10 Differences Between Coinbase and PayPal

What are the differences between Coinbase and PayPal? Most of the crypto users usually go with Coinbase when it comes to trading or investing and therefore you may also be inclined to it.

However, PayPal is also a good option to choose for that matter. But, before choosing it as your medium of exchange it is better to know the differences between PayPal and Coinbase so that you know exactly what you are getting into.

In that case, this article will prove to be extremely helpful.

When you intend to use the PayPal app which uses a POS system may result in a longer wait time to receive the funds for each transaction made though, the process is much simpler than the bank POS.

In fact, there is a lot of potential for PayPal to become mainstream but there is also a lot of difference between it and Coinbase, both in their features and functionality.

Knowing these differences is very important to choose the most suitable platform from these two according to your crypto needs.

In order to know which is better among these two platforms, here is a head-to-head breakdown of them.

Go through it and you will know why Coinbase is still the more preferred option, well, for the time being, that is.

However, both Coinbase and PayPal are good for starters who are just getting familiar with the crypto space.

The interfaces are good enough to support crypto purchases and more. Check out Differences Between Stablecoins and Altcoins.

10 Differences Between Coinbase and PayPal

Differences Between Coinbase and PayPal

Coinbase crypto exchange and PayPal are not at all similar though both are quite established, widely used, and well-known in their respective forte.

Though, as of now, Coinbase has a significant edge over PayPal as far as crypto transactions are concerned, things are bound to change soon considering the pace at which PayPal is trying to catch up with Coinbase.

Therefore, it is good to know the differences between the two for any crypto user so that they are ready to choose one among the two when it is required. Here they are for you.

1. Reputation

Though it started its journey just in 2012, in terms of reputation, Coinbase is, without any doubt, one of the biggest and most popular crypto exchanges in the United States.

There are a large number of investors backing it up with investments made to the tune of more than $500 million. Within this period of time, which is fairly long according to the crypto standards, there are no noteworthy incidents of this crypto exchange suffering any major setbacks such as hacking of the accounts.

Moreover, there is no evident record of mismanagement, mishandling, or misplacing of funds by this reputable crypto exchange.

This is quite an achievement on its part since there are lots of other crypto exchanges that have been subject to scams and hacks and hundreds of millions of dollars worth of crypto coins have been stolen by the scam artists.

On the other hand, in comparison, PayPal is also a well-established financial services company that has been around for a much longer time than Coinbase.

It is also a much larger company than it but it was not before November 2020 that PayPal thought of allowing the customers residing in the United States to buy and sell crypto through them.

However, it still has some catching up to do to be at par with Coinbase because cryptocurrency is a completely different product that works on a unique technology in comparison to any traditional financial product that this platform is accustomed with and known for.

But, it has got all the resources and potential to do so and therefore changes can be seen soon on this platform.

2. Coin Offerings

As of now, Coinbase seems to be the winner in terms of coin offerings because it supports buying hundreds of different types of crypto coins.

However, when you use Coinbase, make sure that you focus on the main coins such as Bitcoin and Ethereum, especially if you do not plan to get into more exotic types of crypto coins or are just starting out. This is because the market caps of the other coins are quite low and these coins may also be undervalued.

On the other hand, PayPal only allows its customers to buy four different types of crypto coins as of now which are Bitcoin, Ethereum, Litecoin, and Bitcoin Cash.

However, they are going to add more pretty soon. If you are a starter it is better to go with PayPal if you want to deal with BTC and ETH. You will get the same benefits as offered by Coinbase when you buy from or sell these coins in the biggest markets.

Read Also:  Crypto ECB vs CBC Block Cipher Modes

3. Ease

If you are wondering which among the two is quick to get started with, well, in that case, PayPal will surely get the nod.

This is because most people are used to using PayPal and you may be as well. If you have a PayPal account it will really be easy to buy your crypto for the first time, thanks to its easy-to-use interface.

On the other hand, getting started with Coinbase is a bit difficult especially if you are starting right from the scratch. However, remember that it is not a hassle to start using Coinbase.

The platform too has an interface that is quite easy to use, clean, and comes with a lot of wizards that will help you to get going. However, if you wish to go for more sophisticated trades you will be better off if you use its Coinbase Pro product though it is a bit less user-friendly.

4. Security

In terms of security, Coinbase has its own security measures in place that are top class and you will get all the necessary information regarding these on the informational page. Though these security measures look a bit fancy, they are good enough to give you a complete peace of mind.

PayPal, on the other hand, typically uses a third-party service to ensure security over the platform. This service is called Paxos which operates in the background even when you use the interface of PayPal to trade your crypto coins or for custody. Though the security features of Paxos are quite good it is still a third-party service, mind you.

