Maybe you’re just getting ready to start investing in cryptocurrency and have already looked at all the different exchanges out there. Which one should you choose? This is not an easy decision, but it comes down to preference and what fits your needs.
In no particular order, this in-depth review will cover the top four cryptocurrency exchanges. By the end of this article, you’ll know some of the pros and cons of each and hopefully have a better idea of which one is best for you.
Intro to Coinbase
When new cryptocurrency investors start researching different exchanges, Coinbase is perhaps one of the first to come up. Established in 2012, this US-based exchange is one of the oldest and most respected crypto platforms available.
The exchange is available in over 100 countries and supports around 30 cryptocurrencies that you can trade. The platform also boasts 43 million verified users.
Alt: Young man in a plaid shirt staring at his laptop
With Coinbase, you can also earn free crypto by completing quizzes. This incentive is great for people just getting started. How much you can earn will vary, but who doesn’t like free money?
For those concerned about security and whether your cryptocurrency investments will be safe, Coinbase takes protection seriously. They claim to store 98% of their users’ digital currency offline. In other words, hackers cannot access these funds. The rest of the 2% is on an online hot-wallet and insured by Coinbase. The insurance covers any losses if their website is compromised.
Coinbase also provides FDIC insurance for US users who have dollars stored on their platform. However, your cryptocurrency is not FDIC insured – nor is there any coverage – if your account gets compromised or hacked and your funds are lost or stolen.
Alt: A pile of fifty-dollar bills
If not using Coinbase Pro, the exchange’s trading fees are among the highest. This is one major downside to Coinbase. For debit card purchases (sorry, no credit cards accepted in the USA), there is a 3.99% fee, and bank deposits (such as ACH transfers) are 1.49%.
Fees like these can eat into your wallet if you use Coinbase a lot. On the other hand, Coinbase Pro is cheaper to use, and setting up an account is free. Coinbase Pro charges maker and taker fees starting as high as 0.50% (they can be lower depending on how much you spend) when you buy or sell crypto, and you can deposit and withdraw money via ACH transfers for free (for USA users).
Although Coinbase provides customer support, a Knowledge Base, and an FAQ page, it is limited. Support responds anywhere between 24-72 hours, but many customers have complained of slow or unhelpful responses. Increased demand may also impede response times.
Intro to Binance and Binance.US
Binance is another cryptocurrency exchange that Changpen Zhao launched in Hong Kong, back in 2017. Due to tight regulations in China, the company later moved to Malta (located south of Sicily, Italy). The exchange has gained recognition across the world and supports hundreds of cryptocurrencies on its platform. It also has some of the lowest fees.
This portion of the review, however, will look at the Binance.US exchange. Created by Binance, the platform complies with US laws and regulations. Although Binance owns Binance.US, BAM – a crypto-trading service – manages it. US residents interested in using Binance will have to create an account with Binance.US instead, as Binance will reject all US residents.
In terms of functionality, Binance.US works similarly to the regular Binance exchange with a few minor differences. For one, Binance.US is not available in all states, such as New York and Washington. If you happen to reside in these states, their services are unavailable to you.
In addition, Binance.US supports fewer cryptos than Binance. However, Binance.US allows its users to trade over 50 different types of cryptocurrencies, which is more than Coinbase has.
Binance.US offers frequent promotional rewards and deals, like coupons or referral codes that you can use to earn some free Bitcoin.
On top of this, they have a staking rewards program. You can stake some supported coins on your account and passively earn income. There is no lock-down period for your crypto either; you can sell or withdraw any time you want.
Although Binance.US has never seen a hack, Binance has. In 2019 Binance fell victim to a hack in which $40 million worth of Bitcoin disappeared from their hot wallet. Binance, as a result, halted all transactions for about a week while they sorted out the mess and filled in the breaches. They were also quick to reimburse their customers out of their Secure Asset Fund for Users (SAFU) insurance fund.
Binance also promised to amp their security measures by improving their Know Your Customer (KYC) verification process and anti-phishing schemes.
Like Coinbase, Binance.US stores the majority of its clients’ crypto on an offline or cold-storage wallet. Yet, for security purposes, keeping your crypto on an external device like a hardware wallet is safer than on an exchange.
As we mentioned, Binance.US has some of the lowest fees compared to any other exchange. They have a 0.1% maker and taker fee and no cost associated with depositing fiat by ACH or wire transfer. However, if depositing by debit card, there is a significant 4.5% fee. If you deposit crypto onto their platform, there is no fee.
