One of the prerequisites to start investing in crypto is to sign up on an online cryptocurrency exchange. Two of the biggest names in the platform exchanges is Coinbase and Kraken. Whether you are thinking of registering on Kraken or Coinbase, it is important to know the differences in how they function and the facilities they offer.
This article will highlight the differences between Kraken and Coinbase with respect to the following categories:
- Kraken vs. Coinbase: Origin and Place of Operation
- Kraken vs. Coinbase: Viability as Trading Platforms
- Kraken vs. Coinbase: Safety and Security Measures
- Kraken vs. Coinbase: Support for Cryptocurrencies
- Kraken vs. Coinbase: Payment Methods
- Kraken vs. Coinbase: Transfer Limits
- Kraken vs. Coinbase: Fees
- Kraken vs. Coinbase: Support for User Locations
- Kraken vs. Coinbase: Customer Support
Before beginning, we will first take a look at what Kraken and Coinbase are and their intended customer base.
WHAT ARE KRAKEN AND COINBASE?
Both Kraken and Coinbase are online cryptocurrency exchanges. A cryptocurrency exchange works on similar lines as a stock exchange except that instead of dealing with fiat currencies, participants can trade in cryptocurrencies. Depending on the exchange, one or more cryptocurrencies can be bought using fiat currencies such as USD, CAD, Euro, Yen, etc.
The difference between Coinbase and Kraken lies in their functionality. Kraken is a trading platform that has various types of accounts for traders and investors. Along with buying and selling crypto, you can also make use of trading tools such as stop loss, profit-taking order, leverage and margin-based trading, and many more.
Coinbase also provides crypto trading facilities with a Global Digital Asset Exchange (GDAX) in 32 countries along with a crypto wallet facility in 192 countries around the world. Coinbase is popularly known for its easy-to-use interface which is ideal for a beginner looking to invest in cryptocurrency.
Both the exchanges have some distinct differences in the services they offer and the way they function, both of which are discussed below.
WHO THEY ARE FOR
Coinbase is definitely the more beginner-friendly option as compared to Kraken. It has a simple easy-to-use interface. Even the buying and selling aspect on Coinbase is much simpler compared to Kraken. For more sophisticated buying and selling features, you can always turn to Coinbase Pro.
Kraken is the more advanced option between itself and Coinbase. It would take a while to get used to the interface for anyone just venturing into the field of cryptocurrency. But this comes with the opportunity of earning more money with the complex trading features.
ORIGIN AND PLACE OF OPERATION
Coinbase was started in June 2012 by Brian Armstrong and Fred Ehrsam. Its service of buying and selling Bitcoin was launched in October of the same year. Since then, Coinbase has rebranded itself as a Global Digital Asset Exchange (GDAX) and also offers an API for developers.
Headquartered in San Francisco, California, Coinbase boasts a user base of around 13 million users as of July 2018.
Kraken was launched in September 2013 by Jesse Powell; with the intention of replacing Mt. Gox which was the then the largest bitcoin exchange and had faced two major hacks. It offered to trade between Bitcoin, Litecoin, and Euro.
Since then, it has expanded its support to 15 altcoins as well as Bitcoin. Its headquarters are in San Francisco as well, and it has reported user activity of 50000 new users each month.
VIABILITY AS TRADING PLATFORMS
Coinbase is a simple platform to buy Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. All you have to do is register an account, verify your email and phone number and set up two-factor authentication. To buy crypto, you need to link your bank account or a credit/debit card to your Coinbase account. Linking a bank account is recommended since there is no fee and the limit is much higher.
Coinbase has been praised for being user-friendly and the best platform for new users to trade cryptocurrency. Once you start using Coinbase, you can get the hang of it pretty quickly. The time taken to obtain crypto is also much shorter when it comes to Coinbase.
If you are a seasoned crypto trader, then you might want to check out Coinbase Pro. Earlier known as GDAX, Coinbase Pro has a range of more advanced options to buy and sell crypto. You can use market orders, limit orders and stop orders instead of just the market price.
When it comes to Kraken, it was designed keeping experienced cryptocurrency traders in mind. Hence, the user interface might seem overwhelming at first to anyone who is new to crypto. With that said, Kraken is the better platform for anyone who knows the ins and outs of crypto to make large profits. With the option of leveraged trading or trading on margin, you can borrow money from Kraken. This can work in two ways:
- You can borrow fiat currency from the exchange to buy a certain cryptocurrency which you are expecting to increase in price.
