Original title: $COIN vs $HOOD: The $160 Billion Battle
Original author: Thejaswini MA, Token Dispatch
Original text translated by: Plain Language Blockchain
A war is quietly unfolding in your pocket, and most people aren't even aware of it.
The two major financial applications in the U.S.—Robinhood and Coinbase—are conducting vastly different experiments on millions of users. Robinhood ranks 14th in the App Store's finance category, while Coinbase ranks 20th, both with market capitalizations around $80 billion. They both target young investors but believe the other's approach is completely wrong.
Both experiments have succeeded to some extent.
The essence of Robinhood and Coinbase
These two companies are not competitors in the traditional sense, but rather are conducting different experiments on the same subject (us).
Robinhood sees the pain points in finance and asks, "What if we fix all the annoying parts?" They offer 15 cryptocurrencies, zero-commission trading, and an interface that allows users to buy Tesla stock without needing a finance degree. Their philosophy is: you don’t need to know how sausage is made to enjoy a hot dog.
Coinbase, on the other hand, takes the opposite approach, asking: "What if we rebuild the entire financial system on blockchain technology?" Coinbase charges more than competitors like Robinhood, but creates a platform for users who want full exposure to the crypto ecosystem, offering over 260 cryptocurrencies. They bet that traditional finance will ultimately go on-chain and hope to become the infrastructure for that transformation.
Coinbase CEO Brian Armstrong stated: "In the next 5 to 10 years, our goal is to become the world's leading financial services application because we believe that cryptocurrency is consuming financial services, and we are the number one crypto company. All asset classes—money market funds, real estate, securities, debts—will be on-chain."
The two companies went public months apart in 2021, both with market capitalizations of $80 billion, targeting mobile-first young investors, but their products seem designed for different species.
This is not a war for dominance, but a competition serving different financial futures.
The race for the expansion of crypto products
Both companies are rapidly expanding their crypto products, but in entirely different ways.
Robinhood's recent announcement shows they are trying to directly surpass Coinbase. In June, they launched Robinhood Chain—its own Layer-2 network supporting tokenized stocks and crypto trading, which will also support assets raised by SpaceX and OpenAI in the future. European users can now trade tokenized U.S. stocks around the clock, not just during market hours. This is the 24/7 trading model that crypto users expect, applied to traditional assets.
They also launched crypto staking for ETH and SOL, acquired Bitstamp, Europe's oldest crypto exchange (for $200 million), and plan to introduce crypto perpetual futures for European users. The crypto infrastructure they built integrates seamlessly with the existing stock trading experience rather than simply tacking on crypto functionality to traditional brokerage services.
All of this—blockchains, tokenized stocks, low fees—is designed for the next generation of investors who will inherit trillions of dollars in wealth.
In the fee war, Robinhood's crypto trading fees are around 40 basis points (0.4%), while Coinbase's equivalent trades can be as high as 1.4% or more. Buying $1,000 worth of Bitcoin incurs about $4 in fees on Robinhood, while Coinbase charges over $14.
Robinhood profits by payment for order flow, where market makers pay for executing retail trades, similar to its stock trading model. This mature model allows them to offer 'free' trading while still making money.
However, Coinbase offers features that Robinhood cannot compete with: true ownership of cryptocurrencies. On Robinhood, what you buy is a crypto 'IOU', merely a receipt for the crypto assets that Robinhood owes you. You cannot transfer Bitcoin to your own wallet, nor can you use it elsewhere; you can only buy and sell within the Robinhood app. You cannot engage in DeFi, stake most tokens, or use cryptocurrencies for purposes beyond buying and selling.
For most people, it doesn't matter; they just want exposure to cryptocurrency, not practicality. But for users who want to engage in complex crypto operations, Coinbase is the only realistic choice among major platforms in the U.S.
Q2 earnings report analysis
This summer's earnings reports revealed the effectiveness of the two approaches.
Robinhood performed impressively. Total revenue grew by 45% year-over-year to $989 million. Crypto revenue surged by 98% to $160 million (rising from 10% of total revenue last year to 16% this quarter), even though the overall crypto market remained relatively stable. They have 26.5 million active accounts, managing assets of $279 billion, a 99% year-over-year increase. By acquiring Bitstamp, they added about 520,000 crypto users, with Bitstamp generating $7 billion in nominal crypto trading volume after the acquisition completed in June.
The platform's assets reached $279 billion, a 99% year-over-year increase, with net deposits of $13.8 billion. Active accounts grew by 10% to 26.5 million, and cash balances surged by 56% to $32.7 billion, indicating an increase in customer wallet share.
Coinbase experienced a "challenging quarter." Total revenue fell 26% from Q1 to $1.5 billion, missing analyst expectations. Trading revenue decreased by 39% due to a decline in retail trading. The stock price dropped 16% on earnings day as investors tried to determine whether this was a temporary slump or a sign of a high-fee model.
However, calling this quarter a failure overlooks the bigger picture. Coinbase achieved a net income of $1.4 billion, higher than the $512 million adjusted EBITDA, mainly due to $1.5 billion in unrealized gains from its portfolio and strategic crypto asset holdings. Even excluding these one-time gains, adjusted net income still showed $33 million, demonstrating actual profitability.
