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Comment by Cookingboy | Hacker News Reader

Coinbase has a key difference from traditional brokers such as Charles Schwab, Scottrade, etc.

It doesn't charge a flat fee for buy/sell crypto currency, but a 2-3% fee based on the transaction value.

So even though I'm sure they've been making cash hand over fist this past 12 months, it makes any sort of future prediction extremely difficult. They not only have to predict customer growth (which leads to transaction volume), but also the price of those cryptocurrencies. It's akin to calculate position from nothing but a accelerometer, and that double integral would be quite a bit of margin of error.

But in the end it may not even matter, as far as revenue growth and even profit wise I'm sure they are doing absolutely amazingly.

Hell, I wouldn't even be surprised if Coinbase has higher daily revenue (definitely more profitable) than Uber at this point.

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I bet Coinbase makes more money from their exchange (GDAX) which does $1 billion each day in volume. While limit orders are free, market orders cost 0.25% of transaction value.

Why would anyone ever want to use a market order versus a limit? In any exchange, for any kind of trading? If you're really ok with e.g. selling for 0.01, set that as your limit.

Because the market could move against you.

If you're ok with buying for 100, but someone else is selling for 99, you've effectively done a market order and have to pay the fees. However if the lowest sell is 101 and then the price moves up to 105, you've just screwed yourself for 4 in order to save 0.25

Huh? Just set your limit to 105 or 200 or 10500. There's no reason to ever use a market order unless there's some other severe limitation on limit orders in a particular implementation.

You can't set your 'limit' to 105, when the current price is 101. That's a market order.

Even if you could, why would you want to buy at 105, when the current price is 101? Just to don't have to pay 0.25 in fees!? That sounds like "The Firm" from John Grisham where rich people would rather pay $2 to lawyers than $1 in taxes.

This is incorrect.

You do not know what the current price will be when you click the submit button. You may enter a limit of 105, and find that when you get around to submitting, the price is suddenly 205 or 1.05. This is why you use a limit order, so that your "market" order doesn't give you a sudden surprise.

On top of that, the current price is only valid for a certain depth. So if the asks are 10x101 and 20x106, I want to set my limit to 105 to make sure I only take that 10x101 order off, and not start chewing through and execute at a much different price than "current". All these orders are changing extremely rapidly for any popular item, so using limits makes sure you get the execution you want.

The limit does not set the price that your order will execute at, but the limit. It'll match at or better than the limit you set. So you never end up paying more than you're OK with, but you prevent getting burned by sudden movements. This is much more important on these cryptocurrency exchanges than traditional stocks.

> it makes any sort of future prediction extremely difficult.

People will always buy $100 worth or whatever regardless of what percentage of a bitcoin that gets them.

Not exactly true. If hype goes up then more people are willing to dump more money into it. The volume and user growth are definitely related to how much hype/excitement there is.

With a flat fee they would also benefit from having more users/transactions.

This seems similar to forex transactions. Fidelity charges a % based fee when buying/selling foreign currency.

Limit orders are free on GDAX.

Experimenting with the low-end shows a $0.99 floor on their fee.

Use GDAX and a limit order and you can purchase for free. Easy to transfer between gdax and Coinbase.

If GDAX is better why use Coinbase?

GDAX is a trading platform, so it might seem a little more daunting (UI-wise) for someone new to crypto.

Not better, just different. On Coinbase you can buy in one step and lock in a price before your bank transfer clears. You can't do that on GDAX. It's a multi step process where you have to deposit money first before you can think about buying. You also don't have to worry about slippage or different order types on Coinbase. It's all abstracted away for you and very simple.

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