Full GDAX vs Coinbase Comparison for 2018 – Are They Related? + Alternatives

Which Coinbase cryptocurrency platform is the best for you?

That’s what we’ll be looking at in this comparison review. Coinbase and GDAX are two popular platforms owned by the same company serving cryptocurrency traders in the United States and abroad, but they are intended for different types of customers.

While Coinbase is designed for the non-trading public to convert the popular cryptocurrencies like Bitcoin to and from US dollars, GDAX is designed for professional and institutional traders. GDAX also caters to international clients in Europe, supporting both British pounds and euros as funding currencies.

For beginners in the cryptocurrency market, we’ve put these two platforms side by side and reviewed them both in this GDAX vs Coinbase comparison.

Feature CoinBase GDAX
Site Type Buy/Sell spot market Real-time trading platform
Location California, USA California, USA
Funding Methods Credit/Debit Card and Bank Transfer Bank Transfer
Withdrawal Methods PayPal, Bank Transfer Bank Transfer
Fiat Currencies USD USD, EUR, GBP
Coins Traded Bitcoin, Ethereum, Litecoin Bitcoin, Ethereum, Litecoin, Bitcoin Cash
Reputation High High
Safety Good Good
Customer Service Good Excellent
Fees Average Low
Limits Based on funding method and trading history Withdraw limits, some deposit limits

A Tale of Two Bitcoin Exchanges

How did one company end up with two cryptocurrency exchanges?

Brian Armstrong and Fred Ehrsam founded Coinbase in 2011 and enrolled it in the 2012 Y Combinator Startup Incubator program. It was not until October 2012 that Coinbase launched to the public, offering the service of buying and selling Bitcoin with bank transfers.

The company attracted investors and by 2014 had grown to serve a million users, acquiring the blockchain explorer Blockr and bookmarking company Kippt. It also began forming partnerships with companies like Overstock, Dell, and Time Inc. to power Bitcoin payments on their sites. In 2015, Coinbase’s growth attracted more investors who gave it the capital and expertise needed to launch an exchange for professional traders called Bitcoin Exchange.

It was in May of 2016 that Bitcoin Exchange was renamed Global Digital Asset Exchange, or GDAXIt was marketed as an alternative to Coinbase for international and professional traders to trade digital assets like Bitcoin and Ethereum. In 2017, Coinbase and GDAX both expanded their cryptocurrency offerings to include Litecoin and Bitcoin Cash.

Which exchange is best for cryptocurrency beginners, you might ask?

It depends on what you would like to do with cryptocurrencies. For example, if your aim is to use Bitcoin to conduct business transactions, then Coinbase is a perfectly functional way to do this. You can move US dollars into Bitcoin and then use the Bitcoins for transactions, and exchange Bitcoins back into US dollars when you need to.

On the other hand, if you’d like to trade Bitcoins or other cryptocurrencies for profit by speculating on whether their values will rise or fall vs other cryptocurrencies and fiat currencies, then a professional exchange like GDAX will suit your needs better than Coinbase.

You might wonder if you can trade anonymously on these exchanges?

The answer to this question for both Coinbase and GDAX is “No.” You are required to verify your identity to open an account and trade cryptocurrencies with either of them. This is because Coinbase and GDAX are regulated as financial service companies and must adhere to strict rules set by American regulators to prevent fraud and money laundering.

What Are the Main Differences Between GDAX and Coinbase?

The main differences between Coinbase and GDAX are a result of the different missions these two exchanges have. Coinbase is aimed at the consumer market while GDAX is concerned with professional traders and institutional investors.

Coinbase, for example, is a buy/sell spot market, which is to say that when you buy or sell a cryptocurrency on Coinbase, the transaction is executed immediately at whatever exchange rate the market is at. It doesn’t allow more sophisticated trading methods like limit orders or auctions that you can find on professional exchanges.

The fee schedule for Coinbase is also more expensive that GDAX on the assumption that the individual user is a low volume trader. To cover overhead and encourage high volume speculators to move to GDAX, Coinbase charges a much larger per-trade fee.

Professional traders will also feel like they are trading blind on Coinbase, compared with GDAX. The analytical tools that professional traders expect are not found on Coinbase, such as customizable moving averages and stochastic indicators.

These tools are the road signs used by professional traders to set their limit orders when they expect the market to rise or fall. Coinbase doesn’t provide any of these speculative tools since it is only a spot market.

What about trading limits?

