Coinbase vs Gemini: A Comparison for Cryptocurrency Traders

Coinbase vs Gemini

Coinbase vs Gemini is some of the most forward-thinking figures in the cryptocurrency industry. They have led their respective exchanges to prominence by providing US and global users with an array of cryptocurrency products within tightly secured confines.

As far as exchanges go, Coinbase has many competitors. Still, Gemini remains one of its fiercest rivals, competing for market share and user growth in this burgeoning industry.

We will look at the components of both Coinbase and Gemini to identify how these crypto exchanges stack up against one another and which exchange is better in security, liquidity, customer service, and more.

To make this comparison more apt, we will use Coinbase Pro instead of the traditional Coinbase platform. This is because Coinbase Pro is the active platform traders use, while Coinbase itself is mostly used by those just getting started in cryptocurrencies. You can learn more about the difference between the two here.

Coinbase vs Gemini: A First Look

Coinbase vs Gemini A First Look

Coinbase

Coinbase, a San Francisco-based cryptocurrency exchange, was founded in 2012 by CEO Brian Armstrong. The company has firmly established itself as a global entity, serving over 35 million users across 32 countries and generating more than $2 billion in yearly revenue.

Coinbase became so popular that it was the first major cryptocurrency exchange to go public in the United States. On April 14, 2021, Coinbase shares began trading on the Nasdaq exchange with the ticker COIN.

Coinbase reported its first-quarter results on May 13, 2021. Although revenue and earnings were strong, the numbers fell slightly below what Wall Street expected. What Coinbase said during the earnings call was perhaps more interesting than the numbers.

The exchange provided three different forms of future guidance based on how the crypto market performs over the coming months. Given the volatility and unpredictability of the crypto space, that’s probably a smart move from Coinbase.

In addition, Coinbase mentioned that it would be listing Dogecoin (DOGE) in the next 6-8 weeks. Other platforms, such as Gemini and Robinhood, have profited from Doge’s recent popularity. Coinbase is certainly hoping to cash in on that.

The company offers various products for individual investors, institutions, and businesses. Its main product offerings for consumers are Coinbase, Coinbase Wallet, and Coinbase Pro, an advanced cryptocurrency trading platform.

Gemini

Gemini was founded by twin brothers Cameron and Tyler Winklevoss in 2014. The exchange touts itself as being regulated by the New York State Department of Financial Services (NYDFS) and adhering to the strictest financial standards.

The exchange operates in six countries: Canada, the United States, the United Kingdom, South Korea, Hong Kong, and Singapore. Gemini is subject to capital reserve requirements, cybersecurity audits, and banking compliance standards. The exchange was voted the 2019 Best Crypto Exchange by Markets Choice and it offers traders a wide range of features such as spot and futures trading, margin, Gemini earning and more with Gemini app.

Can Customers Earn Interest?

Can Customers Earn Interest

Earning crypto interest is becoming increasingly important with each passing day. Coinbase and Gemini have taken notice of this growing trend and have a few options that their customers can take advantage of.

In February, Gemini launched Gemini Earn, a way for customers to generate passive income and earn interest on their crypto assets. Gemini currently offers more than 25 assets that are eligible for interest accrual. As of March 22, 2021, the highest Gemini APY is 7.4%, which is paid on Dai and Filecoin (FIL) balances. Gemini interest rates will be vary depending on your chosen tokens for earning.

Interest is paid daily and will begin at 4 pm EST after customers transfer funds to Gemini Earn on the business day. Gemini will notify customers when interest payments are distributed, and users will be able to monitor their balances in real-time. One important note is that this program is available for customers in all 50 U.S. states.

Unlike Gemini, Coinbase does not offer a traditional interest program. Instead, Coinbase offers staking rewards on a very select group of assets that include Ethereum 2.0 (ETH2), Tezos (XTZ), Cosmos (ATOM), and Algorand (ALGO), Dai (DAI), and USD Coin (USDC).

While Gemini’s interest program works similar to what a bank might offer (passive interest on the net balance), Coinbase’s staking option operates differently. Staking lets customers earn income by contributing to the Proof of Stake (PoS) network for a particular asset. Staking on Coinbase is not offered to Hawaii and New York residents.

