Both Kraken and Coinbase are excellent exchanges in their own right. While they both cater to completely separate markets due to exchange features, coins offered, and deposit methods, let’s do a Kraken vs Coinbase comparison so you can decide which one is more convenient for you.
Within the ecosystem, they also act at different ends of the spectrum, novice versus professional, investor versus trader, and ETF versus futures.
Both these exchanges are the epitome of trusted 3rd parties due to the nature of their stature as exchanges in the United States.
Both Kraken and Coinbase have very stringent verification processes that defy the purpose of the crypto ethos. Coinbase has FDIC insurance and Kraken has margin trading for United States citizens.
Kraken vs Coinbase Comparison
|Our Rating:||Our Rating:|
|Company Luanch: 2011||Company Luanch: 2012|
|Company Location: San Francisco, CA||Company Location: San Francisco, CA|
|Exchange Type: U.S. Margin Cryptocurrency Exchange||Exchange Type: Easy Buy/Sell Methods Exchange|
|Available Cryptocurrencies: 32||Available Cryptocurrencies: 19|
|Trading Pairs: 131||Trading Pairs: 19|
|Buy/Deposit Method: Cryptocurrency, Bank transfer||Buy/Deposit Method: Bank transfer, Credit card, Debit cart|
|Sell/Withdrawal Method: Bank transfer, Cryptocurrency||Sell/Withdrawal Method: Bank transfer, Paypal, Cryptocurrency|
|Fees: Low||Fees: Medium|
|Security: Excellent||Security: Great|
|Community Trust: Great||Community Trust: Great|
|Verification Required: Yes||Verification Required: Yes|
|Customer Support: Good||Customer Support: Good|
|Mobile App: No||Mobile App: Yes|
|Beginner Friendly: No||Beginner Friendly: Yes|
The first thing to do before comparing Kraken vs Coinbase is to know them, so let’s take a closer look at each to get a better understanding of the different features.
What is Kraken?
Kraken is a crypto exchange founded in July 2011 by Jesse Powell. Jesse Powell worked at Mt. Gox and thought he could do better, and he did as Kraken has not suffered a single hack since its inception. Kraken is based in San Francisco, California.
Kraken was the first crypto exchange to have trading data displayed on a Bloomberg Terminal. Kraken is also the Tokyo Government court-appointed Trustee and Germany’s BaFin regulated Fidor Bank.
Kraken was one of the first to offer leveraged margin and also the first to pass a cryptographically verifiable proof-of-reserves audit
Kraken investors include Blockchain Capital, Digital Currency Group, Hummingbird Ventures, Money Partners Group, and SBI Investment.
What is Coinbase?
Coinbase is a crypto exchange founded in June 2012 by Brian Armstrong and Fred Ehrsam. Coinbase wanted to challenge the dominance of Mt. Gox with 30 million users, and they have done that. Coinbase is based in San Francisco, California.
Coinbase has done a lot of regulatory compliance to register as a Money Services Business with FinCEN and adheres to the Bank Secrecy Act, USA Patriot Act, and the various state money transmission laws and regulations.
Cryptocurrency secured online by Coinbase is insured by a syndicate of Lloyd’s of London. United States customers’ USD wallet balances are covered by FDIC insurance up to $250,000.
Coinbase investors include Fred Wilson, Andreessen Horowitz, Union Square Ventures (USV), Ribbit Capital, Draper Fisher Jurvetson (DFJ), the New York Stock Exchange (NYSE), USAA, and several banks.
Kraken vs Coinbase: Reviews
Kraken is complicated to use by design. This initial confusion is due to the security features that have been built in to force user security.
Kraken has been notorious for not responding to tickets/user complaints or issues. They have done a lot to work on this and their recent stats show improvement.
If the cryptocurrency market is in a slump, Kraken allows you to short. This, in my opinion, is hands down the most important feature needed to trade a market constantly.
Coinbase is extremely simple to use. This design has made it easy for Mom and Pop investors to diversify their holdings.
Coinbase offers support through phone and email. Phone support is a dying customer right. This feature makes it easy for older and young people alike to trust the service. The idea of speaking to a human and not a bot calms people down and Coinbase definitively got this right.
