This article is reprinted with permission from Baihua Blockchain, author: TOKEN DISPATCH, copyright belongs to the original author.
Two major financial applications in the United States are conducting completely opposite experiments on millions of users.
Robinhood and Coinbase represent two distinctly different bets on what people want from financial applications. Robinhood ranks 14th in the financial category of the App Store, while Coinbase ranks 20th, with both having a market capitalization of around $80 billion.
Both are chasing the same young investors, each believing the other is making a mistake.
One bets that people want finance to operate like other applications on their phones: simple, intuitive, and invisible. Coinbase is building the infrastructure for the transition from traditional finance to blockchain-based systems.
To some extent, both experiments have been successful.
The key to Robinhood and Coinbase is that they are not traditional competitors; they are conducting completely different experiments on the same subjects (us).
Robinhood examines finance and asks, "What if we fix all the annoying parts?" They offer 15 cryptocurrencies, zero-commission trading, and an interface that makes you feel like you can buy Tesla stock without needing a finance degree. Their selling point is that you can eat a hot dog without needing to know how sausage is made.
Coinbase goes in the opposite direction. They ask, "What if we rebuild all finance on blockchain technology?" Coinbase charges more than competitors like Robinhood, but its platform is built for those who want access to the complete crypto ecosystem, offering over 260 cryptocurrencies.
They bet that traditional finance will eventually turn on-chain, and they want to be the infrastructure driving that transformation.
"In five to ten years, our goal is to be the number one player in global financial services applications, targeting these customer segments, because we believe crypto is eating financial services, and we are the number one crypto company," said CEO Brian Armstrong. "All these asset classes—money market funds, real estate, securities, debt—will be on-chain."
Both companies went public a few months apart in 2021, with market capitalizations of roughly $80 billion, and both targeting the same generation of mobile-first investors. But they may be building products for different species.
They are solving different problems for different users. This makes it more of a race to serve a differentiated financial future rather than a war for dominance.
Both companies are racing to expand their crypto products, but their approaches are completely different.
Robinhood's recent crypto announcements show they are trying to completely surpass Coinbase. In June, they announced Robinhood Chain, their own layer-2 network that will support tokenized stocks, crypto trading, and eventually support private market assets like SpaceX and OpenAI stocks.
European users can already trade tokenized versions of U.S. stocks around the clock, not just during market hours. This is the 24/7 trading 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 launch crypto perpetual futures for European users. They are building a crypto infrastructure that feels native to the existing stock trading experience, rather than tethering crypto to traditional brokerage.
That’s why all of this—chains, tokenized stocks, low fees—feels naturally designed for the next generation of investors who will inherit trillions of dollars.
In the fee war, Robinhood charges about 40 basis points (0.4%) for crypto trading. Coinbase may charge 1.4% or more for the same trade. If you buy $1,000 worth of Bitcoin, it costs $4 on Robinhood, while it’s over $14 on Coinbase.
Robinhood achieves this through payment for order flow, where market makers pay for the right to execute retail trades, just as they do with stock trades. This is a proven model that allows them to offer "free" trading while still making money.
But Coinbase offers what Robinhood cannot: actual crypto ownership. On Robinhood, you are buying a crypto IOU, essentially a receipt for the amount of crypto that Robinhood owes you. This means you cannot transfer Bitcoin to your own wallet or use it elsewhere. You can only buy and sell it within the Robinhood app.
You cannot participate in DeFi, you cannot stake most tokens, and you cannot actually use crypto for anything beyond buying and selling.
For most people, this doesn’t matter; they want crypto exposure rather than crypto utility. But for anyone wanting to do anything slightly complex with crypto, Coinbase is the only realistic choice among major platforms in the U.S.
This summer's earnings revealed a lot about which approach is currently effective.
