How the exchanges met the «thaw» on the crypto market
The first signs of “thaw” can be noticed on the crypto-market. In April, the BTC rate strengthened above $5,000, which gave the industry hope for a soon-to-come recovery. But while business is waiting for spring, crypto exchanges do not waste time and are trying to get a bigger share of the market.
Crypto exchanges is a risky business that is constantly being targeted by hackers and is criticised by the public due to winding up trading volumes and listing questionable projects. But this does not prevent crypto enthusiasts from using their services.
“There is a demand - the exchanges are working, and in spite of various scandals, people wouldn’t not leave them - simply because there are no other tools for replacement.” Fake volumes do not bother anyone, for a trader the main thing is liquidity and spreads. Hacking has also become an ordinary matter, everyone had already got used to, in terms of total volume, they still don’t do much harm. And once new players appear, the market is growing and that is good, ” says crypto expert Vadim Popov.
In addition, platforms suffer from the collapse on the crypto market, due to which there is a decrease in the interest of traders and investors, which in its turn means that the exchanges lose the commission income from transactions.
“Of course, crypto winter did affect the profits of the platforms. This applies to both large and small exchanges. Nevertheless, the market is cyclical, and large sites have not stopped their work on improving products expecting a future “thaw”, ” says Gleb Kostarev, Binance representative in Russia and the CIS.
One might conclude, given all these factors, that crypto exchanges should be under constant stress. And their business, in general, would have to stagnate.
But in the crypto industry it’s all the way around, trading platforms got used to the problems and learned how to make decent money on them. That applies to at least the biggest ones.
Rapid growth of crypto exchanges
After a prolonged collapse, in April 2019, a small thaw came to the crypto market. BTC has grown above $ 5000 and most of the
altcoins followed it. However, the crypto community has learned their lessons from the past and current growth it not accompanied with screams about the soon-to come To The Moon. On the contrary, most experts reacted to this event with restrained optimism.
Crypto exchanges, unlike the rest of the industry, generally ignored the rebound. And this is understandable, because they have several trump cards, which allowed them to stay in business in the period of mass collapse and the outcome of companies from the industry.
“The main thing for the stock
exchange is liquidity: a lot of money, a lot of traders, large volumes, this is what allows you to earn. In the growing market, the struggle will not become much worse, there is no reason for it. Stable performance and convenience - these are the main whales of any stock exchange, in addition to liquidity. Everything else is just trinkets, which are unlikely to be the decisive factor when choosing a trading platform, “- says Vadim Popov.
The year past was difficult for crypto exchanges. And they felt the competition to the full, but now, it seems, the situation has begun to improve.
For example, Coinbase announced expansion of its business to 11 more countries. Now, residents of Argentina, Mexico, Peru, Colombia, Chile, India, Hong Kong, South Korea, Indonesia, the Philippines and New Zealand will be able to use the services of the crypto-trading platform. And it will work in the countries mentioned, as a service provider for both the retail customers, and for professional traders.
Now Coinbase is present in 53 countries of the world on four continents. True, not all of them have the opportunity to trade cryptocurrency paired with Fiat. It would seem like, there is no reason to expand during a recession. But this “recession” is a relative thing. Moreover, Coinbase did not particularly notice it.
According to the calculations by Reuters, last year Coinbase made $ 520 million. And this is an impressive amount not only for the crypto industry, but also for the traditional business. In addition, Coinbase closed another investment round, which pushed the company's total value in excess of $ 8 billion. Such an indicator allowed the stock exchange to enter the top list of the most expensive startups in the world.
Binance is another major crypto-exchange that is not going to lag behind competitors. According to Gleb Kostarev, the platform has plans to launch a fiat exchange in Singapore in the near future. Residents of this country will be able to exchange cryptocurrency for the Singapore dollar.
Prior to this, Binance opened similar marketplaces in Uganda, Malta and Jersey island, which is under the jurisdiction of Great Britain. Binance also became the first of the large platforms to launch trading on a decentralised exchange. The message is clear: Binance is actively developing and is not afraid to move away from traditional business.
Its excellent financial results help. Binance has not published a report for the past year. But analysts of The Block calculated that in 2018 the exchange received $ 446 million, which is a lot.
And Binance is not going to stop there. Last fall, Site Director-General Changphen Zhao announced that Binance crypto-fiat branches would appear on every continent of the world in 2019.
“Our plan is to open about 4-5 fiat platforms around the world per year. We are especially actively looking at those jurisdictions where cryptocurrency regulation already exists and regulators treat cryptocurrency favourably, ” Gleb Kostarev claims.
New players also joined this race. For example, the Japanese e-commerce giant Rakuten opened the registration for his newly created trading platform. For the time being, only those who opened an account with a subsidiary bank of Rakuten and received an ID from the company can use its services.
Japanese Amazon has long been carrying out plans to enter the cryptocurrency market. In August last year, the company bought Everyday’s Bitcoin in
Japan for this purpose. The amount of the transaction was $ 2.4 million. Rakuten received a license to trade in cryptocurrencies from the Japanese regulator at the end of March this year.
Another example is Gate.io. This is one of the oldest Chinese stock exchanges, which survived the ban in the Middle Kingdom on
ICO and cryptocurrency trading. And in 2015, the plarform was subjected to a hacker attack, during which attackers took away 7,000 BTC, which at current prices is about $ 36.7 million.
The stock exchange recovered from the strike and last week completed collecting investments to create a new cryptocurrency on its own
blockchain, Gatechain. In total, Gate.io managed to raise over $ 64 million. The company plans to present the finished product in the 4th quarter of this year.
Not everyone is fine
Of course, the above examples do not mean that all crypto exchanges are doing well. There are those who can not be boastful. Among them, the South Korean crypto eschange Bithumb. Last week, it announced a loss. In 2018, the “minus” of the site was $ 180 million, although the year before the exchange worked in the “plus” of $ 469 million.
The main reason for the loss - the collapse of the market. In addition, last year some hackers attacked the site and stole $ 30 million of cryptocurrencies. Two weeks ago, the problem recurred and this time the attackers got almost $ 20 million in coins.
If you look at the smaller ones, the no-name exchanges, the situation will turn out to be even worse. True, for the most part, the sites themselves, which conduct quite dubious activities, are to blame for this.
Competition among crypto exchanges
The fact that trading platforms are actively developing is undoubtedly - a plus for both the crypto industry and ordinary users. After all, competition drives progress. And with the growth of crypto business, this struggle will only be tightened.
“Of course, competition among exchanges continues to grow, but we believe that users will benefit from it, because exchanges will strive to improve their services, invest in security, develop their products, etc. Just as it used to be, one of the key factors is safety, ” Gleb Kostarev believes.
Orderly development will indeed be able to strengthen the position of the crypto industry worldwide and will give customers a new level of services. After all, in the competition of crypto exchanges, they will finally pay attention to the eternal problems of the industry: hacking attacks and all sorts of scheming. The most important thing is to remember that this fight is for the sake of customers, and not just making money whatever the cost.
Author: Alexey Ryabukha