Another difference is that Coinbase places considerably more limits on trading volume that GDAX. Because Coinbase serves the general audience, it attempts to limit the losses or potential funding problems amateur traders might encounter.

The actual volume limits vary on an account-to-account basis depending on the user’s funding method and trading history. Completing trades over time loosens these restrictions. By contrast, GDAX only has a daily withdrawal limit for individual and institutional clients that is quite large.

How Do the Fees on Coinbase Compare to the Fees on GDAX?

The fees differ quite a bit between Coinbase and GDAX. Coinbase charges fees on deposits and withdrawals that can be significant before a trader pays the costs of the price spread when trading cryptocurrencies.

For instance, buying directly by bank transfer costs 1.49% of the transaction on Coinbase, while making purchases with credit or debit cards costs 3.99%. Making withdrawals also incurs fees, costing another 1.49% for transfers to a bank account or 3.99% for transfers to PayPal.

Only ACH deposits from a bank account to a Coinbase account is free of charge. Wire transfers costs $10 for deposits and $25 for withdrawals.

By contrast, GDAX charges far less. Since GDAX doesn’t allow direct purchases of cryptocurrencies using credit cards or bank accounts, these charges don’t exist on its platform. Deposits and withdrawals by ACH transfer are free. For European clients, only withdrawals using SEPA incur a small flat fee of €0.15. Wire transfers cost the same on GDAX as they do on Coinbase ($10 for deposits and $25 for withdrawals).

The per-trade fees charged by GDAX are much lower than the spreads that traders pay on Coinbase. Market maker fees are 0% and taker fees range from 0.25% and 0.3%. This means that the trader who places an order pays nothing, while the trader that fills an order pays a small percentage.

Are Coinbase and GDAX Safe to Use?

One of the selling points of both Coinbase and GDAX is that they follow established financial regulations to protect their users’ assets. The major investors that now back Coinbase have made sure that the company operates like a financial services institution to guard against possible regulatory actions and to reassure traders that it’s a reliable and ethical partner.

One way Coinbase and GDAX safeguard their customers’ assets is by keeping their funds separate from the operating funds of the exchanges. This is especially critical for exchanges trading in highly volatile assets like cryptocurrencies because the possibility of the exchange collapsing overnight because of a sudden, catastrophic market swing is much higher than with traditional investments.

By keeping a firewall in place between the exchange’s finances and their client accounts, they protect their clients from losses in the event of a financial collapse.

But what about your crypto-coins, you ask?

Coinbase and GDAX have also implemented security measures to protect their customer’s cryptocurrency deposits against the type of hacker heists that have taken place at many exchanges in the past few years. Most of their cryptocurrency reserves are kept in secure, offline servers that are hardened against cyber threats.

PRO TIP

Have your own personal hot and cold wallets to store coins in. The pros never leave their cryptocurrency balances sitting in online wallets.


Alex Bitmann

Why Is GDAX Not Being Used as Much as Coinbase?

The simple answer to this question is that GDAX serves a more specialized clientele that Coinbase, so the number of customers on GDAX is less.

However, GDAX sees a significant volume of trade because it’s customers include large institutional investors and high-volume speculators. Coinbase serves many individuals who simply need to use its conversion service from time to time.

Are There Cheaper Alternatives to Coinbase or GDAX?

Coinbase’s fees are higher than average compared to other professional cryptocurrency trading platforms like GDAX. However, even GDAX has some alternatives that are a bit less expensive.

The lowest cost exchanges in the cryptocurrency market tend to be the pure cryptocurrency markets like Binance. This is because they don’t accept any fiat currency deposits or withdrawals of any kind. This may seem inconvenient, but it does cut a large amount of overhead from their operations.

They needn’t worry about the red tape of banking transfers, international regulations, or local regulations. They usually pass on the minuscule fees that cryptocurrency blockchain networks charge when traders withdrawal their balances and a small per-trade fee that is typically around 0.25%.

PRO TIP

Keep your trading costs low by using USD Tether as a proxy alt-coin that has its value pegged to the USD.


Alex Bitmann

Why Are Coinbase’s Spreads So Large?

Like many currency exchanges, Coinbase collects a per-trade fee in the form of a spread between the buy and sell prices that it quotes, and they can be as wide as 1% of the total value. You don’t directly pay a fee, but this difference in prices quoted to the user and the market rate amounts to a commission paid to Coinbase.

