Trading Cryptocurrency | Coinbase vs Gemini (NEVER Robinhood)
Cryptocurrency is all the rage right now as it enters the mainstream and becomes adopted by every day companies more and more people are looking to get into the space in order to diversify their assets, just as you would with gold or other precious metals.
But many may not know where to begin, or how to get started as there are now several different crypto exchanges to choose from on the market today. It can quickly get confusing, especially if you’re unfamiliar with the space.
Today I’m going to discuss the pros and cons of some of the different exchanges and the reasoning behind why use what I use for crypto trading.
Full Disclosure: I have used and had accounts with Coinbase, Gemini, Kraken, Binance, and Robinhood when it comes to cryptocurrency trading.
And after utilizing these various platforms, I have narrowed it down to Coinbase and Gemini and NEVER Robinhood, for the following reasons:
When it comes to cryptocurrency exchanges, the first thing that comes to everyone’s mind is security. The last thing anyone wants is for their hard earned money to disappear into the ether (ETH joke).
Usually the second thing that comes into mind is the possession of keys, and hot and cold wallets, or hot and cold storage, which is also related to security, so let me explain.
Hot storage is data that needs to be accessed right away and is typically stored locally on a company’s online servers, thus being vulnerable cyber attacks and threats.
Cold storage is considered more secure, as it is not connected to the Internet and is stored offline. You only connect your cold wallet or cold storage mechanism to the Internet when you go to make a transaction, thus making it a far superior choice when it comes to the security of your digital assets.
So this all boils down to the security of your keys. Now your keys are the alpha numerical values or Blockchain codes that are given to and identify your digital assets. Still with me?
Allow me to make it a little simpler. On the exchanges that I prefer to buy crypto from you are given the keys to those digital assets once you purchase those securities. Whether those keys are stored online, in hot storage, or off-line in cold storage, is generally up to you and the exchange you are choosing to do business with.
Now, there are some companies that do not transfer these keys to their rightful owners upon the purchase of these digital assets. And there’s an old saying (well it’s not that old considering crypto is relatively new), but there’s a saying that goes, “Not your keys, not your crypto,” and I stand by that wholeheartedly.
You see with companies like Robinhood, that don’t provide owners their keys, you’re merely purchasing the right to exchange what is a numerical representation of Bitcoin back into USD. See in this case, as of now, you don’t actually own the Bitcoin or Ethereum yourself.
And let’s hope Robinhood does, because this is basically serving as an IOU or a promise to you, until you wish to redeem your crypto for USD at a later date.
And here’s the problem with this. If something was to happen where the financial system as we know it began to collapse, rendering the US dollar as we know it useless (I think you see where I’m going with this).
In fact the whole point of crypto in the first place is to have the diversification and security in an asset that isn’t part of a traditional financial system if said financial system was to collapse. Just as you would with gold or other precious metals.
Think of Bitcoin like digital gold in this case, and Ethereum like digital cash. People hoard gold and buy things with cash. Anyone else see the parallel here?
Just as there are far more transactions in cash, than gold, this proves the same for Bitcoin and Ethereum. Bitcoin currently has about 303,000 transactions per day, verses Ethereum’s 1.3M.
So Coinbase vs Gemini, how did we end up here, and who’s the victor?
Another full disclosure: When I first got into crypto investing I used Coinbase as it was the original OG American exchange, and most trusted exchange on the market.
Now I still have assets in both. I primarily use a Coinbase wallet for minting NFTs, but I mainly utilize Gemini when it comes to investing in the crypto space. So for the remainder of the video I’m going to go through the differences and what made me decide to make the switch and why…
First a little history on the two, Gemini and Coinbase are the most popular cryptocurrency exchanges based in the United States. Both exchanges boast a security-first approach to trading.
Coinbase is a San Francisco-based company that was founded in 2012 by Brian Armstrong. While Gemini is a New York-based company that was founded in 2014 by Cameron and Tyler Winklevoss, who after their $60 million settlement with Facebook founder of Mark Zuckerberg, invested heavily in bitcoin, which eventually led to the founding of their own cryptocurrency exchange.
As a side note, Gemini was recently voted the best crypto exchange in 2019.
SECURITY
Coinbase is known as one of the most secure exchanges around with around 98% of its currency encrypted and stored off-line. A great way that Coinbase tries to stay ahead of any hackers and attacks is with its bug bounty program, which offers rewards to those who disclose any security vulnerabilities.
