.png)
Exchanges are an integral part of the virtual currency world and its ecosystem in particular.
There are many available exchanges that you can buy cryptocurrencies at, and navigating the right exchange can be hard. There’s a number of factors that you have to consider in ensuring that you’ve opened the right exchange based on your expectations and requirements.
Important Factors to Consider:
Types of exchanges
Trading Platforms – These are websites that connect buyers and sellers - many take a fee from each transaction.
Direct Trading – These platforms offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate.
Brokers – These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.
Centralized exchanges do all their transactions in the backend in a database instead of doing them on the blockchain. This makes all transactions much faster and exchanges more liquid. On the other hand, they are becoming a single point of failure and the approach is far from the idea of the decentralized world. Whereas it is pretty hard to operate a decentralized exchange, due to delays in transactions and heightened costs since every transaction needs to be made on the blockchain. Most of the decentralized exchanges are still missing volumes and integrations with other blockchains. They often have implementations only for ERC20.
CEX — Centralized Crypto Exchanges:
There will be third party operator
Fiat currency transactions will be allowed
Market Makers & Takers will be part of the platform
Entries will be in Database most of the times
Higher volume of the transaction due to usually higher user count
Often better User Interface (easy to use, intuitive)
Better Speed of Trading (no real time crypto node update)
Liquidity is offer higher
Robust Know Your Customer (KYC) and Anti-Money Laundering (AML) practices
Private Keys stored in system & associated with User credentials in the crypto exchange application (recoverable)
Prone for hacking/cracking of the system (centralized nature)
DEX — Decentralized crypto exchanges:
No third party operators
Fiat currency transactions likely not be allowed
Interface can be challenging and not user friendly
Most of the times Market Takers will only be part of the platform
Direct updating of trading transactions on Crypto Nodes. No database entries
The volume of the crypto trading transaction will be less
Low-grade Speed of Trading ( due real time crypto node update )
Liquidity will be the challenge (only handle Crypto Coins on Nodes)
No, Know Your Customer (KYC) & Anti-Money Laundering (AML) practices
No Private Keys in the application (you are holding your private keys)
Not the first choice of hacking/cracking of the system (more secure)
Key Factors - Users Choice Criteria
1. Coin Pairs Available
Many exchanges offer only a handful of coins; the most popular being Bitcoin and Ethereum. There are only a handful of exchanges that offer a wider variety of coins. A more diverse option of coins available is better as it gives you more choices of coins to purchase.
2. Liquidity
Liquidity refers to the ease of buying/selling in the market. A high liquidity means that there is a huge number of buyers/sellers. High liquidity is good as it leads to better price discovery and it allows you to transact faster.
3. Security
The level and type of security mechanisms employed by an exchange is vital in ensuring that your coins are safe. Examples of good security practices undertaken by exchanges include:
a) Keeping deposits in cold storage; this means that your coins are safely tucked away offline, beyond the reach of hackers
b) Availability of 2-factor authentication (2FA) option; 2FA increases the security of your account
c) Email encryption and verification; for every transaction there will be an email sent to your account to confirm the transaction
4. Customer Support Quality
Having a responsive customer support would save you lots of time and anxiousness, especially in a fast-paced environment.
5. Trading Fees
Low transaction fees on buying and selling would relatively prevent your margins to be eaten away, especially if you’re a constant trader. It is important to look at the fees of your exchange, to see if it’s relatively comparable to other exchanges.
6. Ease of Use
The user interface of the exchange should be easy to use and clean to avoid confusion. Having the necessary indicators at the tip of your fingers and the ease of navigating through the platform should make it easy for anyone to use the interface.
Potential
At peak, Coinbase onboard 50k Users daily
BNB Binance native coin saw a growth of 25.389% within 5 months
Whether you’re a professional trader or just starting out with cryptocurrencies, #UDAX offers a wide variety of tools for engaging with digital asset markets. It’s straightforward to buy and sell cryptocurrencies through the UDAX exchange, while additional features make the platform capable of handling complex trading operations, as well.
