August 17, 2021

Buy Bitcoin on Robinhood or Coinbase Pro

Read more about Robinhood
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Robinhood and Coinbase Pro are two of the biggest names in retail investing and crypto trading. But which is best for buying Bitcoin?

When buying your first Bitcoin, there's a lot to consider.

Which platform is easiest? What are the fees? Are they safe, secure, and private? Are there any perks or special features? What can you do with your Bitcoin once you buy it?

Robinhood and Coinbase Pro are two popular platforms for those looking to buy Bitcoin. In this breakdown, we'll help you decide which is the right platform for your Bitcoin purchase.

Robinhood

Buy and Sell Cryptocurrency

Robinhood Crypto offers commission-free cryptocurrency investments 24/7. Some of the crytocurrencies available are Bitcoin, Dogecoin, Ethereum, and Litecoin. This offer is currently available to selected states.

What are Robinhood and Coinbase Pro?

Coinbase was founded in 2012, and is based in San Francisco. They started out offering the ability to buy and sell Bitcoin via bank transfers, and have expanded to offer a whole range of cryptocurrencies and crypto-related products.

Coinbase is known for being a beginner-friendly exchange, with a simple app and easy-to-use desktop site—and relatively high fees. Coinbase Pro is their platform for more experienced cryptocurrency investors. While it doesn't cater to new traders in the same way as their main app, it does offer much lower fees.

Robinhood, was founded in 2013 and is headquartered in Menlo Park, CA. While they primarily offer commission-free trading of stocks and exchange-traded funds (ETFs), they launched an additional crypto service in 2018, and have added a number of other cryptocurrencies since then.

The stocks they offer mainly come from the Nasdaq and New York Stock Exchange, with an additional group of popular stocks from international exchanges. They currently only do business in the U.S.

How to Choose Your Exchange

If you've never bought Bitcoin before, you may find yourself overwhelmed trying to choose an exchange, and struggling to figure out which factors to take into account when making your decision.

Below you'll find a list of common considerations, as well as how Coinbase Pro and Robinhood stack up.

Fees

For many people, the fees are the first thing they consider. They'll determine how much you spend on your Bitcoin, all else remaining equal.

These are some of the most common fees:

  • Transaction fees: What you pay the exchange for trading.
  • Spread: The difference between the selling and buying price. Some exchanges charge it on all transactions, others on purchases or sales only.
  • Deposit fees: Different methods will have different prices. Some are free, others extremely expensive. The most common methods are ACH bank transfer and wire transfer.
  • Debit/credit purchase fee: Not all exchanges support this option, and when they do, it is frequently expensive.
  • Withdrawal fees: These vary widely, and may differ whether you're withdrawing fiat or cryptocurrency, and even among coins.
  • Inactivity or maintenance fees: Typically charged annually.
  • Gas fees: To pay for the cost of executing an operation on the blockchain.

 Robinhood
 Visit SiteLearn More
 

Robinhood

Coinbase Pro

OFFER
Get a Free Stock (worth between $2.50 and $225) - Learn More

SPECIAL OFFER
- Learn More

 

Benefits and Features

Stock Trading
$0
No
Options Trading
$0
No
Cryptocurrency Trading
Check
Check
Mutual Fund Trading
No
 
Cryptocurrencies SupportedETC, ETH, BSV, BCH, BTC, DOGE, LTC
38
Fiat Currencies Supported
USD
USD, GBP, EUR
Digital Wallet
No
Yes
Transaction Fee
No
0 - 0.50%
Copy Trading
No
No
Limit Orders
Yes
Yes
Interest Accounts
Up to 0.30%
USDC only, 1.25% APY
Crypto Loans
No
Invitation only
Bank Account Purchase Fee
No
Free
BankingNo service fees for Robinhood Cash Management account. Free debit card with no in-network ATM fees or foreign transaction fees 
Mobile App
Yes
Yes
ACH Transfer Fee
No
Free
Wire Transfer Fee
No
$10 ($25 outgoing)
Crypto Conversion Fee
No
0 - 0.50%
Anonymity
No
No
Biometric Login
TouchID or FaceID
Yes
Cold Storage
Yes
Yes
Maximum Trading Amount
No
Unlimited
Two-Factor Authentication
Yes
SMS or Google Authenticator
Withdrawal Limit
$50,000 per business day
$50,000 / day
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Blank fields may indicate the information is not available, not applicable, or not known to CreditDonkey. Please visit the product website for details.

Robinhood: Pricing information from published websites as of 04/18/2020.

Coinbase Pro: Pricing information from published website as of 04/13/2021.

The Takeaway
As you can see, Robinhood—a commission-free exchange—is better for fees.

They don't charge transaction fees, transfer fees, debit or credit purchase fees, and use limit orders to avoid the bid/ask spread. This means that some trades won't execute if the desired price can't be reached, but that may be worth it in exchange for proper fee-free trading.

