Many people were ecstatic when Robinhood revealed that they would be trading in cryptos. After all, Robinhood allowed investors to buy without paying any additional costs. Adding cryptocurrency to their trade list, according to some analysts, would trigger massive business disruptions.
They said that this breakthrough would be a game-changer, one that would dethrone Coinbase or give it a fight for its money. Why? Because individuals who used the Coinbase app to trade were charged with hefty trading costs.
But, in the face of the cryptospace's most powerful adversary, does Robinhood have a chance? Let's take a closer look at the battle between Coinbase and Robinhood, as well as the consequences of the crypto trading announcement.
Coinbase vs RobinhoodCoinbase boasts [more than 35 million users](https://www.cnbc.com/2017/11/27/bitcoin-exchange-coinbase-has-more-users-than-stock-brokerage-schwab.html) and is one of the most popular crypto exchanges today. It now has more users than Charles Schwab. Talk about disruption!
Why is Coinbase so popular? For starters, it permits you to export your tokens from their site.
Can put it another way, Coinbase let you keep these tokens in a hardware wallet for added security. You may also use these tokens to buy cryptocurrencies on another exchange.
But the advantages don't end there. Coinbase is also extremely user-friendly, with a slick UI that customers adore. While its costs aren't as cheap as those of rival exchanges like Gemini, Coinbase compensates for this by adding ease.
You can even use a credit card to purchase cryptocurrency through the exchange. What's more, Coinbase is widely available to all US citizens.
Robinhood's Potential Advantage
Over the last few years, the Robinhood app has seen a significant increase in its user base. Robinhood now has a user base of around ten million people. And they're working hard to keep this upward trend going.
In addition, it's currently legal in 47 states.
However, Robinhood's one claim to fame, fee-free trading, has been undermined by industry-wide reforms. To put it another way, they're no longer the town's only complimentary trader.
While Robinhood wants to "steal" consumers from Coinbase, this may be tough.
Which digital currencies are available on Robinhood? They include:
What's more, the app also supports real-time market data for the following cryptos:
- Bitcoin Gold (BTG)
- Monero (XMR)
- Dash (DASH)
- Lisk (LSK)
- OmiseGO (OMG)
- Ripple (XRP)
- NEO (NEO)
- Qtum (QTUM)
- Zcash (ZEC)
- Stellar (XLM)
The message of Robinhood continues to resonate with a wide range of young people. It encourages them to use the "free" service and the resulting "democratization."
However, if you cut through these messages, you'll find that the service isn't quite what it purports to be.
Robinhood vs Coinbase: More to Consider
Aside from fee-free trading, Robinhood provides an instant $1,000 money deposit to your account.
What about transactions that exceed this threshold? The software needs a few days to validate the recipients' accounts.
What's the difference between this timeline and Coinbase? You can use the Coinbase app's by-account money transfer limit scheme. This program covers purchases made with debit/credit cards as well as bank account connections.
Transaction fees are charged by Coinbase in both circumstances. While the Credit/Debit service is instantaneous like that of Robinhood, you pay for this convenience.
Like Robinhood, Coinbase permits you to connect to its trading platform known as GDAX.com. This connection allows you to remove the fees and limit trade between US dollars and cryptos.
Buying Bitcoin on Robinhood vs Coinbase
We've already indicated that you can export your tokens using Coinbase. When it comes to Robinhood, this is still one of the most significant contrasts. The coins you trade with Robinhood will never be yours.
As a result, you will be unable to export them. Also, keep in mind that Robinhood holds your stocks for you. You don't keep them in the end.
However, you can use cryptocurrencies to buy ETFs (exchange-traded funds). Compared to trading cryptos like Bitcoin, this common stock offers more security and usefulness. For the typical Jane and Joe, this is especially true.
It's impossible to compare them because of their distinct features and capabilities. Nonetheless, there are certain similarities between the two platforms. Even in a bear market, both sites are good for acclimating newbies to investing and trading.
The Benefits of Robinhood
Despite the current upheaval about fee changes, Robinhood still has some significant advantages. They include a pledge to offer affordable costs and a zero-balance requirement to start an account. While similar features are now available on other exchanges, they remain a compelling lure for Robinhood's target audience.
