$COIN vs $HOOD: A $160 billion showdown

Author: Thejaswini MA; Source: thetokendispatch; Translated by: Baihua Blockchain

A war is quietly unfolding in your pocket, and most people are not even aware of it.

The two major financial apps in the U.S. — Robinhood and Coinbase — are conducting completely opposite experiments on millions of users. Robinhood ranks 14th in the App Store’s finance category, while Coinbase ranks 20th, with both having a market capitalization of about $80 billion. They both target young investors, but believe that the other’s approach is entirely wrong.

Both experiments were successful to some extent.

The Essence of Robinhood and Coinbase

These two companies are not traditional competitors, but are conducting different experiments on the same experimental subject ( we ).

Robinhood identified the pain points in finance and proposed, “What if we fix all the annoying parts?” They offer 15 types of cryptocurrencies, zero-commission trading, and an interface that allows you to buy Tesla stocks without a finance degree. Their philosophy is: you don’t need to understand how sausage is made to enjoy a hot dog.

Coinbase, on the other hand, takes the opposite approach by proposing, “What if we rebuild the entire financial system on Blockchain technology?” Coinbase charges higher fees than competitors like Robinhood, but it builds a platform for users who want comprehensive access to the crypto ecosystem, offering over 260 cryptocurrencies. They bet that traditional finance will eventually go on-chain and hope to become the infrastructure for this 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 swallowing financial services, and we are the number one crypto company. All asset classes – money market funds, real estate, securities, debt – will be on the Blockchain.”

The two companies went public several months apart in 2021, each with a market value of $80 billion, targeting mobile-first young investors, but their products seem to be designed for different species.

This is not a war for dominance, but a competition to serve different financial futures.

The Race for Expansion of Crypto Products

Both companies are accelerating the expansion of their crypto products, but in completely different ways.

Robinhood recently announced that they are trying to directly surpass Coinbase. In June, they launched Robinhood Chain - their own Layer-2 network, supporting tokenized stocks and crypto trading, and in the future will also support assets raised by SpaceX and OpenAI. European users can now trade tokenized US stocks around the clock, rather than just during market hours. This is the 24/7 trading model that crypto users have been hoping for, applied to traditional assets.

They also launched crypto staking for ETH and SOL, acquiring Bitstamp, the oldest crypto trading platform in Europe, for $200 million(, and plan to introduce crypto perpetual futures for European users. The crypto infrastructure they have built seamlessly integrates with the existing stock trading experience, rather than simply grafting crypto functions onto traditional brokerage services.

All of this—Blockchain, 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 fee is about 40 basis points )0.4%(, while Coinbase’s equivalent transaction can be as high as 1.4% or more. Buying 1000 dollars worth of Bitcoin, Robinhood charges about 4 dollars, while Coinbase charges over 14 dollars.

Robinhood profits through payment for order flow, with market makers paying fees to execute retail trades, similar to its stock trading model. This mature model allows them to offer “free” trading while still making money.

But Coinbase offers features that Robinhood cannot match: true ownership of cryptocurrencies. With Robinhood, you are purchasing “receipts” for cryptocurrencies, which are simply receipts 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 participate in DeFi, stake most tokens, or use cryptocurrencies for purposes other than buying and selling.

For most people, it doesn’t matter; they just want exposure to cryptocurrency rather than practicality. But for users who wish to perform complex crypto operations, Coinbase is the only realistic choice among the major platforms in the U.S.

Q2 Financial Report Analysis

This summer’s financial report reveals the effectiveness of two methods.

Robinhood performed brilliantly. Total revenue increased by 45% year-on-year to $989 million. Crypto revenue surged by 98% to $160 million, rising from 10% of total revenue last year to 16% this quarter, despite the overall crypto market being relatively stable. They have 26.5 million active accounts, managing assets of $279 billion, a year-on-year increase of 99%. They added approximately 520,000 crypto users through the acquisition of Bitstamp, which generated $7 billion in nominal crypto trading volume after the acquisition was completed in June.

The platform assets reached $279 billion, a year-on-year increase of 99%, 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.

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Coinbase has experienced a “difficult quarter.” Total revenue decreased by 26% to $1.5 billion compared to Q1, falling short of analysts’ expectations. Trading revenue dropped by 39% due to a decline in retail trading. On the day of the earnings report, the stock price fell by 16% as investors attempted to determine whether this was a temporary slump or a signal of a high-cost model.

However, calling this season a failure overlooks the bigger picture. Coinbase achieved a net revenue of $1.4 billion, exceeding the $512 million adjusted EBITDA, primarily due to $1.5 billion in unrealized gains from its portfolio and strategic cryptocurrency holdings. Even excluding these one-time gains, the adjusted net income still stands at $33 million, demonstrating actual profitability.

