E*Trade Is Close to Launching Cryptocurrency Trading | Hacker News Reader

E*Trade Is Close to Launching Cryptocurrency Trading

bloomberg.com

150 pointspetethomas78 comments

> E*Trade would be one of the largest securities brokerages to allow crypto trading. It will enter into a competitive market with startups like Coinbase Inc., which have made names for themselves as go-to places for such transactions. Closely held Coinbase reached a valuation of $8 billion in 2018 and projected sales of $1.3 billion. Fintech startup Robinhood, most recently valued at $5.6 billion, has also added cryptocurrency trading as a way to woo millennial customers.

TD Ameritrade has also been rumored to have quietly rolled out Bitcoin trading to some customers:

https://bitcoinmagazine.com/articles/td-ameritrade-nasdaq-re...

There seem to be ample comments discussing the "viability" of crypto trading/tokens, but if I'm Etrade, all I care about are the commissions - to hell with the underlying tech or what it can/can't do. Not even just for BTC, ETH, EOS, etc now, but for the coins to come in the future. Sure, they can have prolonged periods of low volume (even manipulated volume), but when there's a frenzy (e.g., 2016-2018), I imagine that the profit potential on commissions would do wonders for "shareholder value". Combine that with Etrade's namebrand (as mentioned in other comments) experience, and infrastructure, and you've got a gang of traders that would gladly do away with the sketchy/lesser-known exchanges for Etrade (my opinion).

If you're e*trade you'd probably only do it if you saw a long term future for crypto.

Not necessarily long term. The only criteria is positive ROI. If you can recoup your costs and turn a profit in six months, I'm not sure you give a hoot if the crypto fad dies off in 18 months.

This really isn't correct at all. Firstly, ETrade is probably not planning on significantly growing its engineering force for one project, so it's likely that spending time on a Crypto exchange is going to involve significant opportunity cost taking other projects off their roadmap. Secondly, they don't need positive ROI, they need to keep their margin, so they probably need a 2x ROI minimum, I don't know what the normal margin in their business is. Thirdly, crypto has significant risks that aren't just ROI. You need to think about the increase in KYC checks and the likelihood of market manipulation reflecting poorly on ETrade as a platform.

ETrade is presumably very cautious to get started, and very slow to move when they do, by nature of their maturity, scale, and industry context. So they're taking many multiples longer than someone like coinbase, for example, to spin up this type of thing.

So this initiative probably started years back.

Is this late-launching residue from bitcoin's 20k days when this would have been, if not less silly, at least less silly looking?

Is this evidence that some big names in finance have been deliberately understating their interest in the space, while scrambling beneath the surface to spin up offerings?

If the rest of the players in this space also support crypto, it starts to be genuinely commoditized, and maybe that could help it. But if you commoditize something that nobody cares about... does it matter? does it help?

I believe the push from 7000 to 20000 was big players like etrade or Sachs. The volume of block movement seemed uniformed at the time.

You mean printing of tethers by Bitfinex.

That bitfinex is shady is no doubt, but if all these stories about printed tether were true - it would have collapsed long ago.

No bitcoin itself

Nobody cares about crypto?

6 months ago Coinbase raised $300m at $8b valuation.

https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-coin...

My experience day-to-day is that the world is strongly divided between those who care a lot about crypto and those who care effectively none. Barring the brief time around peak prices where it punched through to the zeitgeist (when your uber driver is asking about it), it doesn't seem like it's growing, from the perspective of social/cultural demand or narrative.

There is a plenty healthy subset of the world population keeping cryptocurrencies liquid. But this etrade offering represents, to me at least, a level of commoditization that outpaces the underlying demand. In part because coinbase captures that demand very effectively, hence their valuation. I expect etrade's gains here are going to be from capturing new funds from current customers, rather than actually winning the crypto buying customer experience, where coinbase reigns supreme.

Speaking of coinbase, if etrade had to copy one thing of theirs, i wish it were the UI.

