Jack Mallers. Source: Twitter/@JackMallers
Strike, a bitcoin (BTC) banking service by the US-based Bitcoin Lightning startup Zap, about to enable their users to buy BTC on its platform with no added fees — which would make a major difference in paying for transactions when compared to crypto exchange Coinbase, and other services such as PayPal‘s Venmo, and Square‘s CashApp. Per Strike, these companies won’t survive if they keep overcharging users for BTC transactions.
"Starting today, Strike will set out to be the cheapest and easiest place on the planet to acquire bitcoin […] through purchasing, direct deposit, card rewards, and more," said Strike CEO Jack Mallers.
According to him, their new Bitcoin Tab provides the ability to buy BTC on Strike with no added fees outside of the market-spread execution cost charged to Strike by their execution partners. Those costs were below 0.3% at the time of the announcement and "we expect that to drop below 0.1% over the coming months as our volume grows," the CEO said, adding that the more Strike’s volume grows, the less their partners charge.
just setting up my twttr
— jack (@jack)
The announcement specifically named crypto exchange Coinbase as one of the companies who have built their businesses around "charging retail a hefty fee to acquire bitcoin." Coinbase posted USD 1.8bn in revenue in the first quarter of 2021, out of which USD 771m was profit, while of those revenues, "94% came from its asinine trading fees, often nearing 3%," argued Mallers.
He further claimed that Coinbase’s business likely can’t function without the high fees as, among other things, it allows them to acquire "shitcoins" to give away to users. "Make no mistake, when you buy bitcoin on Coinbase, you are supporting shitcoins," he said.
Per Coinbase’s pricing and fees disclosure, they charge a fee based on their estimate of the network transaction fees for each transaction, depending on the buyer’s location, transaction size, payment method, etc. They charge a spread of 0.5%-1%, which they say may be higher, as well as a fee of up to USD 3.99.
Strike’s announcement also mentioned Venmo and CashApp alongside Coinbase, saying they’re charging less than but similar to the recently Nasdaq-listed exchange.
Venmo charges a fee up to 2.3% for buying or selling crypto. Also, there’s a 3% fee for sending money to others using your credit card; 1.5% for transferring money from the Venmo account with the Instant option; up to 5% (and a minimum of USD 5) for adding money using cash a check feature, etc.
CashApp says they charge two types of fees for buying or selling bitcoin: a service fee for each transaction and, depending on market activity, an additional fee determined by price volatility across US exchanges. They, however, do not seem to clearly state what the fees are, even though they have a bitcoin fees page. Meanwhile, at Venmo a 3% fee is charged to send money from a credit card, and while standard deposits are free, Instant ones are charged 1.5%.
Per Strike’s own website, they do not charge fees for the services, while the displayed fees when making an on-chain transaction are the Bitcoin network fees, determined by the free market, and the same for any amount of BTC being sent. There are potentially also Lightning network fees, where Lighting is possible to use, and these are "minimal and at most will cost a few cents per transaction," they claim.
Strike didn’t stop there, issuing a sort of a challenge to these companies, saying that "we just ripped the pin out of the grenade and tossed it into the crowd. Buying bitcoin will not cost more than it takes to acquire. Buying bitcoin will not subsidize shitcoin casinos. […] Compete on the experience in a truly free market, the way it should be. You won’t survive over-charging users to buy bitcoin any longer."
For starters, users can purchase BTC, but the company plans to enable via the tab for users to get paid in BTC, get rewards in BTC, and round-up savings in BTC, among others.
Users can now join the waitlist for the Bitcoin Tab. The public launch is expected "in the coming weeks."