With the total market capitalization of all cryptocurrencies rising from under $10 billion in 2016 to over $200 billion in 2018, more and more people have become interested in this new asset class. Throughout much of 2018, “how to buy bitcoin” has been a very high-volume search term on Google. Just type “how to buy” in Google and see what comes up.
In the early days of bitcoin, the only way to acquire coins was to mine them yourself or buy them from someone else who had already mined them. A site called Local Bitcoins was the most popular place for people to meet up and exchange physical cash for digital coins. But today, in order to exchange fiat currency for cryptocurrency, you have to go to an online exchange.
GDax Vs Coinbase Explained
GDax and Coinbase are two of the world’s premier cryptocurrency exchanges. Coinbase is the largest American-based cryptocurrency exchange. For most Americans and many other people around the world, Coinbase is the premier on-ramp for fiat currency to get into crypto. GDax and Coinbase are owned by the same operators. In fact, GDax recently changed its name to “Coinbase Pro.”
Because of this fact, it’s easy for users to switch funds between the two exchanges. There’s no reason you necessarily have to limit yourself to any single exchange. It’s difficult to say that one of these exchanges is better than the other. Depending on your needs and how you interact with your digital assets, it may become clear which one you want to use, however. GDax is designed for traders. Those who buy and sell crypto often might prefer to use GDax. But Coinbase has a simpler interface. GDax could confuse someone who is not familiar with financial platforms. Yet those who have experience in trading other assets (stocks, commodities, FOREX, etc.) will definitely prefer GDax.
GDax vs Coinbase: Details for Coinbase Users
Coinbase is a basic and user-friendly exchange for those who are new to cryptocurrency. Many people get their first coins through Coinbase.
While the exchange only supported Bitcoin for quite some time, it added Ethereum (the second largest cryptocurrency by market cap) in 2016.
Since then, Coinbase has also added support for:
Coinbase also created its own stablecoin (a coin that attempts to retain a 1-to-1 value with a fiat currency) called USDC. As mentioned, Coinbase is the premier fiat currency on-ramp for crypto. This holds true whether people want to trade different coins on other exchanges or just hold bitcoin for an extended period of time. One advantage of Coinbase is that it allows for a few additional payment methods. While GDax only interacts with bank accounts, Coinbase lets users make deposits with credit or debit cards and make withdrawals to a PayPal account. In order to trade alternative cryptocurrencies (also known as altcoins), it’s necessary to send your Coinbase coins to an exchange that supports those coins.
GDax, Coinbase, and Security
GDax can be used for trading more easily than Coinbase, but it doesn’t support the wide range of coins that some other exchanges such as Binance and Poloniex do. In addition, Coinbase does not have advanced trading features. You can only buy or sell coins at the present price listed on the dashboard. Nevertheless, GDax allows for other options, but we’ll get into that later.
Coinbase works well for those who wish to hold cryptocurrencies on a long-term basis. For example, Coinbase features multi-signature cold storage “vaults.” Let’s unpack that loaded term. A vault is more secure than a hot wallet. Hot wallets are used to facilitate transactions and allow for quick conversion into and out of fiat currency. But they are less secure. Generally speaking, convenience and usability have an inverse relationship with cybersecurity. The more digitally locked down something is, the less immediate functionality a user will be able to get out of it. So, while hot wallets are great if you need to move, spend, or sell your assets often, vaults (Coinbase’s term for assets held in offline cold storage) are a better option for long-term holdings.
GDax vs Coinbase: Details for GDax users
One of the biggest differences when it comes to GDax vs Coinbase is that GDax supports different trading tools. Coinbase only allows simple buy or sell orders to be executed in real-time based on the present price.
For example, with GDax, users can place different kinds of orders in addition to the standard buy and sell orders. These are referred to as market orders as they depend on current market prices. But GDax also allows for limit orders, stop orders, and margin orders.
Margin orders allow users to engage in what’s known as margin trading or trading on margin.
Margin trading is basically like taking out a loan from another user and using that capital to make a larger bet than would otherwise be possible. While margin trading can increase returns, it can also multiply losses.
Stop-loss orders can be used to minimize losses. When a trader holds a certain asset, he or she can place a stop-loss order at a certain price lower than current market prices.
When the price sinks to the level set in the stop order, it will execute, liquidating the position. Using this kind of order is a way to ensure mitigate risk and ensure that if the market takes an abrupt downturn, a trader won’t suffer catastrophic losses.
A buy-limit order serves the inverse function of a stop-loss order. Rather than cutting losses when prices drift lower, limit orders allow traders to take a pre-determined amount of profits when prices move higher.
This lets traders lock in gains without having to keep a constant eye on the markets and try to execute a market order before things change again. Having the ability to place these kinds of orders is quite helpful in a market with notoriously high volatility like the cryptocurrency market. That’s one big reason experienced traders prefer GDax as opposed to Coinbase.
GDax vs Coinbase Trading Fees
One big advantage of GDax vs Coinbase involves GDax’s trading fees. Exchanges make their money by charging a small fee for every transaction, whether it be a sell or buy.
Some exchanges also require a fee for deposits or withdrawals, but not Coinbase or GDax. So, as far as fees are concerned, GDax wins out in the GDax vs Coinbase debate. GDax is able to charge lower fees than Coinbase because of higher trading volumes. People who trade currencies in the near-term tend to make more transactions, leading to higher profits for the exchange. So, while a fee for a buy or sell on Coinbase might be as high as 1.5%, the fee for a similar transaction on GDax might be as low as 0.25%.
GDax vs Coinbase and the Evolving Cryptocurrency Market
All things considered, GDax and Coinbase are very different exchanges. It’s tough to say which is better overall. Experienced traders will enjoy GDax because of the additional trading tools, technical indicators and charting features, and lower fees. Beginner users will find GDax confusing, though.
Coinbase offers a much more intuitive platform. And while the fees are higher on Coinbase, it won’t make a huge difference to the average person who might only make a few purchases a month at most. Unless you’re dealing with very large sums of money, the extra fees won’t add up into much more than a couple of bucks here and there.
When looking at the comparison of GDax vs coinbase, you have to consider your wants and needs:
- Do you find yourself wanting to profit from short-term volatility in the markets?
- Are you experienced with financial trading platforms and their standard user-interfaces?
- What about charts, technical indicators like moving averages, Bollinger Bands, and Fibonacci retracements?
- Do you know how to use advanced trading features like stop-loss and buy-limit orders?
If the answer to questions like these is yes, then GDax might be for you. If you answered no to all of the above, however, you definitely want to go with Coinbase. Coinbase provides the easiest way to acquire the six different cryptocurrencies currently offered (seven if you include USDC). The GDax vs Coinbase debate is an easy choice depending on your needs and experience.