The mining craze has faded, you have a stash of cryptocurrency or just the good old dollars in your bank account. You ask yourself, how do I stack up some more money? Then it hits you. If there is a foreign exchange for different currencies, there must be one for cryptocurrencies. Alternatively, perhaps someone mentioned it to you, a blog post. You may also have seen it on a news channel, but they did not tell you where you can do it and how best to choose. Even if they did, something is missing.
That is why you are here. We are going to give you an informed opinion. From this, we hope that you will make an informed choice. We are going to compare and review two platforms that were founded continents apart. Why? Because cryptocurrency is global, why should a review not be?
Before we go any further, Let’s clarify something quickly. Such exchanges offer trading in two types of currencies, fiat currency and cryptocurrency. Fiat currency is the currency supported by local governments, e.g., the U.S dollar, Euro, or Pounds. Cryptocurrency, as you might be well aware of, are the likes of Bitcoin and Ethereum
Bitstamp has the largest market share when it comes to trading BTC/USD and BTC/EUR. Coinbase, on the other hand, leads on DASH/BTC, ETC/BTC. What do all these abbreviations stand for? The currency, of course. However, you already know that. EUR, USD, and BTC might be more familiar, for Euro, U.S dollar, and Bitcoin. DASH stands for digital cash, ETC for Ethereum.
Coinbase and Bitstamp
Coinbase was founded in 2012 and rebranded to Global Digital Asset Exchange, GDAX, in 2016. It has its headquarters in San Francisco. They offer buy-and-sell trading abilities in 32 countries, with the cryptocurrency available in 190 countries.
Furthermore, Coinbase brokes the trade of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, and LiteCoin. Developers and merchants can use an API that can integrate into applications. You can then accept payments in digital currency.
Bitstamp, on the other hand, was founded in 2011. Bitstamp is self-regulated with in-house practices that prevent money laundering. These practices also assist in customer authentication. Many countries legally recognize Bitstamp, including 28 E.U member states. Bitstamp received a license grant from the government of Luxembourg. They can now operate as a payment institution in the E.U.
Bitstamp helps you access and control your account through custom software using their API. It was also one of the ten virtual currency exchange platforms that responded to a survey by the New York Attorney General. It also has the approval to conduct the virtual trading of currency from the New York State Department of Financial Services.
Differences Between Coinbase and Bitstamp
On Coinbase, clients make Cryptocurrency purchases from Coinbase using rates determined by GDAX. Hence Coinbase is more of a vendor platform that offers the feature of buying for fiat from or selling cryptocurrency to Coinbase for fiat.
On the other hand, Bitstamp offers proper trading between users. For example, if you want to sell Bitcoins at a specific price, the platform matches you to a seller who offers coins at the same price and vice versa.
1. User Interfaces
When it comes to the method of interacting with the platforms, the functionality of both systems seems somewhat similar. However, Coinbase has a more intuitive, direct, and user-friendly interface that a beginner can dive directly into without much fumbling. You can go straight into trading on Coinbase, and you won’t require much learning to begin. On the other hand, trading on Bitstamp has a technical approach to the process, even for a beginner. It may take you a while to get used to if you’re new. Most experienced technicians and traders will feel more at home with this interface. Needless to say, once you have conquered the inevitable learning curve, you should feel right at home on both platforms.
On the same topic, the beauty of Bitstamp is in the advanced trading tools it offers. With a variety of tools for in-depth analysis for the client that reflects the market state in real-time. One such tool is the Trade review-powered candlestick chart. Coinbase offers Coinbase pro, a GDAX rebranded product, which is a solution for professional investors.
2. Safety and Security
Coinbase has never experienced a security compromise in its history of operation. Many people would see this as an advantage for Coinbase, and they would be right. The few times their security could have suffered, there was a sudden drop in the price of Ethereum. This drop, however, was due to a massive sale and not due to any technical failure on their part. Many clients lost money, but the trades were final. There was no violation of how a trading platform should work. This occurrence in itself goes to demonstrate the volatility of the cryptocurrency and any other market.
Coinbase has provided the details of its users to the Internal Revenue Service, which you know as the IRS. This cooperation with the IRS happened in February of 2018, and all clients were notified of this beforehand. Coinbase is required by the IRS to report any users who have traded more than 20,000 US dollars in a year. This exposition might not be a pleasing thing to many, especially people who do not want cryptocurrency to undergo regulation.
3. Cold Storage
Furthermore, they secure 98% of their cryptocurrency assets in cold storage, which means your money remains safely tucked away. You cannot suddenly lose all your currency to a bad trade or security breach.
On the other hand, Bitstamp has had a past that is not as stellar. A couple of years back, in 2015, to be precise, a security breach plagued Bitstamp that resulted in the loss of 19,000 BTC. Good fellas though, they made sure no client bore the responsibility of the loss. They took it upon themselves and refunded clients. Since then, their security has been nothing short of exemplary.
