For many Crypto users, Coinbase has become nearly synonymous with Cryptocurrency as they have a great reputation for being secure, regulated and very beginner-friendly. Many old school Crypto holders you speak to today will likely say that Coinbase was actually where they made their first-ever Crypto purchase as the exchange has been around since 2012 which is ancient in the Crypto game. Coinbase acted as many people’s “gateway” into Crypto, but is a long and proven successful track record enough to keep Coinbase in the number two slot as the second-largest Cryptocurrency exchange or does the up and coming, “rising star” exchange FTX have what it takes to “David and Goliath” the Crypto Titan and continue to take market share away from Coinbase?
Navigating the world of Cryptocurrency exchanges can be tricky, especially if you are looking to get into Crypto for the first time and are unsure of which exchange to choose. We hope that this article will help make your research easier in choosing which Crypto exchange is right for you by breaking down the key features and stats from FTX and Coinbase to help you along your Crypto Journey.
What is FTX
FTX is a centralised cryptocurrency derivatives exchange that was founded in May 2019 by Sam Bankman-Fried (currently the CEO) and Gary Wang (currently the CTO). The headquarters were originally set in Hong Kong but likely due to regulatory worries, they moved the headquarters to the Bahamas in September 2021. FTX was able to explode in popularity and adoption in a short period of time, rising to the number 4 spot for the largest crypto exchange after an aggressive marketing and fundraising campaign.
FTX received backing in July 2021 in the form of $900 million dollars from over 60 investors including the likes of Paul Tudor Jones, Coinbase Ventures, VanEck with other notable players and VC firms such as Paradigm and Sequoia capital and the private equity group Thoma Bravo, giving FTX the whopping valuation of $18 billion dollars at the time and now worth an even more impressive $25 billion. Interestingly, one of the early backers of FTX was competing exchange Binance back in December 2019 but as of July 2021, the two exchanges have parted ways, likely because of their competing platforms.
What is Coinbase
I am assuming that you have heard about Coinbase which is what brings you to this article today. As the largest US exchange, second-largest global exchange and the first Crypto exchange to go public, it is hard not to have heard of them. Along with Binance, Coinbase is the other “OG” exchange in the cryptospace and has its sights set on being the most regulation friendly crypto exchange, and the “go-to” for institutions and retail users who prioritize regulatory security, unlike their bad-boy rival Binance who is always in trouble from regulatory bodies for one reason or another. It is important to state that both FTX.US and Coinbase are regulated and legally operating within the confines of the US legal system, though on a global front, it is harder to navigate the regulatory waters to appease every country. Both FTX and Coinbase are the most friendly globally in terms of regulation, so if regulatory concerns are your main worry then I would highly recommend sticking to one of these two.
FTX vs Coinbase:
Currency and Products Offered
When it comes to products offered, we gotta tip the scales to FTX here quite a bit as their product offering is far more robust than Coinbase. Coinbase is primarily a Cryptocurrency exchange with a few basic methods for users to earn passive income via staking, lacking behind the earn features offered by competitors such as Binance and FTX. FTX also offers derivatives and options trading as well as an NFT marketplace which is a real game-changer as many crypto traders are also NFT enthusiasts.
Coinbase has announced plans to roll out an NFT marketplace and derivatives trading in 2022 with their recent purchase of FairX, but you have to be left wondering what on Earth has taken so long and why they let their competitors beat them to the punch. Both FTX and exchanges like Binance have supported these products for a while now. Both FTX and Coinbase offer a Crypto debit card for US-based customers, if you are based in the US be sure to check out our FTX.US exchange.
User Friendliness
For anyone who has ever used an online bank before or a brokerage account, you should have no issues navigating either of these platforms. They are both very easy to navigate and have an intuitive layout and design. When doing research for both of these platforms I found both FTX and Coinbase have a fairly robust knowledge base/self-help section which is more important than you may think! I can’t tell you how many issues are a simple knowledge base article away from resolving, though I did find the FTX knowledge base far easier to find the information that I was searching for as the search function returned more relevant articles.
