Coinbase and Binance are no longer just about buying and selling Bitcoin. Why the two crypto giants couldn’t be more different – and which company is better equipped for the future.
Even if Coinbase and Binance offer similar crypto services at first glance, the two companies couldn’t be more different. With their very own business model, they have managed to claim significant market shares in the crypto sector. With a high double-digit – briefly even three-digit – billion valuation, the two heavyweights are competing against each other and are likely to still have a tough fight in the coming months and years.
Product range and target group
Binance’s product universe makes every other player, including Coinbase, look old. Pretty much every service available in the crypto sector is offered by Binance. Rather, it is not just a platform company, but it positions itself as a blockchain protocol. Numerous projects rely on the Binance Smart Chain and program their blockchain applications on its layer technology. In contrast to Coinbase, which is building more of a bridge to the crypto sector, Binance also sees itself as a company that relies on the token economy itself. This difference becomes clear when you consider that Coinbase does not issue its own tokens. Anyone who wants to participate in their company’s development can traditionally purchase their shares via a securities account. Binance, on the other hand, has its own ecosystem token with the Binance Coin.
Users who are not firmly in the crypto saddle are likely to quickly feel lost with Binance. The wide range of products on offer quickly overwhelms newbies. Coinbase is positioning itself completely differently here – with a manageable and tidy product range. While Binance, at least that’s the impression, has no focus – other than mastering the entire crypto ecosystem – Coinbase gives the impression of being very focused on individual products and target groups. As exciting as gaining market share in the retail sector may be, in many cases there is more capital in the B2B business or with institutional customers. It is precisely with the latter that Coinbase dominates by defining the industry standard for corporations like Tesla.
Coinbase comes as a well-structured American start-up with a Silicon Valley hue that best sees itself as the new crypto Goldman Sachs. Not so Binance, which is less like a bank, broker or asset management company than Coinbase, but rather a cross between the New York Stock Exchange, Kickstarter crowdfunding platform and SAP. Ultimately, Coinbase is much more tangible for most customers because, despite all its start-up ambitions, it presents itself as a company from the old world and speaks that same language. It earns from the translation effort and not from experimenting with the latest crypto innovations.
Location vs. remote
The fact that customers like Tesla go to Coinbase also has something to do with the location. While Coinbase has a clear regional reference, Binance is a kind of Chinese company in exile. In less regulated jurisdictions such as the Cayman Islands, the Seychelles and formerly Malta, an opaque corporate network has emerged. Binance is not really active in Europe or recognized by the authorities in terms of licensing. The attempt to open up European market shares through the United Kingdom, which had left the EU, did not really work either. Instead, Binance is being gripped by a violent wave of regulations. Important European cooperation partners such as Clear Junction are jumping off and making the European activities of the crypto giant more difficult than ever.
Coinbase with advertising advantage?
Diametrically to this, Coinbase positions itself as a good model boy who, hand in hand with the regulator, drives the European market entry. Above all, however, in contrast to Binance, Coinbase is allowed to actively advertise in Germany. The German Coinbase subsidiary was the first company to receive a crypto license from the German financial regulator BaFin. It cannot be assumed that Binance will be able to follow suit in the near future. Especially since government restrictions continue to tighten and it is more important than ever to get on well with the regulators. Only in this way can the company actively address new customers and, above all, develop the B2B business.
In addition, Coinbase is much closer to the western population. The transatlantic character makes it easier for Coinbase to win the trust of the European population than the elusive Binance. Especially against trustworthy offers from the DACH region, such as Bison from the Stuttgart Stock Exchange or Bitpanda from Austria, Binance should have a hard time with newcomers who are looking to enter the crypto economy. In terms of image, Binance is facing a very large construction site.
Daredevil vs. Conformity
Crypto hardliners may find Coinbase to be too “slick, centralized and adjusted”, but this strategy is paying off, as can also be seen in employee changes. For example, Coinbase Germany manager Jan-Oliver Sell was previously employed at Binance. Binance’s breathtaking growth now seems to be taking its revenge, as the structures for such a crypto empire that Binance is trying to be cannot be set up in a few months. Money alone is not enough to almost make it up Megalomania to sustainably consolidate bordering product expansion. The exaggerated expectations that the crypto sector has always struggled with are channeled in the conglomerate Binance.
On the other hand, innovation requires daredevils who, like Binance, sometimes burn their fingers. Should Binance actually manage to consolidate its ecosystem and make it more suitable for the masses, then, measured against potential market power, Binance, which resembles an Amazon or Google, is more likely than Coinbase. At the same time, Binance, which is attempting decentralization with its DEX, for example, has to face the contradiction, like a platform giant that ultimately controls each of its services should fit into the narrative of the decentralized Web 3.0. Binance still has to find out for itself how the balancing act between the blockchain protocol and the middleman can work.
As easy as it may be to find points of criticism at both companies, on the other hand you also have to recognize what service they provide for crypto establishment and what they have achieved in a short period of time. Both companies have the potential to dominate a market that is still in its infancy in their own way – and to grow massively in the process.