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CoinIQ
Bitstamp Review

Bitstamp Vs. GDAX – Two Advanced Crypto Exchanges Face Off

Bitstamp Vs. GDAX at a Glance

Bitstamp and GDAX are similar in that they are both full-featured crypto exchanges with low fees, good US availability and multiple fiat deposit options. The key difference between the two is that Bitstamp accepts both debit and credit cards. GDAX does not support debit or credit cards anymore.

On the other hand, GDAX does have one convenient feature that Bitstamp lacks: automated ID verification. Instead of an automated system, Bitstamp uses a slow, manual ID verification process. Because of this, it usually takes two weeks or more to unlock deposit/withdraw functionality after you create a Bitstamp account. GDAX has an automated ID system that gives you instant access to deposits, withdrawals and trades if it accepts your ID documents.

Bitstamp GDAX
Strengths
  • Accepts debit and credit cards, SEPA and wire deposits.
  • Low base commission fee (0.25%) and discounts for high volume traders.
  • Low deposit/withdrawal fees.
  • Supports ACH, SEPA and wire deposits.
  • Low base commission fee (0.30% taker / 0.0% maker) and discounts for high volume traders.
  • Low deposit/withdrawal fees.
  • Fast, automated ID verification.
Weaknesses
  • No support for ACH deposits.
  • Poor altcoin support.
  • Slow manual ID verification.
  • Doesn’t accept debit or credit cards.
  • Poor altcoin support.

Background

Bitstamp

Bitstamp Review
Source: Bitstamp

Bitstamp was founded in 2011 by two Slovenian Bitcoin enthusiasts: Nejc Kodrič and Damijan Merlak. On his LinkedIn page, Kodrič writes that he entered the cryptocurrency space with “little more than some basic computer equipment” and €1,000. Kodrič and Merlak were both software developers before they became crypto entrepreneurs.

Bitstamp changed its base of operations several times throughout its seven-year history. After starting Bitstamp in Slovenia, Kodrič and Marlak relocated the exchange to London in 2013. In 2016, Bitstamp relocated again, this time to Luxembourg.

In 2017, CME Group tapped Bitstamp to provide market price data for the derivatives market’s Bitcoin Reference Rate index. CME Group’s partnership with Bitstamp represented not only a huge win for the exchange, but also a big step forward in terms of respectability for the entire cryptocurrency community.

Bitstamp’s leaders bring a wealth of of financial world experience to the table. Their Chief Financial Officer Edward Kemp held the same position at J.P. Morgan before coming to Bitstamp. Head of the Legal Department Stéphane Leloup also handled compliance issues at J.P. Morgan as well as State Street Bank and Societe General. Chief Compliance Officer Michael Leyers was in charge of compliance at Aviva Investors.

Pantera Financial Management gave Bitstamp $10 million in venture capital funds in 2013. In 2017, Bitstamp collected an additional $1.3 million through a crowdfunding campaign.

GDAX

Sourceː GDAX

Unlike the founders of Bitstamp, the Coinbase/GDAX co-founders Brian Armstrong and Fred Ehrsam brought a wealth of experience to the table when they founded Coinbase in 2011. Armstrong had already launched a successful startup– UniversityTutor.com. Ehrsam came from the finance world and worked at Goldman Sachs.

At first, Coinbase was just a digital wallet. Over time, Coinbase started adding exchange features. Then, in mid-2016, Coinbase decided to split in into two different sites. The retail exchange with user-friendly features would keep the company’s original name– Coinbase. The exchange site was dubbed GDAX.

GDAX’s leadership roster is deep when it comes to government experience. Vice President / General Manager Adam White started his career as a Test Engineer with the US Air Force. Chief Risk Officer Michael Lempres was a U.S. Attorney with the Department of Justice and served as the mayor of Atherton, California.

Out of all the cryptocurrency exchanges on the market today, GDAX/Coinbase is one of the most well-funded. GDAX’s major investors include well-known companies like The New York Stock Exchange, USAA, BVA, NTT Docomo and Valor Capital Group. Investors Vikram Pandit, Tom Glocer and Carlos Rodriguez Pastor have also contributed funds.

