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Crypto exchange profits are very high right now, but I'm surprised that they aren't falling faster. Stock trades went to $0 long ago, yet crypto exchanges cont

Crypto exchange profits are very high right now, but I'm surprised that they aren't falling faster. Stock trades went to $0 long ago, yet crypto exchanges continue to charge around 0.5% (with some discounts if you're savvy) and nobody bats an eye. But then again, I can send money anywhere for basically $0, yet everything I do with cryptocurrency comes with transaction fees and waits. I wonder if crypto users are basically more primed to expect fees and crypto exchanges are better at making users forget about it with clever UX? Either way, I expect exchange profits will decline slowly as they begin competing with each other more.

323 5y ago
> yet crypto exchanges continue to charge around 0.5% That's not true. Coinbase charges 0.5%, but little trading is done there. The derivatives exchanges, where most treading actually happens (Binance, FTX, ...), charge around 0.05-0.10%. Some even charge 0% if you use limit orders.
- j_walter 5y ago
  Coinbase Pro used to charge 0% for years...I'm talking 2016-2018 timeframes.
daniel-cussen 5y ago
I don't know, it's just they're such such a juicy target for hacking. They're like real life banks. Every thug wants to rob a bank. Online it's even worse, no need to go to the bank to probably get shot, you can rob the biggest banks from the comfort of your grandmother's basement, all you have to do is find a glitch in the matrix, but like the shittiest matrix ever. Like the matrix in The Matrix, from 1998, the graphics in that movie were full of artifacts.
nickff 5y ago
They're also just starting to accrue the sorts of liabilities which tend to lag behind growth (legal issues & overhead specifically).
BitwiseFool 5y ago
I'd also venture that a decent amount of the people trading crypto today weren't familiar with traditional brokers and investing in the stock market. I'm one of those people and truth be told I had no frame of reference for what is an acceptable fee schedule. I just wanted to trade, and did. Hopefully competition brings fees down, but for the longest time you really didn't have a lot of options when it came to finding an exchange that let you trade the coins you wanted.
vkou 5y ago
> I wonder if crypto users are basically more primed to expect fees and crypto exchanges are better at making users forget about it with clever UX? They aren't, because crypto has no users. Unlike with dollars, where useful main street economic activity dwarfs the horse-trading that's happening on Wall Street - it's the other way around in the crypto space. What it has are speculators, and they will eat that 0.5% transaction fee, if that's the cost of their investments going #tothemoon.
pcthrowaway 5y ago
The largest exchanges generally have much lower rates. Spot trading fees on Binance (the largest centralized exchange by a landslide) are only 0.1% per order, less if you trade a lot of volume.
IfOnlyYouKnew 5y ago
Volatility is so much higher, people don’t notice 0.5 %
xiphias2 5y ago
,,I can send money anywhere for basically $0'' This book (Check your financial privilege) written by a human rights activist is just for you: https://www.amazon.com/Check-Your-Financial-Privilege-Gladstein/dp/B09V2NM9VJ https://www.amazon.com/Check-Your-Financial-Privilege-Gladst... ,,anyone born into a reserve currency like the euro, yen, or pound has financial privilege over the 89% of the world population born into weaker systems.''
- UncleMeat 5y ago
  Yet all of the people getting rich on cryptocurrency seem to live in those 11%. So much for "power to the people."
  - xiphias2 5y ago
    They may live there, but a lot of them are immigrants. I'm an example for that: I migrated to western countries and started to feel that the direction they are taking is similar to what I have experienced in my country when I was young. I decided to quit the government based financial system, as I lost trust in it. Sadly lot of people who don't understand the reason just do lots of day trading, which is a modern version of casino, that's how exchanges make so much profit.
  - kobalsky 5y ago
    the part that matters is that everyone has access to it, not that someone who isn't you is making money with it.
    - glutamate 5y ago
      Who do you think they are making money from?
    - UncleMeat 5y ago
      When the wealthy deign to give "access" to the poor while using the arms of capitalism to enrich themselves, that's not charity. People getting rich off financial derivatives of the transactions of the rest of the world are just getting rich. They aren't providing value.
eweise 5y ago
I'm guessing most people are speculators and expect huge returns so the trade cost is incidental.
vmception 5y ago
Although I expect the law of diminishing returns to kick in with regard to commissions eventually, I expect it to be made up in other ways. Its a whole second decade of crypto exchanges and traditional finance (tradfi) exchanges still dont have REST APIs or anything remotely close to free or accessible for programmatic trading, while crypto exchanges have always had that for free right out the gate. Every day they have 3x as many trading sessions as tradfi exchanges. And thats even before we start talking about selling the data, the international customer set, unilateral discretion in listing anything with a community of potential traders, using company treasury (or customer deposits) in DeFi products for passive yield, and more.
- kasey_junk 5y ago
  The lack of free api’s for traditional exchanges is by design. It’s a risk mitigation technique that only members or sponsored traders can trade on those exchanges. This allows for there to be real ramifications if the sponsor doesn’t do due diligence and allows a counterparty into a trade that can’t settle. Perhaps this limitation is precisely what the trustless features of the coins gives us or perhaps the crypto exchanges just haven’t been bitten by a really bad counterparty risk incident yet. Time will tell.
  - vmception 5y ago
    Its a poor implementation crafted by skittish legal doing cookie cutter things for decades, implemented by certificate chasing IT staff who couldnt launch a tool by a script kiddie if their life depended on it. And then there are also structural differences, such as in crypto the trade is the settlement. So other markets could have a different approach, and then have to deal with settlement.
asdff 5y ago
>I wonder if crypto users are basically more primed to expect fees and crypto exchanges are better at making users forget about it with clever UX? That's pretty much what it is. No one knows the actual spot price of the coin they are buying. They just say "give me $5 of shitcoin" and whatever number of coins is spat out is fine.
- fleddr 5y ago
  And an example of clever UX: On Coinbase, a crypto to crypto conversion has no fees. However, in that conversion the market price of the target coin is higher than the spot market price. So a hidden fee. Clever UX is quite an optimistic term for such a pattern.
romeros 5y ago
>> and nobody bats an eye. Because most people in crypto are utterly convinced that their "investment" of $1000 in crypto will become $100k or even $1M in no time.. so the 0.5% seems negligible.
- shtopointo 5y ago
  > most people [citation needed]
  - FridgeSeal 5y ago
    Gestures broadly at the behaviour of basically every crypto subreddit, YouTube channel and forum; to say nothing of the advertising by crypto businesses.
  - ForHackernews 5y ago
    https://www.youtube.com/watch?v=9hBC5TVdYT8 https://www.youtube.com/watch?v=9hBC5TVdYT8 Matt Damon says line goes up, you coward!
  - root_axis 5y ago
    Excepting darknet commerce, cryptocurrency has no other purpose besides speculation, so it's pretty obvious that speculation is why most people are buying it.
    - danielheath 5y ago
      I wouldn't assume that "wants to buy drugs" is an insignificant component of the market.
      - giaour 5y ago
        I know that controlled substance e-commerce was a key market for bitcoin ~10 years ago, but given crypto's current volatility, transaction fees, settlement times, and vulnerability to forensic accounting, is bitcoin still a viable way to buy drugs?
deleted 5y ago
[deleted]
akrymski 5y ago
Stock exchanges have a central limit order book. Crypto exchanges are like foreign exchange brokers at airports: they act as market makers, earning the majority of their fees from the bid/ask spread rather than some fixed comms afaik. So comparing NYSE to Coinbase revenues is apples to oranges. Coinbase is thus closer to a market maker like Citadel, both having similar revenues (7B)
cyanydeez 5y ago
Casinos give free drinks also.

