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That 2% figure seems high. I know transaction costs in cryptocurrencies tend to be high by financial standards. Maybe that accounts for it. Also maybe by bei

That 2% figure seems high. I know transaction costs in cryptocurrencies tend to be high by financial standards. Maybe that accounts for it. Also maybe by being one of the first to offer such a thing, they can charge higher management fees.

tomp 9y ago
> transaction costs in cryptocurrencies tend to be high by financial standards Well if you own the exchange the effective transaction costs are 0.
- dudus 9y ago
  There are transaction costs for exchanges but there are also transaction costs for miners. Coinbase I think just lumps these into a single number, but other places you can choose the amount that goes to miners, on the risk of taking longer to confirm your transaction if you pledge a low amount.
  - tomp 9y ago
    > transaction costs for miners So? We're talking about an index by an exchange. I seriously doubt it that they'd actually transact on the blockchain; and if they would, that's just plain stupid, because it only increases costs without any benefit for the investors (who still don't actually own their coins).
charlesdm 9y ago
You do know there are hedge funds out there charging 2% on AuM + 20% of profit (or higher) to access crypto, right?
- JumpCrisscross 9y ago
  > there are hedge funds out there charging 2% on AuM + 20% of profit (or higher) For alpha, or the attempted pursuit of it (or a specific risk-return and liquidity profile). The point of index funds is their lower cost.
  - zone411 9y ago
    Exactly, the comparison to hedge funds is not valid. Vanguard S&P 500 ETF has an expense ratio of 0.04%.
- deleted 9y ago
  [deleted]
ryanlol 9y ago
>I know transaction costs in cryptocurrencies tend to be high by financial standards. What would be a normal transaction cost by financial standards?
- dnautics 9y ago
  Charles Schwab, which is relatively high, charges $8/trade (for unmanaged trades).
  - ryanlol 9y ago
    $8 per tx seems like a very high fee for cryptocurrency transactions.
    - umanwizard 9y ago
      It’s really not. Gdax charges 0.25% (only to one party, so let’s call it 0.125 on average). You only have to buy less than $10,000 worth before the fee is higher than $8
      - ryanlol 9y ago
        And Gdax is totally required to charge their index fund customers that 0.25%? I figured that the comment I was originally responding to made it sound like transaction costs are a technical reason for the management fees being high.
- paulie_a 9y ago
  Robinhood charges zero
- asdsa5325 9y ago
  You seem to be confusing transaction costs and management fees
  - ryanlol 9y ago

tomp 9y ago

> transaction costs in cryptocurrencies tend to be high by financial standards Well if you own the exchange the effective transaction costs are 0.

dudus 9y ago
There are transaction costs for exchanges but there are also transaction costs for miners. Coinbase I think just lumps these into a single number, but other places you can choose the amount that goes to miners, on the risk of taking longer to confirm your transaction if you pledge a low amount.
- tomp 9y ago
  > transaction costs for miners So? We're talking about an index by an exchange. I seriously doubt it that they'd actually transact on the blockchain; and if they would, that's just plain stupid, because it only increases costs without any benefit for the investors (who still don't actually own their coins).

charlesdm 9y ago

You do know there are hedge funds out there charging 2% on AuM + 20% of profit (or higher) to access crypto, right?

JumpCrisscross 9y ago
> there are hedge funds out there charging 2% on AuM + 20% of profit (or higher) For alpha, or the attempted pursuit of it (or a specific risk-return and liquidity profile). The point of index funds is their lower cost.
- zone411 9y ago
  Exactly, the comparison to hedge funds is not valid. Vanguard S&P 500 ETF has an expense ratio of 0.04%.
deleted 9y ago
[deleted]

ryanlol 9y ago

>I know transaction costs in cryptocurrencies tend to be high by financial standards. What would be a normal transaction cost by financial standards?

dnautics 9y ago
Charles Schwab, which is relatively high, charges $8/trade (for unmanaged trades).
- ryanlol 9y ago
  $8 per tx seems like a very high fee for cryptocurrency transactions.
  - umanwizard 9y ago
    It’s really not. Gdax charges 0.25% (only to one party, so let’s call it 0.125 on average). You only have to buy less than $10,000 worth before the fee is higher than $8
    - ryanlol 9y ago
      And Gdax is totally required to charge their index fund customers that 0.25%? I figured that the comment I was originally responding to made it sound like transaction costs are a technical reason for the management fees being high.
paulie_a 9y ago
Robinhood charges zero
asdsa5325 9y ago
You seem to be confusing transaction costs and management fees
- ryanlol 9y ago