When buying and selling Bitcoin, you want to be sure that you’re using a legitimate exchange. Too many people have been burnt by exit scams and “hacks.”
With the recent announcement that JP Morgan will be providing banking services to the two major US-based cryptocurrency exchanges, Coinbase and Gemini gained a lot of credibility. Already two of the most established exchanges in the world, their approval by such a major bank is a big step toward mainstream acceptance and adoption of crypto.
Both exchanges are focused heavily on compliance, though we will see how the approaches they take differ quite markedly at points.
Read on for a detailed, in-depth comparison of Coinbase and Gemini.
After their $65 million settlement with Facebook, Cameron and Tyler Winklevoss twins invested heavily in Bitcoin, among other ventures. They claimed to have owned 1% of the circulating supply, worth over $1 billion today.
Gemini - which is the Latin word for “twin” - is the Winklevoss’s way of continuing to play a role in the future of technology. The exchange currently operates in 49 US states plus Washington DC and Puerto Rico, as well as 43 countries worldwide.
Since its launch, Gemini has carved out a lasting place for itself in the ever-evolving crypto landscape. It’s not the largest exchange out there - coming in at 17 in Nomics’ ranking of exchanges by volume - but it has established a reputation as one of the most secure and trustworthy.
In 2017, the Chicago Board Options Exchange (CBOE) - the largest options exchange in the world - launched the first ever Bitcoin futures contract in conjunction with Gemini.
With all that in mind, is Gemini a good exchange for individual investors?
The short answer is: yes. A clean and customizable trading interface paired with low fees and overall transparency makes Gemini a worthy contender. Let’s take a closer look at what it offers.
Gemini has a clean and simple landing page, where you can take a look at all the cryptocurrencies and digital assets supported on the platform.
If you click on “view details” you’ll be taken to the standard trading interface, which is similarly well-designed and functional.
On the left you have the option to Buy, Sell, or Create an Alert. You can also choose if you want to make this order just once, or have it recur on a daily, weekly, biweekly, or monthly basis.
This is all great if you’re looking to buy crypto with the minimum amount of hassle, using an exchange with a very intuitive interface.
If you’re looking to get deeper into the trading side of crypto, then Gemini’s Active Trader is for you.
This interface is much more involved, and allows you to choose the type of order you want to create, view the fee that your order will incur, and watch the orderbook tick back and forth (beware, it can be strangely hypnotic).
The Gemini mobile app does everything you’d expect. The dark theme is easy on the eyes, and it offers full functionality.
You can also spend your Bitcoin and other cryptocurrencies from within the app, using Gemini’s integration with Flexa (more on that below).
Gemini allows you to deposit money via wire transfers, or by linking your bank account to the exchange via Plaid. There are no fees charged by Gemini for either method, though your bank is likely to charge a fee for a wire transfer, which can be more than $25.
You can also deposit a range of crypto to your account on Gemini. Supported assets include:
Gemini’s trading fees are calculated off your 30 day trading volume, with greater discounts the higher it is.
Note: A *maker order* is one that adds liquidity to the market, i.e. it is not filled immediately and sits on the order book for a period of time. Limit orders are the most common type. These are subject to the lower maker fees.
A *taker order* is one that is filled immediately. It takes away liquidity from the market, and hence are called *market orders*. These are subject to the higher taker fees.
Gemini allows up to 10 withdrawals of crypto per month free of charge. After that, you will start paying a fee for each withdrawal. Fees for BTC and ETH are currently 0.001 of each, which is equal to about $9.29 and $0.24 respectively.
Withdrawing fiat via bank or wire transfer will not incur a fee, and neither will withdrawing the exchange’s USD stablecoin: Gemini dollar.
Using the Spedn app (not a typo, based off the hodl pattern), users send crypto to their wallet on the app. When it comes time to pay, you simply create a barcode on the app and scan that at the register. The Flexa network converts your crypto to fiat currency and pays the retailer.
Gemini manages custody of funds deposited into Spedn, so if you trust your coins on the exchange, you needn’t worry about holding them in the app.
The network currently supports brands such as Starbucks, Whole Foods, Barnes & Noble, and Crate and Barrel. It doesn’t require them to install any new software or hardware, which is a big step toward the mainstream use of crypto as currency.
Users are able to spend Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Gemini dollar (GUSD).
At Gemini, we have been trying to build a bridge from the island of crypto to the mainland of finance for the past five years.
Gemini offers the Gemini Dollar (GUSD) - a stablecoin pegged to the US dollar and maintained by 1:1 reserves. These reserves are held at State Street Bank and Trust Company, and are regularly audited to ensure that the ratios are correct. You can find these reports here.
The benefit of a stablecoin is that it allows you to keep your money in the crypto ecosystem without being subject to the volatility it’s known for.
It makes trading in and out of Bitcoin very easy (though this does incur a capital gains event) and the current interest rate for savings held in GUSD is more than eight times higher than the average interest of a “high yield” savings account.
