Perhaps the biggest negative to using Coinbase’s platform is the costs involved. The company makes money in two ways — a spread and a transaction fee. In Coinbase’s case, the spread is fairly standard and is a markup of 0.5% over the quoted exchange price of whatever cryptocurrency is being traded. Robinhood uses a similar pricing structure, although it’s unclear what the exact spread is.
When it comes to the transaction fee, this is where it starts to get complicated (and expensive). Coinbase charges a transaction fee based on the higher of its flat-rate fee schedule or a percentage of the transaction, which depends on the user’s payment method.
The flat fees range from $0.99 for a transaction worth $10 or less, to $2.99 for a transaction over $50. For cryptocurrencies purchased with a U.S. bank account or money in a Coinbase U.S. dollar wallet, the percentage fee is 1.49%. It’s higher for purchases made with a debit card.
As an example, let’s say that you want to invest $1,000 in Ethereum (ETH) using Coinbase via bank account transfer. This would correspond to a $2.99 flat rate or a $14.90 percentage-based transaction fee, so you’d pay the latter. In a world of commission-free stock trading, this could be considered expensive.
On the other hand, Robinhood doesn’t charge any fees at all. It only makes money from the spread between the buy and sell prices, making it the clear winner on pricing between the two.