5. Insurance

Coinbase seems to be more reliable since it offers insurance to cover all different types of crypto that it holds in the hot storage.

However, it does not provide such insurance for the cryptocurrencies stored in a cold storage, which typically accounts for more than 98% of all types of crypto coins held by this crypto exchange platform.

As for PayPal, on the other hand, there is no such provision for insurance as of now for the crypto coins held in their wallet.

This means that there is no protection of your coins held in the platform even in the case of cyber theft. Therefore, it is less reliable than Coinbase and if you are unlucky you may find all your assets gone.

6. Interest Earned

As of now, the newest and the most discussed area in the crypto scenario is Decentralized Finance or DeFi, as it is commonly known. The DeFi platform compensates you for lending your crypto coins out through a wide range of apps and services.

When you use the Coinbase crypto exchange, you will get easy access to these DeFi offerings through their wallet. By using the wallet, you will be eligible to earn a significant amount as interest on a variety of lending apps.

On the other hand, PayPal does not offer such DeFi options to their customers to earn interest, once again, as of now.

This is good in a way because PayPal is more favored and recommended by the experts for the beginners and since DeFi can be very complex, the beginners may not be aware of the details and the risks involved in it and may mess things up.

7. Self Custody

Coinbase allows you to have complete control over your crypto coins. You are allowed to transfer the cryptocurrencies in your Coinbase account to any other wallet to take self custody.

This is why Coinbase is more favored than PayPal by most of the crypto users because they believe that only when they have a complete control over the coins will they have the actual ownership of them.

When they have self custody, they will be the only ones to send the coins from their wallet and not others.

It may be a bit risky but it is always handy when you get more experienced in crypto trading and want to deal with coins and products that are not available on Coinbase or simply do not trust them anymore due to the possibility of getting hacked.

On the other hand, PayPal does not allow such transfer and therefore you will have no control over your crypto coins held in your PayPal account.

8. Orders

Ideally, a crypto trader prefers to have the ability to place Market Order, Limit Order, and Stop Order while buying and selling crypto coins at specific prices just like it is done with stocks in the brokerage accounts.

PayPal however only offers their customers to place market orders which means buying or selling crypto coins right away but with no guarantee on the price of execution.

On the other hand, Coinbase also allows its customers to place market orders but along with that it also offers its Pro product that acts a lot like a trader terminal. Therefore, if you use Coinbase Pro for making more complicated trades you will be better off since it allows using limit orders and stop orders.

Read Also:  7 Differences Between Crypto Holding and Trading

9. Advantageous Features

Apart from the easy-to-use and intuitive interface and simple set up mentioned earlier, the users of Coinbase are also benefited from the price alert feature. This helps them to monitor the price fluctuations of a crypto coin and know exactly when these go above or below their target price.

As for the users of PayPal, in addition to the aforementioned useful features such as an intuitive interface, they are also benefited from the free card reader which is invaluable especially to the businesses.

This feature allows them to know about the more expensive options and prevents them from investing in them, just as they wanted.

The app is also compatible with various operating systems and therefore it does not really matter whether the user is using an Android phone or an iPhone to use the app.

10. Cost

Finally, the cost factor needs to be discussed in detail for a better understanding. When it comes to the cost, Coinbase somewhat eclipses PayPal in this specific aspect.

However, keep in mind that both Coinbase and PayPal do not have an account fee but will charge a fee every time you buy or sell crypto coins. This is how they make money.

It is also good to keep in mind that Coinbase adds a spread of 0.5% on all purchases and sales. This means that when you buy coins the cost will be slightly above the market price and when you sell them it will be a bit lower than that.

Once again, if you use the Coinbase Pro product, the fees charged will be at the lowest rates which may range anywhere between 0.04% and 0.5%, depending on the amount of purchase or sale. However, as said earlier, the only tradeoff here happens to be the little intimidating interface of Coinbase Pro.

If you consider using PayPal for its user-friendliness, it will also be a cheaper option but it will depend on the amount of trade. It can be a cheaper option if the amount is less than $150 but if the amount ranges between $150 and $1000, the standard Coinbase platform will be cheaper.

And, if the amount for trade is more than $1000, both the platforms are almost the same. In this case, the Coinbase platform charges a fee at the rate of 1.49% and that of PayPal is 1.5%.

The payment giant however offers attractive prices for the retail buyers. The fee can be as low as $0.50 for the starters when the volume is worth less than $25 and the highest fee being 2.3% on purchases worth between $25.00 and $100.

However, if you want to make purchases worth more than $1,000, the fee from there will start decreasing in increments in two supplementary tranches till it reaches the lowest rate of 1.5%.