While Tether is the most liquid stablecoin - and has even kicked XRP out of 3rd place by market capitalization - there are strong indications that it is not backed by 1:1 reserves.
Gemini’s whole model is transparency and regulatory compliance. While it’s not the most liquid exchange out there, it is likely one of the safest places to trade.
Gemini was the second crypto company to be issued a BitLicense by the New York State Department of Financial Services (NYSDFS). This license allows the holder to “engage in virtual currency activities” - i.e. operate an exchange.
As part of this, in 2019 Gemini launched an advertising campaign around New York City with slogans like “The Revolution Needs Rules,” “Crypto Without Chaos” and “Money Has a Future.”
The Winklevoss twins’ approach has always been one of regulatory compliance, to the degree required by the law and the demands of the market. Regulation, as they see it, helps build trust in an industry that is sometimes lacking in it, and that’s good for business. (Though some would argue that trustlessness is the whole point of Bitcoin, and the worst sides of the industry are no more shady than some of what goes on at Wall Street).
Nonetheless, the Winklevoss twins are outspoken advocates of individual liberties and as little top-down meddling as possible.
Coinbase is one of the oldest continually-operating exchanges, having been founded in 2012 by Brian Armstrong and Fred Ehrsam. Ehrsam has since moved onto other projects, leaving Armstrong the public face of Coinbase.
Coinbase reached 1 million users in 2014, and has since reportedly hit more than 13 million.
In 2017, Coinbase obtained a BitLicense from the New York State Department of Financial Services which allowed it to legally trade Bitcoin and Ethereum in the state of New York.
Coinbase currently supports 23 digital assets, which are:
Coinbase can’t be faulted on its interface. It’s simple and easy to use. That’s a major consideration for the new-to-crypto users that Coinbase targets.
There’s a big blue Buy Bitcoin button, making it easy to do what you came for.
It’s also easy to set up recurring purchases, so you can DCA (dollar cost average) your way into the market.
Coinbase’s mobile app is a great counterpart to the browser version. Buying, selling, and transferring funds is just as easy as on a desktop.
US customers can pay buy crypto on Coinbase via a number of methods.
Bank transfers (ACH) can be used for buying, as well as depositing and withdrawing fiat. They generally take 4-5 business days to clear.
Debit cards are ideal for small investments. They clear immediately, but can only be used for buying crypto directly through the online platform or app.
Wire transfers are good for depositing and withdrawing fiat, while US customers can also withdraw fiat instantly via Paypal.
Continental European users can buy crypto or deposit funds using SEPA transfers, iDEAL/SOFORT payments (especially popular in Germany), debit cards, and some credit cards.
UK-based customers have almost identical payment and withdrawal options available, with the addition of Faster Payments.
Coinbase was the first global crypto exchange to be granted an e-money license by the UK’s Financial Conduct Authority, and was the first exchange to support the Faster Payments initiative, which aims to reduce inter-bank transfer processing times down from 2-3 business days to just a couple of seconds.
See here for more info.
Canadian Coinbase customers are not quite so lucky. The only payment methods available to citizens of the Great White North are debit cards for purchases and Paypal for withdrawals. A rather limited selection.
If you’re Canadian and looking to transfer larger amount that would be supported by debit card purchases alone, it might be worth looking into Gemini’s offerings in your country.
Check out Coinbase’s short support article for Canadians here.
Coinbase’s fees are notoriously high. Buying with a debit card will cost you almost 4% in fees, on top of the 0.5% spread that Coinbase bakes into the price. Converting between cryptocurrencies will cost you a 2% fee.
|Payment Method||Countries||Funds Available||Currency||Fees*|
|Bank Transfer||USA||5-7 days**||USD||1.49%|
|SEPA Transfer||Europe||1-3 days||EUR||1.49%|
Coinbase users in nearly any country can convert between cryptocurrencies, but cannot always convert crypto back into local currency.
It’s this model that has allowed Coinbase to make over $2 billion in fees since its inception.
Additionally, many people report long waiting times for wire transfers to clear, up to two weeks in some cases. This shouldn’t be a problem if you’re investing regularly and spreading your buys out, but if you’re looking to take advantage of short-term price action it’s worth taking this into account.
Coinbase Pro is the company’s equivalent to Gemini Active Trader: a full-featured trading platform.
Coinbase Pro has lower fees, the ability to set limit, market and stop-loss orders, as well as a slick interface.
Originally called GDAX (Global Digital Asset eXchange), Coinbase rebranded its top-tier offering in 2018. In addition to trading tools geared toward intermediate to advanced traders, Coinbase Pro offers API integration for automated trading.
It’s also up there in terms of liquidity, coming in at #6 on CoinGecko’s ranking of exchanges.
Another benefit is the fact that Coinbase Pro supports same-day wire transfers, meaning that as long as you submit the transfer before the cut-off time (usually 2pm) you can trade with your money straight away. Note that this will incur a $10 fee on top of any fees your bank charges.
Check out our full review of Coinbase Pro.
