For newcomers in the cryptocurrency world, should you choose Coinbase or Robinhood?

Original title: "Is Coinbase or Robinhood Stock the Better Bet?"
Original author: Jack Inabinet, Bankless
Original translation: Lucy, BlockBeats

Editor's note:

This article explores two companies that have a significant impact on the cryptocurrency field-Coinbase and Robinhood. Coinbase has won the favor of a large number of US retail and institutional investors with its crypto-native background and deep roots in the industry over the years.


In contrast, although Robinhood is not as popular as Coinbase in terms of cryptocurrency trading volume, it still has extremely high popularity among US retail traders and has strong compliance capabilities. Robinhood has actively entered the crypto market, developed a non-custodial wallet, and plans to acquire the old European crypto exchange Bitstamp to further expand its influence in the crypto field.


This article deeply analyzes the unique advantages and potential risks of the two companies in the cryptocurrency market, providing valuable reference information for investors. BlockBeasts will compile the original text as follows:

Coinbase stock has always been the obvious choice for investors to get exposure to cryptocurrencies through public companies, but now there is another company that is constantly challenging this position.

Last Thursday, Robinhood announced that it would spend $200 million to acquire Bitstamp, the oldest cryptocurrency exchange still in operation and holding valid licenses to operate in more than 50 countries.

So, should you increase your holdings of COIN stock or HOOD stock?

Today, we will explore the differences between Coinbase and Robinhood to see why investors are confident in both stocks.

REASONS TO SUPPORT COIN

Coinbase is often considered the most reputable cryptocurrency exchange, a distinction that has enabled it to build deep connections among retail and institutional cryptocurrency enthusiasts in the United States in the 12 years since its founding.

Centralized cryptocurrency exchanges typically provide limited insight into their financials; however, as a company listed on the U.S. stock market, Coinbase is required to undergo rigorous audits and submit reports to the SEC, reducing the likelihood that customer funds will be misappropriated.

While the primary function of most exchanges is trading, Coinbase is more than just a simple marketplace; it was one of the first CEXs to establish an on-chain presence and has played a major role in infrastructure development, launching its own wallet and Ethereum L2 Base!

Since Ethereum implemented EIP-4844 in March’s Dencun upgrade, the cost of publishing data on the L2 has dropped by orders of magnitude, and Base’s on-chain operating margins are almost 100%, meaning that almost all transaction fees paid on Base go directly into Coinbase’s revenue.

While Base’s revenue has dropped significantly since its peak in late March, the network remains the second-largest L2 by TVL and generates more profit than any other major L2, regularly netting over $100,000 per day, according to L2BEAT.

Source: Dune

In addition to its on-chain infrastructure, Coinbase offers a full suite of custody tools to its users, providing advanced staking services and an ETH liquid staking token, as well as institutional-grade custody solutions.

Coinbase Custody is widely regarded as the premier digital asset custody provider and serves eight of the 11 spot BTC ETFs in the U.S., including Grayscale’s GBTC and BlackRock’s IBIT (the two largest products by assets under management). This arrangement enables Coinbase to earn custody fees from the assets they manage, in addition to earning trading fees from creation and redemption, which will provide a strong revenue driver for the company if spot cryptocurrency ETFs continue to gain traction among traditional market participants.

Crypto payments have yet to achieve mainstream adoption, but the Coinbase team has developed the infrastructure through its Commerce platform to enable merchants to accept hundreds of crypto assets as payment for goods and services directly into their self-custodial crypto wallets.

If the public's willingness to hold crypto assets increases and they recognize the benefits of self-custody technology, this will help Coinbase generate more revenue through the platform.

Coinbase also caters to international users who are not bound by U.S. financial regulations and can trade futures on a variety of crypto assets through the exchange; these services could easily expand to the U.S. platform — which currently only offers BTC and ETH futures — if the crypto industry gains positive regulatory clarity.

In addition, COIN stock holders can also receive a share of the success of the Coinbase Ventures portfolio, which contains many lucrative private market opportunities that are out of reach for retail and outside investors.

REASONS TO SUPPORT HOOD

While Coinbase holds the edge in terms of cryptocurrency trading volume processed, Robinhood remains the undisputed champion among retail traders in the United States.

While Robinhood has fewer total assets under custody on its platform than Coinbase, even when adding up stock, options, cash, and crypto balances, Robinhood had 70% more monthly active users than Coinbase in the first quarter of 2024, highlighting the exchange’s popularity among retail traders.

Undoubtedly, Robinhood’s biggest advantage is its compliance; as a broker, Robinhood is regulated by the SEC, and if the SEC creates a new classification of digital asset securities and trading is restricted to registered brokers, Robinhood would be well positioned to become the dominant cryptocurrency exchange.

While Coinbase is clearly the more crypto-native company and has attracted a lot of talent with strong industry connections, there is nothing stopping Robinhood from creating its own crypto app other than regulatory uncertainty.

Robinhood has developed its own proprietary non-custodial wallet solution and recently launched an integration that enables users to purchase cryptocurrencies directly on the Uniswap mobile app with funds from their Robinhood Connect accounts.

With its proposed acquisition of Bitstamp (although it may still be rejected by regulators), Robinhood acknowledged the growth potential of its crypto business despite its ongoing legal battle with the SEC and confirmed that it will participate in blockchain technology to the best of its ability.

Bitstamp’s 4 million active users are primarily based in Europe, a very attractive demographic for its U.S.-centric buyers, and the acquisition also includes Bitstamp’s core staking and lending products, allowing Robinhood to better compete with crypto CEX services and showing that it can catch up to crypto-native competitors by purchasing crypto technology developed by other companies.

Key Points

For crypto investors who are already bullish on COIN, it shouldn’t be hard to be equally bullish on HOOD, given that the company appears to be aggressively moving into the crypto market and has already won over U.S. retail investors. If the industry boom picks up again, these investors are likely to enter the crypto space because of the easy purchasing and custody solutions provided by Robinhood.

Coinbase, on the other hand, has a proven crypto business performance and has seen significant institutional adoption, as reflected in the preference for its services among spot crypto ETF issuers.

The two listed exchanges each have their own unique advantages and disadvantages. Although Robinhood is currently at a disadvantage in this competition, Coinbase's dominance is not unbreakable, especially in the future stricter crypto financial regulatory environment.

「 Original link 」

欢迎加入律动 BlockBeats 官方社群：

Telegram 订阅群： https://t.me/theblockbeats

Telegram 交流群： https://t.me/BlockBeats_App

Twitter 官方账号： https://twitter.com/BlockBeatsAsia