In this post, I will compare Coinify fees vs those on Coinbase. I will also show a few more other cost dimensions you may not have thought about.
Coinify and Coinbase are two prominent crypto payments solutions. While Coinbase is one of the leading cryptocurrency exchanges in the world, Coinify is simply a brokerage exchange.
While fee structure is an essential consideration, the availability of crypto assets, the availability of service in your jurisdiction, and the quality of customer support also count. For example, it won’t be of any benefit when a certain exchange has low fees but you can’t get the crypto assets you are looking for. Similarly, it won’t benefit you if an exchange has low fees yet its services are not available in your country or State. Thus, while fee structure is important, it has to be considered together with other factors.
The fee structure can either be flat, a variable, or a hybrid combination of both.
1. Flat rate vs variable rate
A flat fee structure is whereby one pays a flat rate regardless of the volume of transactions. On the other hand, a variable fee structure varies depending on the volume of transactions.
Coinify’s flat rate fee structure
Coinify has a flat rate structure. This means that you pay the same percentage rate regardless of the volume of transactions.
The advantages of Coinify’s flat rate fee structure
The following are the main advantages of Coinify’s flat rate fee structure compared to Coinbase’s hybrid fee structure:
- Uniformity – a flat exchange rate is uniform, regardless of the volume of transactions.
- Simplicity – a flat exchange rate is simple to memorize. Thus, you can easily estimate how much fees you would expect to pay per transaction.
- Favors large transactions – for those who make large volume transactions, Coinify’s flat rate is the most ideal. It is cheaper than Coinbase’s hybrid rate.
The disadvantages of Coinify’s flat rate fee structure
The main disadvantage of Coinify’s flat rate fee structure is that is not favorable to those who make transactions in small amounts. For small transaction traders, Coinbase’s hybrid fee structure is the most ideal.
Coinbase’s hybrid fee structure
Coinbase has a hybrid (semi-variable) fee structure. This hybrid fee structure has a minimum fee payable plus a graduated scale.
The advantages of Coinbase’s hybrid fee structure
- The fee is affordable to small-scale traders
- The fee scale graduates as one grows up
The disadvantages of Coinbase’s hybrid fee structure
- It is not ideal for large-scale traders
- The fee structure is complicated, especially for beginners
- It ends up being a lot more expensive for large transactions
2. Types of fees
There are different types of fees for different transactions. Some of these fees include:
- Gas fee
- Handling fee
- Withdrawal fee
- Taker fees
- Maker-taker fee
All transactions on both Coinify and Coinbase have a gas fee component. Since both of them rely on blockchain networks to make the exchange of crypto assets. In essence, a gas fee is a network fee incurred in using a blockchain network. Different blockchain networks have different amounts of network fees. For example, the Bitcoin blockchain network charges several times more gas fees compared to the Ethereum blockchain network. On most networks gas fee is a flat fee. Thus, no matter the value of a given transaction, you will pay the same gas fee.
Maker-taker fee is charged by Coinbase when trading on its platform. Different platforms have different policies regarding the maker-taker fee. Some platforms charge only taker fees while others charge only maker fees. Yet, some other platforms charge a maker-taker fee on a 50/50 basis – that is, both the maker and taker share the fee on an equal basis.
The handling fee is often charged by exchange brokers such as Coinify since they are handling transactions on behalf of their customers, unlike Coinbase where customers will have to handle transactions on their own.
Generally, cryptocurrency exchanges ought to have low transaction fees since they don’t charge a handling fee. However, this is not always the case. It is not rare to find brokerage exchanges having lower transaction fees compared to cryptocurrency exchanges. For example, for large-scale traders, Coinify’s aggregate transaction fees are lower than those of Coinbase.
Withdrawal fees are often charged when you want to withdraw your cryptos using fiat currency withdrawal methods. Generally, withdrawing through a bank transfer attracts low fees compared to Card withdrawals.
3. Fee drivers
The main drivers of fees on both platforms are:
- Trades – when you engage in the buy and sell trade, you have to pay the maker-taker fee. In addition, you will pay a gas fee /network fee.
