With Bitcoin’s popularity on the rise more and more people around the world are asking how to start using it and what are the best tools available.
The basic features with many services are the abilities to store, send, and receive bitcoins, but once this is solved the next natural step is to find a place to buy and sell the digital currency.
Coinbase and Bitstamp are two of the most popular exchange services especially among American users.
San Francisco based Coinbase is known as “the PayPal” of Bitcoin and its main focus is to provide easy access through simple and intuitive services for individuals, merchants, and investors.
Bitstamp is located in Slovenia and its mission is to be an efficient Bitcoin exchange solution with robust trading services and easy deposit and withdrawal of traditional currencies.
How do they compare?
Buy and Sell: Both services provide bitcoin/US dollar exchange services, but they differ in their style. Coinbase users buy and sell bitcoins directly from the company. They publish their bid and ask prices on their service and users can go to the “buy/sell” page to enter their orders. In the case of Bitstamp the company acts as an exchange where users buy and sell between themselves at the best prices offered on the system.
Link Bank Account: On Coinbase US customers can link their bank accounts to move dollars between their financial institutions and Coinbase. Once this is done the deposits and withdrawals are automatic each time they buy and sell Bitcoins. On Bitstamp this service is available for EU customers, US users can deposit and withdraw dollars by wire transfer.
Instant Orders: Once the accounts are setup and funds deposited users of both services can buy and sell bitcoins and both companies offer Instant Orders. This means that when users enter their buy and sell orders they are executed immediately at the best price available at that time.
Limit Orders: These orders consist of buying and selling at specific prices indicated by the users. Coinbase doesn’t support this type of order. On Bitstamp users can enter limit orders that stay open until they are either cancelled by the client or executed in the market.
An order book is a screen where all the bid and ask orders are published with the price and volume information so all buyers and sellers can see the depth and breath of the market. Bitstamp offers this feature in a chart and in list format. Because Coinbase doesn’t handle customer orders they only publish their own bid and ask prices with no volume information.
Holds Bitcoins: This is the ability to store and hold users’ bitcoins in their service. On both Coinbase and Bitstamp they hold and store Bitcoins for their customers. Users can also check their balances and account activities on both services.
Holds Dollars: This is the ability to store and hold customers’ dollars in their accounts. In the case of Bitstamp customers can deposit, store, and withdraw US dollars whenever they want. Because of compliance reasons Coinbase doesn’t yet hold dollars on their customer accounts. Each time users buy and sell bitcoins the dollars are deposited and withdrawn from their clients’ accounts in their financial institutions using the ACH automatic transfer system.
Other Currencies: For deposits and withdrawals Bitstamp supports US dollars, British pounds, and Swiss francs. In the case of Coinbase for now they only support US dollars within the United States.
Coinbase offers full wallet services that include the ability to send and receive bitcoins by email and SMS. In the case of Bitstamp users need to get wallet services from 3rd parties, but they can link them to their Bitstamp investing accounts.
Which one should I use?
If you live in the US and prefer an easy to use service with the ability to buy and sell bitcoins then Coinbase is your best option.
If you are seeking more advanced trading services with the ability to deposit and withdraw in other currencies as well then Bitstamp is your best alternative.