Binance vs. Coinbase: How do they compare?
One of the first steps into cryptocurrency investment is learning where to buy digital assets like Bitcoin (BTC), Ether (ETH) or a smaller cap altcoin. While there are a plethora of platforms available that serve the purpose, Binance and Coinbase stand out as the most adopted and popular crypto exchanges worldwide.
Deciding which crypto exchange is right for you should be your primary concern when looking to invest in the market. Beginners, especially, could be discouraged if the experience is not smooth enough and poor accessibility steps in the way of a purchase.
Both exchanges have been around for several years. Coinbase was established as early as 2012, Binance in 2017. Is Coinbase better than Binance then? It’s widely believed that Coinbase is a more straightforward platform to use. How do they compare, and is it fair to think Binance is good for beginners?
We’ll try to answer these and other questions, highlighting the main differences between the two exchanges and offering readers relevant guidelines on establishing which crypto exchange platform is best for their trading strategy.
Binance vs. Coinbase — Which should you choose?
There isn’t a better platform; it’s mainly a question of which is more suitable for the new user or for any user, based on their investment goals.
They both have advantages and disadvantages, but if we had to define the two exchanges in a nutshell, Coinbase is easier to use and ideal for the beginner while Binance is cheaper and better suited to the advanced trader.
However, there is much more to consider before choosing the platform to start a journey into crypto trading and investment, and we encourage you to read on to find out more.
A little history of the two exchanges
Binance was founded in 2017 by Changpeng Zhao, also known as CZ, a Chinese-Canadian business executive, and previously, a developer who worked on creating Blockchain.info and also served as chief technology officer for OkCoin, another crypto exchange.
Binance is currently the world’s largest exchange in terms of the daily trading volume of cryptocurrencies. It is indeed Coinbase’s direct competitor both in terms of trading volumes and market capitalization.
Binance is available in more than 180 countries worldwide, though they had to create a separate company, Binance.US, specifically for United States users due to the country’s more burdensome local jurisdictional regulations.
The exchange has faced several regulatory actions in different countries worldwide, mainly due to accusations of money laundering issues. The company had to relocate several times before finally being established and headquartered in the Cayman Islands.
Binance has earned a reputation as an exchange that sometimes has carried out some business activities before asking for permission, which has caused further regulatory issues. Acting without too many restrictions certainly favors more rapid innovation, which the exchange has shown over time and other platforms. However, it has also caused closer scrutiny from authorities.
In 2020, the exchange launched Binance Smart Chain (BSC), a blockchain network built for running smart contract-based decentralized applications (DApps) and allowing users to manage their digital assets cross-chain. Binance Smart Chain is supported by Coinbase Cloud, which offers secure read/write and participation infrastructure for BSC, empowering those looking to build on the chain or help secure the network.
Functionalities like Bitcoin mining, decentralized finance (DeFi) and other financial crypto services have sealed Binance’s success over the years.
Coinbase took its name from the content of the “input” of a generation transaction that has no parent transaction outputs, and it is called “coinbase.” In simple words, it’s the first transaction of a new block.
The U.S.-based platform was the first mainstream Bitcoin exchange, founded by former Airbnb engineer Brian Armstrong and former Goldman Sachs trader Fred Ehrsam. It launched in the United States in June 2012, three years after the Bitcoin white paper became known worldwide.
At first, Bitcoin was the only existing cryptocurrency traded on the platform, and for the first time, it was available for purchase via bank transfers.
The exchange received funding from prominent venture capital companies like Union Square Ventures and Andreessen Horowitz in the first few years. It partnered with Overstock, Expedia, and Dell to allow them to accept Bitcoin payments.
Coinbase effectively has two platforms, Coinbase and Coinbase Pro. Coinbase Pro is derived from the previous platform known as GDAX (Global Digital Asset Exchange) and is aimed at more advanced traders. The straightforward Coinbase platform is designed with new crypto investors who simply need to buy or convert cryptocurrency. It can be used for educational purposes, too.
In April 2021, Coinbase Global became the first cryptocurrency company to go public on the Nasdaq exchange via a direct listing (investments offered directly to the public with no brokers involved). The platform currently has approximately 73 million verified users, 10,000 institutions, and 185,000 ecosystem partners in over 100 countries who trust Coinbase to quickly and securely invest in cryptocurrencies and use it as a means of exchange.
Coinbase has primarily succeeded in staying on the right path on the regulatory side. However, the crypto community has widely criticized it for working tightly with the IRS and the equivalent office in other countries to reveal personal data for taxation purposes.
How do they compare?
Both Coinbase and Binance offer users the possibility to purchase cryptocurrency with fiat currencies like the U.S. dollar, the euro and the pound sterling. However, their service offering is rather different, starting with the number of cryptos available on each platform.
