Looking for the best place to get started with cryptocurrency trading?
Security and risk continues to be a serious concern with exchange sites being hacked and large amounts of cryptocurrency assets being stolen, not to mention scam sites that open and collect deposits until they are shutdown.
However, there are a number of exchanges that have established themselves as reputable, secure, and well-financed. In the United States, the two most successful exchanges are Coinbase and Gemini, so we’ve reviewed both in this Gemini vs Coinbase comparison.
|Site Type||Buy/Sell Spot Market||Exchange & Auction|
|Location||California, USA||New York, USA|
|Funding Methods||Credit/Debit Card and Bank Transfer||Bank Transfer|
|Withdrawal Methods||PayPal, Bank Transfer||Bank Transfer|
|Coins Traded||Bitcoin, Ethereum, Litecoin||Bitcoin, Ethereum, Bitcoin Cash|
|Limits||Based on funding||Limited deposits|
Two Bitcoin Exchanges for Newcomers
Security and funding transfers are handled professionally and follow legal requirements. Verification of your identity is needed to begin, but once that is accomplished, it’s quick to get started with a debit or credit card.
Trading on Coinbase consists of spot market buying and selling, meaning that you buy and sell your cryptocurrencies immediately at whatever price the market is at the moment you press the buy or sell button. Coinbase offers trading in Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, which are all established cryptocurrencies with plenty of liquidity.
Coinbase has a fairly complex trading limit system that determines the volume you’re allowed to trade based on the type of funding source you use (credit card vs. wire transfer, for example) and your trading history on Coinbase. As you complete trades, Coinbase loosens the restraints on your account.
This means that in addition to spot market trading, Gemini maintains an order book of buy and sell orders called limit orders. Limit orders allow traders to ask for a price above or below the spot market, specify how much to buy or sell, and how long to wait for the order to trigger before cancelling it.
Like many exchanges, Gemini maintains an order book that displays for traders the amount of demand that exists to buy or sell a cryptocurrency at any given price.
Funding your trading account with Gemini requires either a bank transfer or a wire transfer. They don’t take credit or debit cards. You’ll need to complete an identity verification before you begin, which is standard practice in the industry to prevent criminal or fraudulent transactions.
The only trading limits that Gemini enforces is a deposit limit of $500 per day and $15,000 per month from bank accounts. Wire transfers, however, aren’t affected by these limits.
Main Differences To Consider
Gemini, on the other hand, offers a trading experience that is closer to a professional exchange, including an auction facility. It discourages amateurs from trading in high volume by imposing a $500 daily deposit limit, but doesn’t limit deposits by wire transfers preferred by institutional traders.
How Do the Fees on Coinbase Compare to the Fees on Gemini?
Coinbase loses the battle on fees when compared with Gemini.
Gemini charges only a 0.25% fee on trades. Deposits and withdrawals are free.
Coinbase, on the other hand, charges a 3.99% fee for credit and debit card purchases and 1.49% for bank transfers to its accounts. In addition to this, Coinbase collects a trading fee in the form of price spreads between the buy and sell prices that it quotes.
Which is Safer, Gemini or Coinbase?
Both of these exchanges follow financial industry regulations and practices that protect their customer’s assets. They keep user funds separated from the exchange’s operational funding to prevent loss if the exchange has a liquidity crisis.
Coinbase and Gemini also have implemented careful offline storage of most of their cryptocurrency holdings to avoid the kind of embarrassing hacker heists that have happened at less secure exchanges.
Anyone trading cryptocurrencies should have their own hot and cold wallets to store their coins in. Pros never leave coins on exchanges for more than short-term trading.PRO TIP
Why Is Gemini Not Being Used as Much as Coinbase?
Gemini has been in existence only since 2015, while Coinbase has had much longer to build a community and reputation. Another limiting factor for Gemini is the daily deposit limit of $500 that makes it less attractive to individual traders who’d like trade more than this.
Another issue for Gemini is that its direct competition from Coinbase is actually GDAX, the professional exchange operated by Coinbase. Many traders simply use Coinbase as a pass-through account to move funds or Bitcoins to GDAX where the fees are more reasonable.
