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So, you want to invest in cryptocurrency. Welcome to the future of finance!
You’ll need to join an exchange if you want to purchase, sell, or invest in crypto. While there’s an endless number of exchanges on the market, two of the most popular for new crypto investors are Coinbase and Robinhood.
But both platforms have diehard fans, which makes it tough to discern which platform is actually better for you. Coinbase is a digital currency exchange that specializes in all things crypto, while Robinhood is a more generalized investing app that offers crypto, too.
So, is Robinhood better than Coinbase, or vice versa? It really depends on your situation and what you want to use the platform for.
Coinbase vs Robinhood: which is better?
Coinbase is better for:
- Buying, selling, or transferring crypto
- A wider variety of coins
But it charges high fees.
Robinhood is better for:
- ETFs and stocks in addition to crypto
- Speculating on the value of cryptocurrency
But it offers fewer coins and no crypto transfers.
Not sure whether you should invest in Coinbase vs Robinhood? Here’s a breakdown of what makes each platform unique, and how to pick the right option for your own crypto journey.
Coinbase VS Robinhood
The Minority Mindset team polled our readers and found that 40% prefer investing in crypto. 70% of readers say that cryptocurrency is a valid way to grow your money, too—and since 77% of our readers rely on investment apps, it’s no wonder why so many people want to know the differences between Coinbase vs Robinhood.
Let’s get the similarities out of the way first, shall we? Both Coinbase and Robinhood:
- Are based based in the US
- Allow you to buy fractional shares in cryptocurrency
- Offer apps for Android and iOS
- Allow you to buy Bitcoin, which is arguably the most trusted and in-demand cryptocurrency
- Secure your investments with FDIC insurance, two-step authentication, and more
However, that’s pretty much where the similarities end.
What is Coinbase?
Coinbase is an online platform where you can buy and sell digital currency or cryptocurrency. Founded in 2012, the brand went public in 2021 and now has over 89 million verified users. It also:
- Provides a free digital wallet to store your crypto
- Allows you to make payments with crypto
- Gives you a place to learn about the ins and outs of cryptocurrency
Do your friends also invest in crypto? If so, Coinbase makes it easy to transfer cryptocurrency from one person to another, which is called a peer-to-peer transaction.
What is Robinhood?
Robinhood, on the other hand, is a mobile trading app that offers no-commission stocks, ETFs, options, and digital currencies. Robinhood has been around since 2013 and has around 17 million users, so it’s not as prolific as Coinbase, but it’s still a popular option for investors.
Robinhood lets you buy and sell without paying any commission, making it one of the most cost-effective investment apps out there.
Sure, crypto was kind of an afterthought for Robinhood, but by adding a few of the most popular crypto coins to their platform, Robinhood is now a viable crypto option for newbie investors.
Everyone and their mother will try to tell you one platform is better than the other. I’m not here to do that. When it gets down to it, you can choose the best platform based on three criteria: fees, coin selection, and user experience.
1. Fees
You’ve probably heard the rumors, so let’s get this out of the way first: is Coinbase more expensive than Robinhood? Yes.
Coinbase makes it almost impossible to understand exactly how much you’ll pay in fees for each transaction. And yes, they charge fees on every single transaction, so make sure you plan your transactions out before you trade—otherwise you’ll be on the hook for even more fees.
Coinbase charges fees out the wazoo for several actions, including:
- Network transaction fees: These are also called miner’s fees, and Coinbase passes them onto you as the crypto owner.
- Crypto transactions: Your transaction fees depend on your payment method (percentage-based fees for debit versus flat rate fees for ACH), how big your order is, and what Coinbase calls “market conditions.” Fees can be as low as $1 per trade and as high as $50 or more. And yes, that’s considered extremely high compared to other crypto exchanges.
- Credit transactions: If you borrow money from Coinbase, they’ll charge you 2% of the total transaction.
- Exchange fees: Coinbase has a separate fee schedule for their exchange fees, so give these a careful look-over before you transfer your Bitcoin for Ether.
The good news is that Coinbase doesn’t charge you to store your crypto in its wallet, or to transfer crypto between your different wallets. That’s the silver lining, I suppose.
To be honest, Coinbase has a lot of fees and they’re kind of coy about it, which is a big turnoff for me. It’s the biggest downside to using the platform.
Robinhood, on the other hand, doesn’t charge any fees. True to its namesake, this platform promises that, when you invest $100, you get $100 worth of crypto. The only fees you’ll pay with Robinhood are called the “spread,” which is the difference between the buying and selling prices.
Robinhood’s commissions are initially free but may eventually cost you a monthly fee for premium features, like margin trading and after-hours trading.
Unlike Robinhood, Coinbase charges a fee for moving money out of the account for investing purposes. So if you plan on using your account for both buying and selling, Robinhood will likely be more cost-effective than Coinbase in the long run.
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2. Coin Selection
As of right now, there are nearly 10,000 cryptocurrencies on the market. That gives you a dizzying number of options to choose from!
Some options, like Boba Fett Warr or Demonic Doge, probably won’t revolutionize crypto as we know it, but even so, you probably want a platform that’s compatible with a decent number of cryptocurrencies.