FDIC insurance means everything for some investors but not being able to short is a fair trade-off for insurance. Knowing that even if Coinbase goes bankrupt, your funds are still yours and no third party has a right to claim them is simply marvelous when you go to sleep every night knowing hackers are probing everything looking for a weakness.
Kraken has the reputation of being the cheaper exchange compared with Coinbase. This boils down to how the exchange is used. Kraken users transact multiple times in a month, opening and closing multiple trades on average in various currencies. The trading volume approach is very lucrative.
Kraken fees need to be reviewed and understood to trade effectively. The tiers offered can make all the difference to the monthly bottom line for a professional trader or investor. The costs of trading can be astronomical to the user’s trading balance when they are not taken into account.
Depending on your location you might have to go into your bank to perform an international bank transaction. This means they will ask you questions about why you are doing this, where did the money come from, and implement taxation to clear funds back into your accounts.
Coinbase has the opposite reputation of being the more expensive exchange when compared with Kraken. This can be summed up by the type of exchange Coinbase has on offer – simple, easy to use and designed for Mom and Pop crypto enthusiasts.
The mass appeal of this exchange as the first point of contact generates a huge volume of buy and hold investors. Their users may purchase once a month and similarly sell just as often. This user-based volume approach is also highly lucrative for the Coinbase bottom line.
Coinbase fees, as with Kraken, need to be understood to invest successfully. These fees are rigid and can eat away at your working capital very quickly. All transactions need to be carefully considered by the small trader or investor.
Coinbase fees are expensive because they offer multiple modes of entering crypto debit cards, credit cards, and wire transfer. International banking is not cheap but effective in regulating and securing legal transactions.
International bank transfers are an option, and while this can be an annoyance, some sacrifices have to be made for safety and security.
Safety and Trust
Is Kraken Safe?
Kraken is the safest exchange thus far not suffering a single hack. This is by design and not by accident. Kraken engineers have taken the time to design a system that works and is usable for the most part.
Automatic signing off is an annoyance but this minor irritation is a security feature and how we need to treat logged in sites.
Another amazing feature is 2FA or 2-factor authentication. Which means you need 2 factors/things to use the service. In this case, first, you log in as normal. Second, you provide a code normally generated on your phone by Google Authenticator for the site in question. Each code is generated specifically for your username and the site in real-time; old codes will not work and random codes most definitely will not work.
Another amazing feature is the Global Settings Lock. This feature blocks IP addresses that are not associated with the account.
This can be spoofed/made to look like another address is being used than the actual originating address, meaning someone in the United States can look like they are computing over the internet from Austria. This would have to be a targeted attack and, for the most part, probably the user’s fault. This would have nothing to do with Kraken.
Is Coinbase Safe?
While Coinbase clients have been hacked, Coinbase itself is safe and secure. They have a large pool and 98 percent of their customers’ cryptocurrency are offline in cold storage wallets. These cold storage offline wallets are kept in secure vaults and safety deposit boxes around the world.
Coinbase uses SMS 2FA. Coinbase will SMS your cellphone a number that needs to be input after your login details. This is safe unless someone finds your details online and you mention your crypto interests. You can also use Google Authenticator.
Kraken vs Coinbase: Conclusion
When considering Kraken vs Coinbase, we first must understand that the two serve two entirely different communities. The analogy is eating a steak with a knife and fork.
Investors (fork) and traders (knife) go about the process of purchasing crypto for different reasons. Both need to perform the same transaction of purchase cryptocurrencies (eating the steak).
Kraken is for the more advanced user who wishes to actively trade. As such it provides more trading pairs and smaller fees to allow for a greater number of purchases and sales. With Kraken, you can also short (sell first and buy later) cryptocurrencies which help to balance the market.
Coinbase is more user-friendly. Coinbase allows users to purchase crypto while waiting for a bank transfer to clear, which is an amazing feature. Coinbase was designed for traditional investors to partake in crypto and they did this extremely well, pushing the price higher.
In conclusion, the question: Kraken vs Coinbase, “Which is better?” depends on the user’s skill and what the investor wants to accomplish.
Jesus Cedeño is a certified doctor turned cryptocurrency expert, writer, and investor who lives in New York City. Jesús specializes in cryptocurrency product reviews, tutorials & technical analysis. Follow him on LinkedIn to stay up to date on his latest work on blockchain, decentralization and crypto investments.