Woody Allen and Crypto Currencies

By datatrekresearch in Blog

“80% of success is showing up.” Woody Allen wrote that in a letter to William Safire in 1989, and it remains one of our favorite sayings to this day. It is even the inspiration for DataTrek’s most fundamental product attribute: a daily email. We show up for you, every trading day.

It is also an underappreciated feature of crypto currencies, because even after the annus horribilis of 2018, they still haven’t gone to zero. Cryptos still show up, and in fact remain valuable assets. A few data points as a reminder:

• The market cap of all crypto currencies is $268 billion right now. That is about the same as the market cap of Wells Fargo ($278 billion) or 3x the value of Goldman Sachs ($87.4 billion).

• Bitcoin represents 42% of that amount, at $113.7 billion in total value. Not only is that larger than Goldman, but also Morgan Stanley ($86.6 billion), or the combined value of Bank of New York Mellon ($54 billion) and State Street ($34 billion). Deep irony there, since those banks could do a lot to increase institutional acceptance of cryptos by offering their custody services in the space.

• Despite the industry’s difficult times in 2018, there are still 20 crypto currencies with market caps north of $1 billion. Another 75 show aggregate value above $100 million.

Another way cryptos continue to “show up” is by providing users with a low-cost payment system. Yes, there is price volatility to factor into this equation, but as far as transaction costs go bitcoin and other major cryptos are doing quite well.

Here is the latest 24-hour data from bitinfocharts.com, which tracks both average and median transactions and system fees for major currencies:

Bitcoin:

• Average Transaction: $29,376
• Average Transaction Fee: $0.60 to $1.00
• Average Transaction Fee Percentage: 0.002 – 0.003 basis points
• Note: using median transactions sizes ($361) and fees ($0.12), the percentage is 0.033bp

Ethereum:

• Average Transaction: $775
• Average Transaction Fee: $3.48
• Average Fee Percentage: 0.45 basis points

Bitcoin Cash:

• Average Transaction: $7,530
• Average Transaction Fee: $0.04
• Average Fee Percentage: 0.001 bp

Litecoin:

• Average Transaction: $7,015
• Average Transaction Fee: $0.09
• Average Fee Percentage: 0.001 bp

The bottom line here is that transaction fees across these major cryptos are much lower than traditional credit/debit cards and also do not charge minimum balance fees/wire charges like commercial/retail banks. If you need proof that blockchain technology is an efficient way to manage a payment system, look no further. Yes, other parts of the ecosystem (wallets and exchanges) still need some help on the security side of things. But the core architecture is show up for work every day.