In this Coinbase vs. Robinhood comparison, we take a deep dive into everything from security to available cryptocurrencies and wallet options. Read on to find out which platform will work best for you.
Two of the most popular places for U.S. investors to buy and sell cryptocurrencies are leading digital currency exchange Coinbase and innovative trading app Robinhood. Both are extremely popular platforms for investing and trading and both have user-friendly apps. But which one is the best fit for you?
There are some key similarities and differences between the two platforms. In this article, we’ll take a closer side-by-side look at Coinbase vs. Robinhood to see how the two platforms compare in the ways that matter to users. Read on, and you’ll get a sense of which might be the better way for you to convert your U.S. dollars to cryptocurrencies.
Coinbase vs. Robinhood: Fees
Perhaps the biggest negative to using Coinbase’s platform is the costs involved. The company makes money in two ways — a spread and a transaction fee. In Coinbase’s case, the spread is fairly standard and is a markup of 0.5% over the quoted exchange price of whatever cryptocurrency is being traded. Robinhood uses a similar pricing structure, although it’s unclear what the exact spread is.
When it comes to the transaction fee, this is where it starts to get complicated (and expensive). Coinbase charges a transaction fee based on the higher of its flat-rate fee schedule or a percentage of the transaction, which depends on the user’s payment method.
The flat fees range from $0.99 for a transaction worth $10 or less, to $2.99 for a transaction over $50. For cryptocurrencies purchased with a U.S. bank account or money in a Coinbase U.S. dollar wallet, the percentage fee is 1.49%. It’s higher for purchases made with a debit card.
As an example, let’s say that you want to invest $1,000 in Ethereum (ETH) using Coinbase via bank account transfer. This would correspond to a $2.99 flat rate or a $14.90 percentage-based transaction fee, so you’d pay the latter. In a world of commission-free stock trading, this could be considered expensive.
On the other hand, Robinhood doesn’t charge any fees at all. It only makes money from the spread between the buy and sell prices, making it the clear winner on pricing between the two.
Coinbase vs. Robinhood : Cryptos available
When it comes to cryptocurrency selection, there’s no comparison. Coinbase is the clear leader with 96 tradeable cryptocurrencies, ranging from popular coins like Bitcoin (BTC), Ethereum, and Cardano (ADA), to smaller cryptocurrencies like Gitcoin (GTC) and Orchid (OXT). It’s worth mentioning that Ripple (XRP) is one of the few major cryptocurrencies not available on either Coinbase or Robinhood.
Robinhood offers seven different cryptocurrencies for trading on its platform, including popular digital assets such as Bitcoin, Ethereum, Litecoin (LTC), and Dogecoin (DOGE). It provides real-time market data for several other notable cryptocurrencies, but a few popular cryptocurrencies that are not available for trading on Robinhood but are available on Coinbase include Stellar (XLM), Tether (USDT), Cardano, and Monero (XMR), just to name a few.
While Coinbase is the clear winner when it comes to cryptocurrency selection, there are two big points to keep in mind. First, Robinhood has made it clear that it plans to expand its cryptocurrency offerings over time. So it’s a smart idea to check the latest availability before deciding which platform is best for you. Second, remember that cryptocurrency trading is just one part of Robinhood. It’s also a fully-functional stock and options investing platform. So it can be a smart choice for customers who want to buy and sell some of the most popular cryptocurrencies in addition to other types of investments.
Coinbase vs. Robinhood : Wallets
This is a big difference between the two platforms. Coinbase is a true cryptocurrency exchange with several wallet options. You can store your cryptocurrencies on the platform’s own hosted wallet, send them to your personal wallet, or send them to any other cryptocurrency wallet of your choosing.
There are also ways to spend your cryptocurrency through Coinbase’s app. This makes it a great option if you want to buy Bitcoin to ultimately use as a currency, for example.
In Robinhood’s case, it’s purely a trading platform when it comes to cryptocurrency. You can buy and sell cryptocurrencies within your Robinhood account. You cannot send or receive cryptocurrencies to or from external crypto wallets, nor do you have the ability to spend cryptocurrencies bought or sold through Robinhood. The company is planning to develop these capabilities. But for the time being, the only thing you can do is convert your U.S. dollars into seven different cryptocurrencies and convert cryptocurrencies you’ve purchased back into dollars.
In a nutshell, Coinbase allows you to own and use cryptocurrencies. Robinhood is essentially letting you speculate on the price.
Coinbase vs. Robinhood : Security
Both platforms are secure places to buy, sell, and store cryptocurrency.
We’ll start with Coinbase, which holds over $100 billion in users’ cryptocurrency and has never been the victim of any major theft. More than 98% of customer funds are in cold storage, which means they aren’t stored in internet-connected wallets and are therefore not vulnerable to hacking. Assets stored online are insured against hacking incidents, and any cash balance stored in Coinbase accounts is FDIC insured up to $250,000 per customer.
However, it’s worth noting that Coinbase’s insurance protects against breaches that are Coinbase’s fault, not yours. In other words, if someone gets into your account by stealing your password, your cryptocurrency can be lost forever, so it’s important to safeguard your account information.
Security is one area where Robinhood’s platform holds a key advantage over Coinbase. Specifically, because cryptocurrency cannot be transferred out of Robinhood accounts, there’s no way users’ digital assets can be stolen. Like Coinbase, Robinhood keeps most cryptocurrency in cold storage and carries crime insurance to protect assets stored online.
Conclusion
The short answer is that the best platform for you depends on what your goals are when it comes to cryptocurrencies. Coinbase is the better cryptocurrency exchange in the sense that it has the far better selection of cryptocurrencies available for trade and allows users to “own” their cryptocurrencies by being able to send them wherever they want, spend them on real-world purchases, and more.
On the other hand, if your main goal is simply to take advantage of the price appreciation potential of cryptocurrencies over time, Robinhood’s simple, no-fee platform could certainly make the most sense for you. Keep in mind that Robinhood’s cryptocurrency platform is still evolving, and it’s likely that its capabilities will improve significantly over the next year or two. And remember that you can trade stocks and options on Robinhood’s platform as well, making it more of a one-stop investment platform than Coinbase.
The bottom line is that some customers will be better off with Coinbase, while Robinhood is the more logical option for others.