[HN Gopher] Understanding Coinbase
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Understanding Coinbase
Author : jger15
Score : 83 points
Date : 2021-03-13 19:53 UTC (3 hours ago)
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| eruleman wrote:
| The biggest threat to Coinbase are decentralized exchanges like
| Uniswap & Sushiswap. During the peak of DeFi summer, Uniswap
| handled more trading volume than Coinbase. [0]
|
| Uniswap airdropped its token $UNI to all users on Sept 17, 2020.
| Uniswap is already at a $17 billion market cap. Coinbase is
| expected to IPO at ~$100 billion.
|
| [0] https://www.theblockcrypto.com/data/decentralized-
| finance/de...
| gruez wrote:
| How's the liquidity/UX/fees on decentralized exchanges these
| days? Last I heard they were pretty lacking in those aspects.
| dehrmann wrote:
| The biggest threat is Bitcoin (and other popular
| cryptocurrencies) stop going up or experience a crash. Sure,
| there are true believers, but I suspect most people are just
| looking for an asset that's going up. It could be gold, Nikes,
| NFTs, Pokemon cards, or bitcoin.
|
| Or stocks, I suppose, but at least they have revenue.
| epx wrote:
| Bitcoin skeptic is the new politically incorrect
| granzymes wrote:
| Correct me if I am wrong, but those decentralized exchanges
| don't seem to allow converting a token to dollars/euros/other
| currencies or vice versa.
|
| At some point the ecosystem needs to interact with banks for on
| and off ramps, and that is where Coinbase excels.
| gbasin wrote:
| I would argue the biggest threat to coinbase is another crypto
| winter where volumes fall by 90%! And eventually the asset
| class becoming mature, so fees also fall by another 90%
| mancerayder wrote:
| Didn't Coinbase already survive that 2 years ago?
| hanniabu wrote:
| Yes, and before that.
| geniium wrote:
| That's what we call a strong correction. Or even a <<
| capitulation >>. It's pretty healthy if u ask me. Market
| cycles. It will happen again.
|
| The question is when? After what BTCUSD price? We'll probably
| run the bull a few more months and then crash.
|
| And then start all again.
| gruez wrote:
| >And eventually the asset class becoming mature, so fees also
| fall by another 90%
|
| Are we talking fees for coinbase pro, or the spot price
| offered by coinbase on their website? The prices for the
| former are already pretty low, with most exchanges charging
| around 0.2% on their lowest volume tier. The prices for the
| latter might be high, but I can totally imagine it staying
| high considering that forex rates at your local bank is
| equally as bad (around 1-2%). As a point of comparison for
| both, transferwise charges 0.4% for converting euro to usd.
| gbasin wrote:
| The fees. 0.2% is not low compared to any mature market for
| trading. As a point of reference, Robinhood is free.
| Interactive Brokers will charge you a fraction of a cent in
| commissions, so on a $30 stocks that's about 0.01%
| mandelbrotwurst wrote:
| Sure, although you are comparing the rate to that of
| stock trades while the person you're replying to is
| comparing to currency exchanges.
| gruez wrote:
| Stock trading is cheap for a variety of factors that's
| not applicable to crypto (eg. payment for order flow,
| stock lending [1]). A stock brokerage can also skimp on
| security because the legacy financial system has an undo
| button for oopsies. Finally, a 0.2% fee is relatively
| competitive with a "reasonable" commission of $5-10/trade
| (the going rate before brokerages became commission-free)
| as long the trade is below a few thousand dollars.
|
| [1] https://news.ycombinator.com/item?id=20276551
| [deleted]
| mquander wrote:
| Why will those factors not be applicable to crypto?
| (People taking custody of their own cryptoassets may mean
| that the exchange can't lend them out, but as exchanges
| continue to pass the test of time more and more people
| may be willing to leave assets on exchanges.)
| gruez wrote:
| AFAIK the only reason why there's a market for lending
| stocks is because the SEC prohibits naked short-selling.
| If you want to short-sell, you need to locate a share
| somewhere and "borrow" it, which leads to brokerages
| offering to do that for a price. For crypto this isn't
| required because you can short using CME bitcoin futures,
| which is cash settled and therefore doesn't require you
| to locate/borrow anything.