- You can also borrow cryptocurrency to sell it and repurchase it later if you are anticipating a drop in price.
With Kraken, you are also given access to short-term market dynamics in the form of a chart supplied by TradingView.
SAFETY AND SECURITY MEASURES
The safety standards employed by any online exchange is of the utmost importance. In the past, big exchanges such as Mt. Gox have been hacked, and investors have lost large sums of money.
Coinbase has been known to have a number of security features to keep your funds intact. It offers two-factor authentication for your account which makes it highly difficult for anyone who is looking to hack into your account to be successful. All digital currency is maintained in online servers as well as cold storage. Cold storage makes up 98% of the customer’s funds and the remaining in online servers.
Your funds on Coinbase are also protected by insurance by a syndicate of Lloyd’s of London, and all USD currency is insured by FDIC insurance, up to a maximum of $250,000. Any money you lose because of hacking will be repaid. If you are in possession of a significant amount of crypto, you can use something called Coinbase Vault. Multiple users have to confirm the withdrawal of funds before it can go through.
You can also have a Multi Sag vault which means that there are three keys to a single vault. One remains with the user, the second is shared with others, and the third stays with Coinbase. It also separates funds owned by users and the company. User funds are not used for any company operations. Further, Coinbase is in compliance with all regulations of the US government regarding cryptocurrency.
Kraken has a rock-solid reputation of having the best security features so much so that it hasn’t had a single major hack since its inception. During the famous hack of Mt. Gox, Kraken was chosen as the platform for repayment to clients. Like Coinbase, the majority of the coins are stored in cold storage except the ones being traded at the moment. The coins that are needed to maintain the liquidity of the clients are stored in hot wallets.
Other security features include two-factor authentication for account login and funding, PGP/GPG encryption for email communication, global settings lock to prevent hacking of account information. All the private information of clients are encrypted and stored on secure servers. The data is encrypted and stored in locked racks in a top-tier data center. The information for different purposes is stored on different servers completely isolated from each other. To prevent DDoS attacks, Cloudflare is used.
Similar to Coinbase, company and individual funds are maintained separately, and one cannot be used to run the operations of the other. Similar to Coinbase, Kraken also operated well within the U.S. regulations and laws.
SUPPORT FOR CRYPTOCURRENCIES
Coinbase is aimed at being a beginner-friendly website. Hence, it offers trading in only Bitcoin, Litecoin, Bitcoin Cash, Ethereum and Ethereum Classic. These currencies are the major ones in the world today, and therefore, Coinbase is the best platform for getting into crypto.
Three fiat currencies USD, EUR, and GBP are supported.
On the other hand, Kraken has a good number of cryptocurrencies that can be exchanged and traded. These total 17 in number and include Bitcoin, Ethereum, Dogecoin, Bitcoin Cash, Litecoin, Ethereum Classic, Dash, EOS, Melon, Iconomi, Stellar Lumens, Augur, USDT, Monero, Ripple, Zcash, and Gnosis.
Kraken is also in the works of adding more altcoins to this list. You can trade these cryptos against fiat currencies such as CAD, EUR, GBP, Yen, and USD.
Also read: What is Blockchain? | Beginner’s Guide
You can deposit funds into Coinbase using fiat currency via bank transfers as well as credit/debit cards. Crypto deposits using wallets are always available. The buying process is almost instantaneous with Coinbase. When it comes to withdrawals, you can use PayPal (only for US customers) as well as bank transfers and credit/debit cards.
Note: The fees for credit/debit card transfers is much higher compared to direct bank transfers. The time taken for bank account transfers is higher in this case.
The only way to deposit fiat currencies into your Kraken account is a direct bank transfer. If your bank account within the European Economic Area, then you are at an advantage since you can use a SEPA payment into your account.
Other options to deposit fiat currencies such as Neteller/PayPal and credit/debit card are not allowed with Kraken. Withdrawal methods are the same as the deposit methods. Transfer of cryptocurrencies through wallets is allowed. The transfer process can take from 1 to 5 days.