Another thought: how much of crypto's valuation comes from the contrarian narrative that it's a rebellion against exactly the stodgy old guard that etrade represents? Gold's contrarian narrative has survived the commoditization of gold trading. Will crypto's? Whether buy into it because it's a get rich quick scheme or a genuine financial disruption, both of those stories rely on a narrative that it's different/exempt from wall street bullshit. can that narrative exist in a world where the primary interface with the market is wall street bullshit?

The idea of a goldbug hedging against the apocalypse by buying gold on etrade is very, very funny to me. Crypto's a little better positioned since etrade doesn't own the blockchain, but gold's safe from a power outage. Apples and oranges...

No idea tbh.

I was recently surprised to see that I could order products off overstock.com with Bitcoin. PewDiePie recently started live streaming exclusively on a crypto coin based platform, d-live. I agree with your general sentiment, but I am starting to see wider use and acceptance of crypto coins.

The overstock thing doesn't interest me much, for the same reasons as etrade. Has the smell of old guard playing catchup, whether to hedge against unlikely success, or just because that's the kind of thing that inept monoliths are prone to do.

The pewdiepie thing is very interesting to me. He, like fortnight, is responsible for shaping the norms of the next generation. If fortnight decided to make bitcoin the only way to get currency into the game I'd be long bitcoin. Because whatever 12 year olds are doing today is whatever's going to be google-sized in 2040. So that's a neat thought.

I'm not familiar with D-Live. Looked it up real fast. It looks like... a whole bunch of nothing, that I don't know why I should care about it, or why it's a thing... I have three reactions to that:

1) I just turned 30 and, right on time, don't know shit about what young people are into. D-live could be a big deal and I'm miscalibrated.

2) D-live is actually a fledgling thing, and they're paying pewdiepie loads of cash to do this. The platform, from a messaging perspective, basically IS pewdiepie. He may also be behind d-live in some meaningful way, or otherwise stand to get crazy rich(er) from this.

3) D-live is to speech what crypto is to finance: amidst privacy woes, hate speech, censorship, deplatforming, and runaway algos, there's a cultural demand for disruption and alternative ecosystems that allow people who feel marginalized by the current ecosystem to escape to a new eden. Crypto feels like it's gotten a handful of false starts and failure to launch in narrative-space with this idea. But it feels like the speech/platform version of this same narrative is just beginning to take hold, and with a lot more early steam. If crypto can interweave itself within that larger cultural shift, and manage to hang on? Maybe that could work.

Overstock does more than just accept bitcoin for purchases - they’re so bullish on crypto they’re planning to sell their retail business to focus entirely on blockchain. https://www.google.com/amp/s/seekingalpha.com/amp/article/42...

I never understood why, if the situation becomes so bad that government-issued money is worthless, would people prefer gold instead of, say, water, toilet paper, medicine, access to a dentist, and so on?

>why [...] would people prefer gold instead of, say, water, toilet paper..

"Hi here's your monthly pay it's $5,000 of toilet paper. Where would you like me to park the truck that's full of it?"

The purpose of a money as a technology is to be a highly salable good that stores wealth across time and space.

Taking your salary in toilet paper isn't good because it's not as salable and it also can rot and degrade. If someone tells you that it's good your money rots because then everyone will have to work more than if their money was more robust (inflation) they're probably the person that can create money costlessly but charge you for it (a bank). If they claim that it's bad if the amount of money required to produce something decreases (deflation) when reducing the consumptive inputs (labor, materials, yes even money) creates a more efficient product, is less demanding on the planet, they are probably that gain their wealth from taxing and taking your things (states).

> Hi here's your monthly pay it's $5,000 of toilet paper. Where would you like me to park the truck that's full of it?

Don’t know if you realize this, but that’s literally what was happening in Ukraine (and probably elsewhere) during 90s after USSR collapse. People were paid with products of factories they worked on. Toilet paper, teapot sets, boxes of matches, etc. not fun times.

Supposedly Russian sailors were paid in vodka during the same period.