USDC shares many attributes with GUSD, such as audited 1:1 reserves and the ability to earn relatively high rates of interest on a number of platforms.
Its market capitalization recently passed the $1 billion mark, which is 100x more than Gemini dollar’s. If liquidity is an issue, keep this in mind.
Both USDC and GUSD are centralized stablecoins, meaning you’re trusting a governing body to actually have the reserves they say they do, as well as not to run off with your funds or confiscate them overnight. The revolution that Bitcoin bought to the financial and technological worlds was trustlessness, so it’s worth making sure that the trade-off is worth it when dealing with centralized coins.
Recently, CENTRE - the consortium set up by Circle and Coinbase to oversee USDC - confirmed that they had frozen a user’s wallet after a request from law enforcement. The $100k cannot be moved on the blockchain unless CENTRE reverses the blacklisting.
If you don’t like the idea of your funds being subject to potentially arbitrary seizure, look into DAI. It’s a decentralized US dollar stablecoin on the Ethereum blockchain that relies on no third parties.
Coinbase has won itself a large share of the first-time crypto demographic thanks in part to Coinbase Earn. This platform rewards users with cryptocurrency for watching short videos that explain different digital assets, such as DAI, BAT, and EOS.
It’s a good way for new users to be introduced to crypto in a beginner-friendly way, and earning up to $50 without investing a dollar surely creates a nice first impression of the space.
In February 2019, Coinbase acquired a small startup named Neutrino. Neutrino offered blockchain analytics software, claiming to be able to track transactions not just on the Bitcoin network - which just about anyone with a lot of time on their hands can do - but also on privacy-focused blockchains such as Monero.
Over the past 3 years, we've created one of the best platforms available for the analysis, investigation and identification of illegal cryptocurrency transactions on different blockchains and within smart contracts.
As Coinbase continues building out more products and services, Neutrino technology and expertise will be used to improve compliance processes, trustworthiness and transparency, as well as to better protect the end-to-end integrity of customers' cryptocurrency transactions as much as possible.
This all plays into Coinbase’s strategy of proactively working with governments and law enforcement agencies. Yet the acquisition of Neutrino caused a bit of a stir, as the startup was founded by three former members of Hacking Team - an Italian surveillance company that has sold tracking software to governments of countries with less than stellar human rights records, such as Bahrain, Saudi Arabia, and Sudan. The CIA, DEA, DoD, and FBI are also customers of Hacking Team’s, making use of their products which can remotely monitor computers, de-encrypt files (potentially including encrypted cryptocurrency wallets), record VOIP calls, and surreptitiously activate microphones and webcams.
Coinbase founder Brian Armstrong addressed the backlash in a post shortly after the acquisition. Subtly acknowledging that Coinbase was aware of the Neutrino founders’ previous work, Armstrong stated that the his company “did not properly evaluate everything from the perspective of our mission and values as a crypto company. We sometimes need to make practical tradeoffs to run a modern, regulated exchange, but we did not make the right tradeoff in this specific case. We will fix it and find another way to serve our customers while complying with the law.”
Coinbase does a lot more than just comply with the law, it actively works with government agencies to weaken cryptocurrency and restrict users’ civil liberties. In acquiring Neutrino, which claims to be able to track Monero transactions, Coinbase is going above and beyond its regulatory requirements.
Recently, news came out that both the DEA and IRS intend to buy access to Coinbase Analytics, the tracking platform that the company developed with the help of Neutrino. The deal would be worth up to a quarter of a million dollars for Coinbase.
“Bitcoin — and crypto more generally — is about the rights of the individual and about the technological protection of civil liberties,” Armstrong says. If you’re getting involved in crypto and agree even slightly with that statement, it’s worth considering spending your money at an exchange whose CEO does more than just pay lip service to the ideology behind crypto.
So, which exchange best suits your needs? Hopefully this article has given you some backstory on both Gemini and Coinbase, explained the features and fees of each, and helped you to consider the ideology behind each company.
As the two best-regulated and most compliant exchanges in the U.S., you can’t really go wrong with either.
If you’re a beginner just looking to get started with buying cryptocurrency, either of the two will provide all the tools you need in a simple, intuitive platform.
If you’re looking to get more involved in trading, while Gemini’s Active Trader has a great interface with many order options and indicators, Coinbase Pro beats it on liquidity by a massive margin.
If you’re concerned about privacy and furthering the trustless, decentralized ideology behind Bitcoin, it’s best to stay away from Coinbase. Their work with Neutrino, Hacking Team, and government surveillance agencies renders any claims to care about the revolutionary power of decentralization completely meaningless.
Gemini cooperates with regulatory bodies, but only to the extent required by law, and with the goal in mind of bringing the crypto space to more mature markets. They are on the leading edge of financial compliance and regulation, and there is no evidence that they actively work to undermine the security and privacy of crypto like Coinbase does.
The choice is yours to make, and hopefully this article has given you a good idea of each exchange’s pros and cons. Enjoy your journey into crypto.