When it comes to trading cryptocurrency, using an exchange is one of the most straightforward methods. However, with so many options available, it can be challenging to determine which one is suitable for you. As Bitcoin and other cryptocurrencies gain more traction in the mainstream, the demand for digital currency continues to grow.
If you’re looking to buy and sell digital currencies, a cryptocurrency exchange is a convenient platform to use. These exchanges function like stock exchanges, allowing you to trade your fiat currency, such as U.S. dollars, for crypto coins and vice versa. Additionally, you can typically trade one type of cryptocurrency for another.
Choosing the right crypto exchange can be a daunting task. In this article, we’ll compare three popular exchanges — Kraken vs. Gemini — to help you learn more about their services and make an informed decision that aligns with your financial objectives.
Kraken and Gemini: What are They?
Kraken and Gemini are both highly respected cryptocurrency exchanges that prioritize regulation and security, with notable founders behind each platform. Jesse Powell established Kraken after witnessing the Mt. Gox security breach that left many investors without their funds and no means of repayment. In response, Powell created Kraken as a highly regulated and secure crypto exchange.
Gemini, on the other hand, was founded by the Winklevoss twins, who gained notoriety after accusing Mark Zuckerberg of stealing their concept for Facebook. However, they have since redirected their focus towards investing in cryptocurrency and launched their own exchange, Gemini. The exchange’s branding, which features twins, is on-brand for the Winklevii.
In this article, we’ll compare these two powerhouse exchanges side by side, allowing you to see how they stack up against one another. Our full review of Kraken vs. Gemini is available below.
Kraken
Established in 2011 and headquartered in San Francisco, California, Kraken is an exchange designed for advanced cryptocurrency traders. It offers a wide range of order types and provides access to over 50 coins and fiat currency pairs. One of its unique features is access to margin accounts, as well as over-the-counter services for traders with larger positions.
Kraken applies a 0.9% fee when purchasing stablecoins, which are cryptocurrencies tied to other assets such as the U.S. dollar or gold. For other cryptocurrency purchases, there is a fee of 1.5%. However, users must also pay an additional online banking processing fee of 0.5% for their purchase.
It is worth noting that only euro-denominated cards are accepted for credit or debit card funding of Kraken purchases. For USD transactions, users must rely on bank purchases, such as ACH or wire transfers.
Kraken puts a premium on security, keeping most deposits in cold storage facilities that are not permanently connected to the internet and are located in various places. Additionally, Kraken employs encryption and surveillance to ensure that both the platform and information are as secure as possible.
Gemini
Gemini, founded in 2014, is headquartered in New York City and offers a platform for managing digital assets. It provides additional features such as earning a yield on stored digital assets, earning rewards on everyday purchases through the Gemini Credit Card, and paying with crypto assets at tens of thousands of retail locations in the U.S. through Gemini Pay.
Compared to Kraken, Gemini has fewer coins available for trading and charges a flat fee of 99 cents to $2.99, plus a 1.49% fee on transactions above $200. Similar to other exchanges, Gemini employs cold storage to secure assets, as well as two-factor authentication, encryption, and certifications to enhance security measures.
Comparing the Fees of Kraken and Gemini
Using a credit card to deposit funds on Kraken can result in relatively high fees. The platform charges a processing fee of 3.75% of your deposit amount plus an additional $0.25. Additionally, stablecoins and other crypto or FX pairs incur fees of 0.9% and 1.5%, respectively, which can result in total fees of up to 5%. This is considered high compared to other exchanges.
However, upgrading to Kraken Pro can result in much more reasonable fees. The platform employs a maker/taker fee schedule that incentivizes lower fees for higher volume trades. Maker fees range from 0.16% to 0.00%, while taker fees range from 0.26% to 0.10%.
Gemini, on the other hand, charges fees based on the order amount and type of currency being used. The platform also includes a convenience fee that adds approximately 0.5% more than the quoted price. For orders using U.S. dollars, transaction fees range from $0.99 for orders of $10 or less up to $2.99 for orders between $50 and $200. Orders above this range incur a fee of 1.49% of the order value.
