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Trades involving cryptocurrencies such as Bitcoin take place on a cryptocurrency exchange — an online platform that makes it possible to buy and trade. Here, we’ll take a look at two well-established exchanges, Coinbase and Binance, to see what each has to offer and which may be better for you.
Understanding Cryptocurrency Exchanges
Investors who want to trade cryptocurrencies or digital currencies for cash or other assets do so on a cryptocurrency exchange in the same way that traditional stocks are traded on a stock exchange.
On a stock exchange, your transactions are sent to your online portfolio. On a cryptocurrency exchange, your trades can be sent to a digital cryptocurrency wallet, which is an online storage space. A cryptocurrency exchange can accept credit cards, wire transfers and other forms of payment as a means of purchasing cryptocurrency.
Some cryptocurrency exchanges will allow you to withdraw your cryptocurrency, while others will not. Some will allow you to move your investments into a digital wallet, while others don’t offer one. Lastly, certain exchanges allow you to earn, as well as buy and trade, cryptocurrency.
Coinbase and Binance Recently Made Headlines
A widespread recent sell-off of cryptocurrency slashed market value by an estimated $1 trillion and sent Bitcoin plummeting to a low not seen since 2013. Both Coinbase and Binance experienced stability issues in the sell-off, which impacted customer service.
Binance, the largest cryptocurrency exchange in the world, caused frustration among investors when it suspended Ethereum withdrawals temporarily due to congestion on its network. During the same period, Coinbase’s platform experienced intermittent outages.
Although the IRS is beginning to monitor Bitcoin trading more closely, cryptocurrency traders should be aware that for now, stability issues persist. This can impede the withdrawal of digital assets, leaving investors vulnerable during periods of volatility and liquidation.
How Cryptocurrency Exchanges Are Rated
Fees and rules vary by cryptocurrency exchanges, in part because the cryptocurrency industry is still new enough that regulation practices are continuing to evolve. For now, investors should know that their experience may vary from one cryptocurrency trading platform to another.
In general, you should conduct research before investing in cryptocurrency. The types of transactions you’ll be able to make, as well as the fees associated and the online storage options available, will depend on which cryptocurrency exchange you’re engaging with.
We’ll start our comparison of Coinbase vs. Binance by delving into some of the basics, features and fees of each cryptocurrency exchange.
What Is Coinbase?
Coinbase is the largest cryptocurrency exchange in the U.S. It has more than 56 million verified users in over 100 countries, and it maintains approximately $223 billion in assets.
Since its start in 2012, U.S.-based Coinbase has prided itself on offering cryptocurrency newcomers an accessible starting point. Coinbase deems itself “the easiest place to buy and sell cryptocurrency.”
- Trade more than 50 types of cryptocurrency
- Use dollar-cost averaging if you’d like to
- Participate in the task economy and earn cryptocurrency
- Store your own cryptocurrency in a digital vault with time-delayed withdrawals
- Spend cryptocurrency via cards, and accumulate rewards
- Access and watch your account on the exchange’s mobile app
- Receive support by email
Coinbase Account Terms
You only need $2 to open and retain a Coinbase account, but you’re allowed to do up to $25,000 of transactions per day. It’s possible to earn $5 in free Bitcoin for signing up.
Coinbase and FDIC Insurance
Coinbase collects funds from its investor accounts and puts them somewhere safe as insurance protection. In the U.S., investor assets can be held in custodial bank accounts, money market funds or U.S. Treasurys. For the money parked at banks, the institutions that Coinbase selects are backed by the Federal Deposit Insurance Corp., and as such they are insured up to $250,000 per customer. Outside of the U.S., money from Coinbase accounts is held in dedicated custodial accounts.
More experienced users can try Coinbase Pro. Fees will vary depending on your monthly trading volume.
Here are the fees and policies for Coinbase:
|$10 or less||$0.99|
|More than $10 and up to $25||$1.49|
|More than $25 and up to $50||$1.99|
|More than $50 and up to $200||$2.99|
|Source of Payment||Fee|
|U.S. bank account or Coinbase wallet||1.49%|
|Instant card withdrawal||Up to 1.5% (minimum fee of $0.55)|
|ACH (automated clearing house) transfer||No fee|
|Wire transfer||$10 ($25 outgoing)|
What Is Binance?
Binance is a cryptocurrency ecosystem targeted at more experienced cryptocurrency investors. Going by trading volume, it is the biggest cryptocurrency exchange globally. Although it is not available to U.S. consumers, a version of it is — called Binance.US.