Supported Currencies and Listing Policies

GDAX and Bitstamp are both somewhat limited when it comes to altcoin availability. Bitstamp customers can trade only five different coins: Bitcoin, Ripple, Litecoin, Ether and Bitcoin Cash. Likewise, GDAX only supports four cryptocurrencies: Bitcoin, Bitcoin Cash, Ether and Litecoin.

On Bitstamp, there are three different ways to trade Ripple, Litecoin, Ether and Bitcoin Cash: via Bitcoin, dollars or euros. In addition, Bitstamp lets you trade Bitcoin for dollars or euros and euros for dollars.

GDAX doesn’t list Ripple and it doesn’t offer the EUR/USD trade pair, but it does let you trade Bitcoin, Bitcoin Cash, Ether and Litcoin for Bitcoin, dollars or euros. Also, GDAX lets you buy and sell Bitcoin with British pounds. Bitstamp does not support GBP at all.

Markets GDAX Bitstamp
Bitcoin 3 2
Bitcoin Cash 3 3
Ether 3 3
Litecoin 3 3
Ripple 0 3

Listing policies

Because Bitstamp and GDAX only list a handful of the most popular cryptocurrencies, they have not published any information about how they decide to list individual coins.

Security and Hacks

GDAX has a better security record compared to Bitstamp.

Hackers stole 19,000 BTC from one of Bitstamp’s hot wallets in 2015. Following that hack, Bitstamp shut down to retool its entire security system. Today, Bitstamp no longer holds large amounts of its funds in hot wallets. Instead, it uses an offline cold wallet to store 98% of its assets. Also, Bitstamp hired an external auditor to conduct routine security checkups.

Despite the fact that GDAX/Coinbase has been around since 2011, it has never had its coffers raided. Coinbase uses security features like mandatory background checks for its employees, SQL injection features, IP address whitelists and site action limits to protect its systems. In addition, GDAX has a bug bounty program. Through the bug bounty program, “white hat” hackers can earn cash rewards for identifying security issues on GDAX and Coinbase.

Availability and Verification

GDAX and Bitstamp both have good availability, but Bitstamp takes the edge in this category because GDAX locks down certain features in some parts of the world. Canadian GDAX users, for example, can buy but they aren’t allowed to issue sell orders. (Click here to find out more about which GDAX features you’ll be able to use in your country.)

Except for residents of Wyoming, Hawaii and Minnesota, most US residents can use GDAX. Bitstamp is also unavailable in Hawaii and Wyoming, but it doesn’t operate in New York. Residents of most other western countries can use both exchanges.

Verification policies

As mentioned above, GDAX has a much quicker ID verification system, due to the fact that it uses automated software to process ID documents. If the photos you upload pass the scan, you can begin using GDAX just a few minutes after you open an account. All you need is a photo ID to unlock most features.

Because Bitstamp lacks an automated verification system, it can take anywhere from a few weeks to a month to unlock your account. Unverified users can’t do anything on Bitstamp because Bitstamp requires verification for all types of deposits and withdrawals. In addition to a photo ID, you also need to provide proof of residence (a utility bill, bank statement, etc.) to pass verification.

Trading, Fees and Apps

Trading interface

GDAX and Bitstamp have very similar interfaces. Both exchanges have drop-down menus that let you select the currency pair you want to trade. In addition, they both let you fine-tune your trades. Neither exchange allows margin trading.

The key part of both interfaces is the buy/sell box. You can use the buy/sell box to place limit, market and stop orders. Market orders are conducted using the standard market price for whatever you want to trade. Limit and stop orders let you place orders that are either above or below the market price.