323 5y ago

> yet crypto exchanges continue to charge around 0.5% That's not true. Coinbase charges 0.5%, but little trading is done there. The derivatives exchanges, where most treading actually happens (Binance, FTX, ...), charge around 0.05-0.10%. Some even charge 0% if you use limit orders.

j_walter 5y ago
Coinbase Pro used to charge 0% for years...I'm talking 2016-2018 timeframes.

daniel-cussen 5y ago

I don't know, it's just they're such such a juicy target for hacking. They're like real life banks. Every thug wants to rob a bank. Online it's even worse, no need to go to the bank to probably get shot, you can rob the biggest banks from the comfort of your grandmother's basement, all you have to do is find a glitch in the matrix, but like the shittiest matrix ever. Like the matrix in The Matrix, from 1998, the graphics in that movie were full of artifacts.

nickff 5y ago

They're also just starting to accrue the sorts of liabilities which tend to lag behind growth (legal issues & overhead specifically).

BitwiseFool 5y ago

I'd also venture that a decent amount of the people trading crypto today weren't familiar with traditional brokers and investing in the stock market. I'm one of those people and truth be told I had no frame of reference for what is an acceptable fee schedule. I just wanted to trade, and did. Hopefully competition brings fees down, but for the longest time you really didn't have a lot of options when it came to finding an exchange that let you trade the coins you wanted.

vkou 5y ago

> I wonder if crypto users are basically more primed to expect fees and crypto exchanges are better at making users forget about it with clever UX? They aren't, because crypto has no users. Unlike with dollars, where useful main street economic activity dwarfs the horse-trading that's happening on Wall Street - it's the other way around in the crypto space. What it has are speculators, and they will eat that 0.5% transaction fee, if that's the cost of their investments going #tothemoon.

pcthrowaway 5y ago

The largest exchanges generally have much lower rates. Spot trading fees on Binance (the largest centralized exchange by a landslide) are only 0.1% per order, less if you trade a lot of volume.