>Don’t know if you realize this

Yes, it's what I was referring to. Trade will occur regardless of what happens. If factories run out of a fiat money, they'll offer to trade the factory outputs for worker labor. It's just that the people with the most performant money will survive the best.

In a normal situation it would not make sense but:

> if the situation becomes so bad that government-issued money is worthless

If you are receiving a salary (!) in a non-gold currency, and have an effective method of converting that currency to drinking water, food, toilet paper, medicine, etc. then, even if it is a crisis, what do you need gold for?

And if the value of government-issued money has completely collapsed, chances are that things are so bad that you'll need things for your immediate survival. Also, as there won't be a central instance setting a commonly-agreed value of gold, it is up to each supply to set their own prices, so how would gold keep its value?

The idea is that gold would still be tradable for those things. It would be a universally recognized store of value and medium of exchange.

If the government-backed currency fails, the concept of currency still exists. It just has to be intrinsically rare.

Yeah, if you have a pile of 1oz bars, then you’ll need to batch your purchases accordingly. (That’s a lot of toilet paper).

Exactly. The idea that you would even have access to the internet and computers in the event of a governmental collapse is inane.

Crypto is posited as a hedge against oppressive governments, but the people who use it almost always live in countries that offer more freedom and democratic control than anyone ever had in history.

People who are actually oppressed by their governments - the North Koreans and Turkmenistanis of the world - don't even have the infrastructure to buy crypto.

It’s not good when the government collapses but it is good for things the government does not sanction: illegal drugs, blackmail, extortion, etc.

Full-blown government collapse is quite far-fetched scenario. Infrastructure in venezuela still works at some level, however poorly. Bitcoin works in places pretty well where goverment is crappy but still not that crappy, that you have electricity, internet, etc.

"if the situation becomes so bad that government-issued money is worthless"

For a real-world example of this, look at Venezuela now. Its inflation was recently estimated at 1,300,000%.

And what do people want? Yes you guessed right: food, groceries, medicine. They are selling gold to afford these necessities. https://www.miamiherald.com/news/nation-world/world/americas...

> They are selling gold to afford these necessities.

They are probably using anything that there is available as a currency replacement. I would bet that mostly physical USD, but also gold, bitcoin, cigarettes etc. I don't think gold is the main replacement when national currency starts hyperinflating, just a tool among others.

Historically government-issued money has become worthless on a country by country basis so if say you lived in Venezuela and had money in gold you could smuggle it out and buy a condo in Miami etc.

I daresay offshore accounts could fulfil the same function with less hassle.

Or just save your money in the first world country with the most stable currency (dollars in the US as of now) like most of us third world citizens have been doing for a long time. We're not buying gold, and if the point ever comes that another currency is stronger, I guarantee the US will see capital flight like it's never seen before (hence all the wars would be my guess).

There is also a third group, those that care strongly about crypto because they believe it is a bad, bad idea.

Downtrending? Power outage? Do you even solar panel? Gold is safe? It doesn't seem like it's growing? What? Get rich scheme? Rebellion? You seem to be a victim of fake news, trust in your government, and or just don't know how actually big the crypto space is.

Haven't you heard? Bitcoin is the new Gold. It IS a genuine financial disruption, hence the absurd Bitcoin bubble which has not popped...

The last recent Bullrun to 20k was merely just a peek of it's future price, and an introduction to the mass of the new technology & products that will be used in the upcoming fourth industrial revolution that is around the corner along with Elon's self landing space rockets and auto-driving vehicles.

A company/project can now put their valuation on a Coin (with a specific supply amount) and skip the whole government printed fiat regulatory process. Tell me how that's not a game changer in this corporate world.

People confuse Cryptocurrencies for a get rich quick scheme because of the Scammers. But, They are also the same people who can't envision the next, Xerox, Amazon, or any other megacorp. Do you know what happens when you invest into these companies/coins before they go big? You Get-Rich-Quick!

Everything about cryptocurrencies makes it the perfect hedge from it being a borderless asset, decentralized and a 24/7 market. Trading cryptos IS the new thing on wall street, If you have not noticed already.