There are a couple reasons why Coinbase’s spreads are wider than many fiat currency exchanges. Coinbase looks like a currency exchange, but it’s not a true exchange. It’s just a convenient place to convert cryptocurrencies from US dollars and back.

The volume of transactions on Coinbase is small compared to fiat currency exchanges, which is what allows those fiat exchanges to maintain very small price spreads. It may also be convenient to Coinbase to charge higher trading fees to encourage high volume traders to use their GDAX platform instead of Coinbase.

The company assumes that these professional traders would move to the more reasonable fee schedule there, while occasional cryptocurrency users won’t balk at higher fees on Coinbase because they aren’t trading large amounts or very often.

PRO TIP

Transferring funds from a Coinbase account to GDAX is free. Save money moving your business to GDAX.


Alex Bitmann

Top 10 Alternative Exchanges

Name Main Information Pros/Cons
Kraken Founded in 2011, Kraken is one of the oldest exchanges still in business today. Based in San Francisco, this cryptocurrency exchange focuses on the European market, though it has recently expanded itself into a fully international company. Kraken accepts a wide range of major fiat currencies such as Canadian dollars, British pounds, Japanese yen, US dollars, and euros.
PROS:

•One of the original cryptocurrency exchanges

•Accepts most major fiat currencies for funding accounts

CONS:

•Their customer service has suffered because of the influx of new traders in recent months

Bittrex Bittrex is a newcomer in the United States that opts for the pure cryptocurrency strategy seen in Asian markets. It offers trading in over 190 different alt-coins, but it doesn’t accept fiat currencies such as US dollars.
PROS:

•The first pure cryptocurrency exchange in the US

•Reputable exchange operating within US regulations

CONS:

•Doesn’t accept fiat currencies, so you’ll need your own cryptocurrencies to start

Binance Binance is a newcomer as an Asian pure cryptocurrency exchange. Located in Hong Kong, Binance has aimed to become the go-to exchange for Asian cryptocurrency traders, offering trade in a host of alt-coins. As is the case with other pure cryptocurrency exchanges, Binance doesn’t accept fiat currency funding, but USD Tether is a popular proxy for cash.
PROS:

•Led by a team of former cryptocurrency executives and developers from other exchanges

•One of the lowest cost exchanges

CONS:

•Chinese regulators have made the future of Chinese exchanges uncertain

Bitfinex Bitfinex is another Hong Kong-based exchange that has been in business since 2014. They offer trading in many alt-coins using Bitcoin and US dollars as the main funding currencies. Like other Chinese exchanges, the future of Bitfinex has become less certain because of the Chinese government crackdown on Bitcoin trading.
PROS:

•A wide selection of funding options

•A well-establish exchange serving international traders

CONS:

•Hackers have hit Bitfinex in the past

Bitstamp Bitstamp is a European exchange and one of the veterans in the cryptocurrency marketplace. Based in London, they operate under the liberal regulations of the UK. They offer trading in Bitcoin, Ethereum, Ripple, and Litecoin.
PROS:

•Accepts several major fiat currencies

•UK-based exchange licensed by the EU

CONS:

•Doesn’t offer the full range of alt-coins that exists

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Gemini Gemini is an American cryptocurrency exchange that caters to professional traders and offers a wide range of cryptocurrencies for trading. They accept US dollars as a funding currency and have stringent trading limits for individual traders.
PROS:

•US-based, professional cryptocurrency exchange

•Accepts US dollars and offers a wide range of alt-coins for trading

CONS:
•Deposit and withdrawal limits are low for individual traders
BitMEX BitMEX has its headquarters located on the island republic of Seychelles for maximum regulatory independence. They specialize in leveraged trading in Bitcoin using US dollars and in Ethereum, Monero, and ZCash futures.
PROS:

•Independent exchange located in Seychelles

•Offers leveraged trading and futures in several cryptocurrencies

CONS:

•Restricted for US residents

Quoinex Quoinex is a cryptocurrency exchange located in Japan that is the first to be officially sanctioned in that country. It’s backed by investors from several big banks and has a professional management team with traditional banking experience.
PROS:

•Fully sanctioned Bitcoin exchange in Japan

•Accepts fiat currency deposits

CONS:

•Lacks an English version for its website

Kucoin Kucoin is another Hong Kong-based exchange that offers trading in a full range of alt-coins. Kucoin is known for its Kucoin shares which were sold to raise its initial capital. Traders who own Kucoin shares receive special benefits such as rebates on their trading fees.
PROS:

