Source: thetokendispatch

Compilation: Vernacular 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 value of around $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 competitors in the traditional sense, 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 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 know how sausages are made to enjoy a hot dog.

Coinbase, on the other hand, is taking the opposite route, proposing, "What if we rebuild the entire financial system on blockchain technology?" Coinbase charges more 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 ultimately go on-chain and hope to be the infrastructure for this transformation.

Coinbase CEO Brian Armstrong stated: "Our goal over the next 5 to 10 years is to become the leading financial services application globally because we believe that cryptocurrencies are eating up financial services, and we are the number one crypto company. All asset classes - money market funds, real estate, securities, debt - will go on-chain."

The two companies went public several months apart in 2021, each with a market value of $80 billion, targeting young investors who prioritize mobile, 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 cryptocurrency products, but their approaches are completely different.

Robinhood recently announced that they are trying to directly surpass Coinbase. In June, they launched Robinhood Chain—its own Layer-2 network, supporting tokenized stocks and cryptocurrency trading, with plans to support assets raised from SpaceX and OpenAI in the future. European users can now trade tokenized U.S. stocks around the clock, rather than just during market hours. This is the 24/7 trading model that crypto users expect, applied to traditional assets.

They have also launched crypto staking for ETH and SOL, acquired 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 are building seamlessly integrates with the existing stock trading experience, rather than simply grafting crypto functions onto traditional brokerage operations.

All of this—chains, tokenized stocks, low fees—is designed for the next generation of investors who will inherit trillions of dollars in wealth.

In the cost battle, 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 worth of Bitcoin, Robinhood charges about $4, while Coinbase charges over $14.

Robinhood profits through 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" trades while still making money.

But Coinbase offers features that Robinhood cannot match: true cryptocurrency ownership. With Robinhood, you are purchasing "IOUs" for cryptocurrencies, just 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 participate in DeFi, stake most tokens, or use cryptocurrencies for purposes other than buying and selling.

For most people, it doesn't matter; they only want exposure to cryptocurrencies rather than practicality. But for users looking to perform complex crypto operations, Coinbase is the only real option among the major platforms in the United States.

Q2 Financial Report Analysis

This summer's financial report revealed the effectiveness of two methods.

Robinhood performed impressively. Total revenue increased by 45% year-on-year to $989 million. Cryptocurrency revenue surged by 98% to $160 million, rising from 10% of total revenue last year to 16% this quarter, despite the overall cryptocurrency market being relatively stable. They have 26.5 million active accounts, managing assets of $279 billion, a year-on-year growth of 99%. By acquiring Bitstamp, they added approximately 520,000 cryptocurrency users, with Bitstamp generating $7 billion in nominal cryptocurrency trading volume after the acquisition was completed in June.

Platform assets reached 279 billion USD, a year-on-year increase of 99%, with net deposits of 13.8 billion USD. Active accounts grew by 10% to 26.5 million, and cash balances surged by 56% to 32.7 billion USD, indicating an increase in customer wallet share.

Coinbase had a "difficult quarter." Total revenue fell 26% from Q1 to $1.5 billion, missing analysts' expectations. Trading revenue dropped 39% due to a decline in retail trading. On the day of the earnings report, the stock price fell 16% as investors tried to determine whether this was a temporary slump or a signal of a high-cost model.

However, labeling this season as a failure overlooks the bigger picture. Coinbase achieved a net revenue of $1.4 billion, exceeding the adjusted EBITDA of $512 million, primarily due to the $1.5 billion 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.

Operating expenses increased 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%. Custodial 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 more.

Coinbase continues to launch new products: new derivatives, expanding the Base chain, and introducing the Coinbase One Card. Despite the decline in revenue, the fundamentals remain strong.

Coinbase's Infrastructure Empire

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 main custodian for over 80% of Bitcoin and Ethereum ETFs in the U.S., managing approximately $113.4 billion (, which accounts for a total of $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 needs a crypto payment rail, they also use Coinbase's backend.

Coinbase has over 240 institutional clients, more than 420 liquidity providers, and regulatory licenses that most competitors cannot reach. 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.

Their "Universal Trading Platform" strategy is showing initial results. They have launched perpetual futures with up to 10x leverage, bringing derivative trading that was previously only available on overseas trading platforms to US 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's wealth before they become wealthy.

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 bonds before they had money. When these children grew up and earned money, their loyalty translated into spending on movies, merchandise, streaming, and vacations, creating a multi-generational cash machine.

Robinhood dominates among young investors, 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 to lock in actual profits (. Even if it's only 50 dollars ), it creates an emotional hook that keeps users coming back.

Its "full financial" expansion aligns with this logic. Robinhood Gold ( is a $5 monthly subscription ) that includes a 3% cash back credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers have 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, targeting the "massive wealth transfer" of $84-124 trillion from the baby boomer generation to the younger generation 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 simply 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 risen by 135%, while Coinbase has only increased by 30%, most of which came in the last month.

US Bank 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 volatile altcoin trading that retail users are abandoning."

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: reduce fees and hurt profit margins, or stick to high fees and risk losing traders. They chose profit margins and imposed fees on previously free stablecoin transactions, while Robinhood's rates are about 50% lower.

Mizuho reaffirmed its $120 target price 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 from competitors, focus on NPS and execution, and the inelasticity of crypto prices are all impressive."

However, Coinbase has institutional credibility. While other trading platforms compete on transaction fees, Coinbase builds relationships with institutions that will determine the integration of crypto and traditional finance in the next decade.

Neither company will disappear. They cater to 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 crypto infrastructure.

This reveals two competing theories about how people will interact with money in the future:

• Robinhood believes that the future of finance will be "invisible," abstract, and simple, integrating into lifestyle applications, making finance a part of the environment.
• Coinbase bets on winning trust through its architecture.

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

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