Binance provides access to over 500 cryptocurrencies, Binance US to over 60 types of digital assets. Coinbase and Coinbase Pro offer over 90 cryptocurrencies.
Users who want to buy, hold or trade the leading cryptocurrencies could simply use Coinbase, where coins like Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Solana (SOL) and all major cryptocurrencies are widely available.
Both beginners and experienced crypto traders might choose a more comprehensive platform like Binance that offers several trading options for smaller cap coins or tokens. Minimum order amounts are $2 for Coinbase and $1 for Binance.
Binance vs. Coinbase Pro fees
The different fee structure is a significant distinction between the two platforms. Crypto exchange fees can define a trader or investor’s choice, especially when considering the costs for fund deposits and withdrawals.
Binance has its own token BNB, and for this reason, it’s capable of offering lower fees than Coinbase.
Bank transfers of available fiat currencies are free. However, buying cryptocurrencies with a credit card incurs a 4.5% fee on Binance.US and 1.8% on the primary exchange.
Deposits are free for all cryptocurrencies, while withdrawals vary depending on the blockchain network and can fluctuate due to factors such as network congestion.
Trades using BNB will grant users a 25% discount. The standard maker and taker trading fee is 0.1%, which drops down to 0.02% when an increased volume of trades occurs.
Bank transfers are also free on Coinbase Pro. However, the maker-taker fee is 0.5% for those who trade less than $10,000 a month. It only lowers down to 0.1% when trade volumes are incredibly high or at “whale” levels, which means in the range of millions of dollars.
There is a 1% fee to convert and withdraw crypto to cash in addition to standard network fees. A network fee is necessary to have the transaction processed by the blockchain network.
A 3.99% fee is applied for credit card purchases, 1.49% for Coinbase wallet or bank account purchases, and wire transfers are $10 for deposits and $25 for withdrawals.
In summary, Binance offers much lower fees per transaction. It also provides a fee structure that encourages high-volume traders to use it.
Binance vs. Coinbase: Features
Generally speaking, Coinbase allows you to buy and sell cryptocurrencies simply with no advanced features. Binance, on the other hand, provides a generous set of tools for a more comprehensive trading experience.
Binance unique features
Recommendations: Binance Dex offers access to top DApp recommendations on DeFi (including lending, earning, insurance and derivative services), NFTs, cross-chain bridge solutions, the BSC building tool, trading and the chance to buy any cryptocurrency with MoonPay payment system.
User rewards: To encourage user participation on their platform, Binance often holds giveaways and challenges, with users claiming prizes in the Binance rewards center. Moreover, Binance frequently airdrops coins or tokens soon to be listed on their platform.
Binance Academy: It provides a free comprehensive crypto education, ideal for beginners and advanced traders with tutorials on trading, mining, NFT, metaverse and all things crypto.
Multiple types of trade options: Binance offers many trading tools, including advanced charting with hundreds of overlay managements and indicators via the embedded TradingView charts.
API keys: Binance allows third-party apps to integrate with Binance by giving the public access to their API keys.
Coinbase unique features
Learn and earn: By watching education videos on cryptocurrency projects, users can earn rewards equal to a small amount of the cryptocurrency they are exploring.
Newsfeed: Users can enjoy the built-in newsfeed service on Coinbase to keep up-to-date on current crypto news, trends and developments in the cryptocurrency market.
Price alerts: Coinbase users can receive mobile pushed notifications to view updates or price changes of their cryptocurrency through the provided watchlist.
Binance vs. Coinbase: Wallets
Leaving crypto assets on exchanges is not recommended for beginners and advanced users because single-server platforms are more vulnerable to hacking attacks than distributed systems.
There are different types of cryptocurrency wallets, and many are hot wallets – as opposed to cold wallets or storage – that work when connected to the internet. Internet-based wallets are more vulnerable to hacking attacks, and therefore, users should consider the best protection for their assets.
Moreover, crypto exchange wallets are custodial, meaning that the exchanges own custody of their customers’ assets, which might be risky if the exchange goes bankrupt or suddenly closes business for different reasons, as happened in the past with the Canadian Exchange Quadriga, for example.
With custodial wallets, users never have complete control of their crypto assets as the exchange acts as a bank; thus, the owners do not possess the private keys to claim full ownership.
On the other hand, moving assets out of the custodial wallet means that the owners need to take full responsibility for their investments, and if they lose the private keys, they might lose access to their funds too.
Coinbase and Binance both have stand-alone crypto wallet apps or browser versions. The Trust Wallet was acquired by Binance in 2018, and it is now the official Binance wallet.
It supports over 53 blockchains and over 1 million digital assets, including DApps and NFTs.
