[superfrank]

There was a time when would have loved to buy Coinbase stock.

Just a few years ago, they were by far the easiest was to buy crypto (IMO). At that time they also felt like the most legitimate site and for people who didn't 100% know what they were doing, but wanted to buy some Bitcoin, that perception of legitimacy is important. For those reasons, I feel like they kind of dominated the casual coin holder space, and I think they could justify the fees they were charging.

In the last year or so it feels like that's all changed. Because of things like Apex Crypto, it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase. It seems like their market (non-crypto people looking to buy crypto) is being eaten alive. I don't understand their value prop or why their higher fees make sense anymore.

I've been burned too many times, so I don't short stocks or buy puts, but I just can't see this being a good buy. Unless they drastically lower their fees, I just don't see them continuing to grow users.

[perardi]

What’s “Apex Crypto”?

I am not being obtuse or sarcastic here. Is it this? http://apexcrypto.com Because that website tells me nothing at all. And past that, Google only shows a few press releases.

-

But on the consumer crypto coin collector criteria, it still seems like Coinbase has the mind-share. And I imagine they have the reach and scale to be in compliance with regulators, which is what makes them a more attractive investment.

Me? Square’s Cash app is awfully slick, and makes buying drugs…I mean…buying non-fiat currency to stick it to the man all very easy. But I have no idea if people use that feature frequently.

[superfrank]

> What’s “Apex Crypto”?

Apex Crypto is a crypto clearing house, similar to the clearing houses we have for the stock market. Companies like Robinhood, WeBull, SoFi, etc aren't building their crypto trading infrastructure from the ground up. They're plugging into services like this, which handle the exchange between fiat and crypto and a lot of the regulatory compliance. This drastically cuts down the complexities and lowers the barrier to entry for offering buying and selling of crypto.

I don't know all the details of the services they offer, but services like this are the reason it seems like every app under the sun will now let you buy and sell crypto.

[gruez]

>Apex Crypto is a crypto clearing house, similar to the clearing houses we have for the stock market

Is this the same "Apex" that handles clearing for stocks?

[superfrank]

I'm not 100% sure. I actually tried to do some research on that a few months ago and couldn't find anything definitive one way or the other (I haven't looked since then).

When I did look, I found some press releases about them partnering, but it was light on details. Based on the name and the fact that their logos now match (they didn't used to), my guess is that they aren't two separate companies.

[unstatusthequo]

Or a hell of a clever ruse to cause exactly this confusion by consumers to think it’s more legit than it is. All of this is buyer beware outside of CoinBase. Why? CoinBase and regulators are best buddies. Hard to be dodgy with Big Brother peering into your customer data via IRS subpoenas.

[rawtxapp]

> But I have no idea if people use that feature frequently.

Looks like they made 4.57B$ in revenue with 97M$ in profit [1]. And "We’ve continued to see strong adoption, with 3 million customers [buying bitcoin] through the past year, and in January we saw 1 million new to bitcoin in just one month."

1: https://www.coindesk.com/square-cash-app-bitcoin-revenues-sw...

[tedunangst]

It's a bit odd to count that as revenue. Like Robinhood counting their entire trade volume of $350 billion as "revenue".

[rodonn]

Unfortunately under US accounting rules you have to do it this way in your financial filings.

[woobar]

But bigger brokers (in fact, much more than just brokers) like Merrill ($18B) or Schwab($10B) do not report their transaction volume as revenue.

[wfleming]

I'm having trouble finding a good citation, but I think the GP is referring to a quirk of US accounting rules that causes crypto trades specifically to be counted as revenue. The same does not apply to traditional financial market trades, which I think is what your numbers are.

[skybrian]

Weirdly, it seems there are no GAAP accounting rules for cryptocurrencies yet. Apparently there is informal guidance that it should be treated as an intangible asset:

https://news.bloombergtax.com/financial-accounting/tesla-bit...

[Black101]

Many Stock brokers like Webull let you buy crypto, but you can't transfer them to your wallet or use them to make purchases. Also, they claim no fees, but they add the fee to the spread (the spread is artificially increased to 1% both ways (2% total)) ... so it is like a hidden fee that ends up being more then what you pay on Coinbase, especially if you trade a substantial amount each month [1]. So Coinbase is still one of the best even though they can't handle the loads when the market get busy.

1. https://i.imgur.com/IohYn4o.png

[superfrank]

> Many Stock brokers like Webull let you buy crypto, but you can't transfer them to your wallet or use them to make purchases.

Fair, but I feel like most people I know aren't using crypto as a currency right now. They're more interested in holding or speculating on the price, so transferring to another wallet is a non-issue.

> Also, they claim no fees, but they add the fee to the spread (the spread is artificially increased to 1% both ways (2% total))

I'm not up to date on Coinbase's latest fee structure, but I think 2% still may be less than, or at least comparable, to what they are charging. Even if it isn't, the illusion of no fees will attract a certain amount of people.

