Coinbase vs Kraken: Exchange Review: Are They Safe?

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Coinbase and Kraken are two of the largest and most trusted digital asset exchanges that are currently in operation. Due to their many similarities both Kraken and Coinbase have appeal to some of the same consumers, however there are also some significant differences between the two brands that can make an impact on the bottom line for some consumers.

This article will examine these two brands in depth, including their security features, customer service, fee structures, and other basics. Users will get a sense of the pluses and minuses of each of these platforms, which hopefully can help them make a smart decision about where to invest their finds.

Comparing Coinbase vs. Kraken

Coinbase is one of the highest volume exchanges in operation today. Their website claims that they have served over 10 million total customers and have done over 50 billion USD in total trades.

They were founded in San Francisco in 2011 and had a very successful initial fund-raising experience. Coinbase began operations with over 100 million USD in start-up capital, which was instrumental in helping them establish their significant market share.

Since then they have established partnership with Fred Wilson and Union Square Ventures, Andreesen Horowitz, and Ribbit Capital. Additionally, they are funded by the New York Stock Exchange, USAA, Draper Fisher Jurvetson, and many other reputable financial institutions.

Coinbase is also known as one of the companies that has helped to push for wider adoption of digital currencies. They are responsible for the choice of a number of companies to begin accepting Bitcoin as a form of payment, including Overstock, Dell, and the Dish Network.

Kraken was also started in 2011 and is based in San Francisco. They were initially intended to be a Bitcoin trading platform exclusively, however they have since added a variety of other currencies.

They do not list the exact figures of how many users they have, however they claim generally that it is in the tens of thousands. They also claim to be the exchange that trades the highest amount of euros for cryptocurrencies anywhere online.

Kraken was founded by venture capitalist Jesse Powell after his experiences helping with the recovery from the infamous Mt. Gox crash. When the formerly prominent exchange folded in the wake of a hacking attack, Powell decided that a more secure alternative was needed and began designing the Kraken software.

Funds accepted by Coinbase vs. Kraken

Coinbase and Kraken each feature ways to exchange both fiat currency and other cryptocurrencies on their platform. Kraken accepts bank transfers and any of the coins that they trade, while Coinbase also allows users to use their credit and debit cards. Both sites use similar methods to pay out to their customers, however Coinbase additionally offers PayPal as an option.

Options offered by Coinbase vs. Kraken

Coinbase and Kraken both allow users to act as market makers and takers, buying and selling a variety of different types of digital assets. Coinbase has two main products: their GDAX exchange platform and an application programming interface (API) that can be used to accept payments and build applications.

The Kraken exchange offers all of these features, however they also offer some advanced trading options as well. They have ways that users can place stop loss orders and lend on margin, which may have some appeal for experienced traders looking to maximize the power of their currencies.

One option that Coinbase offers that Kraken does not is they allow their customers to place their orders before their funds have fully cleared. This allows users to lock in prices immediately instead of having to wait for final approval of their funds.

The Coinbase display is very clean and user-friendly, despite the large amount of information that they pack into any given screen. Kraken offers even more information on their display, which has led some users to call their designs cluttered and confusing.

Consumer Support

Coinbase had some significant customer service issues during their first years in operation and developed a particularly negative reputation. To counteract this they put a significant amount of money and effort into their customer service department.

They have added live phone-based customer service representatives, which is unheard of in the cryptocurrency industry, as well as an automated instant messenger feature. For whatever reason, however, there was a significant jump in the number of consumer complaints lodged against Coinbase in March of 2018. The majority of these new complaints were related to issues with the availability of users’ funds, though Coinbase has not chosen to make any comments about why this is.

Kraken has customer service features much closer to the industry’s lowered standards. They have an FAQ page and a support ticket system, both of which have received mediocre ratings, and they lack any sort of live customer contact features. Additionally, there have been a number of recent complaints regarding difficulty with the account verification process in particular.

Trust

Coinbase is potentially the most trusted exchange in the marketplace today. The money that they have put into developing strong security systems and customer service features has helped to earn the goodwill of the community.

The strength of their backers also helps, as that makes it unlikely that the business would completely fail, even in the event of extreme market fluctuation. Coinbase is also FDIC insured, which can help users avoid the danger of a bank run or other major financial events.

Kraken is not as well known as Coinbase and they do not have the same amount of trust that the larger institution receives. They do not have FDIC insurance, however their website claims that they keep enough funds on hand to avoid runs and other events.

Kraken is still backed by relatively large institutions as well, and they have done nothing significant to cost themselves the public’s trust. Overall, these are both known as reputable institutions that have not had any significant legal issues.

Security

Both Kraken and Coinbase were founded in the wake of the Mt. Gox hacking disaster and as such they both put considerable focus on ensuring that they had completely secure platforms. Many of the steps that the two platforms use are similar, including the fact that the majority of their funds are kept offline in multi sig cold storage wallets.

Neither company uses their customers’ funds to cover their own operations costs. All consumer accounts are kept strictly segregated and protected, meaning that it is unlikely that any failure of the business could affect their users’ money.

Coinbase has gone to the extra step of also insuring their users accounts with Lloyd’s of London who will reimburse them in the event of major failure on Coinbase’s part. Users’ own failures to secure their accounts are not protected, and the individual will be held responsible for their own funds.

Fees

Kraken tends to have slightly lower fees than Coinbase overall, however this does depend on the type of account that you have, as well as the types of transactions that you are performing. Regardless of the transfer type, Kraken’s fees will almost always be below 0.36%, whereas the lowest fees that Coinbase charges tend to be around 1.49%

Credit and debit card transactions on Coinbase are even more expensive, reaching as high as 3.99%, one of the highest rates in the industry. All of these fee structures are variable, especially for different transaction types and payment methods. As such, readers are strongly encouraged to consult their specific fees tables to get exact quotes.

Offered Crypto

One of the most significant differences between these two platforms are the types of currencies carried. Coinbase has a somewhat small selection of coins, limited to only Bitcoin Ethereum, and Litecoin. The possibility always exists that at some point they could choose to expand their offerings, however there have been no announcements about this at this time.

Kraken was carrying 17 different currencies at the time of this articles publication, and they tend to add new assets all the time. This includes all of the coins that Coinbase carries, as well as other prominent currencies like Monero, Dash, Iconomi, Ripple, and Gnosis.

Summary

Kraken and Coinbase are two of the largest Bitcoin and Ethereum exchanges in the world and at times they attract a similar type of clientele. Coinbase, however is generally known as a better platform for beginners, while Kraken tends to be seen more as a trading platform for experienced users.

Coinbase makes it very accessible to buy in and begin trading, however they also tend to have higher fees for most transaction types. Kraken has lower rates, more features, and more currency options, however they have a lower profile in the industry and offer far less help to their customer when they are having issues.

Both platforms are well secured and legally compliant, so there is little risk associated with the platform at a basic level. It is up to the individual user to check the fee structures and other specifics related to the exact types of trading that they expect to be doing.

Peter Lehmann

Peter is a blockchain investor and cryptocurrency writer at Vkool.com. Since 2014 Peter has advised blockchain startups and ICOs on content marketing, strategy and business development.

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