Robinhood crushed their quarter, with total revenue growing 45% year-over-year to $989 million. Their crypto revenue particularly exploded, growing 98% to $160 million (up from about 10% of total revenue last year to 16% this quarter), even as the overall crypto market remained relatively stable. They now have 26.5 million funded accounts, holding $279 billion in total assets, a 99% increase from last year.
Adding about 520,000 new crypto users from the Bitstamp acquisition, along with $7 billion in nominal crypto trading volume generated after the acquisition is completed in June 2025.
The company held $279 billion in platform assets at the end of the quarter, a 99% increase from the previous year, and $13.8 billion in net deposits. Funded accounts grew 10% to 26.5 million, while cash sweep balances surged 56% to $32.7 billion, indicating stronger wallet shares per customer.
Meanwhile, Coinbase experienced what polite people would call a "challenging quarter."
Total revenue fell 26% from Q1 to $1.5 billion, below analyst expectations, with trading revenue down 39% due to retail trading exhaustion. Shares fell 16% on earnings day as investors tried to figure out whether this was a temporary fluctuation or a sign that people actually don’t want to pay high fees for complexity.
"We still see their growth facing long-term risks due to above-average retail trading fees and increasing competition from platforms like Robinhood," said Arca analyst Alex Woodard. "Coinbase needs to implement cheaper trading fees and continue to expand its product offerings through acquisitions to avoid losing market share."
But calling this quarter a failure overlooks the bigger picture.
Coinbase reported a net income of $1 billion, actually higher than their adjusted EBITDA of $1 billion, due to unrealized gains of $1 billion from portfolio and strategic crypto holdings. These paper gains would push net income far above their core operating performance.
Even removing these one-time windfalls, the adjusted net income was still a solid $100 million, indicating actual profitability in a weak quarter.
Beneath the surface, there is a lot to like; operating expenses rose, but mainly due to a one-time $100 million hit from a data leak. Core costs—such as technology, administration, and marketing—actually decreased, showing real cost control, and their USDC business continues to hum along, with stablecoin revenue reaching $100 million, thanks to a % increase in average balances, and custodial assets reaching a historic high of $100 billion.
Prime Financing balances also reached record levels. This is part of Coinbase Prime, their institutional service that operates like traditional prime brokerage—providing custody, trading, lending, and financing services for hedge funds, family offices, and other large crypto investors. Prime Financing specifically refers to margin lending, where institutions can borrow against their crypto holdings for additional trading or investment.
Coinbase continues to ship: launching new derivatives products, growing their Base chain, and launching the Coinbase One Card. So yes, revenue is down, but the fundamentals look stronger than ever.
But Coinbase's infrastructure play is more complex than it appears on the surface.
Coinbase holds $100 billion in institutional custody—this is a record high, representing a large portion of the entire institutional crypto market, and when you buy a Bitcoin ETF, you might be using Coinbase's infrastructure.
Coinbase is the primary custodian for over % of all Bitcoin and Ethereum ETFs in the U.S., controlling about $100 billion of the total assets in crypto ETFs. When BlackRock's IBIT or Fidelity's FBTC needs to store billions of dollars in Bitcoin, they call Coinbase. When PayPal wants to launch the PYUSD stablecoin or when JPMorgan needs a crypto payment rail, they use Coinbase's backend.
Coinbase has over institutional clients, liquidity providers, and regulatory licenses that most competitors cannot match. Their custody division is licensed by the New York State Department of Financial Services, a regulatory approval that took years to obtain and will take competitors years to replicate.
Their "everything exchange" strategy is starting to show results beyond custody. They just launched perpetual futures with up to x leverage, bringing derivatives trading previously only available on offshore exchanges to U.S. retail traders. They are integrating decentralized exchanges directly into their app, allowing you to trade Ethereum or any tokens existing on Base without leaving Coinbase.
Their Baselayer network processed over token launches in a single day, beating Solana. But the real genius lies in how Base integrates with everything else Coinbase is doing; ETF providers can use Base for instant settlement, companies can tokenize assets directly on the network, and retail users can access the infrastructure driving billions of dollars in institutional activity.
