The crypto space has more exchanges than you can count — do we really need all these exchanges? Let’s discuss in this article.
Over the last couple of years, the crypto exchange market has exploded at a rate seemingly unrelated to the value of the cryptocurrency markets. At this time, CoinMarketCap alone lists over 250 different trading platforms; however, there are probably hundreds more. Although it’s difficult to get precise numbers about exchange launches, this year we’ve seen many more new exchanges come to the market, including the Binance DEX, DX.Exchange, and BQT.
So, Isn’t the Exchange Market Too Crowded?
A new crypto user would probably say yes. After all, with hundreds of exchanges to choose from, any newcomer being told to “do your own research” has their work cut out.
Each exchange offers a combination of coin pairings and trading fees, with different user interfaces, quality of customer service, and security considerations. Some allow fiat on-ramping, others don’t. This all comes before you consider additional offerings like exchange tokens, margin trading, or the whole centralized vs. decentralized debate.
However, for anyone who’s been around the cryptocurrency scene for a few years, there are reasons to welcome an influx of new exchanges. One critical point it solves is the distribution of funds across many smaller targets for hackers.
Back in 2014, crypto exchange behemoth Mt. Gox was handling around 70% of Bitcoin transactions worldwide. Hackers hit the exchange hard, lifting 850,000 BTC, worth around $450m at the time. The incident was catastrophic for the markets. Bitcoin lost more than half its market cap over just a few months.
Since then, other hacks have topped Mt. Gox in terms of value. Coincheck was targeted in 2018, and hackers lifted $530m worth of NEM tokens. However, in 2018, the total crypto market cap was far higher, and critically, far more distributed over many more exchanges.
Healthy Competition
By itself, fund distribution is a good enough reason to support new exchanges coming to the markets. After all, in an industry predicated on decentralization, it would be a peculiar situation for users to petition for having fewer exchanges.
Besides, the competition between exchanges is no bad thing for users. Trading platforms have to fight for users, meaning they must keep trading fees competitive. It has also resulted in some innovative features for users. For example, Binance was the first exchange to pioneer the exchange token. Users holding BNB are eligible for discounted trading fees and other “premium” advantages. The success of BNB has led others such as Huobi and KuCoin to follow suit. However, new exchanges in 2019 are coming up with even more new and innovative ideas.
For example, BQT is a relatively new trading platform with several compelling features. It offers social trading, so that users can share their trading strategies and tactics with others. The platform also provides users access to BQT University, which has courses for traders of all levels.
BQT also sees the value in working together with other exchanges as part of an ecosystem, having chosen to list the BNB token among the first pairings on its platform.
Variety of Token Offerings
BQT also has a refreshing approach to coin listing. Whereas some newer exchanges stick to offering trades in USDT, BTC, and the major alts, BQT is taking a pragmatic approach to listing. A blog post from the company CEO states that:
We will bring to market not a specific number of coins but a specific mix of them. Each must have a reason to exist in the market and an ability to create a community of buyers and sellers.
Thank you!https://t.co/KSoYwFdpDc
— CZ Binance (@cz_binance) 14 Jul 2019
Again, the point comes back to distribution. Multiple exchanges offering alts means that no single token is at risk from being delisted from one exchange. This risk was highlighted when Binance withdrew from the US markets some weeks ago, meaning US investors lost access to several alts only available to them via Binance.
DX.Exchange is another relatively new exchange having launched earlier this year, and another great example of a startup platform offering standout features. DX pioneered tokenized stocks, offering real stocks from companies like Apple or Google, which are represented as tokens on the blockchain.
It has recently launched the first smart leveraged token, allowing users to trade on margin without borrowing. Considering Binance has only just launched its margin trading platform, it’s once again testament to the innovative mindset of these newer platforms. They’re proving themselves capable of developing new solutions ahead of market leaders.
Closing Thoughts
Overall, the exchange market is indeed crowded. However, there are powerful upsides. Fund distribution means less risk to markets. Even better, exchanges are innovating to ensure the best and most attractive experience for users. Like the rest of crypto, the exchange market is growing up.