Poloniex vs Gemini at a Glance
Boston’s Poloniex and New York’s Gemini, are strong mid-tier players in the crypto-trading industry. When evaluating Poloniex vs Gemini, you will need to consider the very different approaches these two exchanges take. While Poloniex focuses on advanced retail investors with margin trading and dozens of altcoins, Gemini focuses on institutional traders with limited, but high-volume markets and a fee structure that penalizes low-volume trades.
Our guide to Poloniex vs Gemini will help you decide which is best for you.
Where Did They Come From?
The Boston-based exchange Poloniex was founded in 2014 by Tristan D’Agosta. Unusually, D’Agosta is not an expert in finance or an experienced developer like other founders of crypto exchanges. Rather, he is a musician and freelance composer.
Poloniex’s first challenge came only a few months after it hit the market. Hackers stole 12% of the Bitcoins in Poloniex’s customers’ accounts. Though it was a serious breach, Poloniex came out of the situation with a higher level of trust among the crypto community. Within months of the hack, Poloniex made all of its customers whole.
As reported by CoinTelegraph, Poloniex’s actions generated a “positive and sympathetic response” from the cryptocommunity. The sense that Poloniex would put its customers first helped catapult the exchange to the top of the industry. Poloniex became the first exchange to generate more than $1 billion in trading volume as customers in more than one hundred countries flocked to its trading markets.
Wall Street money to the rescue
Wall Street-backed mobile payments firm Circle Internet Financial bought Poloniex in early 2018. With greater resources at its disposal, Poloniex will have the opportunity to expand its services. However, Circle’s founders are placing the firm’s near-term focus on fixing Poloniex’s customer support system.
Last year’s exponential growth in crypto trading overwhelmed Poloniex’s customer support system. Circle’s founders praised Poloniex’s achievements as an exchange, calling it “a magnificent accomplishment, but one that also comes with whiplash.”
Due in part to its struggles, Poloniex no longer stands at the top of the crypto exchange heap. CoinMarketCap reports solid, mid-tier performance as Poloniex generates about $72 million in trading volume each day.
New York-based Gemini was founded in the same year as Poloniex by entrepreneurs Tyler Winklevoss and Cameron Winklevoss. The twin brothers wanted to create and cryptocurrency exchange that could integrate with the traditional finance industry.
That prime directive led the Winklevii to put Gemini through the toughest regulatory systems in the country. Twenty months after announcing their exchange, the Winklevii finally opened Gemini to customers as Gemini Trust LLC.
Registering as a trust in New York lets Gemini reassure the big Wall Street financial firms that the exchange is a safe place to do business. At the same time, the trading interface allows retail customers to trade on the mid-sized exchange. CoinMarketCap regularly reports Gemini’s daily trading volume in the $44-$47 million range.
Supported Currencies and Listing Policies
Poloniex outmatches Gemini when it comes to the range of cryptocurrencies customers can trade. Gemini only supports bitcoin, ether and z-cash. Poloniex, on the other hand, offers more than 60 trading pairs on its bitcoin market. Although Poloniex also has trading markets for ether, ripple and tether, those markets are much smaller with only a dozen trading-pairs each.
Gemini does have one advantage over Poloniex: the ability to trade its listed cryptocurrencies with the US dollar.
In the wake of the US Securities & Exchange Commission’s investigation into tokens, Poloniex reaffirmed its commitment not to list tokens that act like securities.
Beyond that, Poloniex does not provide formal guidance to project teams hoping to join the exchange. Besides having a built-in customer base, Poloniex says they “select projects that we believe are unique, innovative, and that our users would be interested in trading.”
Gemini has such a limited number of cryptocurrencies on its exchange that it does not document its selection criteria.
Security and Hacks
The theft of 97 bitcoins from Poloniex’s hot wallet in March 2014 came only a few months after the exchange opened for business. By July 2014, however, the exchange announced that it had reimbursed all of its customers.