With over five million users, Trust Wallet secures assets with a PIN, biometric access, encrypted key as well as a 12-word recovery phrase. It allows earning interest on the stored cryptocurrencies and staking coins, giving currency holders some decision power on the network by voting and generating an income.
The Coinbase Wallet allows users to store over 4000 crypto assets in one place, including cryptocurrencies, NFTs and DApps. It can be used both on mobile or browser, and it’s supposed to protect digital assets with industry-leading security.
It secures assets with a password and biometric access controls. It also provides extra protection with an encrypted 12-word recovery phrase that allows access to the wallet.
Like their standard trading platform counterpart, the Coinbase wallet is intuitive and easy to use, while the Binance Trust Wallet is less straightforward but offers lower fees.
Binance vs. Coinbase: Security
The crypto world has come to terms with security issues that have rightly distraught users in the past. The multiple security hacks that occurred over the years, though, have encouraged exchanges to deliver enhanced security features that grant more reliability nowadays.
Despite that, leaving assets on exchanges is still not thoroughly recommended, and users should be aware of the possible risks that such action might bring. Coinbase appears more secure, considering it never had significant attacks since its inception.
On the other hand, in 2019, Binance suffered a significant hack, with as many as 7000 Bitcoin stolen from the exchange. Binance has since taken rigorous measures to increase all security standards following the painful episode.
Binance and Coinbase offer robust security features to protect users’ digital assets. However, Coinbase appears more transparent about its steps to keep customers’ funds safe.
Here are a few of the security options available on each platform.
Binance security features
Binance offers many protection tools for its customers regarding security features. However, it sometimes lacks full transparency on their details.
For instance, the platform does mention that the vast majority of user funds and assets are safely stored in offline, cold storage facilities. However, it does not reveal the exact amount of such secured funds.
Binance supports rigid sign-in protocols, including two-factor authentication, based on SMS, Google authenticator app, hardware, or email methods. It provides advanced access control with opt-in security features such as IP and wallet address whitelisting, API access control and device management.
Whitelisting crypto addresses is an increasingly common feature among exchanges. It gives the ability to restrict access to addresses that can withdraw a user’s cryptocurrency. Customers save them in their address book, blocking other addresses from accessing their funds.
Binance provides emergency emails, notifications, and security alerts if suspicious activity is detected. The exchange risk management system analyzes every withdrawal attempt, password reset, two-factor authentication and email address change. Unusual activity triggers suspended withdrawals for a minimum of 24–48 hours for the user’s benefit.
Advanced-Data Encryption is offered to protect user data and personal information, including Know Your Customer (KYC) information and data in transit, secured via end-to-end encryption, thus ensuring only users have access to their data.
Advanced verification feature requires that a government-issued photo ID and a picture of the customer are provided to unlock more features such as access to larger deposit and withdrawal limits.
Coinbase security features
Coinbase guarantees to keep 98% of assets offline in cold storage and is the only crypto exchange that provides FDIC (Federal Deposit Insurance Corporation) insurance with up to $250K on currency deposits. Coinbase offers two-factor authentication via SMS or the Google Authenticator app.
Coinbase also offers cryptocurrency vaults to secure customers’ stored digital assets further. These vaults prevent stored crypto from being immediately withdrawn by adding optional security steps like multiple user approvals to avoid fraudulent withdrawals. They are also time-locked so that unapproved vault withdrawals get canceled within 24 hours.
Binance vs. Coinbase: Main differences
Binance vs Coinbase taxes
Coinbase uses a First in, First out method for a customer’s Cost Basis tax report. The report summarizes all crypto purchases and sales along with the cost basis and capital gains a customer incurred during a given financial year.
Binance also offers users the possibility to generate their account statements to perform tax calculations. All transactions are tracked and accounted for automatically through the Tax Tool Functionality. The Tax Tool Functionality API can automatically file taxes via third-party tax tool vendors for more than one financial year.
Coinbase vs. Binance — staking rewards compared
Staking lets investors earn income with their crypto by contributing to a particular asset's proof-of-stake (PoS) network. When users stake crypto, they make the underlying blockchain of that asset more secure and more efficient, and, in exchange, they get rewarded with more assets from the network.
Without the need to manage private keys, trade, or perform other complicated tasks, users simply can participate in staking projects and earn cryptocurrencies easily and safely by submitting a simple request.
Coinbase and Binance both support staking for multiple cryptocurrencies and digital assets.
Besides earning cryptocurrencies by watching educational videos, Coinbase offers a staking service for a limited number of cryptocurrencies, including ETH, Tezos (XTZ) and Algorand (ALGO).
Binance offers DeFi staking and locked staking. DeFi stacking helps proxy users to participate in related decentralized projects in a user-friendly and straightforward manner.
“Locked staking” refers to the process of locking digital assets on a PoS blockchain for a specific time. This contributes to the network and also provides the user with staking rewards.