There are also no fees if you decide to withdraw your dollars from their platform via ACH. For wire transfers, there is a 15-to-35-dollar fine when pulling your money out. Lastly, if you choose to withdraw your crypto from Binance.US, the fee amount and minimum you have to take out will vary. For example, with Bitcoin, there is currently a minimum withdrawal amount of 0.001 with a fee of 0.0005.
While customer support for Binance is not the greatest, Binance.US appears to be better. Again, this depends on how much demand Binance.US has on their platform and how backed up they are with support tickets.
How Easy Is It to Sign Up with Binance.US?
The sign-up process for Binance.US can be a bit confusing and tedious. The first verification step requires an email, a new password, and your current residential address. This part of the verification process will allow you to deposit and trade with crypto.
If you want to deposit and trade with fiat currency, you have to go through two more verification steps. The second step requires you to give Binance.US additional information such as a government ID and a proof-of-address document like a bank statement. Once completed, it will increase how much crypto you can trade and withdraw from your account. It will also give you access to the next verification process.
(Note: if the name on your proof-of-address does not match the name on your government ID, like your driver’s license or passport, then it may slow or halt the verification process.)
To be verified for fiat deposits and withdrawals, you will have to go through a third step. You need to verify your residential and other information you provided earlier, followed by a questionnaire. If all goes without a hitch, you can link up a bank account or debit card and start performing transactions.
One negative thing about this whole process is that you have to give a lot of personal information to be verified. This method prevents money-laundering schemes and other sorts of illegal activities, but it can be annoying and raise an issue if you don’t like giving out your personal information.
The time it takes to verify your account can also be a pain, depending on how much demand Binance.US has. For some, the process can take less than an hour to complete. For others, it might take two to three business days. Unfortunately, when Binance.US gets flooded with new users, it takes some individuals a week or longer to get fully verified.
Intro to Gemini
The platform offers different crypto coins to trade, but it only supports around 35 types. In comparison, Coinbase, Binance.US, and Kraken (which we’ll get into later) have more to offer.
Alt: A key in a padlock on top of chains
Perhaps Gemini’s biggest claim to fame is that it is considered the most secure exchange. That’s their focus and priority. They store most of their users’ assets on an offline, cold-storage system, with a small percentage on an insured hot wallet.
As an extra measure of protection, they require all their users to set up Two-Factor Authentication (2FA). They also support hardware security keys, a USB device that offers a secure login process. Users can also whitelist approved addresses, which means you can only withdraw your crypto to wallets or other exchanges that you trust and disable them if you ever need to.
The list of security features goes on, but needless to say, Gemini has gone all out to protect their users’ crypto. As a result, they have not seen a successful hack. For these reasons, it might be safe to store your crypto on their exchange. Yet, some deem this poor practice, and you should still consider storing your digital currency on a hardware wallet.
Another bonus? Gemini has lower fees compared to Coinbase. Their maker and taker fees will differ, depending on the trade interface you use. For example, Gemini has their standard, beginner-friendly interface, and they have their more advanced trading interface for experienced traders.
When you use their simple trading interface, whether by mobile device or through their website, the fees will be higher and quickly add up. Since the rate is the same for both the mobile and web applications, you’ll be charged a flat fee of $2.99 if you make an order valued between $50-$200, for example. The cost can be as high as 1.49%.
If you use their ActiveTrader interface, however, the fees can be as high as 0.35% for takers and 0.25% for makers. Additionally, the rate will go down on the ActiveTrader interface the more you spend. Even though the ActiveTrader is more complicated to use, the fees are lower. Thankfully, beginners can quickly learn how to use this interface as there are helpful guides and tutorials on the internet.
Another great thing about Gemini is that there are no fees when making a deposit or withdrawal, with a few exceptions.
Gemini has both a helpful Support page and FAQ page that customers can go to for tutorials and answers to questions. You can also call or email support. However, customers have complained of poor customer service as it’s taken days for Gemini’s support team to respond. If something goes wrong and you need help, this can be a big problem. Also, they use email as their primary response method.
How Easy Is It to Create an Account with Gemini?
As part of Gemini’s security features, the exchange requires a lot of KYC information to verify you. They will ask for details such as your social security number, your residential address, and government-issued identification, like a driver’s license or passport.
Once verified, you will then have to send a wire transfer to Gemini to deposit and withdraw funds to your account. They first have to verify your bank account before you can start depositing money by ACH transfers. Gemini does not charge a fee for wire transfers, but your bank may. It can take up to two business days to complete, but once verified, you’ll be able to deposit and withdraw your money using the ACH method for free.