I can't tell if this is satire or not but in the event of a loss of power on a large scale, say in a government collapse, a solar panel won't do you much good without the rest of the internet infrastructure.

> The last recent Bullrun to 20k was merely just a peek of it's future price, and an introduction to the mass of the new technology & products that will be used in the upcoming fourth industrial revolution that is around the corner

You accuse the parent of being s victim to fake news and then make a wildly unsubstantiated claim as though it were fact.

> skip the whole government printed fiat regulatory process

The regulatory processes prevent the Bitfinex, Tether, Mt. Gox, Quadrigas, Bitconnects, etc... And that's just off the top of my head.

> Trading cryptos IS the new thing on wall street, If you have not noticed already

You're vastly overstating the influence of crypto on wall street.

Yeah cause global power outage is such a legitiment threat in this day of age... muh electric cars, muh bitcoin, muh gold... a loss of power large scale would most likely be end of the world; trading wouldn't even matter at such point. Did you forget countries are moving to electric for a greener future? _electricity is not going anywhere._

>You accuse the parent of being s victim to fake news and then make a wildly unsubstantiated claim as though it were fact.

Bitcoin has _ALWAYS_ surpassed it's all-time-high, it's only a matter of time. But it's those people that don't believe in it that end up buying the top and get burnt cause their lack of conviction, then you hear the 'cryptos is scam' bs. Autonomous blockchains and Cryptocurrency is in fact the future, hence why there is so much money in this space. You can't ignore this infancy.

There's plenty of scam projects for sure, just like the plenty non-crypto scam companies in the real world... And about the legit exchanges like Coinbase, Gemini, and Kraken that do follow the US regulatory process? Some of the best exchanges like BitMEX don't even work under US jurisdiction and is yet successful. Those exchanges you specifically mentioned are straight up scams (BCC) and has dealt with sketchy 3rd parties to process their withdrawals, hence why they were shut down or under fire.

As for Tether and BFX, this is the same FUD getting played out again, along with the "X country bans Cryptos", wall street looking into crypto BS. They've already built positions long time ago.

You don't need to ask a bunch of questions and use waffle phrases, this is not a complicated space. Cryptocurrencies are a silly scam and people who love new scams gravitate towards it, most other people don't care.

Does anybody here just use Bitcoin and Ether to write to their respective databases?

I feel like these binary discussions always here miss this native use case that people use. Those people wouldnt brag about it

CoinBase is a terribly run company. I had the pleasure of using them for 6 months. Their support does not exist. Half of the transactions are held for a few days. The reason why they are still running is that they got the license to operate such business in many states. The moment someone offers the same but with actual support... their business will suffer.

Yeah just start a competitor, the licensing alone is something like 3 million... There's very little competition in the space and I guess there are reasons for that.

3m is snack money for VC nowadays.

bitcoin is just getting started..

> if you commoditize something that nobody cares about

I think cryptocurrencies are an obvious trash fire. I also think they contain all the elements (flow information asymmetry, bad price transparency and consistency, high technical volatility, and zero capacity for fundamental edge) that make it quite profitable to make markets in, i.e to be the house in respect of. Combine that with the general culture around cryptocurrencies, which I suspect is averse to litigation, and you have a supremely profitable business.

One need not love what they trade. (I do see an ethical issue with selling retail customers such products.)

Seems to me that launching at the peak of a bubble is a lot sillier. Launching after a deep bear market when it's been back in an uptrend for four months is pretty reasonable, and more likely to be good for your customers.

I wonder, can you make an argument that Bitcoin is like an index akin to S&P, but for gambling and hedging against events like asset seizure or state currency failure?

First let's assume that fundamentals remain unchanged. No innovation, no growth in adoption, no major security failures. Let's also assume that the rough percentage of world populations willing to gamble remains roughly the same over the decades. BTC is deflationary, private keys will keep getting lost indefinitely. So wouldn't it make sense for the price of Bitcoin to at least keep up with inflation, forever?

