Since shortly after the conception of Bitcoin and the blockchain public ledger, cryptocurrency exchanges have generated a massive amount of revenue and transaction volume. Millions of transactions each day on the most popular exchanges provide a caricature of a quickly-growing billion-dollar industry. But although hundreds of potential exchanges exist in the blockchain sector, Coinbase continues to dominate.
By far the largest cryptocurrency exchange website, Coinbase quickly established itself as the default for the creation of wallets, the purchase of Bitcoin, and the exchange of hundreds of cryptocurrencies. Its userbase continues to grow as Bitcoin captures the public’s attention and there is little reason to suspect that the site is going to begin losing users anytime soon.
Though Coinbase offers several unique features to its grateful users, most analysts point to the simple user-interface, the ability to conduct instant purchases of currency, and the overall security of the site as the main reasons for its unprecedented domination of the market.
Coinbase is not always the best option for global traders looking to maximize their profits and participate in the growing economic powerhouse of cryptocurrency exchange.
First, consumers should be aware that Coinbase is an exchange company registered with and based in the United States. While this is great news for the U.S. citizens who comprise a large portion of its userbase, this spells a major problem for most foreign users. Coinbase only allows transactions for citizens in 32 countries.
This poses two unique problems for some traders looking to turn in their Bitcoin for cash or trade it for another currency.
For many foreign traders, Coinbase simply is not an option at all. Singapore is the only Asian country that is permitted to use the exchange, and no African country is represented on the Coinbase list of accepted countries. This means that investors in Africa or most of Asia—significant portions of the cryptocurrency community—are unable to access the main functions of the site.
But even for those that live in acceptable countries, it is possible that all of Coinbase’s features are still unavailable. For example, traders in Australia are able to buy, but cannot sell, and are restricted from linking bank accounts to their profile for quick trading. Similarly, Canadian users are unable to sell currencies and cannot use their bank account.
This may not be entirely the fault of Coinbase. A plethora of legal obstacles and miles of red tape often prevent cryptocurrency organizations from properly operating in some counties.
Still, many analysts heavily critique Coinbase for their lack of global inclusivity. One correspondent articulates that a lack of global inclusivity serves as an antithesis to the original purpose of cryptocurrencies, which remain rooted in a core desire for borderless transactions and equitable decentralization.
A lack of representation and inclusion on the market is not the only reason a trader may be looking for a new way to exchange their coins. Controversy surrounding Bitcoin Cash and incredibly high transaction fees continue to inspire the savvy trader to shop around for alternatives to Coinbase.
Whatever the reason for the switch, there are several respectable cryptocurrency exchange websites which offer their services to investors willing to make a change in their trading host.
Perhaps the most popular alternative to Coinbase, the Great Britain exchange CEX has cultivated a very positive reputation among millions of crypto-traders all over the world. Boasting over 1,000,000 users, CEX presents itself as a professional, compliant, established alternative to Coinbase.
The biggest selling point for foreign users barred from Coinbase is that CEX is operational (and legally compliant) in 99% of countries. Almost ironically, though, CEX is only operational in twenty-four of the fifty states in the United States. In any case, CEX’s global inclusivity is a major reason that some foreign traders are considering making the switch.
Another favorable quality enjoyed by users of CEX is the fair commission system. In addition to offering “reasonable trading fees” for both parties involved in a transaction, CEX offers special deals for high volume traders and additional offers for “market makers.” Whether one is an experienced trader or a novice, CEX offers relatively fair commission rates for their exchange’s transactions.
For traders who anticipate a lot of action, their margin trading system allows for 1:3 as well as 1:2 leverages, along with automated fund borrowing and protection against negative balances. All of these factors should be persuasive to high volume traders looking to make the most of their money and skill.
CEX is not without its downsides, though. The most significant con to using the CEX is likely their lack of alternative cryptocurrency markets. At the moment, CEX only offers a market for the trade of Bitcoin. Compared to Coinbase, the singular market severely limits investment options.