- Not available for U.S. customers
- Trade up to 500 cryptocurrencies
- 24/7 support
Although Binance.US doesn’t offer the same number of cryptocurrencies and trading pairs as its partner, Binance, it’s still one of the largest cryptocurrency exchanges to be found stateside. It launched out of San Francisco in 2019 and comes equipped with the same technology used on the global platform.
Here’s a look at its key features:
- Built for a U.S. audience
- Limited exchange — trade up to 50 cryptocurrencies in most U.S. states (seven states do not participate)
- No built-in digital wallet
Here are the fees and policies for Binance.US:
|$10 or more||
|Source of Payment||Fee|
|Bank deposit or withdrawal||No fee|
|Credit card||Not allowed|
|ACH transfer||No fee|
Binance Account Terms
You need $10 to open and maintain an account on Binance.US. The platform allows for dollar-cost averaging, meaning you can program your account to buy a set amount of cryptocurrency on a consistent basis. Minimum and maximum trading amounts depend on the cryptocurrency you’re investing in.
Binance and Security
Both Binance.US and Coinbase offer two-step authentication. Coinbase offers U.S. cryptocurrency investors a digital vault as well.
Coinbase vs. Binance: Key Differences
What do these two large cryptocurrency exchanges have in common, and how do they differ? Let’s explore that and figure out which one might make the most sense for you.
If you’re in the U.S., Coinbase will provide you with a more complete set of cryptocurrency tools and trading options than Binance, which is solely available in a constrained version called Binance.US. Here are the details on where these exchanges are available:
- Coinbase is available in the U.S. with the exception of Hawaii.
- Binance.US is available in the U.S. with the exception of these seven states:
- New York
- Coinbase operates two: the original Coinbase and Coinbase Pro.
- Binance has a global platform, but only Binance.US works in the United States.
- Coinbase has a low minimum entry point ($2 minimum) and allows for individual trading.
- Coinbase Pro offers expanded functionality and the ability to make both individual trades and crypto-to-crypto transactions.
- Binance.US requires a minimum investment of $10 and allows individual trading, crypto-to-crypto trading and peer-to-peer trading.
- With Coinbase, fees range depending on the type of transaction and the way it is financed.
- Binance.US charges a low, 0.1% spot trading fee and a 0.5% Instant Buy/Sell fee. The platform uses your 30-day trading volume and your daily BNB balance to determine trading fees.
Cryptocurrency exchanges do not receive protection from the FDIC or the Securities Investor Protection Corp. as traditional cash and securities assets do. Coinbase and Binance have their own approaches to security.
Coinbase’s Approach to Security
- Coinbase keeps less than 2% of customer funds online and stores the rest offline in what is termed “cold storage” (a safe or otherwise secure offline location).
- Coinbase asserts that all of the digital currency held on its platform is insured for particular circumstances, such as individual account breaches or theft by Coinbase employees.
Binance’s Approach to Security
- Binance.US holds U.S. dollar deposits at custodial bank accounts, which are typically insured for up to $250,000 per customer.
- To date, Binance.US has not reported any security issues. However, its partner, Binance, has acknowledged that in 2019, hackers compromised the Binance network and stole 7,000 bitcoins. Affected users were reimbursed by the company.
Coinbase vs. Binance: Which One Wins?
If you live in the U.S., you’re likely to have a better experience with Coinbase — the platform that will allow you to do more with cryptocurrency than its competitor, Binance.US. Coinbase offers investors a notable level of control, from dollar-cost averaging to timed withdrawals, a digital vault for secure storage and the opportunity to earn cryptocurrency assets.
If you’re relatively comfortable with cryptocurrency investing and aren’t in need of secure storage and timed investments, you may benefit from Binance’s lower fees.
Data is accurate as of May 24, 2021, and subject to change.
About the Author
Kelli Francis is a writer and content strategist. She started her career with a degree in journalism from the University of Oregon and went on to work in some of the industry’s busiest newsrooms, from The Seattle Times to MSN.com, WebMD and Yahoo. In nearly a decade at Yahoo, she worked as an assistant managing editor at Yahoo Finance, specializing in personal finance content; a producer for Yahoo News; and a managing editor on Yahoo’s home page team. A perennial seeker, Kelli is currently expanding her knowledge of all things finance as a student at The American College of Financial Services. She is also the very proud mom of a wonderful and unstoppable 7-year-old with Autism Spectrum Disorder.