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Where Should You Invest in Crypto?

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Where Should You Invest in Crypto?


Investing in cryptocurrency might help you add diversity to your portfolio. However, learning how to buy and sell digital currencies used to come with a steep learning curve. Exchanges such as eToro and Coinbase aim to change this by offering simple trading platforms that could be easy to use.

eToro offers a unique approach to investing via a social form of trading that allows you to copy other traders. While Coinbase is one of the oldest crypto asset exchanges still in operation, and it offers an intuitive trading interface.

Each platform has some unique features that make them attractive to different types of investors. Let’s compare eToro versus Coinbase to help you decide which one works for you.

eToro vs. Coinbase

People learning how to invest money could benefit from using a brokerage account or an exchange to help them acquire the assets they would like to invest in.

eToro offers the opportunity to buy cryptocurrencies and copy top traders, and Coinbase makes it easy to access more cryptocurrencies and NFTs. Here’s a side-by-side comparison of eToro versus Coinbase.

eToro

eToro

Coinbase

Coinbase

HeadquartersMain features

  • Social trading

  • Copy trading

  • Virtual trading account

  • Supported wallet

  • Staking

  • NFT marketplace

  • Rewards debit card

  • Supported wallet

  • Staking

Mobile app

Trading fee structureSupported cryptocurrencies Types of supported transactions

  • Market orders

  • Limit orders

  • Market orders

  • Limit orders

  • Stop orders

Funding methods

  • ACH transfers

  • Wire transfers

  • Debit cards

  • Credit cards

  • ACH transfers

  • Wire transfers

  • Debit cards

  • PayPal

  • External crypto wallets

Accessibility

  • Hawaii

  • Minnesota

  • Nevada

  • New York

  • Tennessee

Best for…Visit eToroVisit Coinbase

How does eToro work?

eToro is an investment platform founded in 2007 by David Ring, Ronen Assia, and Yoni Assia. It’s headquartered in Tel Aviv, Israel.

eToro availability

Even though eToro has been around for so long, it hasn’t been available in the U.S. In fact, U.S. customers are limited to using eToro for cryptocurrency trading. U.S. customers can’t use eToro to buy and sell stocks, though the platform’s website says that stock trading is coming soon to the U.S.

eToro crypto trading isn’t available in Hawaii, Minnesota, Nevada, New York, or Tennessee.

What eToro offers

One of the unique features of eToro is its social trading aspect. You could view how other investors manage their portfolios if they choose to share. You could then make similar moves with your own portfolio.

On top of that, eToro offers copy trading, which allows you to copy the actions of top investors automatically. eToro expands on the social aspect with access to forums where traders discuss their strategies.

eToro also offers a virtual trading account. This account gives you $100,000 in fake money, so you could practice different strategies and learn how to use the platform before risking your real money.

The virtual trading account could be an attractive feature for people who want to learn how to buy cryptocurrency and test different techniques. However, keep in mind that the funds you have in this account aren’t real, and the trades you execute are not actual market trades.

eToro trading fees

eToro charges a flat 1% trading fee on purchases or sales of cryptocurrencies. While this simple fee structure might make it easy to understand how much you’re paying for each transaction, it’s higher than several other cryptocurrency platforms.

Learn more in our eToro review.

How does Coinbase work?

Coinbase is a crypto trading platform founded in 2012 by Brian Armstrong and Fred Ehrsam. It is based in San Francisco, California.

Coinbase availability

Coinbase is one of the oldest cryptocurrency exchanges still in operation today. Although eToro has been around longer, it only added cryptocurrency trading in 2017. Coinbase Global, Inc. is a publicly traded company listed on the Nasdaq stock exchange under the ticker symbol COIN.

Coinbase is available in all U.S. states except Hawaii.

What Coinbase offers

Coinbase has a simple and intuitive interface that allows users to trade cryptocurrencies with relative ease. You could buy crypto with various fiat methods, including debit cards and PayPal, as well as transfers from your bank account and external crypto wallets.

You could quickly see how much — in U.S. dollars (USD) — a cryptocurrency costs you to buy. You could then use the Coinbase wallet to store your digital coins or keep them in offline storage using the Coinbase Vault.

In addition to crypto trading, Coinbase has a non-fungible token (NFT) marketplace that enables you to buy, sell, and collect your own digital art. The platform also offers a Visa rewards debit card you could use to make everyday purchases using cryptocurrencies.

Coinbase trading fees

Coinbase used to have a flat trading fee structure, but it recently switched to a tiered maker/taker model, bringing it more in line with other cryptocurrency exchanges. In this structure:

  • A maker is someone who places an order that would be executed later, putting it on the books at certain terms. The order isn’t executed until there’s a match for it.