The prices at Coinbase Pro are fairly reasonable. But if you're considering fees alone, Robinhood is the cheaper option for buying Bitcoin.

Ease of Use

Especially for first-time buyers, ease of use can be the main concern. If buying crypto is something you've never done before, it can seem particularly daunting, what with all of the unfamiliar language and potentially confusing data.

Robinhood is an app specifically designed for average people to use, rather than professional investors, and it shows. The interface is intuitive and not overwhelming, and even complete beginners should be able to figure it out in a short time.

As an app designed for experts, Coinbase Pro is going to be inherently harder to use—the main Coinbase app is much more comparable to Robinhood in terms of usability.

The Takeaway
Robinhood is generally simpler, but the truth is, Coinbase Pro isn't all that complicated. If other factors about Coinbase Pro appeal to you, it shouldn't take all that long to figure out.

Features

If your goal is simply buying Bitcoin, then many of these won't matter. But once you get more comfortable in the crypto space, you may be interested in a wider range of options.

Beyond the exchange, here are some of the most popular features that crypto traders look for:

  • Staking and interest accounts
  • Educational resources
  • Rewards credit and debit cards
  • Crypto Pay (allows you to spend your coins at retailers)
  • Crypto-backed loans
  • P2P trading
  • NFT marketplace
  • Custodial and non-custodial wallets

Robinhood Features
In this arena, Robinhood comes up pretty short. The fact is, they're not a dedicated crypto exchange; their main customers are stock and ETF traders. Here's what they do offer:

  • Cash Management Service: Users can earn interest on fiat currency in their accounts that they haven't yet invested in a stock or cryptocurrency.

    • No minimum balance.
    • Withdraw your cash at any time, free through in-network ATMs nationwide.
    • Funds are FDIC insured for up to $250,000.

    Robinhood

    Robinhood Cash Management - 0.30% APY

    • Earn 0.30% APY
    • 75,000+ Free ATMs

  • Robinhood Gold: Allows users to trade on margin up to 2x for a $5 monthly fee.

    • Access Morningstar reports and Level II market data from Nasdaq.
    • Larger instant deposit limits, depending on their account balance.

    Robinhood

    Robinhood Gold

    • Professional Research
    • Access to Investing on Margin
    • Bigger Instant Deposit
    • Level II Market Data

  • Educational Resources:

    • Keep users up to date on the latest market news.
    • A series of helpful guides for beginners to invest online.
    • Robinhood Snacks, a 3-minute newsletter that offers their take on daily financial news.

Coinbase Pro Features

By comparison, Coinbase Pro offers a good variety of crypto-specific features to help you get the most of your crypto holdings.

  • Staking Rewards: Earn interest on your coins. They currently support 6 coins with different rates of return:

    • Ethereum - 5.00%
    • Algorand - 4.00%
    • Cosmos - 5.00%
    • Tezos - 4.63%
    • Dai - 2.00%
    • USD Coin - 0.15%

  • Debit card: Users can spend their crypto directly and earn rewards.

    • While it isn't available yet, it will be accepted anywhere Visa debit cards are.
    • No annual or sign-up fee.
    • Up to 4% cash back rewards on every purchase.

  • Coinbase Wallet: Standalone app that lets users store their cryptocurrency and manage their private keys directly on their devices

    • Available worldwide
    • Doesn't require a Coinbase account

  • Crypto-backed loans: Users can borrow against the value of their Bitcoin

    • 8.00% APR, due monthly.
    • Minimum you can borrow is $10,001.00; requires a deposit equivalent to $25,002.50 in BTC.

  • Rewards: Earn cryptocurrencies like Amp, The Graph, and Stellar Lumens while you learn more about them

    • Videos and quizzes that usually take 1-3 minutes.
    • Earn about a dollar a minute.

The Takeaway
If you're looking for a platform where you can expand your knowledge and comfort level with cryptocurrency, Coinbase Pro is the way to go. If you're not as interested in crypto as you are more traditional trading, Robinhood is your best bet.

Security and Privacy

While you don't necessarily need to be an expert on security to choose an exchange, it does help to be aware of a number of common features:

  • Multifactor authentication: Prevents unwanted access to your account. SMS is good; an authenticator app is better.
  • Address allowlisting or whitelisting: Choose in advance which crypto wallet addresses you want to allow withdrawals to—typically, yours.
  • Cold storage: Exchanges may keep most or all of their crypto stored offline, or in "cold storage," rather than online. If their system is hacked, the hackers won't have access to the cryptocurrency.
  • Insurance: Cash holdings are usually FDIC insured. Crypto holdings may be protected by private insurance policies. Some exchanges set money aside to reimburse customers in case of theft.
  • Bug bounty: Many large companies pay bug bounties to would-be hackers to find flaws and reveal them to the company's internal security team.
  • Encryption: Encryption can be used to protect any personal information the company has it stored in their system.

