There are several cryptocurrency exchanges currently in the market. Which exchange is considered the best really depends on what a trader or investor would like in a platform. Traders for instance will need a cryptocurrency exchange with a good number of trading tools and charts with several market indicators. On the other hand, a long-term cryptocurrency investor would more likely look for a platform with a good security track record and a good selection of cryptocurrencies to trade. In this article we will take a look at some features that make a good cryptocurrency exchange, as well as discuss two well-known cryptocurrency exchanges: Crypto.com and Coinbase.
Disclaimer: We want to emphasize that this is not financial advice. Cryptocurrencies operate in a volatile market, where values can drastically fluctuate in a blink of an eye. It is imperative to conduct thorough research and seek guidance from a qualified financial advisor before investing.
How a Cryptocurrency Exchange Works
The basic premise of a cryptocurrency exchange is to connect cryptocurrency buyers with cryptocurrency sellers. At the center of every exchange is an order book. This order book is responsible for storing buy and sell orders as well as connecting buyers and sellers with each other. To connect buyers and sellers as efficiently as possible, a cryptocurrency exchange implements a series of algorithms in the order book that match buyers and sellers using specific order criteria such as which cryptocurrency token or coin is used in the trades, the quantity of cryptocurrency in each order, and the price specified in each order. Once a buyer and seller are connected by the order book, the account linked to the sell order is credited with the buyer’s fiat currency from the order and the account linked to the buy order is credited with the seller’s cryptocurrency from the order.
Features that Make a Good Exchange
As mentioned, what makes a good cryptocurrency exchange depends on an individual’s needs. However, there are some common features that make a good cryptocurrency exchange. Let’s take a look at what some of these features are.
No matter what a trader or investor looks for in an exchange platform, the security of the platform is arguably the most important feature that is taken into consideration when choosing which platform to use. Seeing that cryptocurrency service providers are popular targets for cyberattacks, it is important for an exchange platform to have the necessary security infrastructure and measures in place to protect its users’ funds.
The next important factor is the platform’s level of liquidity. Not only does this mean that an investor or trader can exchange large amounts of cryptocurrency at a time without having to worry if their orders will be filled or not, it can also be indicative of the level of trust that other traders and investors have in the platform - representing how comfortable they are with leaving their funds on the platform.
Number of Trading Pairs
The number of trading pairs refers to how many cryptocurrencies a user can trade on the exchange platform. The more trading pairs that are available on the platform, the more investment or trading options an investor has. Platforms with a decent number of available trading pairs are attractive because users don’t necessarily have to have multiple trading accounts on multiple exchanges to trade the cryptocurrencies that they want to. Furthermore, a large number of trading pairs also contribute to the platform’s liquidity.
Fiat Onramp and Offramp
Of course, an exchange platform needs to have seamless integration with the fiat banking system. This makes it easy for investors and traders to deposit funds onto THOR platforms, as they are able to do so straight from their bank accounts. This also means that the user can easily cash out the interest on their cryptocurrency investment or trading profits.
An exchange platform’s trading fees can have an effect on a user’s cryptocurrency profits. Although the average exchange platform fee is between 0.2 and 0.4 percent, the amount of cryptocurrency lost to fees can add up quickly if a user buys and sells large amounts of trades frequently.
Now that we have taken a look at some of the features that a good cryptocurrency exchange platform should include, let’s take a look at how Crypto.com and Coinbase compare with each other.
Great Customer Service
Crypto platforms don't always have the best customer service. This is a shame because if anything ever goes wrong with your account, you're going to want an exchange that can quickly respond to your needs. If you happen to come across an exchange with high marks for service, this is a huge perk that could seriously improve your experience.
What is Coinbase?
Coinbase is the largest U.S.-based cryptocurrency exchange and offers users over 150 available cryptocurrencies to trade. The platform has a good reputation in the industry when it comes to security as the exchange has been able to fend off a number of cyber-attacks and minimize the losses of any attacks that were able to get through their tough security infrastructure. The team also conducts audit reports of any cryptocurrencies that want to list on the platform - protecting users from rug pull and scam coins.
