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E*Trade Is Close to Launching Cryptocurrency Trading
- apo 8y ago> E*Trade would be one of the largest securities brokerages to allow crypto trading. It will enter into a competitive market with startups like Coinbase Inc., which have made names for themselves as go-to places for such transactions. Closely held Coinbase reached a valuation of $8 billion in 2018 and projected sales of $1.3 billion. Fintech startup Robinhood, most recently valued at $5.6 billion, has also added cryptocurrency trading as a way to woo millennial customers. TD Ameritrade has also been rumored to have quietly rolled out Bitcoin trading to some customers: https://bitcoinmagazine.com/articles/td-ameritrade-nasdaq-reportedly-offer-btc-and-ltc-paper-trades/ https://bitcoinmagazine.com/articles/td-ameritrade-nasdaq-re...
- RickS 8y agoETrade is presumably very cautious to get started, and very slow to move when they do, by nature of their maturity, scale, and industry context. So they're taking many multiples longer than someone like coinbase, for example, to spin up this type of thing. So this initiative probably started years back. Is this late-launching residue from bitcoin's 20k days when this would have been, if not less silly, at least less silly looking? Is this evidence that some big names in finance have been deliberately understating their interest in the space, while scrambling beneath the surface to spin up offerings? If the rest of the players in this space also support crypto, it starts to be genuinely commoditized, and maybe that could help it. But if you commoditize something that nobody cares about... does it matter? does it help?
- wolco 8y agoI believe the push from 7000 to 20000 was big players like etrade or Sachs. The volume of block movement seemed uniformed at the time.
- coralreef 8y agoNobody cares about crypto? 6 months ago Coinbase raised $300m at $8b valuation. https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-coinbase-valued-at-8-billion-despite-bitcoins-plunge.html https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-coin...
- RickS 8y agoMy experience day-to-day is that the world is strongly divided between those who care a lot about crypto and those who care effectively none. Barring the brief time around peak prices where it punched through to the zeitgeist (when your uber driver is asking about it), it doesn't seem like it's growing, from the perspective of social/cultural demand or narrative. There is a plenty healthy subset of the world population keeping cryptocurrencies liquid. But this etrade offering represents, to me at least, a level of commoditization that outpaces the underlying demand. In part because coinbase captures that demand very effectively, hence their valuation. I expect etrade's gains here are going to be from capturing new funds from current customers, rather than actually winning the crypto buying customer experience, where coinbase reigns supreme. Speaking of coinbase, if etrade had to copy one thing of theirs, i wish it were the UI. Another thought: how much of crypto's valuation comes from the contrarian narrative that it's a rebellion against exactly the stodgy old guard that etrade represents? Gold's contrarian narrative has survived the commoditization of gold trading. Will crypto's? Whether buy into it because it's a get rich quick scheme or a genuine financial disruption, both of those stories rely on a narrative that it's different/exempt from wall street bullshit. can that narrative exist in a world where the primary interface with the market is wall street bullshit? The idea of a goldbug hedging against the apocalypse by buying gold on etrade is very, very funny to me. Crypto's a little better positioned since etrade doesn't own the blockchain, but gold's safe from a power outage. Apples and oranges... No idea tbh.
- Consultant32452 8y agoI was recently surprised to see that I could order products off overstock.com with Bitcoin. PewDiePie recently started live streaming exclusively on a crypto coin based platform, d-live. I agree with your general sentiment, but I am starting to see wider use and acceptance of crypto coins.
- whttheuuu 8y agobitcoin is just getting started..
- JumpCrisscross 8y ago> if you commoditize something that nobody cares about I think cryptocurrencies are an obvious trash fire. I also think they contain all the elements (flow information asymmetry, bad price transparency and consistency, high technical volatility, and zero capacity for fundamental edge) that make it quite profitable to make markets in, i.e to be the house in respect of. Combine that with the general culture around cryptocurrencies, which I suspect is averse to litigation, and you have a supremely profitable business. One need not love what they trade. (I do see an ethical issue with selling retail customers such products.)
- DennisP 8y agoSeems to me that launching at the peak of a bubble is a lot sillier. Launching after a deep bear market when it's been back in an uptrend for four months is pretty reasonable, and more likely to be good for your customers.
- bumby 8y agoAre there any numbers on how much crypto is being used as a currency (i.e. actually buying things) vs. how much is being used as an investment (i.e. buying and holding/trading with the hope it goes up in value)? I'm curious how each compares to traditional currency and how much this affects the competitiveness of it as a common currency. My initial thought is that so many people look at it as an investment it may limit it's ability to be a good medium for exchange.
- chx 8y agoIf you are a legit company with pesky things like bookkeeping and accounting then you do not want Bitcoins on your books. You might accept Bitcoin as a gimmick by utilizing a third party service which buys them and gives you money (like BitPay) but there's no legic economy. How could there be when it is so volatile and it's basically held up by hype? The risks are clear for a business and what's the advantage...?
- jedberg 8y agoYou’d be a fool to spend your bitcoins. It’s a deflationary currency. That means it’s worth more later than now in the long run. As opposed to dollars, which is inflationary and worth less as time goes on.
- logicchains 8y agoYou'd be a fool to spend your dollars, when you could instead just buy bonds, which you could redeem for more dollars in the long run.
- m3kw9 8y agoJust another instrument for Wall Street to make money. Crypto isn’t about decentralization or immutability at all right now
- duxup 8y agoSo if you buy on ETrade... are you buying actual coins they hold for you or is it some other sort of bitcoin related ... thing?
