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Businesses The Almighty Buck

Zero-Commission Trading is Coming To Crypto (bloomberg.com) 37

Posted by msmash from the up-next dept.
Zero-fee trading first came to exchanged-traded funds and then to online stock and option transactions. Now the strategy is spreading into the cryptocurrency sphere. From a report: Seen as the most profitable sector of digital-asset world, trading platforms are feeling the pressure as industry heavyweights such as Binance and BitMex grab market share with both trading volume and coin prices sagging. ShapeShift, which has operated an exchange since 2014, said Wednesday it's begun offering free "perpetual" trades.

"Free trading has become a feature of all fintech direct trading offerings, from Robinhood to SoFi and even JPMorgan," said Lex Sokolin, global financial technology co-head at ConsenSys, which offers blockchain technology. "So it's not surprising that in a digital race to acquire the most users, execution prices are starting to collapse." The practice turned out to be a catalyst for Charles Schwab, which recently reported it opened 142,000 new trading accounts in October, a 31% jump from September, after the brokerage offered zero fees. Fresh income is being generated from interest earned on client cash holdings. Firms in the crypto world are taking notice.
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Zero-Commission Trading is Coming To Crypto More

Zero-Commission Trading is Coming To Crypto

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  • So, you get your trade executed for free, but it gets executed at the worst possible price?
    • And good luck cashing out. "Fresh income is being generated from interest earned on client cash holdings."
      Crypto exchanges tend to be... difficult... to get your filthy fiat back out of at the best of times. Now slow-rolling withdrawals will be their major source of revenue.

    • Re: (Score:3)

      by leonbev ( 111395 )

      They probably make their money when you try to get the money out of the exchange. Those "transfer" fees are usually a killer.

    • It's ALL automated; used to be the top (probably still is) that the top software, top AI, and most super computers (not biggest) were going to the stock trading "industry."

      It is not the WORST price for you but the machines are allowed to gamble at the speed of light to benefit them and you last of all. It's as far from investing as you get and it certainly didn't increase stability as all the BS hype said it would (they had to put in automated protections to stop it from a massive crash literally during a h

  • How do these "exchanges" make money off of the rubes if the trades are free? Are they just waiting until enough people deposit their "coins" with them, and then run off with the fake money?

    • Re: (Score:1)

      by rldp ( 6381096 )
      It says right in the TFA: "Fresh income is being generated from interest earned on client cash holdings."
      • I've seen my bank statement, the interest rates are laughable - where are they getting this great interest rate?

        • At the moment banks are offering interest rates just above 0% on savings accounts and probably the only reason they haven't dropped the rate below 0% yet is that they fear consumers pulling out their money when that happens. So interest doesn't sound like a sustainable business model in today's economy. I think it's likely another case of "get the users now, figure out how to be profitable later."

          • I predict "how to be profitable later" turns out to be "take the money and run, sip tiki drinks on a beach in a non-extradition country while the rubes try to sue a web of Bahamian shell companies with no assets"

          • Banks with brick and mortar branches offer close to 0% APY on savings. Even credit unions don't offer much better. Banks without branches, on the other hand, offer about 2% currently. So I pulled my excess cash out of Chase and put it in CDs at Ally and a savings account at American Express. I still keep the Chase account around for ATM deposit and withdrawal access.

        • Re: (Score:2)

          by Squach ( 177719 )

          Banks get paid 1.55% on deposits at their local Federal Reserve bank. So, they take your money, offer you 0.05% interest, deposit it at 1.55%, and make the spread of 1.5%, for example.

          https://www.federalreserve.gov/monetarypolicy/reqresbalances.htm

      • Re: (Score:2)

        by DogDude ( 805747 )
        They're earning interest on fake money? Who sets these interest rates, Ronald McDonald?

        If they're keeping US dollars.... why?

  • .... aaaannndd it's gone (Score:3)

    by hdyoung ( 5182939 ) on Wednesday November 20, 2019 @10:46AM (#59435162)
    I remember that South Park episode about investing.... 'thanks for your deposit..... depositing into account.... investing...rebalancing....leveraging for added returns.... adjusting portfolio balance.... aaaaandddd it's gone. Next customer please!"

