Cryptocurrency traders have dozens of options to choose from when deciding where to trade. The specific features you might need in cryptocurrency exchanges will vary depending on your experience and trading style. Today we are going to compare the San Francisco-based Coinbase and Seychelles-based Poloniex cryptocurrency exchanges.
Coinbase is a cryptocurrency exchange that was launched in San Francisco, California in 2012 by Brian Armstrong and Fred Ehrsam. Uniquely among crypto exchanges, Coinbase has made efforts to comply with regulatory demands from the government; in February of 2021 they appointed a new global compliance officer. This has attracted the attention of individual investors and venture capital firms alike.
In 2016, Coinbase recognized that the needs of large, institutional investors differ from the needs of smaller individual investors. Coinbase therefore split their platform into two separate components: Coinbase for beginners and individual investors, and Global Digital Asset Exchange (GDAX) for professionals. GDAX has since been rebranded as Coinbase Pro.
Poloniex is another popular cryptocurrency exchange. Founded in Delaware in 2014 by Tristan D’Agosta, Poloniex rapidly ascended to become one of the dominant coin-trading exchanges. In recent years the volume traded on Poloniex has declined in response to a variety of forces.
Evaluating Crypto Trading Exchanges: Coinbase vs. Poloniex
When choosing a platform for crypto trading, you must evaluate what features you will need when trading. Does the platform support your preferred cryptocurrency? How secure are they from malicious actors? How much is it going to cost you to use? Is it optimized for mobile trading? What kinds of deposit methods are there? How is the customer support?
We are going to compare Coinbase to Poloniex in terms of ease of use, purchasing methods, supported cryptocurrencis, security, fees, mobile availability, customer support, and advanced features.
Ease of Use
For users who are seeking a beginner-friendly and simple experience, Coinbase may be a superior exchange. Coinbase has a reputation as being more beginner-friendly and better designed overall, and also offers a friendly mobile app. Poloniex has a more intimidating interface and may be better suited for technically advanced users. People who wish to make margin trades may find Poloniex useful.
Traders in the following countries are not able to use Poloniex at this time:
- United States
- North Korea
For people seeking to convert their fiat currencies (USD, GBP, EUR) into cryptocurrencies, Coinbase is the superior choice. Traders may fund their accounts through traditional deposit methods such as debit card and bank transfers.
Poloniex offers fewer deposit methods – they will need to have cryptocurrency available to trade on the exchange. Bank transfers, debit card purchases, and other uses of traditional currency are not supported by Poloniex.
Coinbase does not support the full spectrum of altcoins, but it does support trading of the more established cryptocurrencies such as Bitcoin and Bitcoin Cash, Litecoin, and Ethereum Classic. Coinbase also allows users to trade up-and-coming cryptos such as Dogecoin and XRP. Users can also trade in fiat currencies such as the USD, Euro, and GBP on Coinbase.
Poloniex offers broader support for altcoins, but it is a cryptocurrency-only exchange, meaning you cannot deposit fiat currency into your Poloniex account. If you wish to trade in Ripple, Dash, Zcash, or other lesser-known cryptocurrencies, Poloniex may be a better exchange for you. Other supported cryptocurrencies include Atom, Tron, and Tether, and the bigger coins such as Bitcoin.
Since cryptocurrencies are digitally stored currency, they are uniquely vulnerable to scams, hacks, and other security breaches. It is important for you to know that your chosen cryptocurrency trading platform is housing your assets in a secure, stable environment.
Coinbase and Coinbase Pro
Coinbase has an excellent reputation for keeping their clients’ assets secure. Indeed, Coinbase has not yet suffered from a major hack. While some people have had assets stolen, this has historically been traceable to weak passwords or user error, not to any error or issue from Coinbase.
Coinbase uses a variety of tactics to keep their assets safe. One of Coinbase’s most effective security features is two factor authentication. No trade can be completed without an email and text verification, meaning that unless your email and your mobile device are compromised, your assets are secure.
Coinbase also utilizes AES-256 Encryption to keep your wallet and key safe. Coinbase Pro users enjoy cold storage of their coins, meaning that they are stored offline and therefore away from hackers. Coinbase Pro also offers FDIC Insurance up to $250,000.
Further insulating customers from instability, Coinbase and Coinbase Pro do not use customer funds for operational purposes. In other words, your coins in the Coinbase vault will never be treated as company funds.
Poloniex also offers many modern security features such as two factor authentication. Despite this, Poloniex has suffered from security and stability concerns in the past. They are currently making operational changes to repair some of the reputational damage that has been done. In 2014, Poloniex suffered a hack affecting many BTC traders. In 2019, Poloniex suffered a flash crash when shares of the altcoin CLAM dropped in value and crashed margin trades between BTC and CLAM.
