During the Great Bitcoin Bubble of 2017/2018, everyone wanted a piece of Bitcoin in their portfolio. It seems mania comes and goes, with the recent Bitcoin halving stirring another frenzy of Bitcoin buying as speculators continue to hope that the cryptocurrency starts its second bull run to the moon.
If you’re planning on getting into crypto, you have two options. The first is to buy a Bitcoin or a satoshi (0.00000001-BTC). You store the crypto in a wallet on your computer or a hard, offline wallet like a Ledger Nano or Trezor.
Buying and holding, or “HODLing” crypto, mean that you have faith in the long-term viability of the digital asset as a store of value. You believe Bitcoin might be the future of the monetary system, or altcoins will one day be worth billions.
The second method of investing in the crypto sphere is through trading. With trading, you take the approach of trading crypto-to-crypto pairs, as well as crypto-to-fiat pairs, in the same manner as you would when trading with a forex broker.
Traders are interested in speculating on the price of crypto assets, using a strategy to try and make some profit out of the market. Traders do not have to be die-hard crypto enthusiasts, and many of them want to turn their trading profits into USD – or “Lambos” or other hard assets.
How you want to involve yourself with crypto is up to you.
Either way, you’ll have to open an account when you want to purchase crypto. To do that, you’ll have to register with an exchange that trades in your region. Think of exchanges like a stock market/forex market, as well as a broker – all rolled into one.
An exchange helps your buy and sell coins and tokens, and some of them also provide trading platforms where you can trade other crypto-to-crypto and crypto-to-fiat pairs.
In this review, we’re going to unpack the offerings from Coinbase and Coinbase Pro – the most established regulated US-facing exchanges.
What’s the Difference Between Coinbase and Coinbase Pro?
As we mentioned, you have two options when going into crypto investing. Coinbase understands this model and split its business model into two divisions to cater to the specific needs of the market.
As of September 2019, Coinbase separated its business into Coinbase, and Coinbase Pro. Coinbase was to be a brokerage providing for the buying and selling of crypto assets, while Coinbase Pro (GDAX), was to host the company’s trading platform.
Essentially, if you want to buy crypto for a HODL strategy, you’ll need to use Coinbase. If you want to trade the crypto markets, then you’ll need to open an account with Coinbase Pro.
Crypto trading is a relatively new system involving thousands of markets, and hundreds of exchanges competing for traders business.
As a result, Coinbase felt it was time to separate the two primary business functions involved with the company. The Global Digital Asset Exchange (GDAX) moved over to the new Coinbase Pro platform, maintaining the Coinbase branding that is a household name in American crypto markets.
Coinbase stays a brokerage, offering Americans and Europeans in 32 countries a convenient place to purchase their crypto.
Coinbase Or Coinbase Pro Market Is Bigger?
Coinbase Pro and Coinbase operate in totally different segments of the market. Coinbase acts as a brokerage, buying and selling crypto at a retail level. Coinbase Pro acts as a crypto exchange, providing a platform for traders to speculate on the price action of various crypto pairs.
Coinbase Pro presents customers with a diverse offering of premium crypto markets to trade. Unfortunately, Coinbase it somewhat limited in its range of markets, with 58 pairs on offer. That’s not as many as Binance, who offer 612 markets
Still, Coinbase Pro sits in the top 50 exchanges in terms of daily volumes, and it has adequate levels of liquidity. Liquidity is essential to traders that want to minimize slippage in settling trades. Slippage is the difference in the price you get on your fill. Exchanges with the best liquidity reduce slippage, mitigating potential losses while maximizing profits for traders.
Which One Is Cheaper? Coinbase Or Coinbase Pro?
Coinbase and Coinbase Pro accept the same payment methods for deposits and withdrawals. This regulated exchange operates using KYC and AML policies, so you’ll need to verify your identity when you want to withdraw from the platform.
Users can transfer funds between Coinbase, and Coinbase Pro accounts instantly, with no transaction fees. Customers will also find it comforting that all Coinbase and Coinbase Pro accounts come with FDIC insurance for amounts up to $250,000.
Coinbase and Coinbase Pro charge 3.99% for credit card transactions, that’s a full 1% higher than the average credit card rate, which is already high. Bank transfers come with a 1.49% fee for buying, and on the exchange, the maker/taker system comes with costs of between 0.1% to 0.25%, depending on the volume you trade.
Coinbase Pro offers traders margin trading services, with allowance for up to 3X leverage on BTC/USD and ETH/USD, with a $10,000 limit. There is 2X leverage for BTC/EUR, with a limit of 3,000 EUR, and 2X for the LTC/USD pair, with limits up to $500.
Is Coinbase More User Friendly Than Coinbase Pro?
The Coinbase Pro trading platform offers you a world-class interface with real-time order books. You also get outstanding charting packages with technical analysis tools for better trading decisions. Coinbase Pro also works with the following order types.
- Margin Orders – Trade with up to 3X leverage on crypto/crypto and crypto/fiat pairs. Build small accounts fast if you can handle the risk.
- Stop Orders – Set your stop loss and never let the market catch you slipping.
- Limit Orders – Limit the price exposure to a pair when filling your order.
- Market Order – Set at the current market price.
Can We Trade Via Mobile In Coinbase And Coinbase Pro?
Coinbase Pro offers a mobile app for Android. However, after inspecting the app, we found it to be a very watered-down version of the platform. There’s limited functionality, and we wouldn’t use it for handling our trades. In areas where the connection is poor, you can expect the app to drop during trades.
We recommend that you avoid trading on your mobile device. You can use the app for monitoring price action and thinking about trading ideas. However, with the limited functionality and connectivity on offer, we suggest you avoid mobile and stick with the desktop platform instead.
Coinbase Or Coinbase Pro Has Better Support?
Coinbase and Coinbase Pro share the same support team. Unfortunately, both are terrible. You get the option of contacting an email ticket desk, with the same 24-hour response time. If you’re in real trouble with your margin account, then you’ll have to call the support team during office hours, Monday to Friday, from 6 am to 6 pm PT.
The Verdict By Bitcoin Tester
Coinbase is the ideal venue for American passport holders to get access to cryptocurrency. You can pay with your credit card and complete your KYC online.
However, Americans need to be aware that Coinbase and Coinbase Pro report to the IRS, and you’ll need to declare any capital gains you make on your crypto assets. Failing to comply with the tax code for crypto investments and capital gains could result in severe legal penalties.
If you have no history of trading the markets, and you don’t want to learn how to trade, then there is no need for you ever to use Coinbase Pro. Coinbase Pro is a fully-functional crypto trading platform. Newbie investors that have no idea how to trade should stay away for trading accounts.
To be successful as a crypto trader, you need an education. You’ll have to learn a strategy that makes your trading activity on the platform profitable. Without a profitable strategy, you’re playing with fire, and you’ll end up losing all your funds.
Take time to practice on a trading platform where you don’t have to use real money before you open a trading account on Coinbase Pro with real money.
Once you have a handle on trading a profitable strategy, Coinbase Pro offers you an attractive trading venue as a US-based trader. You get access to all the top crypto markets, excellent liquidity, and a suite of trading tools on your platform that allow you to complete tasks like technical analysis on all your favorite pairs.