HomeBusinessRobinhood Vs. Coinbase; Facts, The Best Crypto Broker Amongst The Two?
Robinhood Vs. Coinbase; Facts, The Best Crypto Broker Amongst The Two?
November 26, 2021
A proper comparison of Coinbase and Robinhood depends on what service you’re looking for. Robinhood follows the playbook of a traditional stockbroker. Through the app, you can buy stocks and exchange-traded funds on the stock market, but it also has a limited menu of cryptocurrencies.
Coinbase, on the other hand, only offers cryptocurrencies (no stocks or ETFs here), and a lot more of them. Plus, Coinbase has capabilities that could be considered essential when buying crypto — capabilities Robinhood currently doesn’t have.
One advantage Robinhood has over Coinbase is the cost to purchase cryptocurrencies. On Robinhood, it’s free. You can buy and sell crypto as frequently as you want with no fees whatsoever (and pattern day trading rules that exist for stocks don’t currently exist for crypto). You’ll still have to pay the spread (the difference between the bid and ask price).
It’s worth noting that in 2020, a Securities and Exchange Commission order found that Robinhood provided “inferior trade prices,” costing customers $34.1 million. The SEC investigation was about Robinhood’s marketing and execution in general and not crypto trades specifically. Robinhood agreed to pay $65 million to settle the charges.
On Coinbase, it’s not so simple. Coinbase has a widely varying fee structure, depending on the amount you’re buying in U.S. dollars and how you’re paying for it. For example, if you’re buying $100 in bitcoin with a debit card, you’ll pay a fee of 3.99%, or $3.99. If you pay with a linked bank account, that fee would be a flat $2.99. Coinbase also charges a spread of about 0.5% for cryptocurrency sales and purchases; that spread may change depending on market fluctuations.
Overall, fees at Coinbase can get confusing, and frankly, it feels a little outdated to pay per trade when other brokerages have been moving away from that for years. However, Coinbase did announce in September 2021 that users would soon be able to set up direct deposit from their paycheck, either in USD or the crypto of their choice, to automatically land in their Coinbase account. This service is touted to be completely free of fees, and users will be able to set their allocation from their paycheck directly in the app, but the product hasn’t yet been rolled out.
This is where cryptocurrency feels like more of an afterthought for Robinhood, yet it’s Coinbase’s bread and butter. On Coinbase, there are dozens of tradeable cryptocurrencies, and even more that can be added to price watch lists. And, Coinbase adds new tradeable cryptocurrencies fairly often.
Robinhood, on the other hand, currently lists seven.
Cryptocurrency Selection Winner:
This is another category that Coinbase should win by default: Robinhood is a stockbroker that dabbles in converting USD 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 that mean? With Coinbase, you have the option to buy crypto with cash, then store those coins on Coinbase’s hosted wallet. Or you can send those coins to your own Coinbase Wallet, which is completely separate from Coinbase the app. There’s also the free Coinbase Pro exchange, where you can easily deposit coins from your Coinbase hosted or personal wallet, then trade them for a much lower fee.
In short, Coinbase is a really good onramp for new crypto users, offering users many of the capabilities cryptocurrencies were created for in the first place.
With Robinhood, you can’t send coins out of the app, nor receive them from an outside wallet. Really, your only option is to convert your USD into crypto, then convert it back to USD if you want to benefit from any rise in price. However, in September 2021, Robinhood announced crypto wallets were coming, which would allow users to send and receive coins from their Robinhood account. Like Coinbase’s direct deposit feature, though, this has yet to be rolled out at scale.
Crypto Capabilities Winner:
The truth is that both companies have struggled with outages when trading volume spikes. And this, typically, is when users are most eager to have full control of their funds, whether it’s a crypto surge or crash.
So until either platform can prove it can handle an unexpected influx of activity, users should be aware that this is a real possibility. However, according to Downdetector, Robinhood has had 59 reported outages in 2021, while Coinbase has had 68, giving Robinhood a slight edge by this metric.
Technical reliability winner: Robinhood, based on Downdetector’s data — though Robinhood’s platform certainly still has issues.
Ease Of Use
Both apps are incredibly intuitive, fast, clean and easy to use, and that makes sense: Both companies earn a large portion of their revenue through transaction volume. The more people are buying and selling, the more money they make. So it’s in their best interest to create a product that entices buying and selling, even in small amounts, and reduce every bit of friction that exists on the way to pressing the “buy” button.
The end result is a product that’s excellent for beginners in the sense that the buy and sell process is stripped down to the basics; though some argue that it actually shouldn’t be this easy for beginners to trade in risky, speculative assets like cryptocurrency.
Coinbase Pro can feel more like an intermediate-to-advanced trading platform, but if you’re not ready to wade into that, the basic Coinbase platform remains extremely easy to use, as long as you’re OK paying those fees. With Robinhood, you’ll never really come across anything that resembles an advanced trading platform.
Ease of use winner: It’s a draw. They’re both extremely well-designed.
So Which Is Better, Robinhood Or Coinbase?
When it comes to cryptocurrencies, Coinbase is the clear winner here. While its fees can be confusing and high, the option to trade on Coinbase Pro once you have a little experience can bring those fees down. Robinhood’s free trading is nice, but it doesn’t make up for the lack of crypto capabilities (the inability to send and receive coins is its most severe shortcoming) and the shortlist of cryptocurrencies to invest
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 buy — then Robinhood could be a better fit, given the free trades.