Like other exchanges, Coinbase also has transfer limits for transactions. The transaction limits depend on your account level ranging from 0 to 3. The account level depends on the number of verifications done on your account. If you have verified your personal information at level 2, then you can buy up to $25000 a day using your bank account. For anything more than that, you will have to transfer funds into your Coinbase USD wallet.
Each account has an available balance depending on the account level. This is how much you can withdraw or send immediately. The amount of digital currency that you can buy and sell also depends on the payment method, the age of the account, the purchase history and other factors. The limit for credit and debit cards on Coinbase is lower as compared to bank transfers.
Like Coinbase, Kraken also has limits for each transaction which depend on the payment method and the tier. You can view your deposit and withdrawal limits by going to Funding→Withdrawal/Deposit and then see the limit on the right tab.
For instance, for an individual account, there is a limit of $25000 daily limit and $50000 monthly limit on digital currencies. You will have to wait for 24 hours for your daily limit to reset and 30 days for your monthly limit to reset.
Coinbase has comparatively higher fees than other exchanges, equal to 1.49% per bank transaction, and 3.99% for every credit/debit card transaction. This can also fluctuate depending on the country and the method of payment.
However, this is justified considering the easy-to-use interface and facilities available such as debit/credit card transfers. Coinbase offers a bonus of $10 worth of BTC when you buy $100 worth of cryptocurrencies. Coinbase Pro is cheaper than Coinbase with fees charged at 0.1% for a maker order and between 0.1% and 0.3% for a taker order.
The transaction fees on Kraken are usually below 0.36%. The fees can be slightly different based on what currency pairs are being used, and extra fees may be charged when funds are deposited or withdrawn.
SUPPORT FOR USER LOCATIONS
Coinbase currently operates in 33 countries but has plans of expanding into other countries as well.
These include countries in Asia, Europe, North America as well as Australia. The entire list of supported countries is given on the Coinbase website.
Kraken is widely accepted all over the world including countries in Europe as well as US, Japan, Canada. It is as easy as signing up on the platform and creating an account. You can start trading as soon as your verification is complete. Kraken has the distinction of having very few verification procedures in order to begin buying and selling.
Coinbase is not known for an exceptional customer support service. However, you can get in touch with the customer services via email and expect a reply within 24 to 48 hours. They have also introduced a chatbot on the website which should be useful in dealing with queries and doubts that occur to users.
Coinbase also has telephonic customer service which can help you with any questions regarding ID verification issues, limit increases, locking of an account in case of hacks, etc. Overall, the customer support of Coinbase leaves much to be desired because of their sub-par response times. Average response time for Coinbase is 24-72 hours.
Kraken has faced a lot of issues regarding their customer support with more and more customers coming up with complaints lately. Most complaints have been about the long time taken by Kraken to perform account verification.
The website has a Contact page which can be used to submit requests; however, the call back time is far from satisfactory. Average response time for Kraken can be anywhere from a couple of days to a month.
The bottom line is that both Coinbase and Kraken are lacking when it comes to providing good customer support. This is, in part, because of the large number of people who are using Coinbase and Kraken. Nonetheless, both websites have well laid-out and detailed FAQ pages which might be used to resolve issues before going further and contacting customer support.
Both Kraken and Coinbase have some things going for them which make them an excellent trading platform for cryptocurrencies. Each has its own pros and cons which make it suitable for a particular application as per the user’s requirements.
- Excellent user interface, especially for beginners
- Mobile Application for both Android and iOS
- More number of methods to deposit and withdraw funds
- Insurance in case of hacks
- Reputable company with no major incidents of hacking
- Only five cryptocurrencies are available
- Can improve its customer support
- Higher fees for transactions
- No incident of hacking since inception
- More than 15 altcoins available
- Advanced trading options with graphics charting tools
- Low transaction fees
- Unparalleled liquidity
- Not the best website for beginners
- Recent cases of poor customer support
- Mobile application available only for iOS
- Fewer methods for deposit and withdrawal of funds
Whether you choose Coinbase or Kraken ultimately boils down to what you are looking to get out of the exchange platform. If you want an easy, fast and safe option to trade crypto and do not mind paying slightly higher fees, then Coinbase is for you. You can even learn the basics of crypto trading on it and then advance to other exchange platforms.
On the contrary, if you want a wide range of tools and low transaction fees, then Kraken is the way to go. Kraken is the best platform to trade in significant amounts of cryptocurrency and make the best profits once you get used to the complicated interface.