Bitstamp has a majority of its assets tucked away in cold storage, as well. It does not end there. Ernst & Young has audited Bitstamp and ensured that they handle the client’s money. This audit also including handling and storage of all your digital assets.
With two factor-authentication Bitstamp makes sure that only you can access your account. You need more than your strong password to log into your account. Two factor-authentication requires a client to use two combined methods of identity verification. Two-factor authentication uses your password and a system-generated token that only you can access. The user receives this token through a supported channel of their choice, e.g., SMS or email.
Both of these platforms have the option of making transactions in the SEPA. SEPA refers to the Single Euro Payments Area. With 33 member states, money transfer in the European Economic Area becomes convenient.
For deposits of Euros to Bitstamp, there is no fee charged if the transaction occurs in SEPA. This feature is the same for Euro deposits to Coinbase in the SEPA.
On Coinbase, bank transfer deposits made with U.S dollars are free. However, any time you buy or sell a cryptocurrency, you pay a 1.49% charge. When you conduct similar transactions through a credit card, the rate more than doubles to 3.99%.
On Bitstamp, every sale transaction incurs a fee of 5% of the transaction amount when using a credit card. There are no transaction fees for cryptocurrency withdrawals. If you withdraw less than 1000 U.S dollars, you pay a $10 fee. For withdrawals higher than that, you pay a 2% fee.
1. Countries of Operation
Bitstamp operates in the 28 E.U member states and an additional 50 countries worldwide. Coinbase, on the other hand, has operations in 32 Countries. As previously mentioned, cryptocurrency available in 190 countries.
2. Preferences Due to Location
Considering that Coinbase has headquarters in the U.S, citizens might be more inclined to trade on their platform. You might prefer them because of this factor. Perhaps then we can say the same for Bitstamp. Considering that Euro deposits in both platforms incur no fee if made through the SEPA, that could bring you to view other factors.
3. Taxman Relations
4. Customer Support
The beginning of the journey of trading might be frustrating or in some ways, a cumbersome undertaking. However, most activities that you have never participated in before have a learning curve too. Of course, you will need time and effort. However, when you get stuck or need some clarification that is not available in the FAQ, what then?
Coinbase has a robust customer service and has built a solid reputation for itself. Going above and beyond, they have added phone client support. This should come as an advantage to you as a user. Most crypto trading software does not come with phone support. This feature is a first within the whole industry, and it is quite a difficult standard to beat.
Bitstamp has received plenty of complaints, many of which are visible on their website. You need to note that ’sBitstamp’s support has answered most of these complaints directly. Some of these were of clients having their accounts closed due to unusually large deposits. From what we could reasonably collect, all the owners of these closed accounts received full refunds.
5. API for Developers
Bitstamp, as previously mentioned, allows account access and control through custom software. Why should this matter? Perhaps you do not like their interface. Maybe you would like to establish a more stringent trading mechanism. You may also want to test some trading models, or you run out of coffee, or something unfortunate happens. That would negate all the work you’ve done. Alternatively, you’d rather be doing something else.
Whatever the case, there is a lot of legitimate trading activities that can be done with Bitstamp’sBitstamp’s API.
Coinbase has enabled payments to integrate into the systems of other businesses. This way, they can set themselves apart and serve a more significant customer base. As at the end of 2016, Coinbase had arranged for Bitcoin payments to Dell and other familiar brands.
What this means for businesses is that you can leverage the power of cryptocurrency. You can take advantage of the vast user base and lead the market in paving the way for the legal trade. Coinbase has cryptocurrency support in 190 countries. That should count for something.
Verdict of Bitstamp vs Coinbase
From the features pointed out above, these are both great platforms. The questions you should ask yourself is, do you want a brokerage platform like Coinbase or a direct user to user trade like in Bitstamp? Coinbase Pro is a feature for advanced trading for users. On the other hand, Bitstamp’sBitstamp’s API allows access and control through custom software. The field could be level here or give the skilled user the ability to make the most of Bitstamps API.
Are you comfortable with sharing your information with the IRS? Will that alone deter you from using Coinbase? Perhaps the number of trading pairs that the platform offers, e.g., BTC/USD are what is of concern for you. You should note that Bitstamp added three new currencies in 2017 with the intent to add more in the years to come. Coinbase might not be the option for you if you are seeking the more exotic types of cryptocurrency.
In terms of trading volume, the significant players are Coinbase in August of 2017, becoming the first unicorn. Coinbase is valued at more than 1 billion U.S Dollars. Bitstamp has been known to clock 9 figure 24-hour trading volumes.
We always recommend that you choose a platform that charges you lower fees. In the long run, these fees accrue into large amounts. You end up paying so many expenses that it negatively impacts your profitability. When you look at Bitstamp and Coinbase, also consider the fees you pay for trading.
We would go for Bitstamp. However, hey, one man’s meat, is another’s poison. What would your platform of choice be?