To illustrate, let’s compare the cost of trading $100 worth of Bitcoin (BTC) on each platform. On Kraken (without using Kraken Pro or trading in stablecoins or FX pairs), the fees would be 3.75% plus $0.25, resulting in a total cost of $104. With Gemini, placing an order for $100 worth of Bitcoin would incur a $2.99 flat fee and a convenience fee of $0.50, resulting in total fees of $3.49 and a total cost of $103.49. While both platforms have high fees, Kraken Pro and the higher order amount on Gemini can help lower these costs.
Available Cryptos for Kraken and Gemini
Kraken, one of the original crypto exchanges, boasts a wide range of over 160 coins and tokens, including popular ones such as Bitcoin, Ethereum, Cardano, Solana, and Dogecoin, as well as many lesser-known coins. It also allows for staking on many of these big coins, including Ethereum, Cardano, and Solana.
In contrast, Gemini offers trading for just over 70 cryptocurrencies, which may seem limited compared to Kraken’s extensive selection. However, investors who prefer to focus on a few select cryptocurrencies may find Gemini’s offerings sufficient. Nevertheless, it’s important to verify that the specific coins you’re interested in are available on Gemini. While it allows for trading of many top currencies, it does not offer some desirable ones, such as Binance USD, BNB, Solana (SOL), Avalanche, and XRP, which are all among the top 15 most valuable cryptocurrencies.
Kraken’s and Gemini’s Wallets Differ from Each Other
Kraken emphasizes that it is primarily a cryptocurrency exchange and not a wallet service. Instead, users can deposit funds into the corporate wallet for safekeeping while their funds are being traded or used for staking. However, Kraken does not provide a personal wallet to its users. Deposited funds are typically moved to cold storage and hot wallets, as is common among cryptocurrency exchanges. When withdrawing funds, the transaction is handled by the hot wallet rather than the deposit address, which means the sending address for withdrawals on Kraken is different from the deposit address. Although Kraken recommends and supports popular hardware wallets such as Trezor and Ledger.
On the other hand, Gemini has its own wallet and encourages users to store their assets with Gemini Wallet for a seamless experience. The Gemini Wallet offers both hot and cold storage for all of the cryptocurrencies supported by the Gemini Exchange. Since it’s regulated by the New York State Department of Financial Services (NYSDFS), investors have insurance for their hot wallet in the event of a hack. Additionally, users also have the option of cold storage, which significantly reduces the risk of a breach in the first place.
Security is their Top Priority
Security is a top priority for cryptocurrency investors, and both Kraken and Gemini take it seriously. While we’ll dive into the specifics below, it’s worth noting that both exchanges are reliable options for security-conscious investors.
Kraken offers standard two-factor authentication (2FA), as well as innovative security features like global settings time locks, configurable account timeouts, and SSL encryption. It also provides “safe-coin storage,” where 95% of all deposits are kept in offline, air-gapped, geographically distributed cold storage to avoid all funds being in one location. It maintains full reserves so users can withdraw funds on demand. Kraken’s servers are secured in cages with 24/7 surveillance, live-armed guards, and video monitors. All sensitive information is encrypted, and accounts are strictly monitored. These advanced features put Kraken at the forefront of cryptocurrency security.
Gemini also prioritizes security, offering 2FA and address whitelisting to prevent unauthorized access. Notably, Gemini provides insurance for both digital and fiat currencies held in users’ hot storage accounts. Gemini is committed to regulation as a means of demonstrating to investors that their money is secure. However, it’s essential to keep in mind that Gemini won’t cover losses resulting from unauthorized access to a user’s account. If someone else gains access to a user’s account, their funds may not be eligible for reimbursement.
Therefore, it’s crucial to protect your private keys and keep your information confidential. Both exchanges are regulated and insured, offering peace of mind to investors who want to ensure everything is above board. In the event of a breach, the company will work to recover your funds.
Conclusion
Kraken offers a wide range of coins and robust security measures, making it an excellent choice for investors. Its highly regulated exchange provides peace of mind, but the transaction fees can be high if you’re not using Kraken Pro. On the other hand, Gemini is perfect for both new and experienced investors who want an accessible and user-friendly platform. Although it supports fewer coins, it is well-regulated and insured, and many find its fees reasonable for the platform’s benefits.
In conclusion, both Kraken and Gemini are reputable cryptocurrency exchanges with their own unique strengths and weaknesses. Ultimately, Kraken vs. Gemini choice depends on individual preferences and needs, such as the desired selection of coins, ease of use, and transaction fees. It’s important for investors to weigh their options carefully and do their own research before making a decision.