However, there is a caveat which is that the Bitcoin purchases will definitely be within its walled garden. When the time is appropriate, you can cash out dollars though you will not be able to keep the actual Bitcoin since it will never be yours.

However, it is always recommended that you check for the fee structures yourself from the respective fee tables so that you know about the updates.

Which is Better to Use – Coinbase or PayPal?

While dealing with cryptocurrencies you are usually recommended to use a custodial service when it comes to buying, selling, and holding your crypto coins as opposed to managing them yourself.

Coinbase is surely a good and reliable platform to go with but PayPal has also recently announced that they will support and allow their customers to buy and sell crypto coins through them now as well.

This may make choosing one of the two quite difficult since PayPal is a payment giant that is also quite reliable and used by a large number of people all over the world.

However, considering the present scenario and the features and functionality of Coinbase and PayPal, you may want to go with Coinbase as of now for buying and selling crypto coins.

There are lots of other good reasons to say so which you should also know to make the right choice in the end.

You can also use PayPal for buying, selling, and holding crypto coins because in March this year, PayPal allowed its customers residing within the United States and its territories, excluding Hawaii, to use digital currencies to make payments at stores that are within its network.

However, at the time of writing, it has extended its service in this particular aspect beyond the US customers.

It now allows buying and selling crypto coins to its customers in the UK. By the end of this year, PayPal is expected to expand its service and offer this opportunity to its global audience.

Any Personal PayPal Cash and PayPal Cash Plus customers can use this platform to buy, sell, and hold crypto coins. As of now, this service is however not available for the business accounts.

Read Also:  8 Differences Between Coinmama and KuCoin

However, all trades on this platform are to be made in USD.

This means that when the customers pay in crypto coins it will not have much impact on the merchants accepting it because every payment will be converted into USD in order to settle a transaction.

However, if you intend to use this platform, check for the fees because it is quite high in comparison to the fees charged by the Coinbase platform.

The payment giant has partnered with Paxos to offer this service to buy and sell crypto coins.

As said earlier, Paxos is the third-party that takes care of the security aspect of the platform during trading and custody.

The process of using PayPal for crypto is quite simple. All the Personal PayPal Cash and PayPal Cash Plus account customers need to do is confirm their account information in order to make their first purchase.

Those who do not have any such account can apply for one before they make their purchase.

Unfortunately, given the current features of PayPal, there are a few specific downsides of using it instead of a more established and reliable crypto exchange such as Coinbase.

First, you cannot move your crypto off the platform. You can hold your coins on the platform or sell them but you cannot lend it to earn some interest.

This means that your coins are subject to several risks such as hacking or someone getting into your account, or even the platform freezing your account itself.

Secondly, you will have a very limited selection of crypto coins to choose from on PayPal as compared to Coinbase.

As said earlier, the platform as of now supports only four of them namely, BTC, ETH, BCH, and LTC.

Thirdly, unlike the crypto exchanges, PayPal will allow you to have access to your public address but you will not hold the private key.

However, this may be a drawback for you as a customer since you will not have ownership of your coins but from the business perspective, it is quite good.

This is because this feature in fact reduces a lot of issues and potential chances of Anti-Money Laundering and Know Your Customer process.

This makes it easy for this payment giant to manage crypto payments more effectively since it does not allow wallet-to-wallet transfers that even most of the larger crypto exchanges find to be pretty challenging.

This means that there is no risk of losing your money due to losing the private key according to the ‘Not your key, not your money’ maxim of crypto.

The user interface is extremely easy to use to buy Bitcoin where an account holder simply has to click on the ‘Buy’ button under Bitcoin. It is absolutely frictionless and seamless.

However, just as it is with any other centralized exchange, there are other risks of using PayPal.

That is why you should go with it if you trust PayPal, not deal with a large volume as that will cost you more in transaction fees, and if you are fine with not having self-custody of your coins.

In simple words, PayPal is just good for short term gains.

Therefore, considering every aspect it is safe to say that when it comes to choosing between Coinbase and PayPal, you should still go with Coinbase as of now.

The most significant reason to say so is that Coinbase offers quite a lot of useful and vital features that PayPal lacks in.

Moreover, if you go through the list of differences between Coinbase and PayPal once again minutely, you will see that there is literally no specific category in which PayPal beats Coinbase.

Of course, over time, you may rest assured that PayPal is going to add new and more useful capabilities as cryptocurrencies become more popular and are widely accepted.

There are several companies that are trying to put up PayPal for crypto.

Therefore, it can be said that it may soon be just PayPal as you know it now. Till that time Coinbase has and will have a distinct edge over PayPal.


It is only when you know the differences between PayPal and Coinbase you will be able to make the right choice by yourself instead of having to rely on hearsay. This article probably has helped you a lot in it and made you more confident.