Coinbase, a leading cryptocurrency exchange, and Robinhood, a popular and innovative trading platform, are often compared to try to determine which is the best service for trading and investing in cryptocurrency. Both have simple applications that are user-friendly for beginners. When comparing Coinbase and Robinhood for crypto, we consider their fees, selection of cryptocurrencies, platform capabilities and uses to determine which service is best for cryptocurrency investing and trading. Consider working with a financial advisor as you explore the ways cryptocurrencies could enhance your investment portfolio.
What Coinbase and Robinhood Offer
Coinbase is the leading U.S.-based cryptocurrency exchange. It offers a wide array of cryptocurrency investments, many payment options and advanced trader applications. If you are looking for analytical tools and technical trading applications, Coinbase is for you. Robinhood is an online brokerage that offers equity investments, ETFs and options along with cryptocurrencies. It does not offer fixed income investments. It may be better for beginners in cryptocurrency investing. Even though Robinhood is strong in many areas, it has not offered a hosted wallet while Coinbase does. That changes in October 2021 when Robinhood starts testing wallets in its application.
Platform Features
Both Robinhood and Coinbase have user-friendly platforms that even beginners can use. On Robinhood, you can trade stocks, ETFs, options, and you can purchase cryptocurrencies. Coinbase only deals in cryptocurrencies. Robinhood can be used only in the U.S. Coinbase can be used in over 100 countries and 49 states. The most significant difference between the two platforms is that, if you use Robinhood, you can’t move your coins from your account except to cash them in unless you want to purchase ETFs. It allows exchanges for ETFs. Finally, Robinhood allows limit orders and Coinbase does not unless you use Coinbase Pro.
Fees and Payment Methods
When you compare the Robinhood to Coinbase fee structures, Robinhood seems, at first glance, to have the simplest and cheapest fee structure. Robinhood offers a no-commission fee structure for cryptocurrency purchases. You do, however, pay the spread between the buy and sell prices; Robinhood does not divulge what that cost is.
Coinbase has a rather complex fee structure. Using Coinbase, you are paying for more services and more cryptocurrency options so Robinhood isn’t as clear a winner in this category as it first seems. For example, Coinbase charges a flat fee of 0.50% for the spread. Transactions typically cost 1.49% if you use a linked bank account or a digital wallet and 3.99% if you use a debit or credit card. The 3.99% fee is one of the highest among the crypto exchanges. The fee structure is lower and different if you use Coinbase Pro.
Robinhood uses free ACH as its payment method. Coinbase has a variety of payment methods, including free ACH and those payment methods listed above.
Currencies and Types of Transactions
Coinbase supports more than 64 cryptocurrency coins. Robinhood supports only seven coins. It does support Dogecoin, while Coinbase does not. Both platforms allow an investor to buy fractional coins. Robinhood only accepts U.S. dollars for transactions. Coinbase accepts U.S. dollars, the euro and the British pound.
Robinhood accepts limit orders for cryptocurrencies and allows exchange with ETFs. Coinbase accepts buy, sell, send, receive and exchange orders. Coinbase does not allow limit orders unless you use Coinbase Pro.
Security Measures
Both Coinbase and Robinhood use two-factor authentication. Both companies have Federal Deposit Insurance Corporation coverage: Robinhood has it on all accounts, while Coinbase has it on only U.S. accounts.
Robinhood does not use a digital wallet for coin storage, but Coinbase does. According to reports in mid-September, Robinhood announced that it would launch a domestic wallet test program in October 2021.
The Bottom Line
For beginning investors, Robinhood is probably the way to go. You can’t climb quite as high on Robinhood since you can only place orders and you have to sell your coin outside the app in order to liquidate them. If you are a beginning investor using Robinhood, you can also invest in traditional securities. Coinbase is a cryptocurrency exchange that offers full-service to its investors. Not only does it have a digital wallet and a full range of trading options, it also offers technical analysis tools geared to medium and advanced investors.
Tips on Investing
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Do you need guidance on investing in cryptocurrency? If you want to know how an investment in cryptocurrency would impact your portfolio, you may want to talk to a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor, get started now.
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If you want to see how different types of investments would improve your portfolio, check out SmartAsset’s asset allocation calculator.
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