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Crypto Exchanges Evolving Fast

crypto exchanges growth

November 11, 2020 | 

JOHN K MWANIKI |  1 Comments| 

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Started around ten years ago, cryptocurrencies are becoming the primary mode of exchange. Satoshi Nakamoto launched the coin to offer an alternative to fiat currency. Even though received with skepticism, the coin has liberated the financial sector.

Cryptos offer faster and cheaper transactions. They are also decentralized, such that there is no need for a central authority. The lack of control means anyone can access these assets.

The demand for digital currencies keeps on rising. This is, even more, as the use cases expand. Earlier, mining or purchasing on online forums was the way to gain cryptos. 

Mining became an issue as it started requiring too much power. It needs special power-intensive Bitcoin mining hardware. These machines are costly to buy and maintain. Buying from online forums is also risky. Several fraudsters swindle traders in such places.

These concerns have seen a rise in crypto exchanges. The exchanges provide a platform to buy and sell digital currencies. They also offer wallet services for storage.

The first crypto exchange went live in January 2010. It started trading BTC at $0.05. This is different from now when there are thousands of crypto exchanges. The BTC is currently trading at around $14k.

The same period has also had challenges for the crypto exchanges. Some of the once big exchanges have collapsed. They have suffered from the crypto volatility. Hacking has also been an issue for most. Some top crypto exchanges have suffered losses in the process.

Bitcoinmarket.com is one of the earliest crypto exchanges. It is not currently operational, having suffered market issues. The same applies to MT. Gox, launched the same year as the first Bitcoin exchange. It became an instant hit commanding massive trades. It then lost it in 2014, having suffered a significant hacking attack. Hackers made away with over 750,000 BTC from the platform.

The crypto exchanges evolved over the years to accommodate the expanding crypto market needs.

Crypto Exchanges Security Evolution 

The decentralized nature of cryptos means the crypto exchanges have been operating anonymously. They don't need to register with any entity to start operating. This yet has been a concern for most users. The decentralization has made the crypto exchanges susceptible to hacking and other problems. 

It is only right that the concerned authorities come into play for consumer protection. 

The first security-related change was the extension of the Anti Money Laundering regulations. The 2019 move by the Financial Action Task Force proposal stopped the autonomy of the exchanges. They would start operating in line with the traditional stock exchange laws. 

The European Union market also adopted the 5th Anti Money Laundering provisions. It meant the crypto exchanges would operate like the other financial service providers. They had to ensure customer due diligence when onboarding a new one. They also were to register when intending to run crypto-related businesses.

The authorities are looking for ways to ensure a secure digital market infrastructure. They want a safe trading space for investors. This is to spar innovation within the sector. 

The crypto exchanges have also been developing several security measures. Most of them have deployed various security solutions on the blockchain technology. They are moving past the traditional two-factor authentication and strong passwords. 

Integrating the new solutions to the existing system is an issue. The crypto exchanges are facing a regulatory hurdle. This has led to a similar push on regulatory changes. 

Crypto Exchanges Regulatory Changes

Regulations are fast becoming a must for the crypto exchanges. They are looking for licenses to compete with the existing financial service providers. They also move to meet customer demand and build credibility in the process. 

One of the needs for the license is to expand the services a platform can offer. Dealing in fiat currencies, for example, comes with more authorization provisions. Coinbase, for instance, had to get a license from the UK Financial Authority. It also needed authorization from the Central Bank of Ireland in 2019. This was the only way it could start offering crypto-fiat exchange services. 

The expanding crypto exchanges have seen countries come up with regulatory measures. The exchanges are now offering more than the virtual currencies. Most of them have fiat currencies, commodities, and other assets. Countries have to react to ensure investor safety.

One of such regulatory measures is by the European. The European Union Commission has provided a detailed regulatory proposal. The document looks to streamline the whole cryptocurrency market, crypto exchanges inclusive. 

The proposal requires crypto exchanges to seek authorization before starting to operate. It also subjects them to regular audits. Moreover, every exchange must provide a whitepaper before getting approval.

The laws might take some time to come into place. Still, they would spur market integrity and investor confidence. 

What Crypto Exchanges Evolution means to the crypto world

The evolving crypto exchanges mirror the current state of cryptocurrencies. Started with Bitcoin, the crypto market has grown to over 7,000 currencies. Cryptos like Ethereum, Ripple, and others have even created a niche for themselves.

Cryptocurrencies are becoming integral in the economy. They are becoming the alternative to a declining stock market. This means there is a need for more innovation in the crypto world.

As the crypto exchanges evolve, crypto use has been changing. Bitcoin has turned from a store of value to a medium of exchange. Several merchants are now accepting it as a mode of payment. It is more like crypto exchanges reacts to the development in the crypto world.

The same also applies to institutional investors. The big money investors avoided cryptos due to security concerns. 

The volatility and decentralization worked against hedge funds and commercial banks. Evolution is creating a more investor-friendly environment. 

Crypto exchanges are also evolving to meet the needs of the new markets. It can cater to all the varying clients' needs.

Bottom Line 

The changes in crypto exchanges have been rapid and sustained. Over the years, the crypto exchanges have been looking to ensure customer satisfaction. They are also looking to include new features and products. 

With time, the crypto exchanges will end up like the existing stock exchanges. Better still, they might end up merging. There is always more to look forward to.

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John Mucullum
Hii Nice Blog ! I am fan of you website after reading this blog. Completly agreed with your blog about crypto exchanges. I have also find a fantastic website which consists some marvelous blogs on crypto & botcoin (Ausfinex.com)

0     Reply    8 months ago from: Australia

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Total Market Cap The Total Market Capitalization (Market Cap) is an indicator that measures the size of all the cryptocurrencies.It’s the total market value of all the cryptocurrencies' circulating supply: so it’s the total value of all the coins that have been mined.

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Price Cryptocurrency prices are volatile, and the prices change all the time. We are collecting all the data from several exchanges to provide the most accurate price available.

24H Cryptocurrency prices are volatile… The 24h % change is the difference between the current price and the price24 hours ago.

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