Justin is an active trader with more than 20-years of industry experience. He has worked at big banks and hedge funds including Citigroup, D. E. Shaw and Millennium Capital Management.
There are thousands of cryptocurrencies and thousands of exchanges to trade them on. However, there’s no getting away from two names dominating each sector. As bitcoin is the crypto most people are familiar with, the exchange they are most likely to have heard of or use is Coinbase. In the same way that some crypto alternatives to bitcoin are seen as superior to BTC, there are many Coinbase alternative exchanges and Coinbase alternatives, which are more than happy to pitch for the top spot. This article will cover the following:
Coinbase is a US-based crypto exchange, which has been in operation since 2012. It is the world’s most popular exchange to buy and sell bitcoin, ethereum, litecoin and other altcoins. More than 35 million people in over 100 countries trust Coinbase as a transaction system and store of assets.
One key plus point for users of Coinbase is that you can make an instant purchase of crypto using Visa, MasterCard credit and debit cards. This has led to it becoming the de facto exchange for buying cryptos. It now boasts:
As the old saying goes – if it’s not broken, don’t fix it. But many traders are keen to explore the Coinbase alternatives.
Coinbase is playing catch-up in three areas. All are related to the exchange appearing to go against the futuristic, decentralised and transparent nature of cryptos.
One of the alternatives to Coinbase is London based CEX, which has been helping people buy and sell bitcoin, ethereum and litecoin since 2013. Crucially though, the exchange has almost complete global coverage. It is available in 99% of the world’s countries and 47 US states.
One of the big question marks over the whole sector is to do with client safety. Crypto is, after all, an unregulated market.
CEX has prioritised developing its regulatory infrastructure. The group of companies has licenses in multiple jurisdictions and one entity CEX.IO LTD, has been registered as a Money Services Businesses (MSB). That scheme is administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the US Department of the Treasury.
The big selling point for CEX is that it has never lost any client funds. Coinbase is also committed to security. Approximately 97% of bitcoins at Coinbase are held in encrypted, geographically separated, offline storage. There is still a sense that some firms like CEX are getting the edge on Coinbase in terms of client safety.
In October 2020, some crypto traders found themselves unable to access their Coinbase accounts. For some, their logjam lasted more than a month, at a time when crypto prices were exceptionally volatile.
CEX doesn’t just compare well to Coinbase, it has a lot going for it in its own right.
There’s no disputing Coinbase’s credentials, the service is, for one thing, tailored to beginners. Those who come into the sector with a bit more experience might prefer the more advanced features offered by Binance.
Binance does lose some ground to Coinbase in terms of client safety. Being head-quartered in the US means that, despite its several mishaps, Coinbase is operating in a highly regulated environment.
Binance’s approach is a lot less transparent. As recently as June 2018, Binance users reported they were missing funds following a planned system ‘upgrade’. Binance issued an apology and offered 70% discounts on trading fees to prevent a rush for the door.
Kraken is one of the oldest and largest crypto exchanges. Founded in 2011, the firm has established a healthy reputation in the crypto community. But is it fair to say that it’s better than Coinbase?
The firm now has 100s of staff and has managed to maintain its revolutionary ideals. The one compromise to conformity is the need for clients to provide proof of ID to register. In most other ways. Kraken is on-message in terms of being part of the campaign to democratise the global financial system.
Kraken is very much the finished product. Its position in the market is secure and it is particularly popular with intermediate and advanced crypto investors. The functionality at Coinbase is more user-friendly but, at the same time, more limited.
Bitstamp has been operating for as long as Coinbase. Founded in 2011 the Luxembourg based exchange has a global client base.
Being regulated cuts both ways. A lot of investors will be delighted to have some additional security. It does mean that Bitstamp is not available in as many countries as Coinbase and margin trading is also not available at Bitstamp.
There’s nothing wrong with a bit of healthy competition. The recent scramble by Coinbase to open up services in new countries is an example of the dominant firm having to up its game.
How it pans out for the respective exchanges, and which transpires to be the best Coinbase alternative, is anyone’s guess but for now, at least, customers are certainly benefitting.
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