    As far as standard investing goes, it was a bit of funny hyperbole. As far as crypto trading goes, I'd call it an accurate prediction of the future.

    E-currencies are unregulated and uncapitalized, As an asset, they've been shown to be extremely volatile and highly insecure, both physically and electronically. It's an asset that represents no underlying utility. Yes, some of these criticisms also apply to fiat currencies, but enough people have agreed to honor the USD and the Euro that they are useful means of exchange, and the value is backed by powerful governments. On the other side, you put your money in crypto, be ready to ride the bull, cause you're in the wild wild west and there's no sheriff around.
  • Bitcoin is the real deal, and the greatest invention of the 21st century. Bitcoin is a fantastic instrument to fight against inflation, and money debasement. Bitcoin is genuinely censorship resistant. Only Bitcoin is genuinely scarce in the digital world

    You can 'fork' Bitcoin the software, to get something incompatible at the protocol level. But, you can't 'fork' the philosophy. The philosophy is mainly driven by the 'don't trust but verify' mindset. Without the philosophy, the incompatible 'fork' is just

    • Re: (Score:2)

      by GoTeam ( 5042081 )
      what if you compare the value of steel to a paper bag full of "special air"? I think bitcoin is a bit more like the special air in the bag (which is probably worth less than the paper bag)
      • F.A. Hayek in 1984: "I don't believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can't take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something that they can't stop."

        Steel is worthless as money, because increasing the supply of steel is easy (elastic in supply). You can't increase the supply of Bitcoin, and Bitcoin is here to stay. You may like it or now, but we have to live with Bitcoin

        • Re: (Score:2)

          by GoTeam ( 5042081 )
          Still, if you previously captured the farts of a now dead actor, that's a pretty limited supply. A couple people may think it's valuable. As long as they're willing to pay for it, it's valuable. Once the idiots die that value farts in a bag, it is once again valueless.
          You may dislike governments and think you can protect you "wealth" from them, but you can't. With a single law, they can make you bags of farts worthless and illegal in their country. Once enough countries agree with them, you're left with ju
          • Value is subjective. Very few people hold God bars, and Gold bars are valuable. Arts are valuable for some people. Bitcoin is free market money; You don't have to value Bitcoin; this will not lower the price. Bitcoin has new properties that humankind never had before.

            Indeed, governments can ban Bitcoin, China and India banned Bitcoin, and Bitcoin is still here, and stronger than ever. Bitcoin is engineered to overcome this kind of issues.

            We have negative rates in Europe, and negative rates are a perfe

            • Re: (Score:2)

              by GoTeam ( 5042081 )
              Heh, the great part is with time I could easily be proven wrong and I accept that. I'm happy with my current investments and pension, but that really only guarantees me peace of mind for today. Many things could torpedo my plans over the next hour, month, year... but I'm happy today. Your plan works for you, so, cool. I may have historical trends in my favor, but that doesn't mean innovation is dead. If you can afford additional risk for a bigger payoff, cool. So we're both happy!
        • Bitcoin will prove itself year after year and earn our trust. This is still the beginning for Bitcoin!

    • steal

      is this a Freudian slip?

    • > You can 'fork' Bitcoin the software, to get something incompatible at the protocol level.

      Unfortunately, Blockstream did just that in 2017:

      https://youtu.be/VoFb3mcxluY [youtu.be]

      • Segwit was necessary to fix the malleability issue, and to add some functionalities required to develop software working as layers of Bitcoins. Increasing the blocksize leads nowhere. Ethereum is the perfect example to look at (full centralization). Blockstream never harmed Bitcoin. Bitmain tried to undermine Bitcoin, and failed.

        Now we have Lightning and Liquid as Layer 2 of Bitcoin. Bitcoin is now fully scalable using layers, the job is done.

    • Yup, it's doing a wonderful job of fighting inflation right now, as it augers into the ground. Inflation can't keep up!

  • Snakeoil cryptocurrency, the added value being new “investors” coming into the market, until the bubble bursts.

  • The exchanges will end up taking the icing off of your cake and not filing your trades. Nothing is free.

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