And while Coinbase builds infrastructure for institutions, Robinhood is executing perhaps the smartest long-term play in finance: capturing an entire generation before they get wealthy.
Similar strategies have worked well; Disney built its empire by capturing the hearts of children in the early 20th century, long before they had wallets. From cartoons to theme parks, Disney became part of childhood itself. When those kids grew up and started earning money, they brought loyalty, spending on movies, merchandise, streaming, and vacations, turning that early emotional bond into a multi-generational cash machine.
Robinhood dominates among young investors in a way that should worry traditional brokerages.
About 50% of Robinhood's customers are millennials, about 25% are Gen Z, and 20% are Gen X.
The average Robinhood user starts investing at ages 19-22, compared to millennials in their 20s and baby boomers in their 30s on other platforms.
Robinhood even guides new users quickly through their first sell action, not because they want people to trade constantly, but because locking in actual gains creates an emotional hook that brings users back. Once someone makes real money on the platform, even if it's just $50, they are psychologically invested, making it hard to break away.
Their expansion into all things financial makes sense in this context.
Robinhood Gold, their monthly $5 subscription, bundles a cash-back credit card, high-yield savings, retirement matching, and margin discounts. Gold subscribers have grown year-over-year to a million users who use Robinhood for banking, cards, and retirement.
The platform now holds $279 billion in custodial assets, and it wants a share of the "great wealth transfer," which involves the transfer of trillions of dollars from the baby boomer generation to the younger generation over the next decade.
In the next twenty years, this wealth will be passed from the baby boomer generation to the younger generation, though no one knows exactly who will get what or when. But Robinhood bets that if you establish habits early, you don’t need to predict inheritance patterns; you just need to be there when the money appears.
Both stocks have similar market capitalizations, with Robinhood at $8 billion and Coinbase at $8 billion. In their year-to-date performance, Robinhood is up 50%, while Coinbase is only up 10%, most of which came last month.
Bank of America analyst Craig Siegenthaler recently raised his price target for Robinhood to $15 while lowering Coinbase from $80 to $70, reasoning that "Robinhood's crypto revenue is exploding, while Coinbase is overly reliant on volatile altcoin trading that retail users are abandoning."
Coinbase's global market share has slipped from 40% to 30%, then slightly recovered in the last month, while Kraken recorded the largest growth in U.S. market share this year. Coinbase faces a classic dilemma: lower prices hurt margins, or hold firm and risk losing traders. They chose margins by charging for previously free stablecoin trades, while Robinhood's rates remain around 0.4%.
Mizuho just reaffirmed its $15 price target for Robinhood after meeting with CEO Vlad Tenev, citing the company's crypto resilience and positive push for tokenized stocks.
"We are particularly impressed with the opportunity for tokenized stocks in Europe, moving to the high-end market, and potentially moving to teens, with 30% of net deposits coming from competitors, focusing on NPS/execution as key growth drivers, and crypto price inelasticity," the analyst said.
But Coinbase has institutional credibility, while other exchanges compete on trading fees. Coinbase is building relationships with institutions that will determine how crypto integrates with traditional finance over the next decade.
Neither company is going away; they are serving genuinely different user needs, and both needs are growing. This looks more like market segmentation than a winner-takes-all competition—Robinhood for mainstream finance, Coinbase for crypto infrastructure.
This is a glimpse into two competing theories of how people will interact with money in the future.
One theory suggests that the future of finance will be invisible, abstract, easy, built into applications that feel more like lifestyle products than brokerage; finance becomes ambient, which is Robinhood's worldview. Neither side is right or wrong. They are simply targeting different ends of the spectrum. One tries to win trust through simplicity, while the other does so through architecture.
Related: Robinhood's cryptocurrency revenue doubles, CEO makes big bet on asset tokenization
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