Bitstamp Agrees to Implement $5 Minimum Trade Size- Was it Necessary?

Bitstamp has agreed to implement a minimum trade value of $5 following allegations by a Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term trader of an "exploit" in their fee structure. The change will be effective May 15.

The trader contended as follows: Bitstamp claims to charge a 0.2% fee. However, they also round their fees up to the next cent. This causes an issue with very small trades. For a $0.86 trade: $0.86 x 0.2% = $0.00172. This is then rounded up to $0.01, equaling 1.16% of the trade value- or "6 times" their posted rate.

While just a penny, it was argued that it can add up quickly when orders are spliced into many micro-trades, common when your counterparty is a bot.

The issue was passionately taken to the Bitcointalk forum and elaborated upon at length. In the passionate debate that ensued, users alleged that even Bitstamp itself throws in micro-amounts for trade in order to make the most of the "bug" that was "by design".

The trader asked Bistamp to impose a minimum trade size of $5, which would alleviate the issue. Surprisingly, they recently agreed and tweeted the following:

These difficulties are easily avoided by many online brokers of securities/instruments. In a "democratic pricing model", for example, some charge a penny per a share, but a minimum flat fee of $X and a maximum of $Y per trade. This model carries three advantages: (1) Perfect consistency to the fee schedule in the middle range (one penny per share). (2) Rewarding higher volume (upper range, where max fee is reached) with proportionally lower fees, a key competitive factor in any environment. (3) Discouraging lower volume (lower range, minimum fee reached) with proportionally higher fees.

Customers delivering their brokers ultra-high levels of business can even pay a monthly fee in Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term for a lower flat fee per trade. The monthly fee can even be waived if a minimum monthly trading volume is reached. This guarantees revenue for the broker while rewarding clients for business.

Indeed, Vault of Satoshi in February. The fee ranges from 0.3% to 1.0%, depending on the moving 30-day volume. Alternatively, $99 per month can get you unlimited trades.

The amazing thing here is how Bitstamp was so quick and willing to change their business model following complaints started by one client. Perhaps an example of Bitcoin's decentralized community, although it is better argued that the decision was not reached by consensus.