Here’s what GDAX’s interface looks like:

header 1 1
Sourceː CoinIQ

Bitstamp’s interface has the same core features. The currency pair selector is even in the same exact location– the top left part of the screen. The buy/sell box is on the right rather than the left and real-time charts appear in the middle of the screen. Both exchange interfaces have an order book view, which displays a list of recent trades.

pasted image 0 18
Sourceː CoinIQ

Fees

Though both Bitstamp and GDAX have low commission fees that decrease the more often you trade, GDAX offers a better overall deal because it gives all market makers a 0.00% commission fee rate. What that means is that you won’t have to pay any commission at all if you add liquidity to GDAX’s marketplace.

Here is GDAX’s fee structure chart:

pasted image 0 16
Sourceː CoinIQ

Bitstamp’s 0.25% commission fee is also quite low compared to Changelly and other so-called “retail” exchanges, which typically charge 0.5% or more in commission fees.’

However, Bitstamp doesn’t offer different prices for “market maker” and “market taker” trades. It just applies one standard sliding fee to all types of trades. Because GDAX doesn’t charge market makers any commissions at all, GDAX is a far better deal for frequent traders. Casual traders won’t notice much of a difference in fees, though.

Here is Bitstamp’s commission fee schedule:

pasted image 0 17
Sourceː CoinIQ

Mobile apps

Though Bitstamp’s apps are somewhat limited, Bitstamp still has better mobile app support compared to GDAX.

Bitstamp has mobile apps for iOS and Android that let you use basic functions like view real-time charts and place limit orders for Bitcoin and the other digital currencies on Bitstamp’s menu. Future upgrades will allow Bitstamp users to submit verification information via the app.

GDAX doesn’t have any official apps. However, because Coinbase and GDAX are two faces of the same exchange, you can use create a Coinbase account and use the Coinbase app to perform basic trades. You can’t, however, get the best prices via the Coinbase app because it doesn’t let you place limit orders.

Customer Support and Community

GDAX has much better customer support tools compared to Bitstamp.

Once you create a Bitstamp account, you’re pretty much on your own as far as figuring out what to do. Bitstamp has a FAQ page, that that’s about it as far as support literature goes. If you need further assistance, you have to use Bistamp’s ticket system to submit a help request.

GDAX’s knowledge base consists of many well-written articles and it can be easily understood by anyone that’s new to cryptocurrency. In addition to the knowledge base, GDAX’s support team is active on Reddit, Twitter, Facebook, Keybase and many other social media platforms.

Cryptocurrency Regulation

GDAX and Bitstamp both have a good track record of trying to cooperate with government regulators. However, GDAX perhaps has the edge in this category.

Because GDAX is registered with FinCEN (Financial Crimes Enforcement Network), it is can automatically operate in most US states. A list of all of GDAX/Coinbase’s state licenses is available here. In addition, GDAX has chosen to comply with New York state’s controversial and expensive BitLicense. GDAX is one of the few exchanges that has taken out an insurance policy to cover losses resulting from employee theft and physical/cybersecurity exploits.

Bitstamp also complies with best financial service practices. Each Bitstamp customer has to go through a rigorous verification process before they are allowed to make any type of deposit. Other exchanges allow unverified users to deposit and withdraw cryptocurrency, but Bitstamp has made verification mandatory for all types of deposits and withdrawals. What’s more, Bitstamp helped the DEA bust a Silk Road criminal in 2013.

Final Thoughts

Though neither Bitstamp or GDAX support most altcoins, either exchange can provide a solid gateway into the cryptocurrency world. Once you have a verified account on Bitstamp or GDAX, you’ll be able to turn your fiat money into cryptocurrency using a variety of different payment methods. However, because Bitstamp offers debit and credit card buys, it’s probably the best choice for most people. GDAX no longer supports debit or credit card buys, but Bitstamp does.

The convenience of using your credit card to invest in crypto via Bitstamp does come with a tradeoff– long verification wait times. Because Bitstamp verifies each of its customers manually, you may have to wait two weeks or longer to get started with Bitstamp.

In terms of reputation, Bitstamp and GDAX are about the same. Both exchanges are well-known in the crypto community and both are on good terms with regulatory authorities in the US and Europe. Bitstamp did have one notable security breach, but following the incident the exchange took steps to ensure that it would not happen again.

Alex Munkachy

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