Are There Cheaper Alternatives to Coinbase or Gemini?
The lowest cost cryptocurrency exchanges are the pure exchanges that don’t handle fiat currencies. This cuts much of the cost of running these exchanges since it eliminates the regulatory and financial transaction overhead.
These exchanges usually charge a small trading fee on each trade and a withdrawal fee that covers the cost of using the cryptocurrency blockchain networks.
Many traders keep their trading lean by buying USD Tether, a popular proxy coin that’s pegged to the US dollar. They move these coins in and out of pure cryptocurrency exchanges and convert them back to US dollars elsewhere.PRO TIP
Why Are Coinbase’s Spreads So Large?
Coinbase collects its per-trade fee in the form of a spread between the buy and sell prices that can be over 1%. The reason Coinbase’s spreads are wide is probably for a couple of reasons. Coinbase is not a true exchange, but a convenient place to quickly convert Bitcoin to US dollars and back again.
The assumption is that large volume traders will move their capital to Coinbase’s professional exchange, GDAX. Therefore, most trades on Coinbase are lower volume. Also, charging a higher trading fee encourages traders to move their activity to GDAX if it becomes too expensive for them.
Transferring funds to GDAX from Coinbase is free and easy to do. If you plan to trade in high volume for profit, GDAX is the better platform.PRO TIP
Top 10 Alternatives
|Kraken||Created in 2011, this San Francisco-headquartered exchange has focused on the Euro market in the past. Today, Kraken accepts funding in Canadian dollars, US dollars, British pounds, and Japanese yen, and it’s one of the most successful cryptocurrency trading platforms.||
•Well-established and accepted exchange
•International focus, accepting most major fiat currencies
•Customer support has been overwhelmed by influx of new traders
|Bittrex||This new pure cryptocurrency exchange operates in the United States and offers coin-to-coin trading in over 190 different cryptocurrencies. The catch is that they don’t take legal currency like US dollars, so you’ll need to own a major cryptocurrency like Bitcoin to get started.||
•The only US-based pure cryptocurrency exchange
•Regulated like a financial institution
•Doesn’t accept deposits or withdrawals in US dollars
|Binance||A new Asian pure cryptocurrency exchange based in Hong Kong, Binance is positioning itself to be the place Asian traders go to trade in the up and coming alt-coins. Like other pure cryptocurrency exchanges, Binance avoids the hassle of handling legal currencies by using proxy coins like Bitcoin or USD Tether to serve as the primary trading currency.||
•Founded by an experienced team of former cryptocurrency executives and developers
•Some of the lowest fees among exchanges
•Chinese regulations could disrupt Binance and other exchanges in the future
|Bitfinex||This exchange is also based out of Hong Kong and has been in operation since 2014. It offers trading in a wide variety of alt-coins priced in Bitcoin and US dollars.||
•Allows several payment options
•An established, international exchange
•Has been hacked in the past
|Bitstamp||This European exchange is one of the veterans in the business and is based in the UK where regulations are quite liberal. They offer trading in Bitcoin, Ethereum, Ripple, and Litecoin, and have been fully licensed in the EU for Bitcoin trading.||
•An international exchange that accepts many legal currencies for funding
•UK-based and EU-licensed
•Doesn’t offer a full set of alt-coins for trading< [/wpsm_cons]
|HitBTC||This Danish cryptocurrency exchange has been in business since 2013 as a global platform for trading Bitcoin, Ethereum, Litecoin, USD Tether, Dogecoin, and other alt-coins. HitBTC accepts US dollars and Euros to support its international trading.||
•European exchange that accepts major legal currencies
•Features anonymous trading accounts
CONS:•There have been long delays in the past processing verifications of identity and withdrawals
|BitMEX||Headquartered in the Seychelles, an archipelago in the Indian Ocean, BitMex mainly handles trading in Bitcoin with US dollars and offers leveraged trading. There are also futures that can be traded on the site for Ethereum, Monero, and ZCash.||
•Offers leveraged trading, which makes short selling and higher profits possible
•Offers futures trading in alt-coins like Monero
•Restricted for US residents
|Quoinex||This cryptocurrency exchange was the first to be officially regulated in Japan starting in September 2017. The exchange is backed and managed by a team of traditional banking professionals who’ve made a foray into the Bitcoin market.||