Verdict: There is a big difference between an interest-earning program and staking. While both options generate passive income for customers, a traditional interest program is an easier and preferred choice for most. Although Gemini has a clear lead, Coinbase may likely follow Gemini’s lead and launch a similar program in the future.

Read more: TOP 20+ Best Staking Coins To Trade & HODL In 2022: A Full Guidance For Crypto Traders

How Do They Stack Up on Security?

How Do They Stack Up on Security

On a technical level, Coinbase is known as one of the most secure cryptocurrency exchanges around. With 98% of crypto stored in offline, encrypted wallets, theft is greatly mitigated. Other, more standard features are also used by Coinbase, such as two-step verification, SSL encrypted web traffic, and AES-256 encrypted crypto wallets and private keys.

Another way Coinbase tries to stay ahead of hackers when it comes to Coinbase security is with its bug bounty program. The exchange offers rewards of anywhere from $200 to $50,000 for developers who disclose software security vulnerabilities.

To date, 484 reports have been resolved, with a total of $441,281 paid out to developers for their work on better securing the platform. Coinbase also regularly updates its users about attempted phishing attacks, which run rampant in the industry.

Gemini claims it not only protects users from external threats but also against human error. Most exchange assets are stored offline in cold storage, and multi-signature technology is used to eliminate single points of failure.

The exchange also uses standard security measures — such as two-factor authentication, password encryption, and address allow listing. Because of its BitLicense in New York, Gemini undergoes financial and security audits regularly, which should make users feel more at ease when using the platform.

Gemini is one of the few crypto exchanges to provide insurance against theft from hot wallets. As per the company, Our policy insures against the theft of Digital Assets from our Hot Wallet that results from a security breach or hack, a fraudulent transfer, or employee theft.

This should help put traders at ease. The main concerns for Gemini users are phishing attacks that plague the industry. In September 2020, it was revealed that hackers stole $16.8 million in funds from Gemini and two other cryptocurrency exchanges by deceiving users with web domains that mimicked the trading platforms.

Verdict: Gemini takes security extremely seriously. The Winklevoss twins understand that the future of crypto will be built on strong, stable exchanges. Luckily for users, thus far, they have lived up to their commitment to security as a priority for Gemini. Coinbase also sees security as a high priority and has many of the same security measures in place as Gemini. Ultimately, these two crypto exchanges have provided US-based users more peace of mind than other exchanges.

What About Custody?

What About Custody

Coinbase has its security features that allows users to store cryptocurrency securely. Coinbase Custody is a crypto asset custody solution for institutions and is a fiduciary under New York State Banking Law.

The cost for the service ranges from $0-$10,000 for implementation, dependent on the use case, with a 50 bps (0.50%) annualized custody fee. Additionally, there is a $1 million minimum balance for Coinbase Custody users.

Coinbase Custody features include:

  • Segregated cold storage
  • The industry’s leading insurance policy with a $255 million limit
  • Seamless integration with Coinbase Pro
  • Closing in on 100 digital assets available for storage
  • Regular external financial and security audits

Gemini also offers an institutional-grade custody service for users to store their cryptocurrency securely. Because its custody solution is a part of the company itself, Gemini offers a fully regulated custody solution under New York Banking Law. Currently, Gemini Custody offers storage for over 40 digital assets and is growing.

Custody features multi-signature technology on offline cold storage solutions for the highest level of security. The cost for using this service is 0.4% annualized based on all digital assets held in a custody account for all accounts under $1 million in assets. Accounts with more than $1 million must contact Gemini for pricing. There is also a $125 withdrawal fee.

Gemini Custody features include:

  • No minimum deposit required from bank account or credit card
  • Free setup
  • $200 million in insurance coverage
  • Same-day withdrawals to the Gemini Exchange
  • Dedicated account representatives

Verdict: Coinbase Custody and Gemini Custody are regulated under NY State Banking Law and provide offline, cold storage, and multi-signature security. However, they seem to target different users. Coinbase requires its custody users to maintain a minimum balance of $1 million and charges a higher rate (0.50%) and an implementation fee.

Meanwhile, Gemini touts its custody services for users with less than $1 million in assets and charges a lower fee to use their service. For users who will carry balances above $1 million, check out Coinbase Custody first. Alternatively, Gemini Custody is the solution if you plan on maintaining a lower digital asset balance.

How Do They Compare on Fees?

