Coinbase vs Robinhood: A Comprehensive Comparison

Robinhood and Coinbase both let you to do cryptocurrency trades, but what are the differences? Read about Coinbase vs Robinhood to learn the answer.


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When the popular app Robinhood announced they would be trading in cryptos, many people were excited. After all, Robinhood let investors buy without added fees. Some experts believed that adding crypto to their trade list would cause major industry disruptions.

They argued this new development would prove a game-changer, one expected to dethrone Coinbase, or at the very least, give it a run for its money. Why? Because those who traded on the Coinbase app got hit with significant trading fees.

But did Robinhood really stand a chance against the cryptospace's number one competitor? Let's take a closer look at Coinbase vs Robinhood and the fallout after the crypto trading announcement.

Coinbase vs Robinhood

Coinbase boasts more than 35 million users 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.

In other words, Coinbase gives you the ability to store these tokens in a hardware wallet for security reasons. Or, you can move these tokens to another exchange to buy altcoins.

But the benefits don't stop there. Coinbase is also highly user-friendly and includes an intuitive interface that customers rave about. While it's fees are not as low as other exchanges such as Gemini, Coinbase makes up for this by providing added convenience.

You can even use a credit card to purchase cryptocurrency through the exchange. What's more, Coinbase is widely available to all US citizens.

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Robinhood's Potential Advantage

The Robinhood app has grown substantially in terms of users over the past few years. Robinhood currently has about ten million users. And they're making great strides to continue this growth trend.

What's more, it use is now approved in 47 states.

That said, industry-wide changes have impacted Robinhood's one claim to fame, fee-less trading. In other words, they're no longer the only complimentary trader in town.

While Robinhood would like to "steal" customers from Coinbase, this may prove a difficult proposition. Nonetheless, they've put in place supports for the following coins:

Check out the latest crypto interest rate widget and crypto interest calculator widget now.

Robinhood's message continues to appeal broadly to young people. It encourages them to take advantage of the "free" service and the "democratization" it brings.

But once you slice through these messages, you're left with a service that's not all it claims to be.

Robinhood vs Coinbase: More to Consider

Apart from fee-less trading, Robinhood offers an instantaneous money transfer of up to $1,000 to your account.

What about transactions above this limit? The app requires a few days to verify the accounts of recipients.

How does this timeline compare to Coinbase? With the Coinbase app, you can use their by-account money transfer limit program. This program applies to both Debit/Credit card purchases and bank account connections.

In both cases, Coinbase charges transaction fees. 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 mentioned the fact that Coinbase allows you to export your tokens. This factor remains one of the most significant differences when it comes to Robinhood. You'll never own the coins you trade with Robinhood.

As a result, you can't export them. Remember, too, that Robinhood holds stocks on your behalf. You do not ultimately keep them.

That said, Robinhood allows you to purchase ETFs (exchange-traded funds) using cryptocurrencies. This common stock provides greater security and functionality than trading cryptos such as Bitcoin. Particularly, for your average Jane and Joe.

As for Coinbase? They don't even have a plan in the works to offer ETFs. As you're starting to see, comparing Coinbase and Robinhood is a bit like putting apples and oranges side-by-side.

Their unique features and capabilities make them difficult to compare. Nevertheless, both platforms do share some features in common. Both sites also represent excellent means for acclimating beginners to investing and trading, even in a bear market.

The Benefits of Robinhood

Despite the recent shakeup regarding the change in fees, Robinhood still boasts some key advantages. They include a commitment to low prices and zero balance to open an account. While other exchanges now offer these features, they remain an alluring draw for Robinhood's target demographic.

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

Robinhood doesn't publish its trading stats as do other brokers. As a result, it's hard to compare things like their payment for order flow figures. Of course, this likely won't bother new traders who are trading single shares or fractions of shares.

Robinhood and Coinbase: Which One's Best?

When it's all said and done, Robinhood remains best suited for first-time investors and those who wish to invest small sums of money. These include fractional shares, and they require little in terms of research. Simply pay attention to what others are trading.

While the app's overall simplicity makes it easy for beginners to figure out, it offers little in the way of profound research and analysis. Some have also raised questions about the quality of the trade executions.

