The Great Cryptocurrency Exchange Explosion
Over the last decade, a whole lot of people left the traditional fiat banking world, weary of banking giants monopolizing finance.
They opted instead to invest in cryptocurrency.
Built on the premise of a decentralized system, free of massive profits from third-party intermediaries, cryptocurrency promised respite. Respite from banking behemoths profiting off the hard-earned money of small investors. Respite from prohibitively enormous fees and high percentages for sophisticated investors.
After leaving JPMorgan Chase, Bank of China, Mistubishi UFG, and a myriad of other banks worth multiple hundreds of billions of dollars, investors were expecting a new reality in cryptocurrency.
They expected a reality devoid of financial upheaval and constant regulatory interference. They were hoping to focus on growing wealth, not on feeding the institutional investment bodies holding all the power, financial and otherwise.
What they got was something entirely different.
Profiting off cryptocurrency in the name of investment was not a part of blockchain technology’s original design. Cryptocurrency was never meant to exist as a separate but equal economy.
However, that is what happened. The massive surge in cryptocurrency prices over the past few years, coupled with an explosion of blockchain-based companies, created the perfect financial storm, the culmination of which is an entirely new financial ecosystem.
Out of this ecosystem came yet another new and very unexpected source of profit: digital currency exchanges.
Had we been paying attention, we would have seen it coming. There was a need for cryptocurrency trading platforms. The volatility of the market made trading not only extremely profitable but in some cases, necessary. So, crypto exchanges were born, and people started seeing their investments explode in value.
What we did not notice was how immensely profitable it became to run a crypto exchange. Top exchanges like Coinbase and Binance saw profits in the hundreds of millions of dollars last year.
Coinbase, originally projected to hit $1.3 billion in revenue in 2018, was only at around $500 million. Yet for a company whose value did not exist ten years prior, this level of revenue is enormous.
2019 is poised to be even more profitable for the two exchanges. Binance 2019 Q1 profits were $78 million. The company is barely two years old. Its total earnings as of Q1 2019 are over $733 million.
Historically, with wealth comes power. The cryptocurrency market has proven no different. Binance, Coinbase, and other exchange giants have become the centralized body.
The larger exchanges are profiting enormously from the solid monopoly that has developed. In an eerie similarity to the fiat market, big business is taking over, controlling profitability, and putting individual investors at an extreme disadvantage.
Here is the scary part. The cryptocurrency market, once touted as a secure, safe, and autonomous alternative to the rampant corruption and greed in traditional markets, is on the fast track to becoming as corrupt as fiat. The only thing missing is regulation.
Regulation is almost a bad word in cryptocurrency. However, it is what protected Americans, for example, from a repeat of the stock market crash of 1949 that launched the entire western world into the Great Depression.
Is regulation the only solution to this issue? Some investors, especially those coming from the fiat world would say yes. True cryptophiles have different ideas.
In fact, the blockchain tech world is already on track to effectively mitigate the power issues that have arisen within cryptocurrency exchanges. Fighting fire with fire, competitive exchanges are opening. New exchanges are flooding the market on a daily basis.
Open options, open doors
With these new exchanges come options. Options for pricing, for security, for fees, for increased liquidity.
This is great news for investors. At this point, launching a new exchange is easy. Exchanges are available for margin trading, shorting, day trading, whatever suits your fancy.
New exchanges like Singapore-based ecxx offer additional perks, like advanced charts and simple platforms, making navigation a breeze.
These features, combined with top quality cold storage and other security safeguards, mean that “old standbys” like Binance and Coinbase are not the best, or even the safest option for traders.
Ecxx, for example, provides the same level of service provided by exchange monoliths. And users can rest easy, knowing that they are contributing to the new decentralization concept of many exchanges operating collaboratively to overtake the few major players, neutralizing the looming risk of complete monopoly from a few key players.
These new exchanges are not just popping up so a lot of people can make a killing on the next big cryptocurrency craze since the 2017 ICO boom. Yes, exchanges continue to be profitable. But a greater purpose exists.
In other words, once again, the crypto community wins major style points for conjuring up a unique and innovative way to manage a major problem. Rather than going crying to the authorities, demanding parity and pleading with others to fix the problem, they fixed it.
This solution might take a little longer than a government crackdown. It might not receive the media attention it deserves. It isn’t super flashy, and it isn’t a lotto-style quick fix.
Instead, it is crypto enthusiasts doing what they do best. They are working toward a long term, viable solution for issues that reach far beyond the thrill of making a whole lot of money through an exciting new investment opportunity. The exchange economy is the future of cryptocurrency investing.