- jerguismi 8y agoQuite often this kind of instruments might be "tradable debt instruments" which can't be converted to actual bitcoins, but can be traded back and forth on the platform to traditional currencies. The issuing company maintains the peg to the bitcoin market value, probably using futures or similar instruments. Of course they might also enable bitcoin withdrawals/deposits but I somewhat doubt it. There are similar offerings on other traditional platforms and usually they work this way.
- blazespin 8y agoGood question. They might just be making a market.
- dayaz36 8y agoRobinhood already does this
- rajacombinator 8y agoWildly irresponsible but no surprise from the “trading babies” company.
- josephagoss 8y agoInteresting that some companies are still interested in cryptocurrency even though it's still trending downwards. It's more likely that you'll lose money each year than make it, especially with emotion tied into the mix. Some good technical concepts exist in this space but the financial element has made the entire space corrupt to its core. As always. The human element left unchecked will turn anything toxic. I used to lean towards more libertarian ideals but seeing what freedom has done to cryptocurrency has shown me some order and law is needed.
- caprese 8y ago“Interesting that drivers are still interested in gas even though its is trending downwards” Nobody complains about cheap gas except speculators on the wrong side of the market Cryptocurrencies are fuel to write to their respective databases Get on the right side of the market
- DennisP 8y agoThey've been trending upward for the past four months, a third as long as the bear market.
- ForHackernews 8y agoBased on their marketing, I always assumed E*Trade's user base was mostly gamblers, so crypocurrency seems like a natural match.
- wickoff 8y agoI wonder, can you make an argument that Bitcoin is like an index akin to S&P, but for gambling and hedging against events like asset seizure or state currency failure? First let's assume that fundamentals remain unchanged. No innovation, no growth in adoption, no major security failures. Let's also assume that the rough percentage of world populations willing to gamble remains roughly the same over the decades. BTC is deflationary, private keys will keep getting lost indefinitely. So wouldn't it make sense for the price of Bitcoin to at least keep up with inflation, forever?
- notahacker 8y agoThe S&P companies generate a stream of future profit; that's where the value of holding the index comes from. Bitcoin doesn't and I don't see the logic in assuming it's deflationary or that its fundamentals will remain constant in the long term when the empirical evidence strongly suggests otherwise. It's extremely volatile and has lost more value in the space of months than most inflationary currencies have lost in decades. The problem with the idea of an "index for gambling" is that there are plenty of other assets for gamblers to pick...
- bufferoverflow 8y agoI hold many cryptocurrencies, and your argument is only valid if people don't switch to other new better cryptocurrencies. There used to be very strong network effects, but now that you can exchange coins easily, it's trivial to move to a new shiny thing. On the plus side, Bitcoin has a brand name and recognition. An average person has no idea about Ethereum or Monero. In my opinion, its brand is the only thing keeping it afloat. Other coins are clearly superior in functionality (except maybe the hash rate).
- wickoff 8y agoI've heard it argued that Bitcoin's unique feature, something that makes Bitcoin exceptionally valuable in comparison to other cryptocurrencies is its governance model. Bitcoin governance is basically a combination of anarchy with extreme conservatism. In the 10 years of its existence there had been exactly zero intentional hard forks. The immutability of Bitcoin's fundamental rules is ingrained in its community. Why is that important? Let's look at Ethereum for example. Ethereum's developers and community use hard forks to change the rules of their protocol all the time, you have no clue what Ethereum's inflation rate will settle at, its monetary policy is permanently in flux with singular individuals like Vitalik Buterin having enormous influence on governance.
- __ralston3 8y agoThere seem to be ample comments discussing the "viability" of crypto trading/tokens, but if I'm Etrade, all I care about are the commissions - to hell with the underlying tech or what it can/can't do. Not even just for BTC, ETH, EOS, etc now, but for the coins to come in the future. Sure, they can have prolonged periods of low volume (even manipulated volume), but when there's a frenzy (e.g., 2016-2018), I imagine that the profit potential on commissions would do wonders for "shareholder value". Combine that with Etrade's namebrand (as mentioned in other comments) experience, and infrastructure, and you've got a gang of traders that would gladly do away with the sketchy/lesser-known exchanges for Etrade (my opinion).
- whttheuuu 8y agoIf you're e*trade you'd probably only do it if you saw a long term future for crypto.
- joncrane 8y agoNot necessarily long term. The only criteria is positive ROI. If you can recoup your costs and turn a profit in six months, I'm not sure you give a hoot if the crypto fad dies off in 18 months.
- Traster 8y agoThis really isn't correct at all. Firstly, ETrade is probably not planning on significantly growing its engineering force for one project, so it's likely that spending time on a Crypto exchange is going to involve significant opportunity cost taking other projects off their roadmap. Secondly, they don't need positive ROI, they need to keep their margin, so they probably need a 2x ROI minimum, I don't know what the normal margin in their business is. Thirdly, crypto has significant risks that aren't just ROI. You need to think about the increase in KYC checks and the likelihood of market manipulation reflecting poorly on ETrade as a platform.
- granaldo 8y agoJust by trading volume https://www.coingecko.com/en/exchanges https://www.coingecko.com/en/exchanges it is always a good move to get a piece of the pie. Even etoro has launched an exchange
- jgalt212 8y agoSo should I take my money and securities out of Etrade if they are above the levels guaranteed by SIPC?