Day Traders Rejoice—There’s A Free Cryptocurrency Exchange In 2018
2017 was the year of cryptocurrencies. And if you invested in them, it was probably a good year for you, as well.
While the unfathomable success of Bitcoin took the spotlight (rising from USD 1,000 to USD 20,000 over the course of the year), it wasn’t alone in its ascent. Ripple grew even more than Bitcoin did this year. Ethereum and Litecoin made monumental jumps. Even some of the altcoins made unprecedented leaps of over 15,000% in this year alone.
If you’re a swing trader, day trader, or just a general investor in any of these cryptocurrencies, your payout was probably substantial. But, you likely paid out a good amount of those profits in trade fees, as well.
Think of all that money lost to the exchange...
The problem with exchanges: high trading fees
Businesses in the financial sector tend to make a lot of money. Cryptocurrency exchanges are no different.
Coinbase, for example, charges a 1.5% fee to buy Bitcoin from their site. And its sister site, GDAX, features “taker” fees of 0.25%. So if you have $10,000 and make a single round-trip trade with all that capital (buy and sell), you’re instantly down $50. If you made 30 round-trip trades per month with all your capital? You’ve now lost $1,500, or 15% of everything you invested.
These fees, while they don’t seem high at a glance, eat away at profits. And they’re the norm everywhere. They’re why the vast majority of day traders are not profitable, even if they make decent trades. Your trades can’t just be decent if you’re making round-trip trades every day. Those fees add up quickly.
This is why Binance has become the largest exchange by daily volume in under half a year. The Shanghai-based exchange has the distinct advantage of only charging 0.10% of each trade. That’s significantly less than every other major player. Using the same $10,000 account as an example, you’d only pay out $20 per round-trip trade. These low fees, combined with Binance’s numerous trading pair offerings, has allowed it to thrive in an expensive cryptocurrency exchange ecosystem.
But 0.10% still adds up over time. And when you factor in the taxes you have to pay on your winnings, your profits dwindle all too quickly.
The truth is that trading fees are put in place to turn a profit—not to benefit customers. Most exchanges not only could care less about your bottom line, they actually factor in your “lifetime value” as a customer because they know how long someone will stay with them before they go bust.
These are all reasons why Cobinhood (COB) seems so exciting and groundbreaking. It’s the first 100% free cryptocurrency exchange. There are no fees and no commissions at all. Sound too good to be true? I did a deep dive into it to see if it lived up to the hype. Here’s what I found.
What Is Cobinhood (and why should I care)?
Cobinhood launched its exchange in December of 2017 with one goal: create a user-friendly, dependable cryptocurrency exchange with zero fees.
Taking a page out of the book of the zero-fee stock trading site Robinhood, Cobinhood’s value prop couldn’t be easier to understand. There’s no fine print or “fees that aren’t actually fees.” They are the genuine article and offer exactly what they advertise.
The wise skeptic might ask, “But how do they make money?” Good question. Rather than collecting piles of money from commissions, Cobinhood underwrites new ICOs that can be featured on their exchange. Cobinhood takes a small percentage of these new ICO coins to finance their operation. That’s how they locked in Cybermiles and helped them raise $45 million.
https://www.huffingtonpost.com/entry/no-really-a-free-cryptocurrency-exchange-in-2018_us_5a4e3b71e4b06cd2bd03e50a