| syzygyhack wrote:
| Nah. High frequency trading on L1 is too expensive, especially
| long term as state grows.
|
| Biggest threat is L2 exchanges. CEX-style speed and convenience
| and DEX-style non-custodiality. My money is on Nash since they
| went the legal path plus fiat on-ramping, i.e. actually
| competes with Coinbase's main source of profit.
| xienze wrote:
| > The biggest threat to Coinbase are decentralized exchanges
| like Uniswap & Sushiswap.
|
| Yeah, assuming gas fees ever come down to something halfway
| sensible. A _minimum_ of $50 both ways to trade is a tough pill
| to swallow.
| hanniabu wrote:
| Optimism L2 it's having its public release on the 15th.
| Uniswap is expected to launch on Optimism with their V3
| update not long after.
| agumonkey wrote:
| One thing with the eth/uni world.. it seems like fluffy unicorn
| land. It's full of new lingo and bits to assemble (metamask
| etc) to maybe get something working. The crowd for this might
| be very small.
| benreesman wrote:
| Without personally taking a position one way or the other I
| think it's fair to point out that perspectives on DeFi in
| general and AMMs in range from "the future of finance" to
| "scammy ICOs with Solidity code _and_ a whitepaper", even among
| people who are into crypto.
| brianvli wrote:
| Coinbase is more about turning non-crypto currencies into
| crypto currencies while UNI/SUSHI are more about turning crypto
| currencies into different crypto currencies.
|
| In my POV, there's only two ways to get into crypto:
|
| - Centralized exchanges with KYC
|
| - Mining
|
| Coinbase is a KYC centralized exchange and enables people to
| turn their bank account $$s into crypto. Uniswap and Sushiswap
| are only relevant once someone has crypto and needs to exchange
| between various tokens.
| dwighttk wrote:
| Coinbase tells me there are no fees for crypto to crypto
| conversion, just when I initially buy crypto with cash. What
| does a decentralized exchange give me that beats that?
| hanniabu wrote:
| > What does a decentralized exchange give me that beats
| that?
|
| Owning the actual asset and not just an IOU
| rawtxapp wrote:
| There _are_ fees for every exchange, not sure where you saw
| the no fees part.
| dwighttk wrote:
| Do you mean they give me a slightly worse exchange rate
| than I could get somewhere else? The "fee" line when I do
| an exchange is $0.00
| fastball wrote:
| As others mentioned you're forgetting an economy which just
| uses crypto as the means of exchange, which for many has
| always been the long term goal.
|
| But you're _also_ forgetting P2P crypto marketplaces like
| LocalCryptos[1], which (for Ethereum) allows you to have
| smart contract escrow and therefore the middle-man is only
| really required in the case of disputes. I personally have
| transacted > $100k with LocalEthereum, not once having an
| issue with a trade, and most settling in under 30min.
|
| [1] https://localcryptos.com/
| jacques_chester wrote:
| > _As others mentioned you 're forgetting an economy which
| just uses crypto as the means of exchange, which for many
| has always been the long term goal._
|
| Taxes are owed in income or capital gains, whatever form
| that income or capital takes, but taxes can only paid in
| legal tender. Until the IRS et al hang out a wallet address
| for payments you will still need to touch the ordinary
| financial economy.
| fastball wrote:
| A good number of people (in the US at least) legally pay
| no taxes every year. So it's hypothetically possible to
| live entirely within crypto (legally) already.
|
| But yes, that was more talking about the future. That is
| the matter at hand, after all - Coinbase's future (or
| lack thereof).
| echelon wrote:
| Yesterday someone asked for me to pay them in Bitcoin rather
| than PayPal/CashApp.
|
| I'm kind of at a loss for how to do this...
| gzer0 wrote:
| You can send, receive and even buy Bitcoin with fiat with
| CashApp after you go through their KYC procedures within
| the app. [1] https://cash.app/bitcoin
| [deleted]
| noman-land wrote:
| Don't forget working for it by doing stuff and receiving
| payment in them. That's my personal philosophical favorite.
| littlestymaar wrote:
| True, though in practice "stuff" means "drug dealing". \s
| samatman wrote:
| It's fairly normal to receive payment in cybercoins if
| you're working for a company in the space. At least it
| was in the ICO era.
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