the sense that the buying and selling process is reduced to the essentials; although some argue that it shouldn't be so easy for beginners to trade risky and speculative assets like cryptocurrency.

Coinbase Pro may seem more like an intermediate trading platform to advance, but if you're not ready to jump in, the platform basic Coinbase remains extremely easy to use, as long as you are willing to pay these fees. With Robinhood, you will never really come across anything resembling an advanced trading platform.

So which is better, Robinhood or Coinbase?

When it comes to cryptocurrencies, Coinbase is the clear winner here. While its fees can be confusing and high, being able to trade on Coinbase Pro once you have some experience can reduce these fees.

Robinhood's free trading is nice, but it doesn't make up for the lack of crypto capabilities (the inability to send and receive coins is its biggest shortcoming) and limited list of cryptocurrencies to invest in.

article read: Everything you need to know about stock market price volatility 

But if all you care about is speculating on the price of cryptocurrencies – and you don't intend to actually use the coins and tokens you buy – then Robinhood might be better suited, given the exchanges. free.