As a sign of a maturing asset class and a growing component of modern business, digital exchanges have begun populating the crypto arena. With new entrants emerging periodically and existing exchanges constantly streamlining their offerings, even seasoned investors might be at a loss to pinpoint the “best” exchange.
Newcomers in particular are faced with a host of options when looking for a reputable exchange. Two of the best-known digital exchanges in the modern cryptosphere are Binance and Coinbase. Binance is essentially of Chinese origin and now, post the Chinese crypto ban, registered in Malta. Coinbase is an American exchange centered in San Francisco.
Many not global investors remain wary of Binance, simply because of China’s onerous ban on cryptocurrencies overall, although this is not necessarily a legitimate concern.
Patronage of Coinbase is also a product of the American regulatory scene, where exchanges are being legitimized and digital assets as a whole are falling under regulatory oversight, giving much security to the arena.
Binance is a more comprehensive offering for dedicated traders, however, and completely free of any Chinese threat, regardless of what that nation’s regime ends up doing in the long run. In a nutshell, it appears that Coinbase has grown as large as it has and so rapidly, largely on the back of local sentiment. Investors do often look for a “home feel” in the crypto arena. That said, exactly the same could be said of Binance’s origins, although the observation is limited on a digital globe.
Probably the biggest difference between a legacy and digital exchange is the fact that there is no central authority on a virtual exchange, policing matters. Regardless, the digital companies do have a basic duty of due diligence when looking at listing coins, and here both Binance and Coinbase do well. Legitimacy is sometimes hard to pinpoint, but both of these exchanges have it, in part due to their professional approach and reputable behavior.
The Binance Exchange
There is a growing discourse around “serious trading” of digital assets, with the currently common wisdom that “serious” traders should be on the Binance exchange. This is supported in many ways by very involved crypto traders such as day traders or arbitrage traders. Enthusiasts support their assertions by pointing to the exchange’s detailed charting, real-time functionality and ultra-fast transacting. The exchange can cope with millions of incoming trades every second.
The platform also has attributes like stop-losses, high liquidity and very competitive fees. Stop-losses are tools employed by all dedicated traders with almost all trading strategies. Very much like MetaTrader 4 and other forex trading platforms, the Binance exchange emulates all relevant legacy tools and protocols. High liquidity implies that any given trader can enact a transaction on any coin on a willing seller-willing buyer basis, with no delay. The exchanges fees are transparent and highly competitive.
The Binance exchange can be employed as a desktop app, something many users do to add a level of security to their crypto dealings. The exchange’s security is, however, top-drawer and no breaches have ever been recorded, save one incident that appears to be user error and no fault of Binance.
On May 8,2018, some Binance users noted irregular movements of their funds. The exchange clamped down and also went on to offer a $25,000 reward for anyone with information about the incident. It appears from subsequent investigations that some users had their private keys compromised. They weren’t hacked from the Binance database, however, and the company’s reputation remains intact.
Binance Exchange Details
Fees on Binance are pegged at a one percent trading fee. Depositing costs nothing, and furthermore, users have the option of discounting fees by up to 50 percent by employing the native currency. The Binance exchange’s token, BNB, allows users to glean discounts by holding the coin and thus expanding the ecosystem.
Both Binance and Coinbase attract inter-exchange arbitrage traders as none of the coin blockchains are controlled by an exchange, hence transfer times correspond. This is certainly true of the prominent coins. Smaller caps might suffer less frequent exchange wallet updates on Binance.
For many, the fact that a user can’t buy onto the Binance exchange with fiat is a limiting factor, something rival Coinbase has facilitated. The virtual exchange has opted in its migration and, indeed, from the outset, for cryptocurrency, meaning the company still cannot accommodate any user wishing to buy in with fiat.
The company is, however, trying to make sense out of various snippets of individual countries’ legislation so that this route of entry is extended in future. Since America has made the greatest strides in regulating digital coins and exchanges, a fiat approach to Binance is likely to be first offered to US citizens.
