Crypto.com and Coinbase.com are two of the most popular custodial exchanges in the cryptocurrency space. Crypto.com is a Singapore-based exchange that offers a wide range of services, including buying, selling, and trading cryptocurrencies, as well as providing secure storage for digital assets. The platform also provides users with access to a variety of financial products such as loans and credit cards. Coinbase is an American-based exchange that allows users to buy, sell, and store digital assets securely. It also provides users with access to a variety of financial services such as merchant processing and payment solutions. Both platforms offer users the ability to buy and sell cryptocurrencies using fiat currency or other digital currencies. Additionally, both platforms provide users with access to advanced trading tools such as margin trading and limit orders.
Coinbase.comCrypto.comNumber of Users108 million (source)70 million (source)Year Founded20122016Country of HQUnited StatesSingaporePublic or Private?Public, traded on NasdaqPrivateInstitutional Assets Under Custody$90 billion as of Nov, 2021 (source)Uses 3rd parties (source)Security Practiceshttps://coinbase.com/securityhttps://crypto.com/securityNumber of Countries Served
Coinbase is a term used to refer to the process of creating new Bitcoin blocks on the blockchain. It is also used to refer to the transaction that rewards miners for their work in securing the network. The name "Coinbase" comes from the fact that miners are rewarded with newly minted coins when they successfully mine a block.
An exchange is a service that allows its customer to buy and sell (exchange) one form of currency for another. Traditionally, exchanges allow their customers to exchange one fiat (government-issued) currency for another. Crypto exchanges allow customers to exchange fiat and decentralized crypto currencies.
A custodial exchange is a centralized platform that takes "custody" of its customers' funds. It does this by managing the private keys that control their crypto assets.
There are also non-custodial exchanges (often called DEXes or "decentralized exchanges") which do not take custody of their customers' private keys.
This means that users do not have direct control over their crypto assets and rely on the exchange to secure and manage their funds. This exposes customers up to some risks (such as the exchange freezing their funds), while protecting them from others (such as the risk that the user will misplace their password).
Coinbase.comCrypto.comFDIC-insured up to $250,000?YesYesDepository InstitutionsJPMorgan ChaseCross River BankPathwardMetropolitan Commercial BankAre funds owned by customer in case of bankruptcy?Yes (source)Yes (source)
Coinbase.comCrypto.comHold customers’ assets 1:1Yes (source)Yes (source)
When a crypto exchange claims that it holds customer assets 1:1, it means that for each unit of cryptocurrency held by a customer, the exchange holds an equivalent unit of that same cryptocurrency. This is often referred to as a "reserve system."
For example, if a customer deposits 1 Bitcoin (BTC) into their account on the exchange, the exchange holds 1 BTC in reserve. This means that the exchange has the same amount of cryptocurrency as the customer, and can return the cryptocurrency to the customer if they request it.
The 1:1 reserve system is designed to provide customers with peace of mind and increase trust in the exchange. By holding the same amount of cryptocurrency as its customers, the exchange is able to ensure that it has the necessary funds to fulfill customer withdrawals.
It's important to note that not all crypto exchanges use the 1:1 reserve system and some exchanges may hold less than the full amount of customer funds in reserve. Before choosing an exchange, it's important to research and understand its reserve system, as well as its security measures, to ensure that your assets are protected.
The importance of audits when considering a custodial crypto exchange cannot be overstated. Audits provide an independent, third-party review of the exchange's security practices and procedures. This helps to ensure that customer funds are held securely and that the exchange is compliant with applicable regulations. Audits also help to identify any potential vulnerabilities or weaknesses in the exchange's security protocols, allowing them to be addressed before they can be exploited by malicious actors.
Some people complain that 3rd party audits are a violation of one of the central tenets of cryptocurrency -- that crypto should not depend on a 3rd party, it should be truly decentralized. As a result, many crypto companies attempt to provide proof of their assets through a process known as a Proof of Reserves (PoR).
A crypto proof of reserves is a cryptographic process used by cryptocurrency exchanges to prove that they have the same amount of cryptocurrency as their customers. This process involves the exchange publishing a cryptographic hash of all customer balances, which can then be independently verified by anyone with access to the blockchain. By doing this, the exchange is able to demonstrate that it holds the same amount of cryptocurrency as its customers and that these funds are not being misused or stolen.
While PoR is a good idea in theory, in practice it is relatively untested. For example, the original idea of PoR didn't include a Proof of Liabilities. So, while a company could have reserves that match customer deposits, it could also have liabilities that exceed customer deposits.
Coinbase.comCrypto.com3rd Party Financial AuditsYes, Deloitte & Touche LLPNoProof of ReservesYesYes
Coinbase makes 237 tokens available for trade. You can see Coinbase.com's list of tradable assets at this URL: https://www.coinbase.com/trade
Crypto.com makes 280 tokens available for trade. You can see their list of tradable assets here: https://help.crypto.com/en/articles/5978017-what-should-i-know-about-cryptocurrency-deposits-and-withdrawals
Coinbase is one of the most popular exchanges for new crypto users due to its ease of use. They offer a web-based platform designed to be user friendly, and they offer a number of “Learning Rewards” – the opportunity to get paid to learn about new types of crypto.
Qualifying for Learning Rewards is pretty simple – essentially you have to verify your account and not have multiple accounts. Then, you can start taking short, interactive lessons followed by quizzes.
Buying and selling on Coinbase is straightforward. With minimal effort, buyers can start trading quickly with guidance provided by the service itself.
Crypto.com shares some similar features as Coinbase, such as allowing for easy purchasing of coins utilizing fiat money, debit cards, and even Paypal in some cases – but the platform also adds more advanced tools for experienced traders.
For example, you can configure “grid” trading – which essentially means that you can configure Crypto.com to buy and sell tokens at predetermined prices. You might, for example, buy a token today, and configure a grid trade to automatically sell that token when the price was 20% higher.
Both Crypto.com and Coinbase provide functionality to allow users to Dollar Cost Average (DCA) into crypto. This essentially means that if you want to purchase $100 in crypto, you can do it at predictable intervals. This lowers the risk that you’ll invest the entire $100 at the height of the market, because the market will swing up and down over time. (On the flip side, it also lowers the likelihood that you’ll invest the entire $100 at the bottom of the market).
Both Crypto.com and Coinbase.com publish tokens, but they aren’t really comparable. Crypto.com’s token has been summarized as essentially a loyalty program, whereas Coinbase’s token is much newer, and targets developers.
Crypto.com’s native token is called Cronos (abbreviated “CRO”). Owning Cronos offers several benefits:
Coinbase.com introduced an Ethereum Layer-2 chain called Base in February of 2023. It’s aimed at developers that want the security and functionality of Ethereum combined with faster speeds and lower costs.
Coinbase is more popular than Crypto.com, with more than 50% more users, and it has a simpler user interface. But, its real strength is that it’s a publicly traded company on a US stock exchange. This means that it faces greater regulation and that it has to complete public audits every year.
Crypto.com is privately owned and headquartered outside the US. This means that it has less regulatory oversight, and it isn’t required to complete public audits.
If you want to be conservative with your crypto, this may be enough to sway you towards Coinbase.
On the other hand, Crypto.com offers more tokens, charges lower fees, and it’s generally agreed to have more sophisticated trading options.
In the end, when choosing a custodial wallet provider you need to choose what’s most important to you.
