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Coinbase vs. Robinhood: Which Is the Better Crypto Brokerage?

Coinbase vs. Robinhood: Which Is the Better Crypto Brokerage?
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The correct 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, but it also has a limited list of cryptocurrencies.

On the other hand, Coinbase only offers cryptocurrencies (no stocks or ETFs here), and a lot of them. In addition, Coinbase has capabilities that can be considered essential when buying cryptocurrency – capabilities that Robinhood does not currently have.

Outlay

One advantage that Robinhood has over Coinbase is the cost of buying cryptocurrencies. At Robinhood, it’s free. You can buy and sell cryptocurrencies as frequently as you want without any fees at all (the pattern day trading rules that exist for stocks do not currently exist for cryptocurrencies). You still have to pay the spread (the difference between the bid and ask price).

It is worth noting that in 2020, an order from the Securities and Exchange Commission found that Robinhood offered “low trading prices,” which cost clients $34.1 million. The SEC investigation was about Robinhood’s marketing and implementation in general and not about cryptocurrency trading specifically. Robinhood has agreed to pay $65 million to settle the charges.

On Coinbase, it’s not that simple. Coinbase has a widely varied fee structure, depending on how much you buy in US dollars and how you pay for it. For example, if you buy with $100 Bitcoin With a debit card, you’ll pay a fee of 3.99% or $3.99. If you pay with a linked bank account, this fee is a flat $2.99. Coinbase also charges a difference of around 0.5% for cryptocurrency purchases and sales; This spread may change according to market volatility.

Overall, the fees at Coinbase can get confusing, and frankly, pay-per-trade seems a bit outdated when other brokerages have been away from it for years. However, Coinbase announced in September 2021 that users would soon be able to set up a direct deposit of their salary, either in US dollars or the cryptocurrency of their choice, to automatically access their Coinbase account. The service is touted as completely free of charge, and users will be able to set their own allocation from their paycheck directly in the app, but the product is not yet released.

Choosing a cryptocurrency

This is where cryptocurrency sounds like an afterthought for Robinhood, but it’s Coinbase’s bread and butter. At Coinbase, there are dozens of tradable cryptocurrencies, and more can be added to price watchlists. Coinbase adds new tradable cryptocurrencies often.

On the other hand, Robinhood currently lists seven.

Cryptocurrency Choice Winner: Queen Piece.

encryption capabilities

This is another category that Coinbase should win by default: Robinhood is a stock broker that converts US dollars into cryptocurrency, while Coinbase is a cryptocurrency brokerage and exchange that also offers a hosted wallet, as well as a personal wallet if you want it.

What does it mean? With Coinbase, you have the option to purchase cryptocurrencies with cash, and then store those coins in a hosted Coinbase wallet. Or you can send these coins to your Coinbase wallet, which is completely separate from the Coinbase app. There is also a free Coinbase Pro exchange, where you can easily deposit coins from your hosted Coinbase or personal wallet, and then exchange them for a much lower fee. (Learn more about Crypto wallets.)

In short, Coinbase is a really good onramp tool for new crypto users, offering users many capabilities that it was built for in the first place.

With Robinhood, you cannot send coins from the app or receive coins from an external wallet. Really, your only option is to convert USD to cryptocurrency, then convert it back to USD if you want to take advantage of any price hike. However, in September 2021, Robinhood announced the emergence of crypto wallets, which will allow users to send and receive coins from their Robinhood account. Although, like Coinbase’s direct deposit feature, it has not been widely publicized.

Encoder Capabilities Winner: Queen Piece.

Technical reliability

The truth is that both companies struggled with outages when trading volume was high. And that, typically, is when users are most excited to take full control of their money, whether it’s a crypto surge or a crash.

So, for any platform to prove that it can handle an unexpected influx of activity, users need to be aware that this is a real possibility. However, according to Downdetector, 59 outages were reported on Robinhood in 2021, while Coinbase recorded 68 outages, giving Robinhood a slight edge on this metric.

Technical Reliability Winner: Robinhood, based on Downdetector data – although the Robinhood platform certainly still has issues.

Ease of use

Both apps are intuitive, fast, clean, and incredibly easy to use, which makes sense: both companies earn a significant portion of their revenue through transaction volume. The more people buy and sell, the more money they make. So it is in their best interest to create a product that tempts to buy and sell, even in small quantities, and to reduce every bit of friction that exists in the way of pressing the buy button.

The end result is an excellent entry-level product in the sense that the buying and selling process has been stripped of the basics; Although some argue that in reality it should not be so easy for beginners to trade in risky and speculative assets like cryptocurrency.

Coinbase Pro can feel like a medium to advanced trading platform, but if you’re not ready to delve into it, the core Coinbase platform is still very easy to use, as long as you’re OK to pay this fee. With Robinhood, you will never come across anything that looks like an advanced trading platform.

Ease of use winner: It is a draw. Both are very well designed.

Which is better, Robinhood or Coinbase?

When it comes to cryptocurrencies, Coinbase is the clear winner here. While their fees can be overwhelming and high, the option to trade on Coinbase Pro once you have a little experience can lower those fees. Robinhood’s free trading is great, but it doesn’t make up for the lack of crypto capabilities (the inability to send and receive coins being its most severe drawback) and the shortlist of cryptocurrencies to invest in.

But if all you care about is speculating on the price of cryptocurrencies — and you have no intention of actually using the coins and tokens you’re buying — Robinhood may be a better fit, given the free trades.

Queen Piece
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Outlay

0.5% – 4.5%

Varies by type of transaction; Other fees may apply

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