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Why is it so difficult to just create an exchange that charges commissions and nothing more? Target the first 10-20 cryptos with a simple transparent platform a

Why is it so difficult to just create an exchange that charges commissions and nothing more? Target the first 10-20 cryptos with a simple transparent platform and see the money rolling in with minimal risks of ending up naked

swamp_cypress 4y ago
Because someone else will come along and create an exchange that offers ponzi-like interest rates and run you of out of business. Also promising never to gamble with the depositors' funds etc
- mtremsal 4y ago
  This is kind of Gresham's law for crypto. Bad ethics drive good ethics out of the market. Amusingly, this is often studied in the context of how deregulation led to the S&L crisis, i.e. a direct parallel.
Traubenfuchs 4y ago
Greed. They start like that, make a well oiled platform to swap cryptos, but then they think: Why not offer something more exciting? Why leave money on the streets? Even if it's risky.
capableweb 4y ago
This is essentially what Coinbase is. More like a old school bank (not modern) where your funds are "earmarked" for your account, rather than fucking around with lending it around to get some extra profits.
nsaje 4y ago
They're around, they just don't make it into the news. Example: Bitstamp https://www.bitstamp.net/ https://www.bitstamp.net/
cool_dude85 4y ago
Without having done much research, isn't that coinbase's market? Regardless, it costs money to actually comply with laws, do audits, all that, meanwhile you're losing out on a potentially huge revenue stream by not gambling customer funds. As long as things are going well, you'd expect the shady operators to be winning in the short term.
- usrusr 4y ago
  Without having done any research at all I do wonder how reliably anyone could judge evidence that coinbase is in fact that, and not just the same as others, merely being a little more successful in avoiding too-good-to-be-true territory?
substation13 4y ago
This is Coinbase, more or less. The problem is you are competing with exchanges that make leveraged bets using customer funds and so can have lower fees.
- throwayyy479087 4y ago
  The normalization of this is embarrassing. Can you imagine if Vanguard did this with Grandma’s GE stocks?
  - substation13 4y ago
    I'm not advocating for this situation, just pointing it out. In the case of stocks regulators have stepped in to prevent the highly leveraged competitor from existing at all.
gitfan86 4y ago
There is no demand for that. Most crypto money is either libertarians who hold use self custody OR people trying to get rich quick who will put their money wherever they can leverage it the most with the highest APR on deposits.
roenxi 4y ago
Same reason internet services without ads are so hard to come by. There is always more money to be made by adding creative financial products to the mix. Platforms that resist the urge to get creative charge more and don't reach the same scale as the ones that are doing something a little dodgy on the side.
arlcode 4y ago
Welcome to another step along the "banking regulation any%" speedrun crypto is going through. Banks (and crypto exchanges are that for all purposes) have strict rules on what percentage of customer deposits they have to actually hold and what they can do with the rest. If that fails there is a huge liquidity market, if that fails the fdic (or local equivalent) comes to the rescue and if that fails the central bank (as a lender of last resort) can contain the failure of a single bank. It's far from perfect but history has proven it quite robust. Crypto (in this case) decided that all those rules are useless overreach.
m00dy 4y ago
because it is not profitable as you may think. The money is in derivatives(liquidations) and it has always been.

swamp_cypress 4y ago

Because someone else will come along and create an exchange that offers ponzi-like interest rates and run you of out of business. Also promising never to gamble with the depositors' funds etc

mtremsal 4y ago
This is kind of Gresham's law for crypto. Bad ethics drive good ethics out of the market. Amusingly, this is often studied in the context of how deregulation led to the S&L crisis, i.e. a direct parallel.

Traubenfuchs 4y ago

Greed. They start like that, make a well oiled platform to swap cryptos, but then they think: Why not offer something more exciting? Why leave money on the streets? Even if it's risky.

capableweb 4y ago

This is essentially what Coinbase is. More like a old school bank (not modern) where your funds are "earmarked" for your account, rather than fucking around with lending it around to get some extra profits.

nsaje 4y ago

They're around, they just don't make it into the news. Example: Bitstamp https://www.bitstamp.net/ https://www.bitstamp.net/

cool_dude85 4y ago

Without having done much research, isn't that coinbase's market? Regardless, it costs money to actually comply with laws, do audits, all that, meanwhile you're losing out on a potentially huge revenue stream by not gambling customer funds. As long as things are going well, you'd expect the shady operators to be winning in the short term.

usrusr 4y ago
Without having done any research at all I do wonder how reliably anyone could judge evidence that coinbase is in fact that, and not just the same as others, merely being a little more successful in avoiding too-good-to-be-true territory?

substation13 4y ago

This is Coinbase, more or less. The problem is you are competing with exchanges that make leveraged bets using customer funds and so can have lower fees.

throwayyy479087 4y ago
The normalization of this is embarrassing. Can you imagine if Vanguard did this with Grandma’s GE stocks?
- substation13 4y ago
  I'm not advocating for this situation, just pointing it out. In the case of stocks regulators have stepped in to prevent the highly leveraged competitor from existing at all.

gitfan86 4y ago

There is no demand for that. Most crypto money is either libertarians who hold use self custody OR people trying to get rich quick who will put their money wherever they can leverage it the most with the highest APR on deposits.

roenxi 4y ago

Same reason internet services without ads are so hard to come by. There is always more money to be made by adding creative financial products to the mix. Platforms that resist the urge to get creative charge more and don't reach the same scale as the ones that are doing something a little dodgy on the side.

arlcode 4y ago

Welcome to another step along the "banking regulation any%" speedrun crypto is going through. Banks (and crypto exchanges are that for all purposes) have strict rules on what percentage of customer deposits they have to actually hold and what they can do with the rest. If that fails there is a huge liquidity market, if that fails the fdic (or local equivalent) comes to the rescue and if that fails the central bank (as a lender of last resort) can contain the failure of a single bank. It's far from perfect but history has proven it quite robust. Crypto (in this case) decided that all those rules are useless overreach.

m00dy 4y ago

because it is not profitable as you may think. The money is in derivatives(liquidations) and it has always been.