The experience gave D’Agosta and his exchange a new focus on security. “Security is a top priority at Poloniex,” D’Agosta said in the press release, adding “We are committed to continually improving our product to ensure the highest level of protection for our customers.”
Most of the assets Poloniex holds are kept in offline cold wallets with only enough coins in hot wallets to support liquidity on the exchange. Automatic audits and tighter network security policies closed the security gaps that led to the 2014 hack.
Gemini places a similar focus on security — and has done so since its founding. In the eyes of the Winklevii, creating a crypto ecosystem “free of hacking, fraud and security breaches” is the only way the financial system will accept bitcoin and altcoins.
Gemini’s security page outlines the many steps it takes to protect its customers’ assets. From the built-in security of Amazon’s cloud technology to the hot and cold wallets’ multi-signature access limits, Gemini takes a multi-tiered approach to security.
Availability and Identity Verification
Although both Gemini and Poloniex are based in the United States, the two exchanges have very different customer bases.
Gemini focuses on the United States and has worked with state regulators to allow operations in every state except Hawaii and Arizona. Residents of the District of Columbia and Puerto Rico can use Gemini as well.
Internationally, Gemini only supports Canada, Hong Kong, Singapore, South Korea and the United Kingdom.
Poloniex is also available across the US, with the exceptions of New Hampshire, New York and Washington. The exchange’s strength, however, is its willingness to serve customers in more than 100 countries.
Gemini requires a passport or state-issued driver’s license to verify American and Canadian customers. People living in other countries Gemini serves must provide a proof-of-residence in the form of a utility bill or similar document.
Unfortunately, Gemini manually processes the verification requests. During peak periods, or when an identity is hard to verify, the review process can take a long time.
In order to comply with anti-money-laundering regulations, Poloniex requires all of its customers to verify their identity. Poloniex experienced a backlash in early 2017 when it implemented this policy.
“We are bound by the rules and regulations defined by the Financial Crimes Enforcement Network,” D’Agosta told the community. “We have chosen the unpopular path of following the regulations that apply to us because we believe it is the right thing to do.”
The verification material Poloniex requires includes personal information as well as an identification selfie. The processing of customer verifications has been one of the areas Circle has focused on for improvement. A recent update highlighted Poloniex’s progress:
“We are happy to report that in the past 3 months we’ve seen a 33% increase in customers who are instantly verified, a 77% increase in customers who successfully pass our verification process, and an 85% decrease in customer waiting time for verification.”
Trading, Fees and Apps
Poloniex lets customers trade bitcoin, ether, ripple or tether for other cryptocurrencies. The bitcoin market has the most variety with 66 altcoins. The other markets only support a dozen currency pairs each.
Poloniex also lets customers trade on margin, but only for eleven bitcoin pairs.
Gemini lets customers trade bitcoin, ether and z-cash against each other and against the US dollar.
Although Gemini does not offer advanced traders the ability to use leverage, the exchange does have two features for higher-volume traders. Block Trades lets traders place large orders without influencing the market’s price. Auctions provide a cheaper, more efficient way to bring buyers and sellers together for large transactions.
Both Poloniex and Gemini are designed to serve advanced crypto traders, but their trading interfaces are straightforward enough for relative newcomers.
Poloniex provides a live time series chart that customers can use to analyze pricing trends.
Gemini requires customers to activate 2-Factor Authentication before it will allow them to initiate any transaction.
Circle reduced the fees Poloniex charges to better-reflect today’s trading levels and market conditions. Transaction fees now start at 0.2% for takers and 0.1% for makers. Customers’ 30-day trading histories are now calculated on a US dollar basis rather than the previous bitcoin basis. Finally, the thresholds for volume discounts have been reduced.
If you make your funds available for loan to margin traders, Poloniex will charge a 15% fee on any interest that you earn.
Poloniex does not charge for deposits or withdrawals of cryptocurrencies.