•Owners of Kucoin shares receive special perks

•One of the few exchanges that allows anonymous trading

CONS:

•Doesn’t accept fiat currencies to fund accounts

Coinigy Coinigy is an US-based cryptocurrency trading platform located in Wisconsin. It offers access to most of the Bitcoin exchanges throughout the world. It uses their APIs to bring them together on a single website. Coinigy doesn’t handle transactions directly but helps traders managed multiple accounts at other cryptocurrency exchanges.
PROS:

•A productivity booster for traders who juggle multiple exchange accounts

•US-based site that makes access to international markets easier for Americans

CONS:

•Adds its cost to the regular fees at other exchanges

FAQ

What are market, limit, and stop orders?

On professional trading platforms like GDAX, these three types of orders represent the basic actions that a trader can use to execute trades, either immediately or under certain conditions. A market order is a simple order to buy or sell an asset at the current market price. A market order is filled as soon as enough of the asset is available to execute it.

A limit order is different from a market order in that the trader specifies a price at which they want a buy or sell order to execute. In this way, they can try to plan for the market to move to a price that they feel is more reasonable than the current price. A limit order can also be set to expire after a certain amount of time if it’s not triggered.

A stop order is a way to set the price at which an open position should be automatically closed. Stop orders are normally used as a safety measure to prevent a trade from losing too much value when the market moves against a trader. Stop orders are important in leveraged trading to limit risk.

How does GDAX’s real-time order book help traders?

Professional traders use the real-time order book to gauge the amount of supply and demand that currently exists in the market, and what volume of orders are open at different price levels.

This information is important for predicting the potential for volatility or how likely it is that a price level will hold when there’s buying or selling pressure. Order books are useful to short-term traders who try to make quick profits from volatility.

How do Coinbase’s account limits work?

Coinbase has stringent limits on the amount of trading volume that you can execute each day. Those limits are not published because they are calculated based on several different factors that vary depending on a trader’s circumstances.

For example, the payment method used affects the volume of trading allowed. The number of successful trades also is used to limit your trading volume. As you establish a reputable track record, Coinbase will loosen the restraints it places on your trading account. Traders can see the limits that are being applied to their accounts on the verification page.

Is it safe to leave cryptocurrency coins on exchanges when I’m not trading?

It is generally safe to store cryptocurrencies in exchange accounts, but it’s important to understand that the risks of doing so are much higher than keeping US dollars at a local bank. The cryptocurrency balances are not insured by any government program like the FDIC.

This means that if the coins are lost to hacking or if the exchange is suddenly bankrupted by market volatility, recovering your assets is not guaranteed. You will be at the mercy of bankruptcy proceedings or the third-party insurer that the exchange has an insurance contract with.

It’s also well-known in the cryptocurrency community that hackers continue to find ways to hack websites and steal cryptocurrency assets in large amounts. Some established exchanges like Coinbase have significantly hardened their organizations against these threats, but it’s still the case that hacking threats exist and must be taken seriously as a risk in the cryptocurrency market.

How can I trade in alt-coins like Ripple or Monero?

Coinbase and GDAX do business in the major fiat and cryptocurrencies, while pure cryptocurrency exchanges provide a market for the hundreds of lesser-known alt-coins. Traders who speculate in alt-coins do so by using an account at a company like Coinbase to convert major cryptocurrencies like Bitcoin to their local fiat currency and vice versa.

Then they transfer their cryptocurrency balance to a pure exchange to trade for alt-coins. Alt-coins like Tether can serve as a proxy for US dollars, which has made them popular for trading on pure cryptocurrency exchanges. 

 

 

9 Total Score
Final Verdict

Which platform is better for you depends on what you want to do with cryptocurrencies and how much cost you’re willing to absorb to use them. Coinbase is a convenient place to convert US dollars to Bitcoin, Ethereum, Litecoin, or Bitcoin Cash for use in day-to-day transactions or to convert crypto-coins you’ve been paid to US dollars. It’s simple to use and not too expensive if you trade infrequently and educate yourself about the platform’s fees.

GDAX, on the other hand, is a better alternative if you want to trade one of the four major cryptocurrencies for profit. Traders get a suite of professional charting and analysis tools and more sophisticated trading methods like limit and stop orders. It also doesn’t limit the volume of trade you can do each day the way Coinbase does.

Ease of use
9
Fees
8.5
Security
9
Reputation
9
User Rating: 5 (1 votes)
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