- Bank transfers – Bank transfers are relatively cheaper on both platforms compared to Card transfers. It is advisable to make a bank transfer on Coinify rather than use a Card.
- Credit cards – compared to bank transfer, credit card transfer is the most expensive payment method in terms of transaction fees. Using a credit card to make payments via Coinify is much more expensive than via Coinbase. Furthermore, Coinbase has its own Coinbase Card that makes card transactions very affordable to Coinbase users. Thus, Coinbase has a slight edge over Coinify when it comes to card transactions.
- Withdrawals – withdrawing to your bank account or credit card can attract a withdrawal fee.
Other relevant cost factors to consider
Relying solely on fee structure to make a trading, investment, or transfer decision may be inadequate. Other hidden costs may make the transaction much more expensive than what is reflected in the fee structure. These hidden costs may not necessarily be in terms of extra fees and may not necessarily be monetary. These costs may be in terms of lost opportunities (for example, not getting the right crypto asset when you need it most), lost time (for example, delays in responding to your query or problem), or security risk (for example, the risk of being scammed or defrauded or your private data being compromised), etc.
The following are some of the cost factors to consider:
1. Availability of crypto assets
If you are a trader or investor, one of the most important things is finding the type of cryptocurrency that you would like to trade in or invest in.
As an investor or trader, the opportunity cost of not finding the right crypto asset when you need it most can be huge and may not be offset by the benefit of low fees. This is why it is important to consider the number of crypto assets a platform has and the volume of exchange being carried out.
Coinbase has far more varieties of popular coins, including the Binance coin, Bitcoin Cash and USD Coin. It also has a higher liquidity level compared to Coinify. This is evidenced by its huge daily market cap. Thus, if you are dealing in large volumes of crypto assets and your portfolio management involves swapping across diverse types of digital assets, then Coinbase would serve you better than Coinify.
2. Liquidity levels
Liquidity refers to the ability to change crypto assets into cash or cash equivalents. For example, if you hold a certain number of digital assets, how easy will it be for you to convert them into cash or virtual currencies in real time? This is a very crucial question, especially for those who trade or invest in large volumes.
Coinbase Pro has lots of institutional investors. This is an indicator of its high level of liquidity. Also, the volume of transactions being carried out on the Coinbase exchange is a good indicator of liquidity.
It may not be easy to gauge Coinify’s liquidity level since it is not an open cryptocurrency exchange platform but rather a brokerage exchange. Thus, it has limited statistics to show.
3. The ease of opening an account
Regardless of fee structure, one thing that puts off many new entrants into the cryptocurrency market is the difficulty of opening up an account.
Luckily, opening either a Coinify or Coinbase account is as easy as opening a bank account. However, opening an account with either of them may not be as easy as opening an account with some of the crypto exchanges that don’t have KYC requirements such as Kucoin.
4. Security and privacy
Both platforms employ KYC requirements to weed out unscrupulous characters. They also employ Two-Factor Authentication to minimize the costly risk of unauthorized access, which is a common risk to internet users on any online platform.
5. Ease of use
Apart from the hurdle that may be encountered when opening an account due to the KYC requirements, both platforms focus on ensuring that their crypto fans have a great user experience.
Each platform has a user-friendly interface that is sleek and intuitive. This enables crypto enthusiasts to easily navigate to the various products and service points thus saving their time. This ease of use can also prevent costly blunders that may be occasioned by making a bad choice as a result of a poorly designed interface.
Just like Coinbase, Coinify provides easier access to its products and services via the mobile app which is available on both Android and iOS mobile devices.
Both platforms have a QR Code feature that allows easy access to data for mobile users. For example, they can use this feature to capture payment details and paste them into their wallet.