Coinbase is the clear winner here because it offers dozens and dozens of supported cryptocurrencies. Whether you want something steady and reliable like Bitcoin or something cool and quirky like Shiba Inu, Coinbase supports it.
Remember, Robinhood is a general investing app. It mostly focuses on traditional investments like stocks and ETFs. The platform tacked on crypto so it could give its users more options, but even then, Robinhood only offers a handful of coins:
- Bitcoin (BTC)
- Bitcoin Cash (BCH)
- Bitcoin SV (BSV)
- Dogecoin (DOGE)
- Ethereum (ETH)
- Ethereum Classic (ETC)
- Litecoin (LTC)
If you just want to use Robinhood for market research, it also offers data (but no investing options) for these coins, too:
- Bitcoin Gold (BTG)
- Lisk (LSK)
- Monero (XMR)
- NEO (NEO)
- OmiseGO (OMG)
- Qtum (QTUM)
- Ripple (XRP)
- Stellar (XLM)
- Zcash (ZEC)
Coin selection isn’t a deal-breaker, but it depends on your vision for your crypto investments. If you really want to hedge your bets and invest in a more diverse spread of crypto, Coinbase is the way to go. If you just want to invest in the major players, like Bitcoin or Ether, then Robinhood will be just fine.
3. User Experience And Capabilities
The good news is that finance and investing apps have come a long way over the last five years. Both Coinbase and Robinhood have a simple, intuitive user interface that makes both platforms a solid option for newbie investors. They both have a web app as well as a mobile app, so you can manage your money from anywhere.
With that said, you’re going to have a different experience, as well as different capabilities, depending on the platform you choose.
With Coinbase, you get features like:
- Wallet options: If you’re new to crypto, you’ll need a wallet to store your cryptocurrency. Most exchanges give you a wallet for free, and Coinbase is no exception. You’re free to use their wallet or transfer your crypto to a wallet of your choice, too.
- Payment options: You can buy crypto with either your debit card or credit card on Coinbase.
- Alerts: Do you want to sell your Bitcoin once it reaches a certain value? Don’t obsess over the numbers; just set an alert on Coinbase. The platform will notify you of the price change so you can quickly take action.
- Educational resources: If you’re new to crypto, don’t worry. Coinbase is designed specifically for crypto, so their Learning portal will get you up to speed in no time.
- Direct deposit: Since Coinbase allows you to buy fractional shares, you can tell the platform to withdraw either a flat amount or a percentage of your paycheck. It’s a great way to automatically invest in crypto every time you get paid.
- Security: Both Coinbase and Robinhood are FDIC insured and use two-step authentication. However, Coinbase has additional security features that keep your crypto secure. For example, it keeps most of its currency in cold storage, which protects your coins against hackers.
Robinhood, on the other hand, includes features like:
- Low costs: Seriously. And thanks to fractional shares, you can start using Robinhood for as little as $1.
- Robinhood Crypto: This is still in the works, but Robinhood says it plans to roll out an offering that’s specifically tailored to crypto. I’m not sure exactly what that will look like, but we can expect this update to make Robinhood more competitive with Coinbase in terms of storage, transfer options, and more.
- Various investments: Do you also want to manage your stocks and ETFs in the same platform where you manage crypto? Coinbase can’t offer that, but Robinhood can.
Keep in mind that Robinhood only accepts ACH payments, so you’ll need your bank account information to use the platform. It’s also been in trouble with the SEC about its marketing, so that’s something else to note.
Robinhood provides no additional services outside of buying and selling cryptocurrencies, while Coinbase offers more features, including the ability to convert one currency to another.
If you’re interested in other features outside of just investing in cryptocurrency and want to use your account for other purposes as well, then it might be worth using Coinbase instead of Robinhood.
Coinbase VS Robinhood – Choosing The Right Broker For You
I wish I could give you a black and white answer on which platform is better, but as usual, the answer is: it depends.
Coinbase may be a better option if:
- You want to transfer crypto or buy stuff with it
- You want to store your crypto in your own wallet
- You want to keep crypto separate from your other investments
- You want a wider selection of crypto coins
- You’re okay with higher fees
- You want a knowledge hub that’s dedicated just to cryptocurrency
Robinhood may be a better option if:
- You’re new to crypto and want to invest in it on a smaller scale
- You only want to invest in crypto, and you don’t have any plans to buy goods or transfer coins
- You want well-rounded access to investments beyond just cryptocurrency
- You’re okay with paying via your bank account instead of a debit or credit card
Coinbase is an exchange, while Robinhood is a brokerage service. Coinbase is a more comprehensive option that provides you with the opportunity to buy and sell cryptocurrencies, while Robinhood allows you to invest in U.S.-listed stocks and ETFs, too.
Coinbase charges higher fees but provides a more extensive variety of coins. Robinhood offers lower fees and a simple interface, but lacks the ability to efficiently trade cryptocurrencies.
Ultimately, the decision comes down to what you want to do. Do you want to just invest in stocks? Or do you want the option to trade cryptocurrencies?
Are you looking for an easy-to-use interface or do you need access to more coins?
Whatever your decision, be sure to do your research before signing up for any cryptocurrency exchanges so that you can make sure it’s the right fit.
Ready to try these platforms firsthand? Sign up for Coinbase or Robinhood now.
