Coinbase and Binance introduction
Binance
Company founding history
Binance is a cryptocurrency trading platform founded by first-generation Chinese immigrant Zhao Changpeng. It claims to be the world’s largest cryptocurrency trading platform. The company is not currently listed and is still a privatized enterprise.
Founder
Founder Zhao Changpeng’s personal wealth exceeded US$37 billion at the end of 2023, which is still far from the peak of nearly US$97 billion in early 2022, and even lower than the year’s high of US$50.4 billion set in July this year. It is worth mentioning that on November 30, 2021, against the backdrop of the surge in Bitcoin and many other cryptocurrencies, Changpeng Zhao surpassed Nongfu Spring Chairman Zhong Suisui and was promoted to the richest man in China with a net worth of US$90 billion. Become one of the top ten richest people in the world and become famous all over the world.
World’s largest cryptocurrency platform
In April 2021, Binance took the biggest title with $47 billion in 24-hour cryptocurrency trading volume, according to CoinMarketCap.com. Coinbase is the second largest cryptocurrency platform in the world, but it is the largest cryptocurrency platform in the United States in terms of transaction volume.
Transaction type
Binance’s daily trading volume is approximately $11 billion, which is almost ten times that of Coinbase. The exchange is known for its large number of coins listed and low trading fees. Investors can trade 372 different currencies and tokens on the Binance platform; in comparison, only 74 can be traded on Coinbase.
Customer asset protection
Since 2018, Binance has provided customer protection through its User Safe Asset Fund program, which partially compensates user assets if the exchange is hacked and provides funding through transaction fees.
U.S. regulatory crackdown
As Binance, the world’s largest exchange, has been under investigation for many years, many relevant U.S. regulatory agencies have repeatedly vigorously prosecuted, searched, and fined it. In November 2023, all regulatory investigations came to an end after the founder was forced to resign as CEO and pay a high fine of US$2.85 billion, writing the highest fine in the history of the Ministry of Finance. Binance’s momentum suffered an unprecedented Heavy setback.
UK regulatory inquiry
Binance has made headlines in recent years for its problematic relationships with regulators in various jurisdictions. The UK’s Financial Conduct Authority (FCA) ordered Binance to cease conducting regulated activities in the UK. Binance claimed that the FCA’s move would have no impact on UK users wishing to trade through its Binance.com website, but Barclays later blocked UK customers from sending money to the company.
Regulatory investigations in other countries
The FCA’s order follows similar interventions in Japan and the Cayman Islands, as well as criminal charges against unregistered operations in Thailand. Binance’s holding company is reportedly registered in the Cayman Islands, but the company’s corporate structure is less transparent than publicly traded rival Binance.
Coinbase
Company founding history
Coinbase (ticker: COIN) is founded by former Airbnb (ticker: ABNB) engineer Brian. Founded in June 2012 by Brian Armstrong. Armstrong joined the Y Combinator startup incubator program and received a $150,000 cash infusion. Fred Ehrsam, a former Goldman Sachs trader, later joined as a co-founder after seeing Armstrong’s Reddit post.
It is worth noting that although cryptocurrencies can in principle guarantee anonymous transactions, Coinbase transactions are not anonymous: registered users need to provide proof of taxpayer identity, and transactions will be reported to the IRS. Additionally, although Coinbase offers more than 250 different cryptocurrencies to U.S. customers in 2023. Due to KYC requirements to comply with anti-money laundering regulations, it will not accept transactions in Monero and other cryptocurrencies with enhanced anonymity protection.
IPO
On April 14, 2021, Coinbase became a public company and was listed on the Nasdaq. It is worth mentioning that it is one of the few initial public offerings of stocks through a direct listing transaction (DPO).
Company Size
As of March 2021, Coinbase is the largest cryptocurrency exchange in the United States by trading volume. On April 13, 2021, Coinbase was listed on the Nasdaq Exchange, becoming the first listed cryptocurrency company in the United States
I have talked about it in my previous post “Investing in cryptocurrency is not as good as investing in related companies“: Coinbase is the largest cryptocurrency trading platform in the United States, with a market share of 11.1% of the cryptocurrency assets under custody.
Introduction to Cryptocurrency Trading
Top five platforms in the world
In April 2021, the top five cryptocurrency exchanges by trading volume are: Binance, Huobi Global, Coinbase, Kraken, and FTX. Each platform handles billions of dollars in daily trade.