  • A taker is a trader who places an order for immediate fulfillment based on current market prices.

Coinbase trading fees are capped at 0.60% and become gradually smaller with higher 30-day trading volumes.

30-day trading volumeTaker feeMaker fee

Learn more in our Coinbase review.

What both cryptocurrency exchanges excel at

It’s relatively simple to learn how to buy bitcoin and other major cryptocurrencies on eToro and Coinbase. Both cryptocurrency exchanges have easy-to-use interfaces that let you know your fee cost before completing the transaction.

Additionally, you could stake cryptocurrency on both of these exchanges. Staking refers to holding certain cryptocurrencies without using them for other purposes so you can help their blockchains validate transactions. In exchange, you are rewarded with more coins.

Your rewards are usually paid regularly in the same crypto you hold, adding to your store of that coin. Coins eligible for staking begin to earn rewards automatically on eToro, whereas it takes only a few taps on Coinbase to put them up for staking.

Both eToro and Coinbase aim to protect your investments and account. Both platforms use two-factor authentication to add a layer of cybersecurity. They also use insurance supplied by the Federal Deposit Insurance Corp. (FDIC) to protect your U.S. dollar funds.

7 important differences between eToro and Coinbase

There are several crucial differences between eToro versus Coinbase. Which platform you decide to choose may depend on your needs and goals.

1. Trading fees

eToro charges a flat fee of 1% of transactions you execute. This fee goes on top of the money the platform makes from the bid-ask spread.

The bid-ask spread is the difference between the price a seller asks and the price someone pays. eToro shows you the total fees and the total value of the transaction in U.S. dollars before you complete your trade.

On the other hand, Coinbase no longer uses a flat fee after changing its fee structure in March 2022. Coinbase now offers a tiered maker/taker model.

Coinbase fees begin at 0.60% for takers and 0.40% for makers at the lowest tier and smallest 30-day trading volume. However, the more trading you do in a 30-day period, the lower your fees become.

Winner: Coinbase offers lower trading fees that become progressively smaller with higher trading volumes.

2. Virtual trading account

eToro offers a virtual trading account. This is essentially a demo trading account that gives you $100,000 of fake money to practice trading.

You could use this account to learn how the platform works, as well as try different trading strategies. However, keep in mind that your trades or the money you use on this virtual trading account are not real.

Coinbase doesn’t offer this type of practice account, so if you’re interested in learning how to trade, eToro can be an attractive choice.

Winner: eToro offers a unique virtual trading feature that, whereas common in the stock trading world, isn’t as commonly seen in the crypto world.

3. Social trading

Some of the most attractive features eToro has promoted over the years are its social trading tools. You could see how others are trading, execute similar trades, or simply copy their moves.

You could even use the copy trading feature to automatically follow what top traders are doing with their cryptocurrency assets without needing to copy each trade individually. This could be a way to put your crypto portfolio on automatic and potentially benefit from the experience of others.

Coinbase doesn’t offer similar social features or copy trading aspects. Although you could set up automatic buys for your crypto, it’s not the same as following someone else’s moves and profiting when they do.

Winner: eToro uses social trading tools that might be attractive for new or inexperienced crypto investors.

4. Available cryptocurrencies

Both eToro and Coinbase offer access to major cryptocurrencies like bitcoin (BTC), ether (ETH), cardano (ADA), solana (SOL), and litecoin (LTC). You could also get a variety of altcoins or alternative cryptocurrencies on each platform, though you won’t see as wide of a variety as some other platforms such as Crypto.com, which offers more than 250 digital currencies as of May 2022.

eToro offers more than 60 cryptocurrencies, whereas Coinbase has more than 150 cryptocurrencies as of May 2022.

Winner: Coinbase offers more than 150 cryptocurrencies, which gives you more variety of coins to choose from. However, keep in mind that both platforms offer most major cryptocurrencies.

5. Asset ecosystem

Although eToro offers more than 60 cryptocurrencies, it doesn’t offer any other assets to U.S. customers as of May 2022. The platform’s website says that stock investing is coming soon but doesn’t give an exact date.

Coinbase, on the other hand, offers more than cryptocurrencies. You could also access an NFT marketplace using Coinbase to buy, sell, and build a collection.

The platform also offers a Visa debit card that you could use for everyday purchases. When you use this card, you earn cashback rewards in the form of cryptocurrencies. It even allows you to choose the cryptocurrency you would receive the rewards in.