6. The cost of inter-wallet transfers
The storage type for your virtual currencies provided by each platform matters. Both Coinify and Coinbase have wallets that facilitate the exchange of digital currencies. These wallets are:
(a) Coinbase custodial wallet
Coinbase has its native digital wallet – the Coinbase wallet. It is a custodial crypto wallet in the sense that you have to transfer custody (temporary ownership of private keys) of your digital currencies to Coinbase while it still holds them. Nonetheless, Coinbase is known for its top-notch security accompanied by elaborate insurance coverage of digital assets in its custody. Many people would rather surrender their private keys to Coinbase custody than risk losing them. For those who prefer not to keep their private keys, the Coinbase wallet is the better option.
Check out What Is the Difference Between Coinbase and Coinbase Wallet for more.
(b) Coinify’s non-custodial wallet
Coinify’s cryptocurrency wallet is non-custodial. This means that doesn’t take custody of your digital assets. Instead, your virtual currencies are held by an external wallet provider.
Coinify minimizes risks by not keeping your private keys. On the other hand, Coinbase minimizes risks by keeping the bulk of crypto assets in offline cold storage. Thus, for those who would like to keep their private keys closest to their chest, Coinify’s non-custodial wallet is the best option.
You too can play your part in minimizing risks. If a big portion of your crypto assets are not being actively traded, it is advisable to keep them in a secure wallet offline while transferring to the hot wallet only those virtual currencies needed for immediate transactions. Keep those digital currencies that you are not actively using in a cold wallet. Hardware wallets are the ideal choice for offline storage.
7. Availability of service within your jurisdiction
No matter how cheap a given crypto exchange is in terms of transaction costs, it amounts to nothing if its services are not available to you or within your jurisdiction.
The availability of services within your jurisdiction makes it easier to convert your virtual currency to your local currency. Otherwise, you will be forced to convert to a fiat currency that is not your local currency and then incur the extra cost of converting again to your local currency.
Thus, it is important to find out if Coinify and/or Coinbase are available within your jurisdiction. If either of them is not available, then, the decision as to which one to go for is quite obvious – regardless of whether one charges a low fee or not.
Let’s take an example of the United States. If you are a US resident, Coinbase is available in all States except Hawaii. On the other hand, Coinify is not available in many US States including Georgia, New Mexico, Rhode Island, Alabama, Tennessee, Florida, North Carolina, Alaska, Vermont, Hawaii, New York, Connecticut, South Dakota, Idaho, Michigan, and Louisiana. Thus, you are more likely to get the best customer service from Coinbase if you are a resident of the United States. Fee structure aside, if you are a US resident, choosing Coinbase is a better choice.
If you are a resident of the European Union, you will find Coinify your natural home. It is uniquely designed to cater to the European clientele. While Coinbase focuses on being compliant with the US regulatory requirements, Coinify focuses on being compliant with the EU regulatory requirements. Thus, you are more likely to get the best customer service from Coinify if you are a resident of the European Union. Fee structure aside, if you are an EU resident, choosing Coinify is a good option.
8. Cost-cutting mechanisms
One of the favorite features for offsetting costs is passive income. There is no doubt that traditional methods of fund transfers are still cheaper when it comes to transferring small amounts than blockchain technology methods due to exorbitant gas fees.
Coinbase has made great strides in offsetting these costs by providing passive income opportunities which you cannot find on Coinify. Furthermore, it has provided crypto debit cards that make cryptocurrency payments less costly.
As a payment platform, Coinify reduces transaction costs by relying on merchant services provided by financial institutions. This enables it to provide affordable payment solutions on bank trades. Not to be left behind, Coinbase has introduced Coinbase Pro to achieve an almost similar effect. Unlike a standard Coinbase account, Coinbase Pro allows Coinbase users to exchange different cryptocurrencies as they would on any regular crypto exchange like Binance.
Unlike the standard Coinbase account which escalates fees on large transactions, Coinbase Pro provides the best deal in terms of cost-effectiveness to large-scale investors.
Are you considering entering the exciting world of cryptocurrency trading but struggling to choose between Coinbase and CEX.IO? Fear not! In this post, I’ll provide an in-depth comparison of the two exchanges. To do this I will compare their background, fees, security, supported coins, availability, customer support, and unique features. By the end, you’ll have all the information you need to make an informed decision on whether to choose Coinbase or CEX. Read more.