The S&P companies generate a stream of future profit; that's where the value of holding the index comes from. Bitcoin doesn't and I don't see the logic in assuming it's deflationary or that its fundamentals will remain constant in the long term when the empirical evidence strongly suggests otherwise. It's extremely volatile and has lost more value in the space of months than most inflationary currencies have lost in decades. The problem with the idea of an "index for gambling" is that there are plenty of other assets for gamblers to pick...

I hold many cryptocurrencies, and your argument is only valid if people don't switch to other new better cryptocurrencies.

There used to be very strong network effects, but now that you can exchange coins easily, it's trivial to move to a new shiny thing.

On the plus side, Bitcoin has a brand name and recognition. An average person has no idea about Ethereum or Monero. In my opinion, its brand is the only thing keeping it afloat. Other coins are clearly superior in functionality (except maybe the hash rate).

I've heard it argued that Bitcoin's unique feature, something that makes Bitcoin exceptionally valuable in comparison to other cryptocurrencies is its governance model.

Bitcoin governance is basically a combination of anarchy with extreme conservatism. In the 10 years of its existence there had been exactly zero intentional hard forks. The immutability of Bitcoin's fundamental rules is ingrained in its community.

Why is that important? Let's look at Ethereum for example. Ethereum's developers and community use hard forks to change the rules of their protocol all the time, you have no clue what Ethereum's inflation rate will settle at, its monetary policy is permanently in flux with singular individuals like Vitalik Buterin having enormous influence on governance.

>Other coins are clearly superior in functionality (except maybe the hash rate).

This isn't true, and the opposite is quite true.

Bitcoin is the only coin that seems immune from a 51% attack. Every other coin has a significantly lower threshold needed for people to commit a 51% attack.

Ethereum and other Blockchain coins are not 'superior', they use the same POW solution as Bitcoin. Often, another coin will discover a new way to make blockchain better, and Bitcoin adopts it later. When Etheruem failed to scale, I sold all of my POW alt coins.

The rest of the coins are centralized, which defeats the purpose of blockchain. Entirely useless as cryptocurrency.

I see a future for Bitcoin and Stable coins. I don't see alt coins doing anything Bitcoin cant.

Ethereum didn't fail to scale, its just taking much longer than anticipated. The plans are finally coming together though for PoS and Sharding on the base chain, with layer 2 there for more scaling as needed

Layer 2 is not decentralized.

POS is not decentralized

Sharding has a unstoppable risk of a 51% attack.

Ethereum has failed.

> POS is not decentralized

huh?

> Sharding has a unstoppable risk of a 51% attack.

So does bitcoin?

POS uses few users to validate transactions. This is not decentralized.

> Sharding has a unstoppable risk of a 51% attack.

>So does bitcoin?

Bitcoin cost of 51 percent attack is ~400k for 1 hour. ETH is 90k for 1 hour.

https://www.crypto51.app/

> Bitcoin cost of 51 percent attack is ~400k for 1 hour. ETH is 90k for 1 hour.

Seems not wildly different to me and nearly the same order of magnitude, and you are also admitting that 51% is a concern for Bitcoin, so it sounds like we're agreeing now!

> POS uses few users to validate transactions.

The "few" can be quite a large number, and those same validators are by definition very invested.

So if you buy on ETrade... are you buying actual coins they hold for you or is it some other sort of bitcoin related ... thing?

Good question. They might just be making a market.

Quite often this kind of instruments might be "tradable debt instruments" which can't be converted to actual bitcoins, but can be traded back and forth on the platform to traditional currencies. The issuing company maintains the peg to the bitcoin market value, probably using futures or similar instruments.

Of course they might also enable bitcoin withdrawals/deposits but I somewhat doubt it. There are similar offerings on other traditional platforms and usually they work this way.

Are there any numbers on how much crypto is being used as a currency (i.e. actually buying things) vs. how much is being used as an investment (i.e. buying and holding/trading with the hope it goes up in value)?

I'm curious how each compares to traditional currency and how much this affects the competitiveness of it as a common currency. My initial thought is that so many people look at it as an investment it may limit it's ability to be a good medium for exchange.

