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.
***As of November 2023, SoFi decided to end its crypto services by the end of that calendar year. However, this review offers a wealth of unique information about both platforms that could still be useful to you.
Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts
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.
Features on SoFi
The following is a list of account features.
- Payment options: bank account
- Order types: market orders, by dollar amount or number of coins or tokens
- Recurring buys: weekly, every two weeks, or monthly
- Mobile app: Android or IOS
- Credit card: redeem points straight into crypto
- Crypto transfers: not allowed
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securely through Coinbase’s website
Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.
Features on Coinbase
The following is a list of account features.
- Payment options: bank account, debit card, PayPal, wire transfer
- Order types: market orders
- Convert from one crypto to another
- Recurring buys: daily, weekly, or monthly
- Mobile app: Android or IOS
- Learn to earn: learn about and take quizzes on cryptocurrencies
- Crypto wallet: mobile or Chrome desktop extension; no Coinbase account required
- Crypto transfers: transfer crypto into and out of your Coinbase account
- Coinbase card: coming soon.
- FDIC insurance (thru third party bank) for funds held in fiat
Coinbase Fees vs. SoFi Fees
Coinbase has a bit of a complex fee structure. The fee for transactions under $10 is $0.99, and from $10 up to $200, the transaction cost is $2.99. For transactions over $200, the fee changes to a percentage of the total transaction. The fee is 1.49% for standard payment methods and 3.99% for debit and credit cards. Paypal fees are 2.5%, and wire transfers cost $10 for incoming and $25 for outgoing.
SoFi has a much simpler fee structure. SoFi charges a markup of 1.25% for all crypto transactions. Whatever the market price is for the crypto you are buying, they tack on 1.25%.
The transaction fee does add up for large purchases, but SoFi is still a little cheaper than Coinbase. Wire transfers on SoFi cost $15 for an incoming transfer and $25 for an outgoing transfer.
Security Features on Coinbase vs. SoFi
Security is one of the most important aspects of choosing an exchange. Here is a quick comparison between Coinbase and SoFi.
Coinbase security features.
AES-256 encryption protects electronic data. SSL encryption protects its website from data breaches, phishing attacks and other threats. You have the choice of using either Google or Duo authenticator for 2-factor authentication (2FA) to add an extra layer of security on top of your password. The other 2 authentication options Coinbase offers are a code sent by text message and the use of a security key device. You can also enable 2FA for crypto transfers.
Coinbase stores 98% or more of customer funds in cold storage offline.
SoFi offers two-factor authentication (2FA). After entering your email and password, SoFi sends a code via SMS, email or voice call. SoFi also uses SSL encryption to protect its website from data breaches, phishing attacks and other threats. SoFi does not offer or facilitate cold storage of cryptocurrencies.
Altcoins Supported on Coinbase vs. SoFi
When choosing an exchange, it is essential to note how many and which altcoins the exchange supports. A large selection of altcoins is important because it allows investors to get exposure to a broad range of sectors in the crypto market. Even though Coinbase offers a much more extensive selection, SoFi does an excellent job supporting altcoins that can give you that exposure.
Here is a partial list of altcoins that both exchanges support.
- Smart contract platform: Ethereum, Solana, Cardano, Chainlink, Polygon, Stellar, Tezos
- Decentralized finance (DeFi): Aave, Uniswap, The Graph, Maker, Compound, Synthetix Network Token, Yearn Finance, Bancor Network Token
- Gaming: Enjin Coin
- Metaverse: Decentraland
- Storage: Filecoin
Altcoins on Coinbase
Here is a partial list of altcoins available on Coinbase but not on SoFi:
Avalanche, Axie Infinity, Band Protocol, Amp, BarnBridge, Cartesi, Civic, Curve DAO Token, Dash, District0x, EOS, Horizen, Internet Computer, Kyber Network, Loopring, Mirror Protocol, OMG Network, Orion Protocol, Polymath, QuickSwap, Rai Reflex Index, Ren, Shiba Inu, STORJ, Tellor, Wrapped Bitcoin and Zcash.
Altcoins on SoFi
In contrast, only Cosmos is not available on Coinbase.
So, Coinbase or SoFi?
So which exchange wins? Well, both. They each have features that will be attractive to certain types of investors. The choice of which exchange is best comes down to what type of investor you are.
SoFi is suitable for passive crypto investors who prefer not to transfer crypto around, so they won’t mind that SoFi doesn’t allow transfers. The SoFi platform is a good fit for investors who either are inexperienced investors or investors who don’t mind the limited trading features. SoFi will also be attractive to investors who want to invest in other asset classes along with crypto.
Coinbase is an excellent exchange for new investors, and the platform is user-friendly, so even the most inexperienced investor will be able to navigate it easily. Coinbase is also a good fit for investors that are security conscious and want the very best account security available.
Either of these exchanges would make a great first crypto exchange or an alternative exchange to give you more options. Weigh the pros and cons of each and decide which one is right for you.
Frequently Asked Questions
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Not all crypto exchanges are expensive. You pay fees to the companies that process your trades, but many exchanges try to keep fees down to keep your business. Look for an exchange that fits in with your budget.
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Crypto investing can be profitable, but you must do your research and monitor the markets carefully.