Binance is the number three digital exchange globally by volume with around $1 billion changing hands through the exchange every day. There are literally hundreds of trading pairs for traders to choose from, and many investors that are completely immersed in crypto trading couldn’t imagine any other exchange besting Binance.
The Coinbase Option
Coinbase has built its user base by being a polished legacy-style exchange. Trading on sensible legislation, indeed based on legacy oversight of any traditional exchange, the exchange was one of the first to breathe out earlier in 2018. For many, Coinbase is simply better because it accepts payments in, and conversions to, fiat currencies. That said, it lacks Binance’s diversity, hosting but five coins; Bitcoin, Bitcoin Cash, Litecoin, Ethereum and Ethereum Classic.
“On-ramping,” which is “getting into” cryptos and buying first funds, is proving a persistent hassle for new users. Many wish to immigrate to the cryptosphere for enthusiasm, and not simply to trade on the daily markets. Without legacy payment protocols and currencies being able to be employed, however, this interface has become a stumbling block for many users.
No small part of Coinbase’s success lies in the fact that they built with all legacy protocols in place. Any user can fund a trading account through the use of bank transfers of fiat, or via a credit card.
The Coinbase exchange accepts fiat transactions from more than 30 countries around the world. In addition, it will pay out in several of these currencies too, something many users still need, tied as they are to a daily life that runs on fiat.
It is apparent from a glimpse of the Coinbase coin offer, why day traders and more serious investors tend to migrate to Binance’s more extensive offering. Coinbase isn’t really designed for extensive trading, but is rather bitcoin-centric, catering as it did mostly for bitcoin enthusiasts in the heyday of that coin’s recent madness.
For newcomers (and those dedicated to the coins listed) the site is uncomplicated and extremely user-friendly. Both exchanges, in fact, have hit extremely valid sweet spots in the crypto-trading community, but for different reasons.
Coinbase Exchange Fees
Coinbase has attracted some negative press where users have bemoaned their high fees. In a nutshell, Coinbase is making users pay for the pleasure of mingling fiat and cryptocurrency. For example, the exchange bills users some 4% for deposits via credit card, similar to EFT fees. To be fair, banks are pushing costs whenever fiat is involved, but this is why most dedicated crypto traders spurn the exchange for the more competitive structure of Binance and others.
Coinbase has experienced its rapid growth and is currently a multi-million dollar company precisely because it does offer newcomers an attractive route to crypto. There is the option to severely reduce fees, however, by going into GDAX.com, which is Coinbase by another name.
Coinbase and GDAX share a back-end. What this means is that when a user buys bitcoin through the GDAX exchange, the source is the same. In current moves, the GDAX exchange is being engineered as an institutional offering, with Coinbase taking on a custody partner to this end. This won’t prevent any individual registering on the exchange, however, at least not yet.
The company doesn’t advertise this route to buying into crypto on Coinbase, as Coinbase is their “retail” pitch and the reason why they’re making such a success of things. Coinbase is more elegant and user-friendly than GDAX, but even newcomers can save themselves a whack as the steps are similar on both exchanges and not hard to complete.
Users can swap between their GDAX and Coinbase accounts seamlessly, although they will need to register on both exchanges to avoid punitive fees this way.
So, Binance Or Coinbase?
Both the Binance and Coinbase exchanges sport watertight security and Coinbase has also never suffered a breach of its protocols. Most serious traders on either platform store the majority of holdings in a cold wallet facility anyway. Both platforms come with two-factor authentication (2FA) and support is good at both companies.
Support in the digital exchange arena is generally poor, or worse than poor, something that is also a persistent lament of users worldwide. Both Binance and Coinbase, however, offer better-than-average support and user commentary is typically positive.
Binance is the enthusiast’s platform, with the pairs, depth and charting intel dedicated traders need. Coinbase is pitched as a step solution and, although the company should persevere, only time will tell if the Coinbase offer remains as attractive five or ten years down the line.
Coinbase lacks the diversity, asset depth and width, as well as detailed trading tools to satisfy dedicated traders. It does, however, bridge the fiat and crypto worlds, at a price, and individual traders patronize both exchanges based on their own criteria.