Gemini Crypto: Pros, Cons & Comparisons

The Good Brigade/DigitalVision via Getty Images

What Is the Gemini Crypto Exchange?

The Gemini cryptocurrency exchange – formally named Gemini Trust Company – enables purchases, sales, and storage of digital assets. While Gemini is best known for supporting the exchange of cryptocurrencies, it also supports the trading and storage of non-fungible tokens (NFTs).

As a limited liability company based in New York State, Gemini is highly regulated. Gemini’s platform is available to users throughout the United States and in more than 60 other countries around the world.

Gemini’s founders are the Winklevoss twins — Cameron and Tyler. The Winklevosses, who founded Gemini in 2013, are also known for their feud with Mark Zuckerberg in the early 2000s over the founding of Facebook.

History of the Winklevoss Twins’ Gemini Exchange

The Gemini cryptocurrency exchange was first announced in June 2013. The exchange received a charter in October 2015 to operate a virtual currency exchange. In May of the following year, the New York Department of Financial Services authorized Gemini as the first licensed exchange for Ether, the native cryptocurrency of the Ethereum platform.

Gemini achieved institutional adoption in 2017 when the Chicago Board Options Exchange began supporting Bitcoin futures contracts, using Gemini’s auction prices to settle trades. The cryptocurrency exchange in September 2018 received regulatory approval in New York to launch its own stablecoin, known as the Gemini Dollar (GUSD-USD).

Gemini, since its inception, has continued to increase the number of cryptocurrencies it supports, now enabling the purchase and sale of nearly 100 cryptocurrencies. They also purchased the NFT exchange platform Nifty Gateway in June 2019, enabling the platform to support many additional types of digital assets.

Cryptocurrencies on Gemini

Gemini supports cryptocurrencies that are native to their own blockchains, like Bitcoin and Ethereum, in addition to cryptocurrencies that are built atop other blockchains. It also supports several stablecoins, in addition to its own. Among the more than 90 cryptocurrencies that are traded on the Gemini exchange, here are some of the most popular:

• Bitcoin (BTC-USD): Bitcoin is the first and best-known cryptocurrency, comprising a significant portion of the trading volume on Gemini’s platform.
• Ethereum (ETH-USD): The Ethereum platform supports both a native cryptocurrency and blockchain, and an ecosystem of blockchain-based projects. Ethereum crypto trades also comprise a significant portion of the activity on the Gemini exchange.
• Solana (SOL-USD): Solana is another autonomous blockchain and cryptocurrency. Although substantially less than Bitcoin and Ethereum trading volumes, SOL trades on the Gemini platform account for a meaningful portion of the platform’s exchange activity.
• Dogecoin (DOGE-USD): Dogecoin is probably the best-known meme coin. The Dogecoin blockchain is autonomous, with source code that has many similarities to Bitcoin. While Dogecoin is well known, its trading volume on Gemini’s platform is dwarfed by the trading activity of other cryptocurrencies including Ethereum and Bitcoin.
• USD Coin (USDC-USD): USD Coin is stablecoin, meaning that its value is pegged to another asset such as the U.S. dollar. USDC is among the most actively traded stablecoins on the Gemini platform.
• Uniswap (UNI-USD): Uniswap is a decentralized exchange (DEX) platform for digital assets. The UNI token trades on its own DEX in addition to centralized cryptocurrency exchanges including Gemini.

Gemini Dollar

The Gemini Dollar, trading under the exchange symbol GUSD, is a stablecoin that is backed 1:1 by U.S. dollars. Each GUSD in circulation corresponds to $1 USD, which Gemini holds in audited money market funds and bank accounts that are insured by the Federal Deposit Insurance Corporation (FDIC). While holding some USD collateral in money market funds does pose some risk, the price of GUSD tends to hover closely around $1 due to its 1:1 peg to American currency.

GUSD is an ERC-20 token, meaning that it is compatible with the Ethereum blockchain and other ERC-20 tokens. Being compatible with the ERC-20 protocol, GUSD is fully programmable and can be used in conjunction with smart contracts — blockchain-based electronic contracts that can execute automatically.

Tip: GUSD is supported across a variety of cryptocurrency exchanges and decentralized finance (DeFi) protocols and applications.

Net Worth of Gemini Crypto Exchange

Gemini in November 2021 announced that it had raised $400 million in growth capital. The equity funding round, led by Morgan Creek Digital, valued the cryptocurrency exchange at $7.1 billion.

Pros & Cons of Using Gemini

Using any cryptocurrency exchange has both benefits and drawbacks. These are some pros and cons associated with the Gemini crypto platform:

Pros

• Accessibility: The platform is widely available in more than 60 countries. It’s also accessible to users in every U.S. state and the District of Columbia.

• Asset insurance: Gemini provides digital asset insurance for cryptocurrencies stored in users’ digital wallets on the Gemini platform. The insurance covers theft of users’ digital assets resulting from a direct security breach on the platform or theft by a Gemini employee.

• Security: The platform uses a wide range of security best practices, including requiring 2-factor authentication and multiple signatories for some withdrawals. The platform also rigorously screens employees, both at the time of hiring and throughout their tenure with the exchange.

Cons

• Fee structure: Gemini charges relatively high fees compared to its competitors. The platform’s layered fee structure may be confusing to some investors, and high fees can negatively impact investors’ returns.

• Token selection: Although it supports nearly 100 cryptocurrencies, it does not support every type of crypto token. The Gemini platform supports only a small number of native tokens, like Bitcoin which has its own blockchain, in addition to non-native tokens that are built on Ethereum or Solana. Non-native tokens built on other blockchains are not currently supported.

• Limited customer support: Their customer service is limited to email support. Although this measure is in place to boost security, it may be difficult to get help in a timely manner.

• Riskiness of crypto: Crypto is risky. Gemini’s GUSD stablecoin could lose value, or crypto staked through the Gemini Earn program could be unrecoverable in the event of borrower default.

Gemini vs. Coinbase & Kraken

Investors may be wondering how the Gemini platform compares with other major cryptocurrency exchanges. Let’s take a look at how Gemini compares with a couple of its competitors:

Gemini

Coinbase

Kraken

# cryptocurrencies supported

98

174

167

# fiat currencies supported

7

59

7

Geographic reach

61 countries

100 countries

206 countries

Transaction fees

Tiered flat rates: trades < $200

1.49%: trades > $200

3.49%: debit or credit card purchases

0%-0.60%

0%-0.26%

Is Gemini a Safe & Good Investment?

Gemini is among the leading cryptocurrency exchanges globally, supporting nearly 100 cryptocurrencies and a platform for NFTs. Gemini is known for its strong security measures – but security breaches on crypto exchange platforms can and do happen. Investors need to approach Gemini or any other exchange very carefully, making sure to understand all of the risks. While the potential upside of investing in crypto or NFTs may be significant, investors need to do their own homework before committing any capital.