Gemini has not yet risen to the popularity of CEX or Coinbase, but it still manages to offer its own unique benefits. Traders in South Korea and Hong Kong especially stand to benefit from switching to this exchange, as those countries are offered on Gemini but are not offered by exclusive Coinbase. Furthermore, U.S. citizens living in states excluded by CEX should check out Gemini; their service functions legally in 48 U.S. states, plus Washington, D.C. and Puerto Rico.
Unlike CEX’s limitation to Bitcoin trading, Gemini wins major points by offering multiple cryptocurrency exchange options. Additionally, they employ a unique “order matching” system. This means that users can only trade in set pairs: BTC/USD, ETH/USD, and ETH/BTC. While for some this marks a more stable and regulated trade setting, some investors lament the lack of options to trade currency parings outside of the set list.
Additionally, Gemini offers free wire transfers from banks, a quality that sets them apart from most vendors accepting wire bank transfers.
Gemini likely suffers most from their lack of an established community. Because they are still a lower-profile organization than CEX or Coinbase, the market interest is significantly lower. However, savvy investors may look at this as an opportunity to get involved in a new market with low fees, increased inclusion, and more trading options than CEX.
Local Bitcoins Exchange
Some traders are in the market for a unique and niche trade experience, and Local Bitcoins surely satisfies this need. Unlike the global, cross-country trade mechanisms employed in the other major exchanges, the crux of the Local Bitcoins model is its interest in linking interactions based on geography.
On Local Bitcoins, the transactions are entirely facilitated by the buyer and the seller. Local Bitcoins links sellers with buyers based on their location and then allows the buyer and seller to communicate with one another to decide the details of the trade. Meetups to pay for BTC in cash are common, but an escrow/buyer protection service is also offered, free of charge.
By far, the biggest draw of Local Bitcoins is the absolute lack of fees associated with the buying and selling of Bitcoin. There are no additional fees for a seller or buyer unless the seller/buyer wants to list an advertisement on the site, at which point a 1% fee will be assessed for every successful trade. Additionally, merchant invoicing services are available for a .5% fee deducted from the final invoice amount.
Because of the decentralized and communicative nature of transactions on the site, Local Bitcoins is available in nearly every country imaginable. This is a valid motivator for foreign users who have been prevented from using other major exchanges.
The potential drawbacks of the Local Bitcoins exchange system are two-fold. First, it suffers from a lack of market for currencies other than Bitcoin.
Second, some analysts point to possible security concerns as a reason to avoid the site. Meeting up for a cash transaction is sometimes dangerous and is encouraged as a potential method of trading cryptocurrency on the site.
On a final note regarding Local Bitcoins, some users point to a philosophical point as a justification for their switch. It seems almost in-line with the original intentions of Bitcoin—decentralized, borderless, uniting—that the Local Bitcoins exchange places the power of transaction back into the hands of the people.
Conclusion: Many Ways To Switch
There are several reasons why a savvy investor or cryptocurrency trader might be interested in switching to an alternative cryptocurrency exchange. For some, the exclusion of hundreds of countries from Coinbase locks them out of the market. For others, ideological qualms inspire the switch.
Regardless of the reason, it is clear that several alternatives to Coinbase are available to citizens all over the world.
CEX offers an established, reputable exchange with geographical inclusivity and Bitcoin trades, but does not offer additional altcoin exchange markets.
Gemini limits transaction prices and offers their own pairing options for currency exchange, but continues to work to establish their place and identity as an exchange community.
Local Bitcoins is a unique option for trading that gives more freedom and responsibility to the traders involved in the transaction.
Whatever the choice may be, consumers need to conduct their own research before making any decision. The switch from Coinbase is made entirely possible through several great alternatives, but no exchange is perfect. Traders must research to figure out which exchange best fits their individual needs and wants.