Other complaints with Robinhood include the fact trades appear organized to generate payment for order flow instead of based on the best price. Some users also complain that quotes can be delayed and do not stream.

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 stack up when it comes to fees? This area can be difficult to compare precisely because Robinhood's fees are built into its price. In a contest between Coinbase Pro vs Robinhood, Coinbase Pro might initially look like the winner.

After all, it's normal to find listing prices that are approximately 12 percent lower than Robinhood. That said, the Coinbase figure doesn't account for what you'll pay to make the trade.

Remember that Coinbase Pro includes a fee schedule with tiers. These tiers depend on how much you trade, and they're geared towards the biggest traders. For small traders, these fees can prove upwards of 0.50 percent, making Robinhood the more reasonably priced app.

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 critical factor to keep in mind is platform transparency. Of the two apps, Coinbase has the advantage here. The exchange directly matches orders between sellers and buyers. The process lets them place orders in the order book.

The entire order book gets displayed in real-time. What's more, the fee schedule gets posted on their website. While it can be challenging to calculate your net trading price from this list, it's hard not to admire Coinbase's attempts at transparency.

How does Robinhood compare in this aspect? It makes things easier by showing a trading price without any additional fees. You must remember, however, that Robinhood is a broker.

That means they sell order flow to trading firms. As a result, expect a difference between buying and selling of at least $20. While there's no fee, get ready for a hefty markup.

Other trade prices and orders are not displayed, which also detracts from a sense of transparency.

The takeaway? While Coinbase Pro is more expensive up front, it's also more transparent. This fact holds true 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? If not, read up on how to minimize crypto taxes.

Pros and cons of Coinbase

Pros

  • Most trusted brand in crypto
  • Top-tier team and investors
  • One of the pioneers of the industry
  • Never successfully hacked
  • Interoperable suite of crypto products
  • It offers a great user interface for beginners
  • It offers access to over 30 cryptocurrencies

Cons

  • Can be more expensive than other options
  • The site crashes at times of high volatility
  • There is a lack of timely support
  • Transactions can be delayed for up to 3 days
  • Most local payment methods are not supported

Pros & Cons of Robinhood

Pros

  • No fees or commissions on trading activities on Robinhood.
  • Robinhood offers an easy-to-use trading app, both for Android & Apple users.
  • Your investments are secure for up to $500K by Securities Investor Protection Corporation, in case Robinhood fails.
  • Both traditional investment & emerging investment like cryptocurrencies options are available on Robinhood.
  • Supports weekly, bi-weekly, monthly, and quarterly automatic transfers.

Cons

  • No crypto deposits & withdrawal options are available on Robinhood.
  • Robinhood does not support retirement accounts & mutual funds, or bonds.
  • Quite limited in terms of research capabilities.
  • Extremely limited customer support. No phone or live chat service is available for brokerage account holders.
  • Compared to some of the leading crypto exchanges, Robinhood offers fewer cryptocurrencies for trading.
  • Robinhood app is highly prone to failure. It had failed three times in March 2020 alone. It can be a pressing issue for advanced & professional traders.
  • There are geographical restrictions for using Robinhood as only US-baser users are allowed to use Robinhood.
  • Robinhood can place restrictions on your account in some circumstances like being flagged for pattern day trading, which in turn, will prevent you from trading on Robinhood.

The Final Word on Coinbase vs Robinhood

What's the final word when it comes to Coinbase vs Robinhood? The answer depends on your investment goals and strategy.

Do you plan on trading popular cryptocurrencies like Ethereum or Bitcoin? Do you want to deal in US dollars? If so, then Robinhood likely remains your cheaper option.

But what if you're looking for greater visibility when it comes to order and trade activity? And you want to trade large enough to qualify for a discounted fee tier? Then, Coinbase Pro is your better bet, although you'll pay more for its services.

Are you interested in more cutting edge info from the cryptospace? Keep reading to learn more about the best ways to earn crypto for free.

  • Features
  • Ease of use
  • Security
  • Support
  • Reputation
  • Fees
  • Overall
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Go to site
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