Robinhood vs Coinbase 2022: Which Investing Platform is Right for You?
If you are a beginner who is learning how to buy Digital Currency, you have a variety of exchange trading platforms to choose from. Two such popular options are Robinhood and Coinbase.
Although both of these trading platforms make it relatively easy to start trading Digital Currency, there are few important differences between each product.
For instance, Coinbase Exchange platform offers a wider variety of digital assets, including non-fungible tokens (NFTs) as well as the ability to earn interest. Robinhood, on another hand, is a much more basic platform in terms of digital currency, which allows you to trade a limited number of digital currencies.
In this blog, we’ll review Robinhood vs Coinbase to help you decide which platform is more suitable for you.
How does Robinhood function?
Robinhood was launched in 2013, with the mission to “democratize finance for all.” Robinhood is popular for its easy-to-use trading user interface that lets beginner investors understand and get started quickly.
Robinhood founders Baiju Bhatt and Vlad Tenev met at Stanford and created trading software which they sold to hedge funds. After spending time in New York, they went to California to start Robinhood platform, designing it for ease of use and innovating the commission-free trading model.
Its app offers four main investing sub-categories: Stock trading and exchange-traded funds (ETFs), options, margin investing, and digital currencies.
Using Robinhood platform to buy cryptocurrency is fairly straightforward. You simply choose which coin you want to buy and how much and then initiate the purchase.
Also Read: What Is Coinbase? | How To Use Coinbase Account
The Robinhood platform allows you to fund your account with an instant transfer from your bank account, allowing you to buy cryptocurrency directly from your bank account. It is important to note that Robinhood is a brokerage, not a cryptocurrency exchange.
Wallet options
Robinhood also offers a custodial cryptocurrency wallet with no access to private keys for your crypto. If you want to use your own non-custodial wallet, you must transfer your crypto out of Robinhood and pay any applicable network fees.
It’s also possible to send crypto you bought elsewhere to your Robinhood account. However, this feature is only available with the following coins:
- Bitcoin (BTC)
- Bitcoin cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum classic (ETC)
- Litecoin (LTC)
Advanced features
Robinhood platform doesn’t offer any other features for cryptocurrency traders at this time. For example, you can’t earn rewards or earn interest on Robinhood, nor do you have access to a NFT Marketplace.
Also Read: How To Exchange Cryptocurrency On Coinbase
Robinhood is suitable for investors who are interested in buying popular cryptocurrencies and holding on to them. However, it’s unsuitable for coin-to-coin trades or for those interested in more advanced cryptocurrency investing and trading.
How does Coinbase Function?
Established in 2012 by Brian Armstrong and Fred Ehrsam, Coinbase exchange is one of the oldest and best cryptocurrency exchanges still in operation today. Just like Robinhood (HOOD), Coinbase (COIN) is listed on the NASDAQ exchange.
In addition to simple cryptocurrency transactions, Coinbase exchange also offers a Pro version with more advanced cryptocurrency investing and trading options that requires a separate account. You can learn more about the differences between Coinbase and Coinbase Pro if you’re interested in advanced cryptocurrency investing and trading.
Coinbase Exchange is one of the easiest Cryptocurrency exchanges to use. It focuses on buying cryptocurrency with a variety of fiat payment methods, including debit cards and PayPal. Industry website CoinMarketCap consistently ranks Coinbase exchange high for reliability and liquidity.
Wallet options
Coinbase Exchange features a variety of wallet options, including a custodial and non-custodial wallet. You can also keep your coins in Coinbase Vault, which is a mode to store your assets off the exchange. Because Coinbase exchange is a cryptocurrency exchange, you can complete coin-to-coin exchanges and use cryptocurrency transfers for supported coins.
Advanced features
Coinbase Exchange makes it possible to earn extra cryptocurrency coins by learning about new offerings through the Coinbase Rewards program. Coinbase exchange also offers staking for some coins, which allows users to earn interest simply by holding the coins on the exchange.
Also Read: How To Unlock A Restricted Coinbase Account?
Coinbase exchange also recently introduced an NFT marketplace, which allows users to create their own NFTs and buy and sell NFTs others have made.
Fees
Coinbase exchange is used to be one of the most expensive options for buying cryptocurrency. However, the company recently shifted its transaction fee structure to a tiered maker/taker model. As a result, it is now much more competitive with similar cryptocurrency exchanges.
What both excel at
Robinhood and Coinbase exchange are very instinctual for beginners. The user interface for both is simple and allows users to clearly see what they are buying. Each platform also offers a mobile app for iOS and Android devices.
Both firms also make it easy to buy cryptocurrencies using fiat. Robinhood focuses more on bank transfers, and Coinbase exchange allows for debit and PayPal purchases as well. Both platforms allow instant access to user’s transferred bank funds for purchases.
Both Robinhood and Coinbase exchange also offer crime insurance to help protect against theft and cybersecurity breaches. This in turn offers peace of mind to beginners who want to know that their digital assets are protected in the event of a spam attack or data breach.
Additionally, both platforms have met the listing requirements for NASDAQ, which offers some degree of confidence to investors and traders hoping to get started with cryptocurrencies.
6 important differences between Robinhood and Coinbase exchange
- Cryptocurrencies
Coinbase exchange offers hundreds of cryptocurrencies that can be bought, sold, and exchanged. Coinbase exchange also offers more than 150 coins for purchase, whereas Robinhood offers just 15.
