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Jeff Bezos once famously said “your margin is my opportunity.”
This ruthless, financially savvy approach is beginning to play out in crypto markets as well. Early exchanges were able to charge egregious fees because of the lack of competition, but we are now watching a rapid compression of fees across exchanges and trading platforms. Robinhood, a stock and crypto trading platform, has even introduced no-fee crypto trading into the market.
While exchanges’ fee structures are competing in a race to the bottom, a much more important trend is building momentum. Crypto-based online transactions are becoming “no-fee” transactions.
Coinbase Commerce is a great example of this trend. The simple API allows any merchant to begin accepting cryptocurrency from a global audience within minutes. Even better though, all transactions are completely free and don’t involve a single middleman. The peer-to-peer transactions are more secure (Coinbase never touches the private keys), while achieving a level of efficiency and speed previously missing from most online payment systems.
As Kevin Rooke pointed out, 2.7 million online stores can now accept crypto thanks to Coinbase Commerce’s partnerships with Shopify, OpenCart, Magento, WooCommerce, and PrestaShop. The potential is obviously high, but the current adoption is still relatively low — Coinbase only has a little more than 2,000 businesses using the commerce product today.
Merchant adoption of Coinbase Commerce will be a key data point to watch as Coinbase begins to push the product more publicly. In fact, there is likely to be interesting correlations between the adoption of this product and price movements, trading volumes, retail investor interest, etc.
If so, I wouldn’t be surprised to see many other crypto companies jump into “no-fee” transactions. They would use the payment system as a loss leader and leverage it to drive customer acquisition. Regardless, no matter how the market evolves, the fee compression across the ecosystem continues to benefit the mass consumer.
This is a new world — one where rent-seeking middlemen’s days are numbered.
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Report: Apple co-founder Steve Wozniak joins crypto startup Equi: Apple co-founder Steve Wozniak said he's now working with investment-focused crypto startup Equi Capital. Wozniak said this is the first time he has worked with a blockchain company in his career, adding that he "was amazed at the technology behind [cryptocurrency]." Equi aims to act as an investment firm, and it hopes to help both retail and professional investors purchase equity in companies in an effort to replace traditional investing firms. Read more.
US government grants $800K to blockchain researchers: The U.S. government will help fund a distributed ledger platform being developed by researchers at the University of California-San Diego. Subhashini Sivagnanam, a researcher and software architect, won $818,433 from the National Science Foundation to develop the Open Science Chain, a proposed distributed ledger which will help researchers efficiently access and verify data collected through scientific experiments. Read more.
Crypto media banned from WeChat in sudden online sweep: Blockchain and cryptocurrency media accounts in China have been banned on WeChat, the messenger app owned by Tencent. Among those affected are Jinse, which is backed by Node Capital, and Deepchain, a site supported by several token funds. It's not clear at this time precisely why the accounts have been affected. However, newly-enacted rules from China's government may have played a factor. Read more.
US Senators raise crypto mining concerns: Members of the U.S. Senate Committee on Energy and Natural Resources asked about the cost of cryptocurrency mining and the opportunities for blockchain in the public sector on Wednesday. Like other crypto-related hearings on Capitol Hill, the hearing – which featured a range of public and private-sector speakers – served in part as an informational session for lawmakers who aren't very familiar with the technology. Read more.
Threats fly as fight over Siacoin's crypto mining ‘kill switch' intensifies: An effort to keep the $200 million siacoin blockchain free from corporate interests is devolving into chaos amid accusations against the companies at the center of the effort. At issue is the conduct of the protocol's coders, and the motivations behind their push to alter the rules of the blockchain they maintain. Read more.
Decentralized apps like CryptoKitties are stalling: According to research site Diar, the number of daily visitors to CryptoKitties in August was 510, which is a 96% drop from its peak a few months ago. Diar’s findings are even more grim when it comes to other prominent decentralized apps. One example is Augur, a new type of prediction service that lets people wager on future events. After raising $5 million in 2015, Augur finally launched in July—but now counts fewer than 50 users, according to Diar. Read more.
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Nothing in this email is intended to serve as financial advice. Do your own research.