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The increase in operating expenses is mainly due to a one-time loss of $307 million resulting from the data breach in May. Core costs ) technology, administration, marketing ( actually decreased, demonstrating cost control capabilities. Revenue from USDC stablecoin business reached $332 million, with an average balance growth of 13%. Custody assets hit a record high of $245.7 billion. Prime Financing ) institutional financing ( balance also reached a new high, which is part of Coinbase Prime, providing custody, trading, borrowing, and financing services for 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 the decline in revenue, the foundation remains solid.

The Infrastructure Empire of Coinbase

Coinbase’s infrastructure strategy is more complex. They provide institutional custody for $245.7 billion in assets, capturing a large share of the institutional crypto market. When you buy a Bitcoin ETF through a 401k, you are likely using Coinbase’s infrastructure.

Coinbase is the primary custodian of over 80% of Bitcoin and Ethereum ETFs in the U.S., managing approximately $113.4 billion ) of the total $140 billion ( in crypto ETFs. When BlackRock’s IBIT or Fidelity’s FBTC needs to store billions of Bitcoins, they turn to Coinbase. When PayPal launches the PYUSD stablecoin or JPMorgan requires a crypto payment rail, they also use Coinbase’s backend.

Coinbase has over 240 institutional clients, over 420 liquidity providers, and regulatory licenses that most competitors cannot match. Its custody business is licensed by the New York State Department of Financial Services, a regulatory approval that took years to obtain and is difficult for competitors to replicate.

Its “all-in-one trading platform” strategy has begun to take effect. They have launched perpetual futures with up to 10x leverage, bringing derivative trading that was previously only available on overseas trading platforms to U.S. retail users. They have directly integrated decentralized trading platforms into the app, allowing users to trade any Token on Ethereum or Base without leaving Coinbase.

Its Base Layer-2 network processes over 54,000 Token issuances in a single day, surpassing Solana. The real highlight of Base lies in its integration with other Coinbase businesses: ETF providers can be used for instant settlement, enterprises can directly tokenize assets, and retail users can access institutional-grade 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 get rich.

Similar strategies have brought success to Disney. In the early 20th century, Disney captured the hearts of children through animation and theme parks, establishing emotional connections before they had money. When these children grew up and started earning, their loyalty translated into spending on movies, merchandise, streaming, and vacations, creating a cash machine for multiple generations.

Robinhood dominates among young investors, and traditional brokers should be worried:

About 50% of customers are millennials, 25% are Generation Z, and 20% are Generation X.

Robinhood users start investing at an average age of 19-22, which is significantly lower than the 20s of millennials on other platforms and the 30s of baby boomers.

Robinhood guides new users to quickly complete their first sell order, not to encourage frequent trading, but because locking in actual profits ), even if it’s just 50 dollars (, will create an emotional hook that keeps users coming back.

Its “full financial” expansion aligns with this logic. Robinhood Gold) has a monthly subscription of $5,( which includes a 3% cashback credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers increased by 60% year-on-year to 2 million. These users utilize Robinhood for banking, credit cards, and retirement.

The platform currently holds $279 billion in assets, aiming for an “enormous wealth transfer” of $84-124 trillion from the baby boomer generation to the younger generations over the next 20 years. Robinhood bets that if it can establish user habits early, it won’t need to predict wealth inheritance patterns, but only secure a place when the wealth arrives.

Who is winning?

The market values of the two companies are similar: Robinhood at $81 billion and Coinbase at $85 billion. In terms of performance this year, Robinhood has increased by 135%, while Coinbase has only risen by 30%, with much of that coming in the last month.

Bank of America analyst Craig Siegenthaler recently raised the target price for Robinhood to $119, while lowering Coinbase from $383 to $369, stating: “Robinhood’s crypto revenue has surged, while Coinbase is overly reliant on retail users who are abandoning volatile altcoin trading.”

Coinbase’s global market share fell from 5.65% to 4.56%, with a slight rebound in July, while Kraken saw the most significant growth in market share in the U.S. this year. Coinbase faces a dilemma: lowering fees harms profit margins, or maintaining high fees risks losing traders. They chose profit margins, imposing fees on previously free stablecoin trades, while Robinhood’s rates are about 50% lower.

Mizuho reiterated its $120 price target after meeting with Robinhood CEO Vlad Tenev, praising its crypto resilience and aggressive push for tokenized stocks. They stated: “The European tokenized stock opportunity, expansion into upstream and youth markets, 15% of net deposits coming from competitors, focus on NPS and execution, and the inelasticity of crypto prices are all impressive.”

But Coinbase has institutional credibility. While other trading platforms compete on trading fees, Coinbase is building relationships with institutions that will determine the integration of cryptocurrency and traditional finance over the next decade.

Both companies will not disappear. They meet different user needs, and both demands are growing. This is not a winner-takes-all competition; it’s more like market segmentation - Robinhood targets mainstream finance, while Coinbase focuses on cryptocurrency 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 a part of the environment.
• Coinbase bets on winning trust through architecture.

There is no right or wrong between the two; the goals are just different. One side pursues simplicity and trust, while the other builds the underlying architecture.