Also Read: A Detailed Guide To The Coinbase Account Recovery
If a user is only interested in how to buy bitcoin, ethereum, and popular altcoins such as dogecoin or litecoin, Robinhood should work fine. However, if you want a wider variety of cryptocurrency to choose from, Coinbase exchange could be a better choice.
- Fees
This is an area in which Robinhood excels over Coinbase Exchange. Robinhood doesn’t charge trading transaction fees when you buy or sell a crypto. Coinbase exchange, on the other hand, does charge transaction fees. But Coinbase exchange has improved in this area in recent months — it now has a tiered maker/taker model.
In the Coinbase exchange model, what transaction fees you pay depend on how much you buy or sell in a 30-day period, as well as whether you’re considered a maker or a taker.
- Maker: Someone who places a limit order to be fulfilled later when certain conditions are met. Depending on how much you trade, maker transaction fees can be lower than taker transaction fees.
- Taker: Someone who places a market order to be filled immediately. These transaction fees are usually higher than maker transaction fees as you progress through the available tiers based on how much you trade.
For those who don’t want to worry about transaction fees, Robinhood is the best choice.
- Rewards
Coinbase exchange offers a rewards program through its Earn feature. When you watch videos and answer questions about newer altcoins, you receive free crypto coins in return. These coins can then be exchanged or sold later, or you can hold them and see whether they increase in value later on.
Robinhood platform doesn’t offer a way for you to earn free cryptocurrency.
- Staking
One way to earn money from holding on to digital currencies is through staking cryptocurrency. With staking, you’re paid interest for keeping certain coins in the form of additional cryptocurrency.
As of 29th August, 2022, Coinbase exchange pays up to 5.75% APY, depending on the coin in in consideration. The coins are added to your holdings of the particular asset.
Robinhood platform, however, does not offer staking.
- Wallet option
Robinhood platform offers a Cryptocurrency wallet option, but it’s strictly custodial. That means you don’t have access to private keys to secure your wallet and make it your own. Robinhood platform’s wallet basically just lets you send coins from outside Robinhood to your Robinhood account.
Also Read: Coinbase Exchange Faces SEC Investigation Over Its Crypto Listings
Coinbase Exchange, on the other hand, offers different wallet options. Users can keep their coins on the exchange, which acts as a custodial hot wallet for their coins. If a user wants to send and receive coins on the exchange, they are provided with a wallet address they can use.
Coinbase exchange also offers a non-custodial wallet called Coinbase Wallet which gives user control of their keys and doesn’t monitor or have access to their wallet. User can also store coins off the exchange by using Coinbase Vault.
If you want full control over some of your crypto assets, Coinbase exchange could be a better choice.
6. NFTs
If you’re interested in NTFs, Coinbase exchange can be a better choice because it offers a marketplace where you can create, buy, and sell NFTs.
Robinhood platform doesn’t offer access to any other digital assets beyond its limited number of cryptocurrencies.
Which one should you choose?
In deciding between Robinhood vs. Coinbase exchange, it’s important to consider which platform is best for your needs and goals. Here are some items to consider:
- Fees:For some investors, trading fees are an important part of choosing investing platform. Robinhood platform can be a good choice because it doesn’t charge trading fees. However, if you’re more interested in other features, paying some premium trading fees might not matter to you.
- Available coins:If you’re interested in a popular coin, look for a platform that offers that coin. Coinbase exchange supports a wider variety of coins, whereas Robinhood platform is more limited. Unless you’re only looking for a handful of popular coins, Coinbase exchange offers a better selection.
- Advanced cryptocurrency features:Robinhood only offers users the ability to buy and sell cryptocurrencies. If all you want to do is buy and hold or buy and sell, Robinhood’s platform makes it easy. However, if you’re interested in learning more about other types of digital assets, such as NFTs, or accessing perks such as staking, Coinbase exchange is a better option.
FAQs
Is it safe to buy crypto on Robinhood?
Buying any cryptocurrency comes with risks, no matter the platform. Cryptocurrency is a volatile asset class with wide price swings. However, Robinhood platform does offer crime insurance to protect user purchases from breaches and hacks. Now, cryptocurrency investors can also get SIPC insurance to cover their assets.
Also Read: Coinbase Exchange Is Rapid Rise Left It Exposed In Crypto Winter
Is Coinbase exchange safer than Robinhood?
Both Coinbase exchange and Robinhood meet the requirements to be listed on the NASDAQ exchange, and both carry crime insurance. Both services also try to enact safety measures to protect user account as best as possible.
Why is there a price difference between Coinbase exchange and Robinhood?
Robinhood platform doesn’t charge a trading charge. Instead, its process includes a spread, or a difference between what someone is asking for the coin and what someone is willing to pay. Coinbase exchange simply charges a transaction fee based on your trading volume and the type of order you place.
Is Coinbase Pro different from Coinbase?
Coinbase Pro is a different exchange than Coinbase Exchange. It offers more advanced trading options and abilities. You need a different login and account credentials to access Coinbase Pro.
Bottom line
Both Robinhood and Coinbase exchange make it easy to purchase digital currencies using fiat money. However, Robinhood platform is a brokerage that happens to offer access to a limited number of coins, whereas Coinbase exchange is an actual cryptocurrency exchange. As a result, you have more options for digital assets when using Coinbase exchange.
Realize, though, that digital currencies represent an alternative asset class. When investing money, experts recommend that you limit alternative assets to no more than 20% of your total portfolio.
Before you invest in Digital Assets, carefully consider your own needs and goals, and ensure to do your best to limit your risk exposure.
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