How Do They Compare on Fees

Coinbase Pro trading fees are designed in an industry-standard tiered structure dependent on maker/taker status. These fees start at 0.50% and taper downward for higher volume traders based on monthly trading volume.

Pricing Tier Taker Fee Maker Fee
<$10K 0.50% 0.50%
$10 – 50K 0.35% 0.35%
$50 – 100K 0.25% 0.15%
$100K – 1M 0.20% 0.10%
$1- 10M 0.18% 0.08%
$10 -50M 0.15% 0.05%
$50 – 100M 0.10% 0.00%
$100 – 300M 0.07% 0.00%
$300 – 500M 0.06% 0.00%
$500M – 1B 0.05% 0.00%
$1B+ 0.04% 0.00%

Read more: Difference Between Maker vs Taker: Top Full Guide 2022.

Trading fees on Gemini are dependent on how a trade is conducted. Traders utilizing the Gemini API feature to place trades will have a different fee structure than mobile and web-based trades.

For web and mobile traders, any trade below $200 has a fixed fee, while trades above $200 in value will come with a 1.49% transaction fee, which is a steep cost for trading compared to other exchanges.

Additionally, a 0.50% convenience fee is added to each trade. Instead of displaying this cost separately, the convenience fee is added on top of the purchase/sale price of the trade. This brings the total trading fees to 1.99%.

However, Gemini also offers its ActiveTrader, a compatible offering with what Coinbase does with Coinbase Pro. Gemini exchange fees for ActiveTrader start at a 0.35% taker fee and 0.25% maker fee and taper downward based on trading volume.

30-Day trading volume – USD Notional Taker Fee Maker Fee Auction Fee
0 0.35% 0.25% 0.25%
≥ $500,000 0.25% 0.15% 0.20%
≥ $2,500,000 0.25% 0.15% 0.10%
≥ $5,000,000 0.15% 0.10% 0.10%
≥ $10,000,000 0.15% 0.10% 0.00%
≥ $15,000,000 0.10% 0.00% 0.00%
≥ $50,000,000 0.075% 0.00% 0.00%
≥ $100,000,000 0.05% 0.00% 0.00%
≥ $250,000,000 0.04% 0.00% 0.00%
≥ $500,000,000 0.03% 0.00% 0.00%

Gemini also touts no deposit fees on crypto, ACH, or wire transfer deposit fees for fiat currency and a 3.49% debit card transfer fee. Gemini withdrawal fees are also free if customers request fewer than ten per month. More than ten monthly withdrawals come with a fee dependent on the cryptocurrency being withdrawn. Fiat withdrawals via ACH or wire transfer are always free.

Verdict: When considering Gemini’s ActiveTrader fees versus Coinbase Pro, it’s no contest: Gemini is the clear winner. With taker fees starting at 0.35%, you aren’t likely to find a better fee structure anywhere in the industry. This makes Coinbase’s fees look quite expensive by comparison. So, if you only care about trading fees, stick with Gemini and its ActiveTrader platform.

How About Liquidity?

How About Liquidity

Coinbase Pro is a great exchange for cryptocurrency liquidity, as indicated by trading volumes. Users looking to trade crypto in USD will find that Coinbase cannot be beaten. The exchange is top-three in the industry when looking at total trading volume and is the most-used exchange for many top trading pairs like BTC/USD.

Coinbase doesn’t offer the trading variety of other exchanges, and BTC/USD and ETH/USD trading pairs generally account for almost half of all liquidity on the exchange. Crypto-to-crypto trading pairs on the exchange pale in volume compared to fiat trading pairs, making Coinbase less of an option for this type of liquidity.

The trading volume liquidity on Gemini isn’t as high as Coinbase. In total trading volume, Gemini ranks 16th of all major industry exchanges.

Yet, this does make sense when you consider that Gemini is only available to users in a select group of countries. While the BTC/USD market does have significant liquidity on the exchange — it accounts for almost half of Gemini’s trading volume — all other trading pairs have less than stellar liquidity.

The exchange recently announced it would support crypto trading against the Euro and is also working to incorporate other fiat currencies as well as allow users to buy, sell crypto with their bank account and credit cards. Currently, Gemini supports 26 cryptocurrencies and 42 trading pairs, both low numbers compared to its competitors. However, Gemini is beginning to support Ethereum-based DeFi tokens fairly quickly, bringing it more liquidity.

