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Coinbase vs Robinhood
Coinbase offers a dedicated cryptocurrency experience, while Robinhood gives a wider range of investment options.
Both platforms focus on beginner-friendly user interfaces but have a slightly different customer focus. With its characteristic no-commission trading, Robinhood is aimed at frequent traders. On the other hand, Coinbase is an exchange aimed at those first entering the world of cryptocurrencies.
While limited to cryptocurrency assets, Coinbase offers additional crypto features such as coin staking that enables users to earn interest on digital asset holdings.
Both Coinbase and Robinhood are based and regulated in the United States. Robinhood only allows traders from the US, while Coinbase offers its services globally for over 100 countries.
At a glance: Coinbase vs Robinhood
Compare Coinbase and Robinhood on features like coins, fees, new user set-up, user interface and security.
- Instant buy: Purchase crypto instantly with a credit/debit card
- Recurring buy: Periodical purchases can be automated
- Staking: You can earn interest on your crypto
- Coinbase Earn: You can get paid for learning about various tokens
- Coinbase Wallet: You can transfer crypto to your own wallet
- Custody: You can store your crypto funds in cold storage
- Pvt Client Service: For trusts, family offices and ultra-high-net-worth individuals (UHNWIs)
- Instant buy: Purchase crypto instantly directly from your bank account
- Zero trading fees: You don’t to pay any fees or commissions for stocks and options trading
- Fractional Equities: You can buy a fraction of stocks or cryptocurrencies for as little as $1
- Options: The platform allows you to trade options of different stocks
The trading fee is 0.5% plus a Coinbase Fee, which is the greater of a minimum flat fee or variable fee dependent on dollar amount, location and payment method.
For transactions between $1 and $200, trading fees are typically from $0.99 to $2.99.
Purchases with a debit or credit card cost up to 3.99%
Crypto-to-crypto transactions are charged a spread of up to 2% per transaction
Zero stock and options trading fees
Zero annual trading fee
Zero minimum deposit for account opening
$5 a month for access to reports from Robinhood Gold
- Bank transfer (ACH)
- Debit card
- Wire transfer
- Apple Pay
- Bank transfer
- Debit card
According to data from exchange aggregator CoinGecko, at the time of writing, Coinbase is the sixth-largest cryptocurrency exchange in the world in terms of daily trading volume. It is the second-largest exchange with a CoinGecko trust score of 10. It is the only publicly listed cryptocurrency exchange in the world.
Although not a dedicated cryptocurrency exchange, Robinhood has grown exponentially over the last 5 years with a user base that has multiplied from 0.5 billion in 2015 to 13 million in 2020. It is now one of the most popular trading platforms for retail users.
At the time of writing, Coinbase has the third-highest liquidity score on market aggregator CoinMarketCap. While the total volumes on Robinhood aren’t available publicly, users can track the volume of a particular stock traded on the platform.
Since both of these platforms have high liquidity, it should ensure low slippage when executing trades.
Coinbase and Robinhood are security conscious, offering users various ways to secure and manage accounts. Two-factor authentication (2FA), which has become a standard protocol in the cryptocurrency industry, is offered by both platforms to limit unauthorized access. This involves entering a time-sensitive six-digit code, which is generated by your smartphone or security device before access is granted.
After cryptocurrencies have been purchased, both platforms utilize offline cold storage facilities. Cold storage is a method of storing cryptocurrency offline, so no one can steal it even if they hacked the exchange.
Coinbase holds approximately 98% of crypto in air-gapped cold storage, with the remaining cryptocurrencies in hot storage insured against security breaches. The amount held in cold storage on Robinhood is not published. To prevent fraudulent removal, Coinbase gives the option of multi-signature wallets, which require multiple digital signatures before funds can be transferred.
Coinbase ensures digital wallets are secured using an encrypted 12-word seed phrase that can be used to recover funds in case of a lost device or password. In comparison, Robinhood allows biometric access to its application and gives an option for device management. This enables users to check the devices that have logged into the platform and lets them delete the ones they don’t recognize.
While mitigating against cryptocurrency theft, both also hold insurance policies for US dollar balances up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). On Robinhood, to be eligible for the FDIC insurance, you need to choose the “Cash Management” option within the platform.
Coinbase and Robinhood are based and regulated in the United States. Robinhood is regulated by the United States Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization overseen by the SEC. Accounts on the platform are protected by the Securities Investor Protection Corporation (SIPC).
Coinbase is also regulated by the SEC in the United States. In other countries where it operates, it is subject to local laws and regulations. It is registered as a Money Services Business with the Financial Crimes Enforcement Network (FinCEN) and is subject to The Bank Secrecy Act and The USA Patriot Act. Additionally, the exchange is also authorized to issue electronic money in the United Kingdom by the Financial Conduct Authority.
Verdict: Should you use Coinbase or Robinhood?
While there are several similarities between Coinbase and Robinhood, including US HQ and easy access to cryptocurrencies, there are some clear differences that every crypto investor should be aware of.
Coinbase operates in 100+ countries across the world while being a heavily regulated U.S-based exchange. The platform offers access to a wide range of cryptocurrencies along with various related storage services and features. Following Coinbase’s success, it now provides these services to institutional investors too.
Trading fees are higher when compared with other exchanges, which makes Coinbase useful for long-term investors but less advantageous for frequent trading. Users can switch to Coinbase Pro at any time to take advantage of lower fees and more advanced features.
In addition to trading crypto, it allows users to safely store digital assets and successfully transfer funds into a personal wallet. A level of flexibility that is not offered by Robinhood.
Coinbase is a popular option for those first venturing into the world of cryptocurrency.
Robinhood is a trading platform that is based and operates entirely in the United States. In addition to crypto trading, it also offers equities, ETFs and gold as investment options. While the platform charges zero trading and commission fees, it does charge a payment for “order flow,” which is not always transparent and obvious. Thus, you may end up paying above market rates.
Once you have crypto in your Robinhood account, the platform is the custodian of your crypto tokens. You never really own the coins and cannot transfer them into your personal crypto wallet, which you can do through Coinbase.
That being said, if custody is not an issue, Robinhood is a good platform for US-based retail traders that want to trade in stocks, fractional equities, gold and crypto. The all-in-one platform offers zero trading fees and an easy on-ramp directly from a user’s bank account.
What to consider before using Coinbase or Robinhood
- Convenient and easy to use
- Available across 100+ countries
- Crypto and USD funds are insured
- Access to Coinbase Pro at a small fee, allowing access to an advanced trading platform
- Expensive when compared to other exchanges
- Crypto often trades at a premium now referred to as the Coinbase Premium Index
- The user has no control of the wallet keys
- No options and futures trading features
- Easy-to-use interface for beginners
- Zero trading and commission fees
- Offers fractional equities, ETFs and gold in addition to cryptocurrencies
- No minimum deposit to open an account
- The payment method is only through a US bank account
- Payment for order flow charged through the trading spread, which is not transparent and may result in paying above-market rates
- Available only to US citizens
- Only email-based customer support available through an online ticketing system
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