Adapting to the Climate – Cryptocurrency Exchanges
The next era of brokerages has to be the cryptocurrency exchanges that everyone knows about now. Coinbase, Crypto.com, and Binance have all made it into the mainstream, becoming the favorite app of many for crypto trading. It’s fair to say that the new wave of companies can be compared to the original brokerage services of TDAmeritrade, Merrill Lynch, and other pioneers. If they were to follow that path, the major evolution that occurred in stock market trading was the concept of zero-commission trading, which greatly increased access to stocks. Brokerages would charge a commission for every transaction you made, but it was removed as the revenue could be made up in other departments while attracting more users.
Crypto exchanges also charge a fee every time you make a transaction, and it might be time for them to make a switch too. Slowly, fees are being eliminated, and we can see this with Binance, who removed their fees for Bitcoin trading. Due to this, they have gained a lead over competitors, especially when it comes to spot Bitcoin trading. Volume has increased by 128 percent relative to the first quarter and Binance looks to further establish this. According to many, Binance’s moves will likely resonate in the industry and create a price war that will finish with little to no fees, but there is something different about crypto. A larger share of revenue is based on fees that they get from transactions as shown by Coinbase, who gets much of their money from that part of the business. The transition won’t be as seamless and there are many paths to go as crypto continues to grow into a new financial vehicle.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.