Are you confused in choosing between Coinbase vs Bitstamp? Both Coinbase and Bitstamp are two of the oldest and most popular crypto exchanges in the market. They both have been in the business for years, and they are both licensed. Coinbase is licensed in the US whereas Bitstamp is licensed in the EU. The article below will explain to you the differences and comparisons between Coinbase and Bitstamp to help you choose the most suitable crypto exchange for your needs and preferences.
Background and Regulatory Compliance
Coinbase was founded in 2012 with serious backing from venture capital firms such as Andreesen Horowitz and Union Square Ventures. It is based in San Francisco. Coinbase has been around for years by complying with all US regulations for financial institutions. Hence, it is considered as a safe choice for investing in cryptocurrencies. In the public’s eyes, Coinbase is considered as one of the safest, most reliable crypto exchanges. See also: Coinbase vs Gemini.
On the other hand, Bitstamp was founded in 2011, so it is slightly older than Coinbase. It was backed by Pantera Capital, which is a leading cryptocurrency VC fund. Bitstamp is actually the first nationally-licensed crypto exchange in the world. It is licensed in Luxembourg, and since the EU has a “passport” program for financial service companies, it is licensed throughout the EU.
Because of that, Bitstamp also holds a good name in the cryptocurrency space. Furthermore, it undergoes annual audits by one of the four biggest audit firms, so you can be sure that it is clean and transparent. They are always transparent about their operations and compliance.
Security may be one of the factors to consider when choosing between Coinbase vs Bitstamp. Well, security has always been a hot topic in the cryptocurrency world. Since cryptocurrencies are digital money that are traded online, they are prone to cyber attacks. The crypto companies are responsible for securing all transaction processes, but, as the investor, don’t forget that you are also supposed to be careful with your methods. For example, it is your fault if your account gets hacked after using an unsecured public network.
So far, Coinbase has never been hacked since the founding. They have carried strong security measures to prevent attacks and breaches. They keep the vast majority of their cryptocurrency holdings in cold offline storage. Those funds in the cold storage are safe from hacks and data breaches. Even if someone breaches into Coinbase’s network, the intruder is still unable to access the funds in the cold storage. However, Coinbase does get attacked from time to time, and the service’s performance may slow down during an attack.
Bitstamp also puts serious attention to security, but unfortunately, Bitstamp does have a red mark in its history. On the 4th of January 2015, Bitstamp experienced a security breach which resulted in the loss of about 19,000 BTC (which was worth roughly $5.1 million at the time). However, the company is very responsible. They covered the loss themselves so that their customers didn’t lose any money. This is a positive point to consider. Since then, Bitstamp has not experienced any further security problem.
Coinbase is a very good choice for beginners who are just getting started in the cryptocurrency world. The interface is very intuitive and easy to use. It looks just like a typical banking site. Another great thing about Coinbase is that it supports multiple ways for deposits. You can deposit your money via an ACH transfer, wire transfer, or even debit/credit card. And of course, if you already have some Bitcoin, Ethereum, or Litecoin, you can transfer them to your Coinbase account.
Coinbase actually has two platforms, which are the regular cryptocurrency retailer and the full cryptocurrency exchange called GDAX. In the retailer, you can just buy or sell cryptocurrencies without any complicated process. Meanwhile, in order to enter GDAX, you need to possess significant assets of over $5M in discretionary investments. In GDAX, you can access margin trading as well as other more advanced features.
On the other hand, Bitstamp is a well-known European crypto exchange. Compared to Coinbase, the interface is less intuitive. The technical trading screens may even look intimidating in the eyes of a total beginner. However, if you are already familiar with such screens, Bitstamp is actually quite easy to use.
Bitstamp’s verification process may be a hassle for some people because it requires the front and back pictures of your government ID (you may use your passport or driving license) and bank/utility statement. Fortunately, some quick phone snaps and a PDF of the bank/utility statement are sufficient to complete the process.
You should consider the fees as well when choosing between Coinbase vs Bitstamp. In general, if you are only planning to trade BTC, BCH, ETH, or LTC, Coinbase is a better option. It only charges a 1.49% fee if you purchase via a bank transfer, or a 3.99% fee via a debit/credit card. Transferring your tokens to other addresses is free, but you may need to pay the network transaction fees.
Meanwhile, Coinbase’s GDAX uses a maker-taker model to determine the fees. It is free to place a new order, but completing an order comes with a fee of 0.3% – 0.1% depending on your recent trade volume. GDAX encourages liquidity by allowing people tocreate new orders freely.
On the other hand, Bitstamp is probably more beneficial for EU residents. You can deposit euros through a SEPA transfer without any additional fee. A withdrawal through a SEPA transfer only has a flat fee of 0.90 euros. Direct cryptocurrency deposits and withdrawals are also free. International wires have low fees, only 0.05% for deposits and 0.09% for withdrawals.
Bitstamp supports credit cards for deposits, but it is not recommended. The deposit fee via a credit card starts at 8%. It does get lower on larger sums, but the lowest is only 5% and that’s if you deposit more than $5,000.
The trading fees on Bitstamp are a little worse. This is because placing an order also has a fee. However, the fee does starts at a lower rate. The trading fees start from 0.25% and are reduced to 0.10% for a recent trade volume of more than $20,000,000.
Coinbase vs Bitstamp do provide some different cryptocurrencies. Coinbase is a great choice if you are only interested in the four ‘mainstream’ cryptocurrencies: Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), and Litecoin (LTC). However, if you are interested in the more exotic cryptocurrencies, Coinbase is not a viable choice. But it is said that the company is considering adding more cryptocurrencies in the future.
On the other hand, Bitstamp now has a wider range of cryptocurrencies with trading pairs for BTC, ETH, LTC, and XRP. Initially, Bitstamp only supported BTC, but supports for ETH, LTC, and XRP were all added in 2017. They have also started facilitating withdrawals of Bitcoin Cash for their users.
Coinbase has a great reputation in terms of customer service. They have recently added phone customer support, which is an impressive move for a crypto exchange. This move may help to bring the cryptocurrency industry closer towards normal business standards. More and more people will find it easier to invest in cryptocurrencies.
Bitstamp also has great customer support. They are responsive and helpful. It is also worth a note that almost all complaints are directly answered by Bitstamp’s customer support team. This showcases that the company cares about their customers’ satisfaction. Note that there are some complaints about accounts getting closed after unusually large deposits; that is due to Bitstamp’s safety measure for suspicious transactions. In such cases, Bitstamp can give full refunds.
|- US-licensed, founded in 2012, based in San Francisco||- Licensed in Luxembourg and hence EU-licensed, founded in 2011|
|- Great security, hasn’t been breached||- Great security; breached in 2015 but covered the loss themselves|
|- Simple and intuitive interface||- More technical interface, typical of an exchange|
|- Supports BTC, BCH, ETH, and LTC||- Supports BTC, BCH, ETH, LTC, and XRP|
|- Lower debit/credit card fee, placing an order is free||- No fee on deposits via SEPA, flat 0.90 EUR fee on withdrawals via SEPA, has a fee when placing an order|
In general, Coinbase is more recommended for beginners because it is easier and more intuitive to use. You may also choose Coinbase if you feel more comfortable with a US-based company with phone customer support. On the other hand, Bitstamp is great if you want to invest from a European bank account using the SEPA transfer option. You may also choose Bitstamp if you want to trade XRP.