- Make transactions using PayPal
- Earn crypto by learning about trading
- User-friendly, even for beginners
- Some of the highest fees of all exchanges
- Fewer tradable altcoins than Crypto.com
- Fewer opportunities for discounts on fees
What is Crypto.Com
Crypto.com is a cryptocurrency exchange that supports trading, investing, staking, wallets, NFTs, and more. This exchange offers more than 250 different currencies, reasonable fees, and discounts for those who hold a significant stake in Crypto.com Coin (CRO). Its ecosystem of crypto-related products could make it a good choice for those looking to do a lot with their cryptocurrency.
- Lower fees than other well-known platforms
- Added benefits for staking CRO
- Multiple ways to earn crypto or interest
- Customer service isn’t responsive
- Somewhat limited educational resources
- Many coins are not available in the U.S.
Coinbase vs Crypto.com: How They Compare
Crypto.com and Coinbase are two trusted cryptocurrency exchanges offering a native coin. Both exchanges let users buy, sell, or trade cryptocurrency. Plus, they ensure top-notch security and provide a digital wallet. Coinbase’s USD coin (USDC) is a U.S. dollar-stable coin, meaning 1 USDC equals $1. By comparison, Crypto.com provides a Crypto.com coin (CRO), and the more users stake, the more benefits they receive.
Both exchange platforms employ a similar approach to their security and implement security practices such as two-step verification and cold storage of user funds. The platforms also offer FDIC insurance for USD balances up to $250,000. Lastly, both platforms also have an ongoing bug bounty program that encourages technically inclined users to find and report any detected security vulnerabilities.
Coinbase fees are as follows: Up to 0.50% spread per trade, 3.99% for credit card purchases, and 1.49% for Coinbase wallet or bank account purchases. On the other hand, Crypto.com’s fees are 0.04% to 0.4% maker fees, 0.1% to 0.4% taker fees, plus 2.99% for credit card purchases. When comparing the two, Crypto.com does offer slightly more attractive fees. Furthermore, there have been a lot of users reporting that Coinbase’s fees are not consistent and the platform may end up charging higher when dealing with certain cryptocurrencies.
Number of Currencies
Both platforms are evenly matched when it comes to the number of cryptocurrencies as both offer users over 150 cryptocurrencies.
Crypto.com’s wallet implements multi-factor authentication and biometrics. Wallet private keys are also encrypted locally. Coinbase makes use of AES-256 encryption for their wallets which are also multi-signature wallets.
Both platforms support all of the transaction types that someone in the cryptocurrency space would need. These transaction types are the ability to send, receive, buy, sell, withdraw, and exchange cryptocurrency.
Maximum Monthly Trading Amount
Crypto.com offers users a higher monthly trading amount and implements a 30-day rolling withdrawal limit of 500,000 USD. On the other hand, Coinbase limits vary based on the payment method the user used and their geographical location. U.S. users have a $25,000 daily deposit limit.
Coinbase vs Crypto.com: Verdict
Cryptocurrency exchanges play a vital role in the crypto ecosystem as they provide investors and traders an onramp and offramp solution into and out of the crypto ecosystem. The basic premise of a cryptocurrency exchange is to connect cryptocurrency buyers with cryptocurrency sellers. Using sophisticated algorithms, an exchange platform’s underlying order book is able to constantly match buyer and seller orders, with the platform taking a fee for the service that they provide.
There are a number of cryptocurrency exchange platforms in the market, and the ideal cryptocurrency exchange may differ with each user depending on user preferences. Two well-known exchanges are Crypto.com and Coinbase. Although Coinbase is the largest U.S.-based cryptocurrency exchange, Crypto.com does offer an attractive fee structure when compared to Coinbase. Plus, Coinbase’s fees can be confusing at times, with many users highlighting the varying fees. Both exchanges are similar in terms of security practices, the types of transactions supported, and both platforms support more than 150 cryptocurrencies.