Robinhood Security Features[1]

  • Insurance: SIPC Insurance up to $500,000 ($250,000 for claims for cash); "Excess of SIPC" coverage up to $100 million; up to $1.5 million for cash, $10 million for securities per customer; Cryptocurrency crime insurance
  • 100% Reimbursement for Unauthorized Activity: Covers direct losses (cash, securities, and crypto) due to unauthorized account activity as long as it is not the fault of the user
  • Two-Factor Authentication: SMS or App
  • Hashed Account Passwords: Using BCrypt hashing algorithm
  • Encryption
  • Biometric Login

Coinbase Pro Security Features[2]

  • Insurance: Independent insurance up to $250,000 on coins lost to cybersecurity breaches or employee theft; USD balances up to $250,000 are FDIC insured
  • Cold Storage: 97% of user funds are stored offline
  • Two-Factor Authentication: SMS or Google Authenticator
  • Address Allowlisting
  • Biometric Login

The Takeaway
Given their security features, users should feel reasonably safe using either Robinhood or Coinbase Pro.

For those concerned about privacy, Coinbase may not be the best option. They have made or attempted to make arrangements to sell user data to government agencies including the U.S. Secret Service, IRS, and DEA.

Location

When it comes to buying Bitcoin, the laws vary widely by country; in some places, it is unavailable, in others, it is limited.

As Coinbase Pro and Robinhood are both U.S.-based companies, it's U.S. regulations they'll be following. Their laws may or may not match the ones where you are.

The Takeaway
Robinhood is only available in the U.S., meaning if you're in another country, Coinbase Pro may be your best bet.

Liquidity

If you're buying Bitcoin for the first time, chances are you won't have to worry about liquidity, which refers to the size of a trade the exchange can handle without causing the market price to shift.

Only those dealing in very large sums will need to take this into account.

The Takeaway
As a dedicated crypto exchange, Coinbase Pro will almost certainly provide higher liquidity than Robinhood could.

Not totally sold on Robinhood or Coinbase Pro? Review our top picks for Coinbase alternatives in this detailed guide.

Custodial or Non-Custodial

This question has to do with who has control of your coins once you buy them. A custodial exchange will hold them, while a non-custodial exchange will require you to withdraw them to a personal wallet upon purchase.

Coinbase Pro supports both custodial and non-custodial ownership. Users can leave their coins on the exchange, transfer them to a private wallet, or to the Coinbase Wallet, a non-custodial product.

Robinhood, on the other hand, keeps full control over user-owned Bitcoin, calling into question whether traders really own it at all. It is impossible to withdraw Bitcoin purchased through Robinhood into a personal wallet.

The Takeaway
If your priority is having complete control over your Bitcoin, Coinbase Pro is your best bet as they offer both custodial and non-custodial wallets.

Bottom Line

Choosing the right exchange to buy your Bitcoin depends on your preferences. Due to their many similarities, the choice between Robinhood and Coinbase Pro comes down to a few central points, namely ownership, price, and privacy.

Robinhood wins on price, hands down. They truly are a commission-free exchange, eliminating even the spread that most exchanges charge.

But if you can't withdraw your coins from the exchange, you must wonder whether you actually own the coins, or just an IOU for the price at whatever time you choose to sell them. If seeing profit is all you care about, this may be the right choice for you.

Coinbase Pro is a little more expensive, but the Bitcoin you buy will truly be yours. You can withdraw it to use however you see fit. If you see Bitcoin as the future of currency, this choice will suit you better. As a full crypto exchange, they offer a much greater variety of coins and features.

Just remember that Coinbase has a poor record regarding sharing user data with the government, in aggregate at the very least.

References

  1. ^ "Robinhood Security": Robinhood, 2021.
  2. ^ "Coinbase Security": Coinbase, 2021.
Coinbase

Earn $5 in bitcoin for getting started on Coinbase

Personalized $5 reward offer is displayed after account creation. Limited time offer and while supplies last. Offer available to new users who have not previously verified their identification. Offer not available to new users who were referred to Coinbase through the Referral Program or who have previously opened an account using different contact information. Coinbase may update the conditions for eligibility at any time, in its sole discretion. See Terms and Conditions.

Stash

Sign Up and Get $5

  • Sign up, add at least $5 to your account and get a $5 bonus.
  • Invest with fractional shares
  • Get portfolio recommendations
TD Ameritrade

Commission-Free Trading - Online Stock, ETF and Option Trades

Applies to U.S. exchange-listed stocks, ETFs, and options. A $0.65 per contract fee applies for options trades, with no exercise or assignment fees.

Jeremy Harshman is a protector of art and writing at CreditDonkey, a crypto comparison and reviews website. Write to Jeremy Harshman at jeremy.harshman@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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