Winner: Coinbase offers a more comprehensive ecosystem of crypto products that might be useful for someone who wants to immerse themselves in the crypto world.

6. Wallet options

When comparing eToro versus Coinbase, keep your crypto wallet options in mind.

eToro offers its eToro Money crypto wallet. This wallet allows you to send and receive cryptocurrencies. However, although you can send coins from the trading platform to the wallet, you cannot send coins from the wallet to the platform. In fact, you can’t even convert your cryptocurrencies to fiat currencies using eToro’s wallet.

On the other hand, Coinbase offers several different ways to store your cryptocurrencies. You could send your coins from an external wallet directly to your exchange account. Coinbase also offers Coinbase wallet, a separate app and browser extension that seamlessly integrates with the exchange.

It’s also possible to use Coinbase Vault to store your crypto assets off the internet in cold storage, which adds more security to your assets and reduces the chances of a hacker reaching them.

Winner: Coinbase has more robust wallet options that better integrate with its trading platform.

7. Coin-to-coin exchange

eToro doesn’t allow you to exchange one crypto coin for another directly. Instead, if you want to perform a coin-to-coin exchange, you need to use its wallet.

You could convert supported crypto assets within the wallet, but you would need to hold them in the wallet or send them to a different wallet. You cannot send the converted coins back to the eToro exchange.

On the other hand, Coinbase allows coin-to-coin trading of supported trading pairs. If you have one cryptocurrency, you could directly trade it for another coin. Coinbase also offers a conversion functionality that allows you to convert one digital coin to another.

Winner: Coinbase offers more flexibility when trading one cryptocurrency for another.

Which cryptocurrency exchange should you choose?

Deciding between eToro versus Coinbase requires considering your goals and your cryptocurrency portfolio strategy.

Both crypto exchanges make it relatively easy to buy cryptocurrencies using fiat currency, as well as sell your assets later. They also allow you to stake eligible coins to earn rewards.

Choosing eToro

However, eToro is a beginner-friendly platform, as it aims to help you learn the basics of trading or setting your investing on automatic for additional ease of use.

You could find out how to buy and sell cryptocurrencies and try out various strategies with the help of the virtual trading account. Additionally, the social trading aspect allows you to watch other traders and interact with them to learn more about crypto and investing. You could even copy other traders and benefit from their knowledge.

Choosing Coinbase

On the other hand, Coinbase offers more tools for beginner to intermediate cryptocurrency investors who want access to a wider variety of assets, including NFTs and more altcoins. The exchange also offers advanced traders charting tools on a separate platform, Coinbase Pro, which is currently being consolidated into the Coinbase platform.

You could also take advantage of educational materials on the platform and use the Visa debit card that earns rewards as a payment method when you make everyday purchases.

When choosing the right platform for you, make sure to consider the trading fees you’d pay. Coinbase caps its trading fees at 0.60%, and you could have lower fees when you trade more in a 30-day period. With eToro, you’ll pay a flat 1% trading fee on top of the bid-ask spread.

FAQs

Which is cheaper, eToro or Coinbase?

In the past, eToro would have been cheaper than Coinbase, but with Coinbase’s switch to a tiered maker/taker model in March 2022, it would likely charge less trading fees. Coinbase caps its fees at 0.60%, while eToro charges a 1% flat fee on transactions.

Can I trade stocks on eToro or Coinbase?

You cannot trade stocks on eToro or Coinbase as of May 2022.

eToro offers stocks to its international users, but U.S. customers can’t currently trade stocks using eToro. However, eToro says that the ability to trade stocks is coming soon. On the other hand, Coinbase doesn’t offer stocks at all.

What’s the minimum deposit on eToro and Coinbase?

eToro’s minimum deposit in the U.S. is $10, which is the same as its minimum trade amount. Although there isn’t a minimum deposit required for Coinbase, the exchange recommends that you deposit at least $50 to start. The minimum amount to trade on Coinbase is $2.

Bottom line

Cryptocurrencies could be a way to add asset diversity to your investment portfolio. Several cryptocurrency exchanges allow you to purchase crypto assets using fiat currency, including eToro and Coinbase.

Both exchanges offer several attractive features for new and beginner traders. However, it’s important to be careful when adding cryptocurrency to your portfolio. Crypto assets can be volatile, and you could potentially lose money.

Carefully consider your portfolio goals and strategies before choosing between eToro versus Coinbase. You could also explore our list of the best cryptocurrency exchanges.

This article eToro vs. Coinbase [{% now ‘Y’ %}]: Where Should You Invest in Crypto? originally appeared on FinanceBuzz.

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