IfOnlyYouKnew 5y ago

Volatility is so much higher, people don’t notice 0.5 %

xiphias2 5y ago

,,I can send money anywhere for basically $0'' This book (Check your financial privilege) written by a human rights activist is just for you: https://www.amazon.com/Check-Your-Financial-Privilege-Gladstein/dp/B09V2NM9VJ https://www.amazon.com/Check-Your-Financial-Privilege-Gladst... ,,anyone born into a reserve currency like the euro, yen, or pound has financial privilege over the 89% of the world population born into weaker systems.''

UncleMeat 5y ago
Yet all of the people getting rich on cryptocurrency seem to live in those 11%. So much for "power to the people."
- xiphias2 5y ago
  They may live there, but a lot of them are immigrants. I'm an example for that: I migrated to western countries and started to feel that the direction they are taking is similar to what I have experienced in my country when I was young. I decided to quit the government based financial system, as I lost trust in it. Sadly lot of people who don't understand the reason just do lots of day trading, which is a modern version of casino, that's how exchanges make so much profit.
- kobalsky 5y ago
  the part that matters is that everyone has access to it, not that someone who isn't you is making money with it.
  - glutamate 5y ago
    Who do you think they are making money from?
  - UncleMeat 5y ago
    When the wealthy deign to give "access" to the poor while using the arms of capitalism to enrich themselves, that's not charity. People getting rich off financial derivatives of the transactions of the rest of the world are just getting rich. They aren't providing value.

eweise 5y ago

I'm guessing most people are speculators and expect huge returns so the trade cost is incidental.

vmception 5y ago

Although I expect the law of diminishing returns to kick in with regard to commissions eventually, I expect it to be made up in other ways. Its a whole second decade of crypto exchanges and traditional finance (tradfi) exchanges still dont have REST APIs or anything remotely close to free or accessible for programmatic trading, while crypto exchanges have always had that for free right out the gate. Every day they have 3x as many trading sessions as tradfi exchanges. And thats even before we start talking about selling the data, the international customer set, unilateral discretion in listing anything with a community of potential traders, using company treasury (or customer deposits) in DeFi products for passive yield, and more.

kasey_junk 5y ago
The lack of free api’s for traditional exchanges is by design. It’s a risk mitigation technique that only members or sponsored traders can trade on those exchanges. This allows for there to be real ramifications if the sponsor doesn’t do due diligence and allows a counterparty into a trade that can’t settle. Perhaps this limitation is precisely what the trustless features of the coins gives us or perhaps the crypto exchanges just haven’t been bitten by a really bad counterparty risk incident yet. Time will tell.
- vmception 5y ago
  Its a poor implementation crafted by skittish legal doing cookie cutter things for decades, implemented by certificate chasing IT staff who couldnt launch a tool by a script kiddie if their life depended on it. And then there are also structural differences, such as in crypto the trade is the settlement. So other markets could have a different approach, and then have to deal with settlement.

asdff 5y ago

>I wonder if crypto users are basically more primed to expect fees and crypto exchanges are better at making users forget about it with clever UX? That's pretty much what it is. No one knows the actual spot price of the coin they are buying. They just say "give me $5 of shitcoin" and whatever number of coins is spat out is fine.

fleddr 5y ago
And an example of clever UX: On Coinbase, a crypto to crypto conversion has no fees. However, in that conversion the market price of the target coin is higher than the spot market price. So a hidden fee. Clever UX is quite an optimistic term for such a pattern.

romeros 5y ago

>> and nobody bats an eye. Because most people in crypto are utterly convinced that their "investment" of $1000 in crypto will become $100k or even $1M in no time.. so the 0.5% seems negligible.

shtopointo 5y ago
> most people [citation needed]
- FridgeSeal 5y ago
  Gestures broadly at the behaviour of basically every crypto subreddit, YouTube channel and forum; to say nothing of the advertising by crypto businesses.
- ForHackernews 5y ago
  https://www.youtube.com/watch?v=9hBC5TVdYT8 https://www.youtube.com/watch?v=9hBC5TVdYT8 Matt Damon says line goes up, you coward!
- root_axis 5y ago
  Excepting darknet commerce, cryptocurrency has no other purpose besides speculation, so it's pretty obvious that speculation is why most people are buying it.
  - danielheath 5y ago
    I wouldn't assume that "wants to buy drugs" is an insignificant component of the market.
    - giaour 5y ago
      I know that controlled substance e-commerce was a key market for bitcoin ~10 years ago, but given crypto's current volatility, transaction fees, settlement times, and vulnerability to forensic accounting, is bitcoin still a viable way to buy drugs?

deleted 5y ago

[deleted]

akrymski 5y ago

Stock exchanges have a central limit order book. Crypto exchanges are like foreign exchange brokers at airports: they act as market makers, earning the majority of their fees from the bid/ask spread rather than some fixed comms afaik. So comparing NYSE to Coinbase revenues is apples to oranges. Coinbase is thus closer to a market maker like Citadel, both having similar revenues (7B)

cyanydeez 5y ago

Casinos give free drinks also.