Verdict: Coinbase offers more trading pairs and more trading volume than Gemini. When it comes to exchanging liquidity, Coinbase has the advantage, and it’s up to Gemini to up its game and provide users with better liquidity options.

What is the User Experience Like?

What is the User Experience Like

Coinbase Pro is fairly similar to Gemini ActiveTrader in its use as an advanced trading platform. Advanced order books, trading tools, charting, and more can be accessed on the platform.

With its acquisition of Tagomi in 2020, Coinbase began to beef up its user experience for institutional investors. This includes more of a focus on block trading and the previously mentioned Coinbase Custody service for institutions.

The Coinbase mobile app has gotten rave reviews, with 4.4 out of 5 scores from over 200,000 users on the Google Play store.

Similarly, Gemini ActiveTrader provides a professional-level trading experience with advanced charting, multiple order types, auctions, and block trading. At the same time, trades can be conducted in microseconds without compromising security. As for its mobile app, the Gemini trading app has received mixed reviews from users. The app gets a 3.4 out of 5 on Google Play but a 4.7 out of 5 on the Apple App Store.

Verdict: Overall, these two exchanges have similar user experiences. While some users may find they prefer one over the other, both have a track record of providing positive experiences for traders.

How is the Customer Service Experience?

Coinbase gives its customers dedicated phone support from Monday-Friday, 6 am-6 pm Pacific Time. However, this support line can only be used to disable an account if suspected fraud occurs. All other cases will be directed to the Coinbase email request form that can be used to get help with account-related issues.

Gemini has its dedicated customer service phone line and a 24/7 customer support staff available to answer questions via email or chat. Email and chat are more commonly used than phone services, which can take a while to get help.

The most widely attributed user issues are onboarding, making fiat deposits, and withdrawal delays. As per the company’s job postings, Gemini works to hire customer service representatives that are fluent in multiple languages to assist customers better.

Verdict: Gemini offers a dedicated phone support line that can be used for any reason, while Coinbase’s phone support is much more limited. Both exchanges have their fair share of user issues and complaints, which is uncommon in the industry. Both exchanges are about equal when it comes to customer service.

Anything Else Cryptocurrency Traders Should Consider?

Gemini and Coinbase have had issues dealing with increased exchange demand as the popularity of cryptocurrencies has peaked. Both exchanges have had temporary outages or delayed withdrawals. You can dive more into the complete incident report for Gemini here and for Coinbase here.

Coinbase CEO Brian Armstrong released a memo during the 2020 US presidential election to ensure his company would remain apolitical during a time of great divide in the country. This move received mixed reviews and even led some employees to quit.

Gemini recently partnered with a tax compliance firm to provide its customers with an easier solution for calculating cryptocurrency tax exposure. This will allow exchange users to directly download a tax report that is correctly formatted for the IRS. The new tool should be available to customers sometime in early 2021.

Gemini went on a New York City advertising rampage in 2019. Its billboards across the city read Crypto Needs Rules, Money Has A Future, and Crypto Without Chaos, attempting to paint the picture of an exchange that is prepared to take its customers into the future of cryptocurrency.

Conclusion

Coinbase and Gemini are on par in many different categories. This makes it difficult to separate the two. Coinbase’s trading fees are hard to overlook, and anyone using the exchange will take a bite out of their profit potential. Yet, the exchange does make up for its high fees with stellar security and trust. Providing insurance against hot wallet theft has been an important development.

Conversely, Coinbase provides better liquidity with cheaper trading fees, making it a preferred choice for active traders to buy/sell Bitcoim. For instance, according to data from CoinMarketCap, the trading volume of BTC/USD on Coinbase is almost ten-times that of Gemini. At the same time, Gemini still does not offer trading for some of the industry’s top cryptocurrencies like DASH, EOS, ETC.

Those who don’t trade often and are looking for an exchange with the best crypto storage options will find Gemini a good option. But for any remotely active trader, Coinbase will be the better option. Whether you choose Gemini or Coinbase, the main categories you should consider first are customer service and security features.

Still, no matter who you are, there is no reason not to use Coinbase or Gemini to optimize your cryptocurrency trading.

Disclaimer: The information provided in this article is not investment advice from Cove Markets. Cryptocurrency investment activities are yet to be recognized and protected by the laws in some countries. Cryptocurrencies always contain financial risks.

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