2021-10-07 20:11:18

SoFi vs. Coinbase • Which is Better For Crypto? • Benzinga

Want to jump straight to the answer? Coinbase is better for new crypto investors. SoFi is better for those looking for a broader range of investments.

Social Finance, Inc. (NASDAQ: SOFI) was founded in 2011 by 4 students from Stanford Graduate School of Business. Over the years, SoFi has evolved into a modern finance company. SoFi is a one-stop financial shop, part crypto service, stockbroker and financial services company. SoFi supports 28 cryptocurrencies with both a web-based platform and mobile app. The SoFi trading platform is bare-bones and allows users to buy a dollar amount or choose to buy a certain number of coins. All transactions are in USD with no crypto to crypto transactions. SoFi has partnered with Coinbase (NASDAQ: COIN) to complete transactions on behalf of its users. SoFi has over 2 million users. 

Coinbase was founded in 2012 by Brian Armstrong. In October 2012, it launched services to buy and sell Bitcoin through bank transfers. Coinbase added Ethereum in January 2017, then Litecoin in March of that same year. Coinbase now supports 100 cryptocurrencies and regularly adds to that list. Coinbase has a web-based trading platform as well as a mobile app. The trading platform is pretty basic and allows users to buy, sell or convert from 1 cryptocurrency to another. Coinbase is available in over 100 countries and now has more than 56 million users. 

Benzinga compares SoFi and Coinbase because each shares a similar trading platform and a working partnership. 

What Is a Cryptocurrency Exchange?

A cryptocurrency exchange is a platform that facilitates the buying and selling of digital assets. It works much like a brokerage firm; you fund it by depositing fiat currency via a linked bank account after setting up your account. If you have multiple accounts, you can also fund the new account by transferring crypto into it from another account. The crypto exchange acts as an intermediary between buyers and sellers and serves as a custodian for the crypto you buy. 

When using a cryptocurrency exchange, you can interact in 2 ways. You can buy crypto using fiat (USD) then sell it back into fiat (fiat to crypto to fiat) or direct crypto to crypto exchange. If you prefer to trade crypto to crypto, the exchange will have a variety of trading pairs for you to choose from. 

Anyone with stock trading experience will feel quite comfortable trading in the crypto markets, but some differences exist. One difference is that cryptocurrencies are divisible by 100 million, so you can buy tiny fractions of a coin or token. In contrast, when you buy stocks, they are almost always sold by the whole share. There are, however, a few stockbrokers that do fractional trading of stock shares. 

Also, stock shares only trade in fiat currency of the country where the exchange is located. On crypto exchanges, you can trade not only using fiat (USD) but also other cryptocurrencies, most commonly Bitcoin, Ethereum and stablecoins. 

Important Cryptocurrency Exchange Features

When choosing a crypto exchange, it is crucial to pay attention to what features it offers. The number 1 feature is what security features the exchange has in place. Strong security is essential anywhere, but it is even more important in the crypto space as it seems there is no shortage of bad actors targeting exchanges. 

Pay attention to what security features it offers to keep your account safe. Always use 2-factor authentication on every account where it is available. If possible, whitelist every address you use to transfer crypto out of your account. And as always, use unique, strong passwords.

Another significant feature is how many coins and tokens the exchange supports. Depending on what type of investor you are, this feature may be of great importance. Some investors prefer to only invest in Bitcoin or a few of the large-cap cryptos. Others want to invest in many different altcoins to get exposure to a broad range of the crypto market.

Trading features are another essential part of an exchange. If you are an experienced trader, you will probably want more sophisticated trading options. These could include the basics like market and limit orders as well as limit and market stop-loss orders. You could also find more complex order options to set a take-profit price and stop-loss price as part of your buy order. On the other end of the spectrum, you may want basic trading options, like just market orders, if you are new to investing and trading.