
E*Trade Is Close to Launching Cryptocurrency Trading - petethomas
https://www.bloomberg.com/news/articles/2019-04-26/e-trade-is-said-to-be-close-to-launching-cryptocurrency-trading
======
apo
> 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...](https://bitcoinmagazine.com/articles/td-ameritrade-nasdaq-reportedly-
offer-btc-and-ltc-paper-trades/)

------
__ralston3
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).

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

~~~
joncrane
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.

~~~
Traster
This really isn't correct at all. Firstly, E _Trade 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 E_Trade as a platform.

------
RickS
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?

~~~
coralreef
Nobody cares about crypto?

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

[https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-
coin...](https://www.cnbc.com/2018/10/30/cryptocurrency-start-up-coinbase-
valued-at-8-billion-despite-bitcoins-plunge.html)

~~~
RickS
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.

~~~
jnurmine
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?

~~~
DINKDINK
>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).

~~~
keymone
> 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.

~~~
DINKDINK
>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.

------
wickoff
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?

~~~
bufferoverflow
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).

~~~
robertAngst
>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.

~~~
cdiddy2
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

~~~
robertAngst
Layer 2 is not decentralized.

POS is not decentralized

Sharding has a unstoppable risk of a 51% attack.

Ethereum has failed.

~~~
ericb
> POS is not decentralized

huh?

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

So does bitcoin?

~~~
robertAngst
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/](https://www.crypto51.app/)

~~~
ericb
> 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.

------
duxup
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?

~~~
jerguismi
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.

------
bumby
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.

~~~
jedberg
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.

~~~
logicchains
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.

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

------
granaldo
Just by trading volume
[https://www.coingecko.com/en/exchanges](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

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

------
jgalt212
So should I take my money and securities out of Etrade if they are above the
levels guaranteed by SIPC?

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dayaz36
Robinhood already does this

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m3kw9
Just another instrument for Wall Street to make money. Crypto isn’t about
decentralization or immutability at all right now

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josephagoss
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.

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

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