Traders using Poloniex have also complained about account freezes, missing funds, and lengthy transaction times. Service tickets to resolve customer complaints have reportedly taken weeks or months to resolve. Furthermore, Poloniex is not currently serving the United States. Cryptocurrency traders based there will need to find a different exchange to use.
That said, Poloniex has been making efforts to repair the damages to their customers and overhaul their operations. This has included moving operations from the United States to the Seychelles, a cryptocurrency-friendly nation in the South Pacific. The company continues to work on improvements to their applications.
Costs and Fees
Coinbase and Poloniex use similarly structured trading fees. Trading fees are assessed to customers depending on trading volume and a fee schedule. Both exchanges differentiate between a maker fee (a deposit) and a taker fee (a withdrawal)– the fees assessed depend on whether you are moving assets onto or off of the exchange.
European customers of Coinbase Pro can make deposits for free if they use SEPA transfers. Withdrawals will be charged a flat fee of $0.15. Customers can use debit cards to initiate deposits to Coinbase but cannot use credit cards. The lack of a maker fee is an additional bonus to Coinbase Pro.
Coinbase Pro customers in the United States can use a bank wire to deposit money but are subject to a 1.49% bank transfer fee for any deposits, and a rather unfortunate $25 bank transfer fee for withdrawals. Poloniex is not currently available for traders in the United States.
Poloniex customers can expect to pay 0.15% deposit fees and 0.25% withdrawal fees. Poloniex does not offer fiat support: it is a cryptocurrency-exclusive exchange.
Mobile App Trading
Both Poloniex and Coinbase Pro offer the option to trade through mobile applications. Poloniex users can trade using a native app for devices running iOS and Android. While many third-party applications interface with the Poloniex API, be sure to use the Poloniex application and not a third-party application, as many third-party apps are risky.
Coinbase Pro customers can enjoy a native iOS application, but there is not currently an Android application available for Coinbase Pro.
Even for the most technically savvy cryptocurrency trader glitches or technical issues may arise. It is important to consider the user support offered by Coinbase and Poloniex.
Coinbase Pro users have access to a robust customer support infrastructure. Users can find support options available on the Coinbase website, and can expect reponses to their inquiries within 72 hours. This fast turnaround has helped the company maintain a solid reputation regarding customer service.
Coinbase Pro also offers users a phone number to reach a representative, and an online chat option for support.
Poloniex has a worse reputation regarding customer service. Users must submit customer support tickets to Poloniex when they have an issue, and some users have complained of response times of several weeks to several months. Other users have reported serious issues such as frozen accounts which have not been addressed in a timely fashion. These complaints have precipitated a drop in popularity for Poloniex.
Advanced Features: Margin Trading
For experienced cryptocurrency traders looking to take advantage of advanced trading strategies such as margin lending, Poloniex is a better exchange. Coinbase and Coinbase Pro do not offer margin lending or margin trading.
Pros and Cons
When we compare Coinbase vs. Poloniex it is clear that both of these cryptocurrency exchanges have advantages and disadvantages for different types of cryptocurrency users. Let’s look at the pros and cons we’ve identified from each platform.
- Easy interface, good for beginners
- Supports major coins such as Bitcoin
- Accepts fiat currencies
- Strong security practices
- FDIC insured for US investors
- Strong customer support
- Many altcoins are not available through Coinbase
- No credit card support
- No Android-native mobile app
- Many altcoins available to trade
- Low fees
- Margin trading
- Excellent mobile app
- Poor customer service
- Not currently authorized for use in the United States
- No fiat currency support, only cryptocurrency trading
- History of security breaches
So how do you choose whether to use Coinbase or Poloniex when investing in cryptocurrency? It all depends on your tolerance for risk, your available resources, and the kind of trading you want to participate in.
Beginning investors, institutional investors, and people who wish to invest in the major cryptocurrencies such as Bitcoin or Ethereum Classic with minimal fuss should consider Coinbase or Coinbase Pro. Their user interface, FDIC insurance, and strong security and service make Coinbase and Coinbase Pro appealing to this demographic. Overall, Coinbase and Coinbase Pro seem to be the winner in the battle of Coinbase vs. Poloniex.
If you are a US Citizen, you are currently restricted from trading on Poloniex, making the decision of Poloniex vs Coinbase Pro easy.
If you seek to invest in altcoins, have experience with cryptos, and have a higher tolerance for risk, Poloniex may be a better option for you. Poloniex also allows users to margin-trade, which is not a feature available to Coinbase users. However, you should evaluate your own tolerance for risk against the various issues that Poloniex users have reported in the past.