Funds transferred by ACH will appear on your account immediately, so you can start trading crypto at its current price. However, the crypto you purchased with those funds, including the funds themselves, will not be available for withdrawal as your bank transfer will still take four to five business days to fully process.
Overall, setting up an account with Gemini is a quick process for most. The downside is that there’s a lot of KYC involved, and you have to send a wire transfer to verify your bank account. You also have to wait for transfers to be fully processed before you can withdraw your money (or crypto), which can take days.
Intro to Kraken
Kraken was founded in 2011 by Jesse Powell after witnessing the instabilities and disorganization at the former Mt. Gox exchange. The founder of Kraken wanted to build a safe trading exchange that customers could trust.
Not long after this experience, Mt. Gox suffered two security breaches – the second of which resulted in over $450 million of stolen bitcoin. In the end, Mt. Gox had to declare bankruptcy.
Since then, Kraken has become one of the biggest and most popular crypto exchanges, next to Binance (not Binance.US) and Coinbase. The platform has some of the best security and supports around 59 cryptocurrencies. It is also available in every state in the US, excluding New York and Washington.
Like Binance.US, Kraken has a staking program that allows you to earn passive income on your coins. You can start staking by either buying coins directly on their platform or funding eligible coins to your account. The reward payout is twice a week, and there is no lockup period.
Much like Gemini, Kraken focuses on security. For instance, Kraken states that their servers are kept under “secure cages” and have 24/7 video surveillance and armed guards. They even have a white hat hacking team dedicated to testing their cybersecurity to find holes or weaknesses in their defenses to prevent dangerous hackers from breaking in.
Kraken takes a similar approach to protect their customer’s personal information by encrypting and diligently monitoring it. Documents uploaded to their website get watermarked, preventing hackers from using them anywhere else online. If protecting your personal information is a priority, Kraken is an excellent choice.
What also makes Kraken popular is the fact that they have some of the lowest fees around. The fee percentages will vary based on your trading volume each month, but if you’re using Kraken Pro, maker fees can be as high as 0.16%, while taker fees are at 0.26%.
Just like Binance.US, Kraken charges a withdrawal fee on your crypto and has a minimum requirement. Kraken also charges a fee if you’re withdrawing your fiat currency and requires a minimum withdrawal amount. The amount you pay can vary on your withdrawal method.
On the other hand, depositing money in Kraken is free depending on which deposit method you use. For cryptocurrency deposits, however, not all coins that you transfer to your account are free. Some coins, like Bitcoin, Ethereum, and Litecoin, for instance, have no fee. Yet, Filecoin, Polkadot, Uniswap, and others have a price tied to them. Keep that in mind if you’re considering using Kraken.
Like most of the exchanges mentioned above, some have considered Kraken’s customer service to be a weak point. Regardless, Kraken has an extensive Help Center full of tips and help guides. They even offer 24/7 live-chat support if you ever encounter a problem with your account and need assistance.
Registering an account with Kraken is easy. To get started, you simply need to provide an email and create a new username and password. Once you have completed this step, Kraken will send you an email with an activation key – you’ll need this to activate your account.
Even after activating your account, you won’t be able to trade or deposit funds. You’ll have to go through different levels of verification to start depositing funds to your account. That means you’ll need to provide more KYC personal information and documents. Verification is relatively quick. If demand increases, however, getting verified on Kraken may take longer.
Kraken clients have access to a host of fiat funding methods that allow the seamless transfer of funds to your Kraken account. Most clients globally have access to a funding method that doesn’t require additional KYC verification and offers deposits that can be credited to Kraken accounts as early as Same Day.
Wrapping It Up
We’ve covered some of the most popular and secure exchanges available. Each has its pros and cons, but ultimately, you should decide based on your preferences.
Remember, if you’re new to crypto investing and make money on any of these platforms, you’ll need to pay taxes to the Internal Revenue Service (IRS). Reporting your crypto taxes can be a complicated pain, but a crypto tax software like TaxBit will make filing your taxes a breeze. You can easily connect your exchange, and the crypto tax software will automatically calculate your taxes for you and prepare all the necessary tax documents that you need to report.
Another great thing about crypto tax software is that you can connect nearly any exchange. For example, TaxBit supports every crypto exchange as well as over 2,500 coins. You can even attach multiple crypto exchanges if you choose to use more than one.
Welcome to crypto investing!