Customers must pay $5 each month for Robinhood Gold and have 30 days to test it out. This membership allows them to:
- Trade on margin
- Access research (e.g., Morningstar reports on high-volume stocks)
- View market depth data
Unlike other brokers, Robinhood does not reveal its trading statistics. As a result, comparing items like their payment for order flow figures is difficult. Of course, new traders who trade single shares or fractions of shares are unlikely to be bothered by this.
Robinhood and Coinbase: Which One's Best?
When all is said and done, Robinhood is perfect for new investors and those looking to invest small amounts of money. Fractional shares are one of these, and they don't require any investigation. Simply keep an eye on what others are doing.
While the app's overall simplicity makes it simple to use for beginners, it lacks in terms of in-depth study and analysis. Some have questioned the quality of the transaction executions as well.
Another issue with Robinhood is that trades appear to be managed to create a payment for order flow rather than the best price. Some users have also expressed their dissatisfaction with the fact that quotes are sometimes delayed or do not broadcast.
Robinhood offers very little in the way of overall resources and research. That said, the app has very low trading costs. You may also place cryptocurrency trades in small quantities.
Coinbase vs Robinhood Fees
How do the two exchanges compare in terms of fees? Because Robinhood's expenses are included in its price, this area can be difficult to compare properly. In a contest between Coinbase Pro and Robinhood, Coinbase Pro may appear to be the winner at first glance.
For instance, it's common to come across listing prices that are roughly 12% lower than Robinhood's. However, the Coinbase statistic does not include the cost of the transaction.
Remember that Coinbase Pro has a tiered pricing structure. These tiers are based on how much you trade and are focused on the most experienced traders. These costs can be as high as 0.50% for small traders, making Robinhood the more affordable program.
How much would you need to trade to start taking advantage of Coinbase Pro's higher tiers? About $50 million! That's not an attainable price for the majority of new traders.
Coinbase's Platform Transparency
Another important consideration is platform transparency. Coinbase has the advantage here of the two programs. Orders are directly matched between vendors and buyers on the exchange. They can use the method to place orders in the order book.
In real-time, the whole order book is presented. In addition, the cost structure is available on their website. While calculating your net trading price from this list can be difficult, it's difficult not to applaud Coinbase's efforts at transparency.
In this regard, how does Robinhood fare? It simplifies things by displaying a trade price that is free of additional charges. However, keep in mind that Robinhood is a broker.
They sell order flow to trading businesses in this way. As a result, expect a $20 variation in price between buying and selling. While there is no charge, expect a significant markup.
Other trade prices and orders aren't shown, which reduces the feeling of transparency.
The takeaway? While Coinbase Pro is more expensive upfront, it's also more transparent. This fact holds for trades and orders in the market.
You'll also enjoy more transparency in terms of the ultimate markup to trade. Now that you know which investment route is best for you, do you have a handle on taxes?
For more information about Coinbase, check out our comprehensive Coinbase Review: What You Need to Know Before Using it.
Compare with the best alternative exchanges
|Nexo||Best overall crypto lending platform.||Go to site →|
|CoinLoan||Best for crypto loan borrowers.||Go to site →|
|YouHodler||Most versatile crypto lending platform.||Go to site →|
|Bit.com||Best crypto derivatives platform.||Go to site →|
|Matrixport||Best for institutional investors.||Go to site →|
|Gemini||Best crypto exchange for U.S. investors.||Go to site →|
|Binance||Best overall crypto exchange.||Go to site →|
|Kraken||Best U.S. crypto exchange for advanced traders.||Go to site →|
The Final Word on Coinbase vs Robinhood
Do you intend to trade well-known cryptocurrencies such as Ethereum or Bitcoin? Do you like to transact in US dollars? If that's the case, Robinhood is likely to be the less expensive option.
But what if you want to see more information about your orders and trade activity? And you wish to trade in a volume that qualifies you for a lower fee tier? Then Coinbase Pro is the preferable option, however, it will cost you more.
Are you looking for more up-to-date information from the crypto sphere? Keep reading to learn more about the best ways to earn crypto for free.