Fee fi fo fum, as the age-old tale of Jack goes, he tends to have a propensity to take on giants. In the Bitcoin space, there are very few bigger than the likes of Coinbase, PayPal, Venmo and The Cash App (which I’m sick of being plugged in Podcasts, WE KNOW THE CASH APP, we don’t want to use it. Sorry Marty and the freaks, we know you’re just trying to keep the lights on. )
So what am I on about? Well, I’m talking about Jack Mallers latest attack on the beanstalk with his announcement that Strike his company will be reducing their fees to 0.3% when buying and selling Bitcoin, making it the cheapest in the industry right now.
As a third world living broke Bitcoiner myself, I welcome changes like this; to some 3% means nothing but to me, that’s a few thousand sats I don’t get to keep, and I would be inclined to say that those sats are a major lost opportunity cost especially as the purchasing power of sats continues to increase.
I just published Announcing the Bitcoin Tab— Jack Mallers (@jackmallers) July 1, 2021
Today, the cost to acquire bitcoin works its way towards zero.
Buying #bitcoin for no added fees is how it always should have been.
Now it is.
Pawn to e4, world. Your move.https://t.co/2oHMtfa1ys pic.twitter.com/OEPQ50X3JZ
The fee fi fo fum of it all
I know many of us love the idea of “hyperbitcoinisation”, and in pursuit of that goal, we’re willing to make compromises, like okay, Coinbase is nailing people with a 3-4% fee. Still, at least they are allowing their users to buy Bitcoin.
Okay, Binance sells shitcoins on a level that makes online casinos look like reasonable investment opportunities, but it offers people a chance to get into Bitcoin. I’ve seen the mental gymnastics, and it’s a slow creep towards throwing away your principles.
If working as a digital marketer has taught me anything, it’s the power of repetition. I don’t have to craft the best ad with the best copy, but if I can get it in front of your face enough times, a percentage of users will crack, and that’s where we make our profits.
So the theory goes, eventually, if you’re visiting a dodgy source like getting your broccoli at the crack house, after enough visits, you’re going to end up smoking crack. I know some people talk about the purity test of Bitcoin and that we shouldn’t be so evangelical, but we’re humans, and we’re not immutable code; we are prone to corruption.
The race towards zero
Channelling my boy Jeff Booth’s greatest hits, I love listening to that guy; by the way, people should really take note of what he’s saying. It makes a lot of sense. Anyway, one of his favourite lines talks about the race towards zero. As entrepreneurs find a place where they can provide value and extract margin, they will trace in and compete with one another until they remove that arbitrage.
The entire point of a business is to make a product cheaper, faster and better and acquire more of the customer base and, therefore, the total addressable market. While other businesses may do it incrementally, and some industries have a gentlemen’s agreement not to move prices too much for the sake of extorting customers each year, Bitcoin should be an industry that doesn’t have to fall pretty to these actions.
If entrepreneurs eventually race towards zero, why not take it there sooner rather than later?
And this is what Jack is saying.
Let’s not dance around the topic, let’s do the damn thing, and that’s an ideology I can respect, and we can all learn from; we talk about Bitcoin as a free market.
This is the free market at work; this is creative destruction, Strike now forces other businesses to rethink their fee structure and business model, and if they cannot adapt, they have to die; this is the nature of the game.
Where does the money go?
A question I ask myself all the time, and one Jack raises in his announcement. Yes, exchanges need to charge a fee to pay for operational costs and salaries, but what they do with that income is something Bitcoiners need to think about. If Bitcoin brings in a large majority of businesses fees and they’re spending it on listing shitcoins, what does that help?
You’re essentially paying to keep these projects going and giving them even more ammo.
Selling shitcoins is a profitable business; the fees and additional trade volume, as well as scalping retail who don’t know how to read an order book, is easy money. Then all you do is scale that operation by adding more rubbish to trade between, it’s simple and effective, and the house always wins.
This move to reduce Bitcoin fee taking could knee cap exchanges, and then we’ll see what they are made of if they are going to compete.
Do they double down on the shitcoining to cover the shortfall, or do they innovate? Only time will tell.
No shilling, but it is thrilling
This is not me shilling strike; I don’t even use the app, I can’t since I am not in the US or El Salvador based; this is just me taking a look at how competition in the Bitcoin distribution channel space needed this to make it better.
Is Strike perfect? No, it’s a custodial service and has its limitations as they have to play by the rules of being a money services business. We all know it can’t be easy dealing with regulation, especially as Bitcoin continues to threaten so many interests in the financial sector.
Is cheaper Bitcoin acquisition good for the world? Very likely, is it good for me, of course, it is, and I hope other exchanges follow or face losing their customer base.
I am just happy to see innovation aimed at making it cheaper and easier and holding businesses to account. Bitcoin was meant to take away the rentier class that is the middle man, so why are we putting up with being extorted for our sats.
We already busting our arses to mine fiat 9-5, then they chip away tax, bank fees and inflation and the moment you want to store it in the hardest money ever, you get kicked in the teeth with more fees. So a little less novation for the jaw when gobbling up sats works for me.
Until next time, keep stacking! Che-256 out!