Exchange or Retail Platform?

The first entry point into the crypto economy is often through a Retail Platform.

At Blockfolio — the largest portfolio tracking app for cryptocurrency- we frequently have new users ask for recommendations on buying their first Bitcoin.

Today, let’s make sure you know the difference between an Exchange and a Retail Platform by using Coinbase with their sister exchange, GDAX as an example for this write up.

Why did we choose Coinbase?

Coinbase is the most popular retail platform at this time and was recently featured in an article on Bloomberg Technology .

Coinbase is officially number one, at least when it comes to Apple Inc.’s App Store. The software application for Coinbase Inc., operator of one of the world’s largest cryptocurrency exchanges, climbed to the top of Apple’s download ranking for free apps in the U.S.- Adam Haigh

Fees to use Local Currency

Most people who are making their first purchase in cryptocurrency use a retail platform so they can easily trade their local fiat for tokens.

This is not the same thing as an exchange. A Retail Platform charges a base fee for their services plus a premium on the trade price.

In the above example a base fee of $6 is added to the above purchase. The price to Buy a token is usually higher than the price to sell the same token.

Customers for Coinbase can make purchases using their bank accounts or with a credit card. They can also withdraw funds using Paypal. The fee to buy with a bank transfer is 1.5%; a credit card 4%.

If you make your purchase on an exchange like GDAX, you’ll have lower set fees (0.25% or less) but will not be able to make purchases with a credit card or use Paypal.

Usually dictated as “maker” or “taker” fees, exchanges like GDAX will charge a small flat percentage on each trade. There is no premium for trading on an exchange.

Time to Receive Tokens

If you make a purchase through Coinbase, expect to see your tokens in about a week.

Wait… did you say…A WEEK?!

Yes.

In the Crypto world, a week is a long time. This is one of the largest disadvantages of using a retail platform to make purchases. When you buy tokens on an exchange, you receive them instantly, which gives you the option to BUY and SELL quickly.

Some exchanges, like GDAX, offer trading directly against USD. You can also use Bitcoin to make trades.

Order Books

GDAX has ‘Order Books’ as well as ‘Trade History’ and price charts.

An exchange site will offer users a more complete view of market movement by showcasing Order Books, Trade History, Depth Charts, Price Charts and provide the option for Market, Limit, Stop and Margin Orders.

Since Retail Platforms like Coinbase allow users to conveniently swap fiat for Bitcoin, they have no need for order books as the price is set at the time of purchase.

The absence of order books means you are looking at a retail platform and not an exchange.

This is an example of what an order Book might look like on mobile. Courtesy of Blockfolio app.

Final Note

There are advantages to using retail platforms as a beginning trader as the interface is much easier to use. Once your comfortable using a retail platform, there are many resources available to help you transfer your funds onto an exchange.

Here is one resource we found on YouTube that shows you how to move funds from your USD Wallet on Coinbase to the GDAX exchange.

We hope this information has been helpful in choosing an exchange. Please be sure to monitor all your trades with Blockfolio app (it’s free!).

Blockfolio is a free cryptocurrency portfolio tracking software. You can download it in the App Store or Google Play store on your mobile device.

Stay in touch with us on Twitter , Telegram and Facebook or email us at support@blockfolio.com for troubleshooting, feedback and suggestions.