UDAX utilize the latest technology to provide you with the right set of tools to trade the way you want to, while protecting your investments in extremely volatile markets. We also pride ourselves on constant release of software updates.
Platform Benefits:
Bot Trading
Trading bots are computer programs that use various indicators and algorithms to recognize trends and automatically execute trades. While algorithmic trading software has been used by hedge funds in the equity, commodity and currency markets, trading bots for private investors first appeared in the foreign exchange trading space. They have quickly made their way into the crypto asset market. On UDAX you enjoy access to 1) crypto-bot auto-trading and 2) FOREX-bot copy-trading
Trade 24 hours a day, 7 days a week, and 365 days a year automatically
emotion-free trading
incremental low-risk auto-trades
Market Making
Trading bots can also allow investors to use the market making strategy. This strategy provides for “continuous buy and sell prices on a variety of spot digital currencies and digital currency derivatives contracts” in an effort to “capture the spread between the buy and sell price”.
Arbitrage
In the early days of cryptocurrency trading one of the primary strategies that traders used to make profits was arbitrage – i.e. buying assets in one market and then selling them in another for a higher price, thus earning profit on the difference. As cryptocurrency exchanges were decentralized, there were often differentials between prices offered on various exchanges, meaning that profits could be made through arbitrage.
OTC
Institutional investors and high-net-worth individuals (HNI) typically use over-the-counter (OTC) trading when they want to buy or sell a large amount of cryptocurrency. That’s because while 99% of people wanting to buy or sell crypto can do it directly on an exchange, placing an extremely large order that way, if not done right, can be a costly enterprise.
“Generally, you would go trade through an OTC desk when you have a large block trade you want to do without moving the market too much or incurring too much slippage,”
If you are an institutional investor trying to buy a million dollar's worth of Bitcoin, or you’re a startup trying to sell a million's worth raised as seed capital. If you try to place such a large buy or sell order on a cryptocurrency exchange, the order can move the entire market up or down — and lose you a fortune.
Instead of placing a trade on a regular exchange, OTC trading is done directly between two parties. An OTC broker either supplies the trade with liquidity, or finds someone willing to take the other end of the trade.
"Crypto OTC Market Three Times Larger Than Exchange Market, with $12 billion worth of bitcoin trades daily (exchanges process around $4 billion worth of bitcoin per day)."
There are two main types of OTC venues:
An inter-dealer broker, a firm that acts as an intermediary to match a buyer and seller. An inter-dealer broker will normally advertise a fixed fee to both counterparties for their match-making services.
A principal OTC trading company, a firm that will act as the direct counter party and take on the trading risk. Principal OTC trading firms will charge the same as an inter-dealer broker or more, based on market demand and how well they can manage their risk.
WhiteLabel
Providing a full-fledged crypto exchange business service for newbies who want to start their business with their desiring and a unique brand. Everyone can easily and instantly own their own crypto-exchange business from white label franchise business offered by UDAX.
Set their own language with multi languages options
Set their own currency with multi currency options
Frame own design & style and color schema of website can make exchange & trading system easily and quickly
Make branded exchanging platform with logo, brand name etc.
Set options for adding crypto-coins
Advantages of exchange white label solution:
No need to spend too much of money & time in developing the crypto exchange business.
No need to invest in technology creation for your exchange business.
STO and ICO Fundraising Services
ICO/STO launches and promotional trading campaigns all the way to IPO, early-stage accelerator programs across the world,
1) Advise and build stainable and profitable business model, or tokenize existing business
2) List and raise funds through the network and community
3) Engage community to make product/ business successful
4) Reward top promoter/ contributor with % upon IPO
5) IPO
Global Presence to help brand awareness
Expansion completed in Hong Kong, South Korea, Malaysia, Indonesia, Canada.
Soon to be opened Philippines, Singapore, Australia +++
Any blockchain project / ICO coin will be listed on all exchanges globally, enjoying great bond awareness by being represented in our franchise countries, with opportunity to find local business partners and customers.
Sources: Master The Crypto, Blockgeeks, Reuters, TABB Group, udax.global