From left to right, Gemini CEOs Tyler and Cameron Winkelvoss, Coinbase CEO Brian Armstrong and … [+]
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If you’ve ever tried to sell Bitcoin, turn it into dollars, and then deposit those dollars back into your bank account to lock in a gain, you’ve noticed that – depending on the transaction size – that Coinbase has taken away $20, $50, $100…
You’ll never really know the exact amount until you’re ready to lock and load. It’s not a Coinbase issue. Gemini and Kraken’s fee structure is also cumbersome. This isn’t like the old E*Trade, where you would pay upwards of $7 per transaction at times. (Now it’s free). It was costly, but at least you knew instantly what the fee was.
If you’re a regular cryptocurrency trader, like me, and like to cash out and book those gains into fiat to buy hard assets, or reload an IRA, then these exchange fees are sure to drive you wild. When will there be more clarity on fees?
There’s no timeline for this. Maybe it happens fast. Maybe it takes a few more years of being soaked for certain trades and withdrawals. Competition is the main thing that will drive rates lower.
“I think over time, more competition will come as more firms enter the space and trading fees will compress,” says Martin Green, co-chief investment officer and CEO off Cambrian Asset Management in Mill Valley, Calif. He says retailers are the ones getting soaked. “We don’t pay the types of fees that retail pays.”
Different fee structures for different trades at Kraken, Gemini and Coinbase. Coinbase doesn’t … [+]
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Most of the exchanges are moving in this direction, with pro-trader versions of the product that reduces fees or cuts them out to zero, depending on the transaction and quantity of transactions. Each exchange is different. There is no set language so it is hard to compare one to the other. It’s not like comparing TD Ameritrade with E*Trade.
Why are fees so cumbersome and hard to nail down? Because each exchange is different, and each transaction is processed differently on the blockchain, things like Ethereum “gas fees” and multi-chain transaction costs come in to play. Each individual trade is not going to be settled on the blockchain by one exchange. The cost comes from moving assets from off exchange to on-chain.
Imagine your digital purchase being blown apart and going through multiple pipes and each pipe charges a tiny amount until it goes through the Coinbase or Gemini pipe. It’s sort of like that. Call that cryptocurrency blockchain for dummies. I won’t pretend I’m a Wired geek on this one. I’m just an investor.
“Blockchain fees which typically occur when withdrawing money from exchanges have increased dramatically due to the demand. U.S. dollar tether (USDT) usage is now mostly on the Ethereum blockchain but at the same time many of the other coins are using the same blockchain which increases the competition between …….