Coinbase vs. Robinhood: Which one is better for cryptocurrency trading?

Muhammad Naeem

Blogger

Coinbase and Robinhood are two of the most popular and trending tools to invest in cryptocurrencies. While Coinbase is one of the leading crypto exchanges, Robinhood is an investing app that lets its users enjoy trading services with zero fees. Coinbase has a wide range of listed cryptocurrencies, and the list is continuously increasing; Robinhood, on the other hand, has its own distinctive features such as easy-to-use and commission-free trading. Which of these two is the best option for trading? Let's have a look at the features of each platform to help you decide which one best matches your trading style.

What is a Crypto Exchange

A cryptocurrency exchange is an online platform that allows customers to trade cryptocurrencies like Bitcoin, Ethereum, Litecoin and Tether. A cryptocurrency exchange converts fiat currency (Dollar, Euro, etc.) to crypto and vice versa. A crypto exchange is comparable to a stock exchange; however, there are several key differences between the two. While stock exchanges let users buy and sell shares of publicly listed companies and have specific trading hours, crypto exchanges facilitate 24/7 trading of cryptocurrencies without any defined regulations.

Features To Consider In A Crypto Exchange

Cryptocurrencies are highly volatile assets and even one small trading mistake can result in devastating financial losses. Choosing the right cryptocurrency exchange is crucial to mitigating these volatility risks. From Binance, Kraken, Coinbase, ZenGo Wallet, and eToro to Robinhood, the crypto market is flooded with crypto exchanges, each with its own distinctive features. With so many options available, it is crucial to highlight the features that make a crypto exchange reliable, secure and ideal for trading cryptocurrencies. Let’s have a look at the features that you should consider while choosing a crypto exchange.

I. Security Measures

The first and foremost feature to look for in a crypto exchange is its security measures because these ensure the security and safety of your funds against hacks and other security exploits.

II. Range of Cryptocurrencies

Another important factor to look for in a crypto exchange is the range of cryptocurrencies it is offering. Make sure that the crypto exchange you are choosing offers a wide range of cryptocurrencies including the top cryptocurrencies such as Bitcoin and Ethereum as well as emerging altcoins. These options allow you to diversify your portfolio and discover other investment opportunities as well.

III. Ease Of Use

Trading on a cryptocurrency exchange with a complicated user interface can be a challenging task, especially for new users. Look for an exchange with a user-friendly interface, where you can easily trade cryptocurrencies, track your portfolio, and access other essential information.

IV. Transaction Fees

The transaction fees vary from exchange to exchange. Some exchanges charge a flat fee per transaction while others charge fees according to the trading volume of your assets. It is essential to consider the fee structure of the exchange you are going to choose.

V. Payment method

Choose a crypto exchange that offers payment methods that are accessible to you. Some exchanges accept payments exclusively through credit cards, while others provide additional options for fiat currency deposits and withdrawals, such as bank transfers.

Coinbase

Launched in 2012 and based in California, United States, Coinbase is one of the largest and most trusted crypto exchanges in the world; it lets its users buy, sell and trade all kinds of cryptocurrencies. Initially focused on just Bitcoin trading, the platform has evolved over the years and now facilitates the trading of more than 250 cryptocurrencies.

Pros of Coinbase

I. User-friendly

Coinbase has a user-friendly interface that enables both advanced traders and beginners to trade cryptocurrency with ease.

II. Security measures

Coinbase prioritizes the security of user funds and personal information. Coinbase stores 98% of users' data in cold storages that are not connected to the internet, a practice which makes Coinbase highly resistant to hacks and unauthorized accesses.

III. Trustworthy and Established

Coinbase is one of the oldest and most reputable cryptocurrency exchanges in the crypto industry and it has successfully gained the trust of a large number of users over the years.

IV. Range of cryptocurrencies

Coinbase allows you to trade over 250 different cryptocurrencies, including Bitcoin, Ethereum, and Litecoin.

V. Regulatory Compliance

Coinbase follows all the rules and regulations of the countries where it is operating and has successfully obtained licenses in many jurisdictions.

Cons of Coinbase

I. Limited Number of Supported Countries

Coinbase services are regionally restricted and the exchange may not be available in all countries. The exchange has been continuously trying to expand its reach and it is crucial to check if it is available in your country before making an account.

II. Access to All Features Requires Coinbase Pro

While Coinbase offers a wide range of trading features, it is worth noticing that all features are accessible only through a Coinbase Pro subscription.

III. Centralized Exchange

Coinbase is a centralized exchange -- users do not have full control over their assets.

Robinhood

Paying high trading fees even for small transactions can be a painful task, especially for new traders. Robinhood was the first trading platform that pioneered commission-free trading. Launched in 2013, Robinhood originally focused on stock trading rather than cryptocurrency. However, in 2018, Robinhood expanded its services to include cryptocurrency trading.

Pros of Robinhood

I. Commission-Free Trading

In terms of trading fees, Robinhood is very appealing to users. Robinhood does not charge any trading fees and allows users to buy, sell and trade cryptocurrencies without charging any additional cost.

II. Mobile App

Robinhood has a mobile application for both Android and iPhone users. Through the mobile application, users can easily execute trades, access their portfolios, and stay up to date with market trends.

III. Integrated Platform

Robinhood crypto is also integrated with the broader Robinhood platform which further enables users to use additional services such as stock trading, options trading, and more.

IV. Low-interest rate for margin trading

Robinhood charges only 2.5% interest for margin trading.

Cons of Robinhood

I. Limited Advanced Trading Features

Robinhood Crypto's focus on simplicity and accessibility mean that it may lack some advanced trading features that experienced traders may require.

II. Limited Cryptocurrency Selection

Although Robinhood provides real-time data on all cryptocurrencies, it allows trading of just 11 cryptocurrencies: Bitcoin, Bitcoin Cash, Bitcoin SV, Dogecoin, Ethereum, Ethereum Classic, Solana, Shiba Inu, Compound, Polygon and Litecoin.

III. Withdrawals

Users cannot withdraw or send their assets to another wallet. Their assets are stuck inside the exchange until they sell them.

IV. Limited altcoin options

Robinhood has a limited number of altcoins as compared to its competitors.

Robinhood Vs Coinbase: Which Is Better?

From an in-depth analysis of both Coinbase and Robinhood, we can conclude that both have their strengths and weaknesses as cryptocurrency trading platforms. If you wish to enjoy trading well-known cryptocurrencies such as Bitcoin and Ethereum without any trading fees, Robinhood might be the right choice. However, if you want to transfer your assets into your personal wallet, you should look for alternative options such as Coinbase, which offers trading services with advanced features as well as immediate withdrawals whenever you want.