•Fully regulated Bitcoin exchange in Japan
•Takes fiat currency deposits for trading
•Website is marketed to Asian traders and lacks an English translation
|Kucoin||This Hong Kong cryptocurrency exchange trades in a wide range of alt-coins and is well-known for its Kucoin Shares which were issued to raise its initial funding. Traders who own shares in Kucoin get preferential treatment such as trading fee rebates.||
•Kucoin shares give traders lower fees and other perks
•Offers anonymous trading with no identity verification
•Doesn’t accept legal currencies for deposit
|Coinigy||This site is based in Milwaukee, Wisconsin and offers access to most of the popular Bitcoin exchanges by bringing all of their APIs together into a single platform. Coinigy doesn’t actually handle transactions, rather the platform helps traders manage multiple trading accounts in one place.||
•Convenient platform for managing more than one exchange account
•Based in the US, making it easier for US residents to deal with international exchanges
•Adds an additional fee to your trading costs
What are the auctions that are on Gemini?
Auctions are a way to execute a daily trade for many buyers and sellers in a way that their orders are all guaranteed to be filled with a price determined by demand. These auctions are called “crosses” on other exchanges and are not the same as winner-take-all auctions.
How do Gemini’s auctions work?
Traders can place a market order that will make a purchase or sale at the final auction price, or set a limit order with a maximum or minimum price that’s acceptable. The auction software calculates the price at which the largest quantity of all the buy and sell orders can be filled.
How do Coinbase’s account limits work?
Coinbase limits the volume of cryptocurrency that you can trade with your account. The limits vary widely from trader to trader based on the payment method used, how old their account is, how many purchases they’ve made, and other factors. Traders can always see the limits that currently apply to them on their verification page.
How does identity verification work on these sites?
You will need to provide your legal name, address, and contact information. In addition to this, you’ll be required to scan and upload proof of this information. Typically, exchanges will accept government-issued photo ID and sometimes ask for a recent utility bill showing your current address.
Is it safe to leave coins on these exchanges when I’m not trading?
Generally speaking, yes, it is safe. However, the risks are much higher than leaving US dollars at a regulated bank. Cryptocurrency exchanges are a high-risk venture both for their users and their owners.
Bitcoin and other crypto-coins are notoriously volatile, which exposes traders to counterparty risks, meaning that it’s possible an exchange could have a liquidity crisis and collapse overnight. If that happened, your coins may be lost or frozen in your account while the exchange is closed.
Hackers have also been successful stealing Bitcoin from the exchanges, causing traders to lose them completely. There’s often no insurance for the cryptocurrency assets you leave in exchange accounts.
How can I trade in alt-coins like Ripple or Monero?
Exchanges like Coinbase and Gemini are convenient places to convert your US dollars to a major cryptocurrency like Bitcoin to trade for alt-coins elsewhere.
Cryptocurrency trading can become complicated because of the need to convert fiat currencies into cryptocurrencies at one exchange and move them to another. This is because alt-coins are generally traded only on pure cryptocurrency exchanges that don’t accept fiat currency deposits.
Which is the better exchange?
Coinbase and Gemini are roughly equivalent to each other in most categories. Where they differ is in the type of exchanges that they are, so the verdict comes down to ease of use and the needs of each trader.
Coinbase has a slightly wider selection of cryptocurrencies for trading and offers a simple trading experience that anyone can understand. Gemini, on the other hand, offers more advanced trading options that traders with professional investing experience will expect.
So which is the winner?
Coinbase edges out Gemini slightly by being the easiest place to learn cryptocurrency trading for newcomers, and it offers higher trading limits. Traders who want a professional experience can use Coinbase's GDAX platform. However, Gemini is a good choice if you need more sophisticated trading capabilities like auctions or lower deposit fees.