Fee Structure
The number one criticism against Coinbase comes in the form of poor customer support (more on that later) and their fees! I am trying my best to remain unbiased here but there is no way to sugarcoat the fact that Coinbase has higher fees than most of their competitors in nearly every metric from trading fees to deposits and withdrawals. Though before beating them up too bad on this one, many users feel that the fees are worth the opportunity to use such a reputable and professional exchange that is fully regulated and compliance-friendly. If paying the least amount of fees is your main goal then you are definitely going to want to choose FTX.
For deposit and withdrawal fees, FTX takes the trophy here as well. Coinbase has free ACH deposits and withdrawals but charges $10 dollars for wire deposits and $25 dollars for wire withdrawals, €0.15 Euro for SEPA deposits and withdrawals, and £1 pound for Swift withdrawals. For FTX, there are no deposit fees and they only charge for withdrawals made in USD and BRL, so our European and UK readers rejoice! For our US readers, again, I would definitely say that FTX.US would be your best bet but if you are set on using the international FTX then you could be seeing a $75 dollar fee for any USD withdrawals under $10,000 and residents of Brazil who want to withdraw BRL are looking at a 0.3% + R$10 withdrawal fee.
Security
When it comes to Crypto exchanges it is really important not to fall into the “it won’t happen to me,” mindset as Crypto exchanges are notorious for hack attempts and many unsuspecting people were left pretty hurt after hacks did in fact, happen to them. It is important to disclose that Coinbase had suffered a hack in May of 2021 where over 6,000 Coinbase customer accounts were drained and Fox recently released an article in December of 2021 about a couple whose account was hacked and drained of $24,000 dollars even though they stated that they had two-factor authentication enabled and the account was password protected. It is not known how hackers gained access to the account but it is sad to see that Coinbase did not reimburse the couple as they do not cover unauthorized access to accounts, but they did reimburse the funds to the over 6,000 customers that were hacked in May as the fault was found to be in a 2FA breach on the Coinbase platform. To date, there have been no known hacks on FTX which is a good sign.
FTX takes security seriously, there is of course the industry standard 2FA option for logins, account changes and withdrawals (which should always be enabled) and FTX enforces a minimum password complexity requirement. FTX offers the additional security barriers preventing hackers from draining an account by allowing users to set a secondary withdrawal password and 2FA, so even if a hacker somehow gains access to your account, they will also need the secondary 2FA and password before they can do any real damage.
Hacks aside, Coinbase is no slouch when it comes to security either. They have over 10 years of experience perfecting their security systems and even offer custodial solutions where institutions trust Coinbase with hundreds of millions of their dollars worth of Crypto that Coinbase holds in cold storage on their behalf. Along with the standard 2FA, Coinbase also operates on a bulk cold storage policy where 98% of coins held by the company are located in air-gapped cold storage wallets. Coinbase is one of the few exchanges that offer FDIC insurance to US customers, FTX.US also has insurance policies in place to protect US-based customers. I was unable to find any official word on either of these exchanges offering insurance for the funds of international customers, but it has become common practice for exchanges to pull from company treasuries to reimburse customers when they lose funds due to breaches in the platform’s security as we have seen from both Coinbase and Binance in the past.
Support
Customer support is another thing that is often seldom considered by exchange users until an emergency arises, and it really should not be overlooked. If you are experiencing a serious issue, the customer support time could be the difference between saved and lost funds. We’ve already mentioned the hack incidents which gave the Coinbase reputation a pretty serious black eye. What made this worse was that their customer support seriously dropped the ball after the incident as not only did these users lose their funds, but they were not able to reach customer support for days, or weeks in some cases as their support was overwhelmed.
You’d think they would have learned from this and scaled their support which they are getting better at to be fair, but there are still many complaints online about their poor support times. Both FTX and Coinbase offer email support, but FTX has an edge here as they can also be contacted across various social media platforms.