The increase in operating expenses is mainly due to a one-time loss of $307 million from the data breach in May. Core costs (technology, administration, marketing) have actually decreased, demonstrating cost control capabilities. Revenue from the USDC stablecoin business reached $332 million, with average balances growing by 13%. Custodied assets hit a record high of $245.7 billion. Prime Financing (institutional financing) balances also hit a new high, which is part of Coinbase Prime, providing custody, trading, lending, and financing services to hedge funds, family offices, and others.
Coinbase continues to launch new products: new derivatives, expanding the Base chain, and launching the Coinbase One Card. Despite declining revenue, the fundamentals remain strong.
Coinbase's infrastructure empire
Coinbase's infrastructure strategy is more complex. They custody $245.7 billion in assets for institutions, capturing a large share of the institutional crypto market. When you buy a Bitcoin ETF through a 401(k), you are likely using Coinbase's infrastructure.
Coinbase is the primary custodian for over 80% of the U.S. Bitcoin and Ethereum ETFs, managing about $113.4 billion (out of a total of $140 billion in crypto ETFs). When BlackRock's IBIT or Fidelity's FBTC needs to store billions worth of Bitcoin, they turn to Coinbase. When PayPal launched the PYUSD stablecoin or JPMorgan needed a crypto payment rail, they also used Coinbase's backend.
Coinbase has over 240 institutional clients, over 420 liquidity providers, and regulatory licenses that most competitors cannot reach. Its custody business is licensed by the New York Department of Financial Services, which took years to achieve and is difficult for competitors to replicate.
Their 'all-in-one trading platform' strategy is showing results. They introduced perpetual futures with up to 10x leverage, bringing derivatives trading that was previously only available on overseas platforms to U.S. retail users. They have integrated decentralized trading platforms directly into the app, allowing users to trade Ethereum or any token on Base without leaving Coinbase.
Its Base Layer-2 network processes over 54,000 token issuances daily, surpassing Solana. The real highlight of Base lies in its integration with Coinbase's other businesses: ETF providers can use it for instant settlement, enterprises can tokenize assets directly, and retail users can access institutional-level infrastructure.
The generational takeover of Robinhood
Coinbase builds infrastructure for institutions, while Robinhood executes the smartest long-term strategy in finance: capturing young people before they become wealthy.
Similar strategies have brought success to Disney. In the early 20th century, Disney captured children's hearts through animation and theme parks, establishing emotional bonds before they had money. When these kids grew up and started earning, their loyalty translated into spending on movies, merchandise, streaming, and vacations, creating a cash machine for generations.
Robinhood dominates among young investors, and traditional brokers should be concerned:
About 50% of customers are millennials, 25% are Generation Z, and 20% are Generation X.
Robinhood users typically start investing at ages 19-22, much younger than other platforms where millennials are in their 20s and baby boomers in their 30s.
Robinhood guides new users to quickly complete their first sell order, not to encourage frequent trading, but because locking in actual gains (even just $50) creates an emotional hook that keeps users coming back.
Their 'all-financial' expansion aligns with this logic. Robinhood Gold (a $5 monthly subscription) includes a 3% cash back credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers grew by 60% year-over-year to 2 million. These users are using Robinhood for banking, credit cards, and retirement.
The platform currently holds $279 billion in assets, targeting the $84-124 trillion "massive wealth transfer" from the baby boomer generation to younger generations over the next 20 years. Robinhood bets that if they can establish user habits early, they don't need to predict wealth inheritance patterns; they just need to secure a place when the wealth arrives.
Who is winning?
The market valuations of the two companies are close: Robinhood at $81 billion, Coinbase at $85 billion. In terms of performance this year, Robinhood is up 135%, while Coinbase is only up 30%, with much of that coming from the last month.
Bank of America analyst Craig Siegenthaler recently raised Robinhood's price target to $119 while lowering Coinbase's from $383 to $369, citing: "Robinhood's crypto revenue surge, while Coinbase is overly reliant on retail users abandoning volatile altcoin trading."
Coinbase's global market share fell from 5.65% to 4.56%, rebounding slightly in July, while Kraken saw the most significant growth in market share in the U.S. this year. Coinbase faces a dilemma: lowering fees hurts profit margins, or sticking to high fees risks losing traders. They chose profit margins, charging fees on previously free stablecoin trades, while Robinhood's rates are about 50% lower.
Mizuho reaffirmed a $120 price target after meeting with Robinhood CEO Vlad Tenev, praising its resilience in crypto and aggressive push for tokenized stocks. They stated: "The European tokenized stock opportunity, expansion to upstream and youth markets, 15% of net deposits coming from competitors, focus on NPS and execution, and inelasticity of crypto prices are impressive."
However, Coinbase has institutional credibility. While other trading platforms compete on trading fees, Coinbase builds relationships with institutions that will determine the integration of crypto and traditional finance in the next decade.
Both companies are here to stay. They satisfy different user needs, and both are growing. This isn't a winner-takes-all competition, but rather market segmentation—Robinhood targets mainstream finance, while Coinbase focuses on crypto infrastructure.
This reveals two competing theories about how people will interact with money in the future:
Robinhood believes the future of finance will be 'invisible', abstract, simple, and integrated into lifestyle applications, with finance becoming part of the environment.
Coinbase bets on winning trust through architecture.
There are no right or wrong answers; the objectives are simply different. One side seeks simplicity and trust, while the other builds the underlying architecture.
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