Small trades not welcome here
Gemini will charge customers for cryptocurrency withdrawals. The first ten transactions are free. After that, however, crypto withdrawals will incur a 0.002 bitcoin, 0.001 ether or 0.002 z-cash fee depending on the coins you take.
Gemini also applies trading fees on a maker-taker basis. Brand new traders will get charged a 1% fee until they reach the lowest 30-day trading thresholds. At that point, makers and takers are charged 0.75% per transaction. These fees are significantly higher than what other exchanges charge and are clearly designed to discourage low-volume traders. As trading volumes increase, the trading fees decrease to the point where the highest volume traders will see 0% maker fees and 0.1% taker fees.
Neither Poloniex nor Gemini offers mobile apps.
Customer Support and Community
Poloniex has a self-serve support site that provides answers to general questions. However, it does not answer every question a customer might have. Given the relative uniqueness of an American crypto exchange offering leverage, it’s surprising that the support site does not mention margin trading.
Customers with specific, account-related questions can open a ticket with Poloniex’s support staff. Delays are still happening even as Circle invests in Poloniex’s systems. An update six weeks after Circle’s acquisition described the state of Poloniex’s support group.
“We faced a backlog of 159,000 customer issues. Over the past 6 weeks, we have resolved 76,000 of those issues and added 6 new agents to our support team.”
Although Gemini offers the same support options as Poloniex, Gemini never ran into the problems Poloniex faced. Gemini has a site for self-directed support and a ticket-based system for specific questions.
Gemini welcomes regulation as a necessary step for cryptocurrency to become a part of the mainstream financial system. Becoming a licensed trust in New York took time and resources, but put Gemini on a path towards working with New York’s financial institutions.
As Tyler Winklevoss told Fortune, “The regulation is why we’re in New York, why we have a bank partner, and why we’ll have a real business when we launch.”
Of course, accepting the existing regulatory system is not the same thing as wanting more regulation. Cameron Winklevoss recently suggested that the crypto industry could regulate itself. “We believe adding an additional layer of oversight,” Winklevoss said “in the form of self-regulation, is important for consumer protection and to ensure the integrity of these markets.”
His proposed “Virtual Commodity Association” is modeled after the National Futures Association, which America’s futures exchanges rely on to police themselves.
Bearing the burden of regulation
Poloniex, in contrast, has treated regulation as a necessary evil. The exchange follows all applicable regulations, as when it required verification of all its customers, but will do what it takes to avoid regulations that are too burdensome.
When the state of New York unleashed its BitLicense on the cryptocurrency industry, Poloniex chose to shut down operations in New York. D’Agosto pointed to the burden the BitLicense placed on small startups in an interview with Bitcoin Magazine. “From a small business perspective,” D’Agosto said, “BitLicense is both limiting and frustrating.” He further pointed out that “much like any industry, cryptocurrency has businesses of all shapes and sizes as well. BitLicense was not written with small businesses in mind.”
These two American crypto exchanges differ significantly.
Gemini offers a limited number of markets, preferring to focus on volume over variety. Poloniex, on the other hand, supports ten times as many cryptocurrencies.
Both exchanges operate in almost every US state. While Gemini has an international presence, it is fairly limited. Poloniex, by contrast, has customers in more than 100 countries.
Poloniex is one of the few American exchanges that lets risk-tolerant advanced traders use leverage to maximize their returns. Gemini, on the other hand, focuses on high-volume traders – especially with its Block Trade and Auction services. In addition, Gemini’s maker/taker trading fees penalize low-volume traders much more than Poloniex’s.
Your approach to cryptocurrency trading will determine which exchange you prefer. If you need an exchange with high trading volumes to support large transactions, then Gemini may be your choice. If you’re a retail trader looking for high returns, and you’re willing to take risks on lower-volume markets or on leveraged trades, then Poloniex could be your best bet.