> especially if you trade a substantial amount each month

Do people trade a lot using Coinbase (serious question)? I was under the impression that there were better platforms out there more suited to day/swing trading crypto.

[Black101]

The maximum that you can get charged at Coinbase is 1% for a buy & sell transaction pair (0.5% each way), if you don't trade much... so half of webull : https://i.imgur.com/IohYn4o.png

But it goes down quickly. It gets cut in half if you trade $50k/month and goes to down to 0% if you trade a lot.

[superfrank]

That's not including the credit and debit card fees though, right?

It's been a while since I've used Coinbase, but I feel if you want to just buy a small amount of crypto, the total fees can be up to like 10%.

[Alupis]

You mean Coinbase Pro, not Coinbase.

Coinbase charges 2.5% to purchase.

[tedunangst]

For reference, coinbase is currently quoting bid/ask for bitcoin at around 58/62...

[gruez]

That's their quote for casual users. You get much tighter spreads on coinbase pro.

[Black101]

I get $0.01 spread on Coinbase pro unless the market activity is going crazy.

[tedunangst]

I think that's the right comparison for webull or robinhood.

[Black101]

maybe they should add a 3rd option where you would pay 5% ....

[rawtxapp]

I agree with you, I think their coinbase pro fees are relatively reasonable, but I just don't see why anyone would use the "normal" coinbase, the fees are very high, I suspect it's probably name recognition, ease of use and trust.

[JSavageOne]

Coinbase is just a money grab to extract money from people who don't know about Coinbase Pro. Really shady if you ask me and I'm surprised it doesn't seem to have damaged their brand name. The fees on "regular" Coinbase are outrageous and no one should ever buy through there.

[AlchemistCamp]

Are there different requirements for Coinbase Pro that many users of the "normal" service wouldn't qualify for?

[rawtxapp]

Nope, you can just use your existing coinbase account to login to it, it's just more "advanced" as in the UI isn't just a buy and sell button, but still very easy to use.

[realdlee]

No, it's pretty straightforward. If you're on Coinbase, you should switch to Coinbase Pro for the lower fees.

[Alupis]

> it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase

Coinbase even undercuts themselves. Use the Coinbase App - 2.5% fee. Use the Coinbase Exchange App (Coinbase Pro) - 0.5% Fee.

So... buy your Bitcoin (and others) through the Coinbase Pro website/app, then transfer them into your Coinbase wallet/vault for free.

[vmception]

So I don't get that impression because the trading fees are a sideshow.

Coinbase Vault is providing access and liquidity to the whole DeFi market without ever saying it.

Its like not investing in Amazon because you didn't notice AWS. The similarity being limited to there being a non-consumer facing product that might be bigger than the visible one. Coinbase has a lot of growing revenue streams, which has almost nothing to do with the retail platform of non-crypto people looking to buy crypto.

[pdog]

> Because of things like Apex Crypto, it feels like pretty much every stock broker app will now let you buy Bitcoin and they'll do it with lower fees than Coinbase.

Which stock broker app lets you deposit in Bitcoin? Or withdraw your Bitcoin to your own address?

[PascLeRasc]

Cash App does, but that's the only one I'm aware of.

[albertshin]

in the few times I've traded BTC, I've personally seen tighter spreads in Coinbase (fixed + % fee) than Robinhood Crypto ("free").

I'm aware there can be many reasons for this but I couldn't help but wonder if Robinhood was baking in some hidden fees.

[droidist2]

I think the reason is because Coinbase Pro has an API. People running trading bots keep the spreads tighter.

[gibybo]

I think the bull case may be more about their future sources of revenue. If crypto succeeds, exchanging it with fiat may end up being only a relatively small amount of the economic activity. Traditional brokers are not likely to be able to compete with Coinbase in those future markets.

Of course it's really hard to predict what those future markets might be or how much value Coinbase will be able to extract from them, so I have no idea if $68 billion is a reasonable valuation.

[ryanSrich]

Not to mention that Coinbase doesn’t really serve a strong purpose anymore. Why not just use a DEX?

[xienze]

Well first, how are you gonna get Eth or whatever to use that DEX? Some apps have payment options but hoooo boy are the fees outrageous. Coinbase doesn’t have the best fees in the world but just mosey on over to Coinbase Pro and it’s a whole lot better.

Then there’s the gas fees on Uniswap. Not even worth bothering with unless you plan on making $1000+ trades.

The other thing to consider is that for newbies they offer a safe platform with a list of established coins. That counts for something.

[ryanSrich]

Onramp is a good point. Didn't think of that.

> Then there’s the gas fees on Uniswap. Not even worth bothering with unless you plan on making $1000+ trades.

This is fixed by PancakeSwap.

[rawtxapp]

PancakeSwap which is running on a "decentralized" network, "CeDeFi" as CZ calls it, that's tightly controlled by Binance.

I think the real solution are layer 2s, optimism comes to mind, but there are many others too.

[miglmj]

High fees and lack of a fiat on ramp are two big reasons

[arthurcolle]

Liquidity.