If you are a legit company with pesky things like bookkeeping and accounting then you do not want Bitcoins on your books. You might accept Bitcoin as a gimmick by utilizing a third party service which buys them and gives you money (like BitPay) but there's no legic economy. How could there be when it is so volatile and it's basically held up by hype? The risks are clear for a business and what's the advantage...?

Not to mention the tax implications.

In 2017 I worked for a company that often took payment in ETH and held a lot of it long-term. They had a bookkeeper and two lawyers on payroll, and about fifty other employees.

You’d be a fool to spend your bitcoins. It’s a deflationary currency. That means it’s worth more later than now in the long run. As opposed to dollars, which is inflationary and worth less as time goes on.

You'd be a fool to spend your dollars, when you could instead just buy bonds, which you could redeem for more dollars in the long run.

Well lots of bonds tend to have negative returns nowadays...

So you'd be a fool to get paid in dollars, since it's worth less as time goes on.

Money is always a trade with a spending and receiving side. So the real question is what the person who has the goods wants to get in return.

Well, if you follow that logic your whole life, you will have lots of bitcoins when you die. Happy life I guess?

The point of money, currency or any financial asset is to produce value to your life. If you think bitcoin will develop in value, it makes sense to spend less-valuable assets before those bitcoins, but at some point you probably want to use your bitcoins as well for living. Money should be a tool to enable nice life, you shouldn't live for money.

You'd be a fool NOT to spend them. Spending them helps to improve their value by growing the ecosystem. Spend and replace.

This was what I was looking for insight on. At least in some people's view, Bitcoin isn't much of an investment because it has no intrinsic value, yet if the majority holds on to it, it has litle value as a currency/medium of exchange

It's quite hard to get numbers.

Firstly the reported trading volumes are about 95% fake. https://www.forbes.com/sites/cbovaird/2019/03/22/95-of-repor...

Then much of the thing buying is illegal stuff like drugs that doesn't get well reported. Wikipedia has "A reviewed 2013 analysis put the Silk Road grossing $300,000 a day, extrapolating to over $100 million over a year."

Coinmarketcap has daily crypto volume at $43bn a day

so say 5% is real that's $2.1 bn/day trading

and say drugs trade etc is $1m a day, that's a small proportion.

comission on those trades is probably about 0.2%*2.1bn= $4m/day

Regular retail business, not much https://news.ycombinator.com/item?id=19280689

I've gotten user donations from Bitcoin.

I've paid friends in Bitcoin and they have paid me.

I also got a Shift card, which is super cool.

My only reluctance with Bitcoin, is getting a mortgage in BTC. What happens if BTC hits 100k USD/coin?

Ha, I'd love a BTC mortgage. I'll take those odds.

Guess if it was no recourse it could work.

Just by trading volume https://www.coingecko.com/en/exchanges it is always a good move to get a piece of the pie. Even etoro has launched an exchange

Based on their marketing, I always assumed E*Trade's user base was mostly gamblers, so crypocurrency seems like a natural match.

So should I take my money and securities out of Etrade if they are above the levels guaranteed by SIPC?

Robinhood already does this

Just another instrument for Wall Street to make money. Crypto isn’t about decentralization or immutability at all right now

Interesting that some companies are still interested in cryptocurrency even though it's still trending downwards. It's more likely that you'll lose money each year than make it, especially with emotion tied into the mix.

Some good technical concepts exist in this space but the financial element has made the entire space corrupt to its core.

As always. The human element left unchecked will turn anything toxic.

I used to lean towards more libertarian ideals but seeing what freedom has done to cryptocurrency has shown me some order and law is needed.

“Interesting that drivers are still interested in gas even though its is trending downwards”

Nobody complains about cheap gas except speculators on the wrong side of the market

Cryptocurrencies are fuel to write to their respective databases

Get on the right side of the market

They've been trending upward for the past four months, a third as long as the bear market.

Wildly irresponsible but no surprise from the “trading babies” company.

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