If you’re planning to purchase cryptocurrency through Coinbase or PayPal, both services are incredibly user-friendly and accessible to beginners. However, there are several critical distinctions, most notably in terms of supported coins and functionality. In this article, we will compare Coinbase and PayPal to see which is the best.
Coinbase vs. PayPal: Comparison of Fees
Comparing cryptocurrency costs might be challenging for two reasons. Firstly, trading platforms are not always open about their fees. Second, you may be charged to deposit money, trade, or withdraw funds – and there is little uniformity in how these charges are applied across platforms.
For instance, some cryptocurrency apps and exchanges do not charge for deposits but subsequently demand a large fee when you want a withdrawal. Let’s see how Coinbase’s fees compare to PayPal’s.
Trading and deposit fees
Funding your Coinbase or PayPal account can be done using a bank transfer and it’s free. Neither Coinbase nor PayPal allows US residents to purchase cryptocurrency with a credit card.
PayPal users can also top up their balances with cash at select locations, however this may cost up to $3.95. There is no additional fee associated with using your debit card to purchase cryptocurrencies through PayPal.
Coinbase and PayPal both impose a trading fee and a spread on transactions. A spread is a difference between the buy and sell prices of an item; think of it as the platform’s commission. Both platforms charge a spread of approximately 0.5 percent, although the precise amount is computed only after the deal is executed.
Coinbase vs. PayPal: Accepted Currencies
Coinbase far outperforms PayPal in terms of available cryptocurrencies. It currently supports over 90 tokens for its customers in the United States, including nearly all of the top 50 coins and stablecoins. Coinbase’s objective is to list every cryptocurrency that is legally permissible, and the company has been aggressive in adding new coins over the last year.
In comparison, PayPal now supports only four cryptocurrencies: Bitcoin, Ethereum (ETH), Litecoin (LTC), and Bitcoin Cash (BCH). This will not be an issue if you’re only wanting to dip your toe into the crypto waters by purchasing some of the leading cryptocurrencies. However, if you’re looking to purchase other popular coins, Coinbase is a better option.
Coinbase vs. PayPal: Wallets
The Coinbase Wallet is a self-contained application, which means that it can be used even if you are not a Coinbase customer. Coinbase does offer a custodial wallet on its exchange for users who choose not to manage their private keys.
However, if you want full control over your crypto, you might consider using an external crypto wallet such as the Coinbase Wallet. Connecting the Coinbase Wallet to your Coinbase account is simple. One caveat is that the wallet may not support all of the tokens available on the market. Additionally, you may like to explore a hardware wallet that holds your cryptocurrency offline.
PayPal does not offer a dedicated wallet service. Indeed, one of PayPal’s major drawbacks is that you cannot withdraw your crypto assets to another wallet.
PayPal’s withdrawal process requires you to convert your cryptocurrency to dollars, which may have tax ramifications if you’re selling your tokens. Additionally, you may be charged a withdrawal fee while transferring your funds.
PayPal does offer a Checkout with Crypto option, which enables you to pay using your bitcoin assets at select retailers. PayPal will convert your cryptocurrency to a fiat currency, such as dollars, in order to process the transaction.
Coinbase vs. PayPal: Security
There are numerous ways for cryptocurrency platforms to safeguard the assets they store. These measures may include storing a portion of funds in what is known as cold storage, purchasing third-party insurance, and engaging in bug bounty programs that compensate ethical hackers for discovering security problems.
For instance, Coinbase reports that 98 percent of user money are held in cold storage. Additionally, it utilizes a number of additional safeguards, including criminal background checks on staff, a bug bounty program, and additional insurance against theft or hacking.
PayPal makes no mention of how it safeguards user assets. According to the company’s website, “there is no digital key to lose, and we will replace your crypto in its entirety if your account is hijacked.” However, there is no explanation of how the platform safeguards your money, something I often look for on a crypto platform.
Coinbase and PayPal are two extremely different cryptocurrency platforms, owing to their respective companies. One is a payment software that doubles as a cryptocurrency exchange. For the other, purchasing and selling cryptocurrency is their bread and butter; they operate a fully functional cryptocurrency exchange.
PayPal’s primary advantage is its ease of usage. If you’re a PayPal customer looking for a simple way to gain exposure to cryptocurrencies, this may be a nice alternative. It is not a comprehensive cryptocurrency exchange, but it allows you to safely purchase and retain Bitcoin and Ethereum (the two most popular cryptocurrencies), without having to invest time and effort in learning a new system.
Coinbase, on the other hand, is probably the best option if you want to delve deeper into the cryptocurrency seas. It offers a broader selection of coins at comparable prices, and it’s simple to transfer your funds to an external wallet. Additionally, Coinbase has fantastic instructional materials for anyone interested in learning more.