Gemini also stores the majority of its assets in offline cold storage. The exchange is regulated by the New York State Department of Financial Services, and adheres to some of the strictest financial standards. Gemini is one of the few exchanges that provides insurance against theft from its hot wallets.
While both companies offer two factor authentication, Gemini also offers address whitelisting. Whitelisting allows users to approve specific wallet addresses that currency may be moved to, which in turn disallows it to be moved anywhere else.
Both exchanges take security extremely seriously as the future of crypto must be built on strong and stable exchanges. Ultimately these two exchanges have provided US users as the best options when it comes to security.
FEES
When comparing fees between the two, it really depends on the interface that you are using. Coinbase offers Coinbase Pro for more active and advanced traders. Gemini also has a more advanced platform called ActiveTrader.
Even if you aren’t advanced trader, I would encourage you to familiarize yourself with these platforms because the fees can be significantly lower then the app or traditional desktop versions.
When comparing the fees of Coinbase Pro to Gemini’s ActiveTrader, Gemini is the clear winner. With fees starting at 0.35%, it is unlikely that you will find a better fee structure on any exchange in the industry.
So if fees are your primary concern, stick with Gemini and the ActiveTrader platform.
USER INTERFACE/FRIENDLINESS
As for both advanced platforms, Coinbase Pro and Gemini ActiveTrader are fairly similar. Charting, trading tools, and advanced order books can all be accessed on both.
When it comes to the ratings of these company’s apps, Coinbase has the edge, Both apps post a 4.7 star rating out of five on the App Store, but Coinbase has 1.1 million ratings and is ranked #8 in finance, versus Gemini’s 22K ratings.
Now remember, Coinbase has been around longer and has obviously had more time to build these reviews. In my opinion, I think both app user interfaces are extremely user-friendly, especially when compared to some of the other cryptocurrency exchanges on the market.
CUSTOMER SERVICE
As far as customer service goes, if I’m being entirely honest I have never needed to utilize this on either exchange.
Coinbase offers its customers phone support Monday through Friday 6 AM to 6 PM Pacific time. This support line can only be used to disable an account if there is a suspected fraud. All other cases must be directed via email.
Gemini has a 24/7 customer service support staff that is available to answer questions via phone, email, or chat. Again I personally haven’t had an issue with either of these companies that involved or needed customer service. But if I did, it seems obvious to me that Gemini is the better choice in this department.
SUPPORTED COINS
Both platforms actively trade all of the main currencies that you might be looking for such as Bitcoin, Ethereum, and Lightcoin. But if you are looking to get into some of the smaller, more niche cryptocurrencies, Coinbase is the clear winner here trading around 50 different currencies when compared to Gemini’s 18. This number is constantly expanding as more are created.
Personally I don’t have a need for this, as I like to stick to a few main cryptos, But if you’re looking to get into more nice trading, then Coinbase may be the way to go.
Just do your research beforehand and see what each has to offer if you are looking for something specific.
EARNING INTEREST
Being able to earn interest on crypto is becoming more and more popular, both Coinbase and Gemini have a few options that you can take advantage of.
Gemini Earn was launched in February and created a way for users to generate passive income and earn interest on their crypto assets. There are currently more than 25 assets eligible for Gemini Earn.
The interest is paid daily and is transferred directly into your Earn account in the same currency that is invested in, and can be monitored in real time.
Instead of interest, Coinbase offers a reward staking program for a select group of assets. Staking allows customers to earn income by contributing their steak to a network for a particular asset.
There’s a big difference when it comes to a traditional interest program and Coinbase’s Staking Rewards program. Both options will generate passive income, but most users prefer a traditional interest program.
While Gemini is the current leader in this category, it is likely that Coinbase follow with a similar program in the future.
CONCLUSION
So in conclusion, which exchange is right for you?
That may come down to your specific needs. While both platforms are known for their great user-friendly interfaces and security, each might possess a slight advantage depending on what you are looking for in an exchange.
If your main concern is fees and earning interest on your crypto, then Gemini is the way to go. But if you’re looking to invest in smaller more niche cryptocurrencies, then Coinbase may be right for you.
Thank you for joining me and I hope you enjoyed my breakdown of these exchanges and why I chose to use what I use for trading cryptocurrency.
If you are looking to get started with either of these exchanges, I have links in the YouTube description for both. Upon signing up and funding your account with $100 you will receive $10 in free Bitcoin.
Thank you for tuning in to The Stock Market Shop, where we talk shop about the stock market. Until next time!
References:
https://www.covemarkets.com/blog/coinbase-vs-gemini
https://bitcompare.net/versus/coinbase-vs-gemini