Note: FTX declared bankruptcy in November 2022, and the founder was arrested. It had claimed that at its peak in July 2021, the company had more than 1 million users and was the third largest cryptocurrency exchange by trading volume.
The way of cryptocurrency transaction
Transactions in this new and relatively unregulated industry come in two main forms:
- Centralized exchanges (CEX), such as Binance, allow you to entrust your currencies and cryptos to third-party companies.
- Decentralized exchanges (DEX), such as Pancake Swap, do not involve a central authority, and users still have full control over their private keys and digital assets.
Top cryptocurrencies
In addition to Binance and FTX, most of the top exchanges consider Ethereum as the number one cryptocurrency by trading volume. Binance and FTX ranked Bitcoin as the most traded asset.
Advantages of each platform
Exchanges usually differentiate their market positioning and target key users by providing different levels of services to users. Binance is known for its transaction speed, Coinbase is known for its user-friendly interface, and FTX is known for its range of crypto derivatives.
Trading risks
No matter where you buy cryptocurrencies, you should always stay away from risks. Regulators have warned that cryptocurrencies could fall to zero, exchanges could be hacked and investors could be at risk of being robbed of their cash by scammers.
Warning: Investors are strongly warned: You must ensure that you have researched the possible risks of the project you are investing in and the platform you are using.
Regulatory risks
Basically, compared with other mature and common financial products, cryptocurrency trading is still a place outside the prisons in most countries. All investors must keep this in mind!
Cryptocurrency exchanges also vary in the fees they charge and how seriously they take security. The exchange does not provide state-backed deposit insurance, such as the Federal Deposit Insurance Corporation (FDIC) in the United States or the Financial Services Compensation Scheme (FSCS) in the United Kingdom. However, some exchanges themselves claim to offer insurance against theft or exchange failure.
Fintechnology competitors
Paypal
Regarding PayPal’s support for cryptocurrency transactions, please see the discussion in another of my previous posts: “PayPal to buy cryptocurrencies is it not a good idea“.
Block
Block only supports Bitcoin. Regarding Block’s support for cryptocurrency transactions, please see the discussion in my other two previous posts “Incredible Bitcoin fanatical supporter, Jack Dorsey“, and “You should know the company Square (rebraned to Block)“.
Revolut
Revolut is a well-known financial technology company established in the UK on July 1, 2015. Its founders are Nikolay Storonsky from Russia and Vlad Yatsenko from Ukraine.
It started providing cryptocurrency services in 2017 and engages in the trading of cryptocurrencies. But Revolut is not a UK bank and is therefore not covered by the Financial Services Compensation Scheme.
Main advantages
Perhaps the most trustworthy exchange by far is Coinbase. The main reasons are as follows:
- Because the company is publicly listed on the Nasdaq and based in the United States, it means it faces a high level of regulation. Coinbase has custody services that provide insurance against exchange hacks.
- In addition, U.S. dollar holdings of the exchange’s U.S. clients are protected by “FDIC pass-through insurance” up to $250,000 per person.
- Although Coinbase is not the largest exchange in the world, it is the exchange with the largest trading volume in the United States. Since Binance, the world’s largest exchange, suffered a setback due to a heavy blow from US regulations in 2023, Coinbase’s advantage has become even more apparent.
Markets outside the United States
Coinbase is the exchange with the largest trading volume in the United States. In order to expand its business scale and territory, Coinbase has been working hard to expand markets outside the United States. It has now entered Europe and hopes to expand the company’s scale and influence to countries outside the United States, benefiting shareholders.
Binance has already had layouts or branches in major countries around the world, which is the main reason why Binance is the world’s largest cryptocurrency exchange. Among them, China has become Binance’s largest market so far, accounting for 20% of its global trading volume.
Related articles
- “How do Coinbase and Binance make money? Advantages comparison“
- “Bitcoin ETF spot trading approval has far-reaching impact“
- “Enlightenment of Bitcoin reaching new heights“
- “Cryptocurrency ETFs drive surge in related companies“
- “Investing in cryptocurrency is not as good as investing in related companies“
- “Incredible Bitcoin fanatical supporter, Jack Dorsey“
- “PayPal to buy cryptocurrencies is it not a good idea“
- “You should know the company Square (rebraned to Block)“
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