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The past two years have had a huge impact on the retail sector. As the global pandemic forced brick & mortar stores to shutter their doors, sales shifted online. What is more, lockdowns and the rising demand online has caused a huge shift and disruption in the supply chain. And these new challenges are not only affecting physical retail, but putting a strain also on online companies - found that 10 years of growth has been packed into just 3 months, causing a high . Mckinsey increase in competition Platforms like Shopify have made opening online shops easier than ever - a recent analysis by Help Center found that corporate companies like Wells Fargo, UPS, McDonalds, and Accenture, valued at over $180 billion. Shopify’s market cap is now surpassing Changed consumer sentiment, unpredictable buying behavior, and supply chain disruptions - all of these changes have had an effect on how to grow online sales - making marketing and product assortment management even harder. However, a , found that it also poses some significant opportunities, such as the rise in social commerce, hyper-personalization, omni-, and multi-channel approach, customer service automation and D2C strategy. survey by Deloitte To overcome these hurdles and to figure out which opportunities are right for your online business, it is helpful to track and monitor the most important E-Commerce performance metrics. In this article, we will explain the meaning of KPI, what KPI reporting is, and discuss the importance of each of these KPIs. What are KPI targets and KPI reporting? A KPI - Key Performance Indicator - is a metric to help a business to define and track their performance against their targets. For example, to measure the success of a marketing campaign, profitability of the product assortment, or to ideate on how to promote your online store. It helps a business to follow up on the progress made, or improve performance where E-Commerce performance metrics are behind targets. What are E-Commerce KPIs? E-Commerce KPIs can indicate how well your online business is doing in terms of profitability and growth. KPIs tracking and analysis shows in which area improvement is needed, or where the new business opportunities are in order to effectively promote your online store. Whether it is in customer service, product assortment, or marketing - there are several important KPIs that every E-Commerce business should measure and track. Instead of making decisions based on your gut feeling, tracking the most important KPIs will enable your online business to make the right, well-informed judgments. Important KPIs to track to optimize your e-commerce sales There are areas where KPIs overlap, e.g. marketing is closely related to sales. and customer experience is closely related to product assortment. However, to make things clearer, I have provided the most important KPIs across marketing, customer, and product. 8 Most important KPIs in Marketing & Sales 1. CVR - Conversion Rate Is probably one of the most important E-Commerce metrics to track the visitors who “take action” on your site. It measures the success of your sales, marketing campaigns, etc. to indicate how well they are performing. How is it used? It indicates the success of a campaign or a product on the website. CVR is calculated as a % - customers who either purchase something, click on the ad, sign up or create an account. The higher the conversion, the better the result. The benchmark really depends on the industry, but in E-Commerce, the average conversion rate is somewhere around , so a good conversion rate is anything above that. 1.9% 2. CPA - Cost Per Acquisition Is also often described as one of the most important KPIs in E-Commerce, this metric in $ would show the marketing costs per customer acquisition - how much investment is needed to acquire each new customer. How is it used? Even if your other E-Commerce metrics are in line, looking at the CPA would determine how high the ROI is. For example, if your store’s CVR is an above-average 5%, but CPA costs are extremely high; it leaves no room for profitability. 3. Cart Abandonment Rate Reflects how quickly your customers get tired of the long check-out process and drop the purchase. It is usually presented as a %, lowering this rate can have a direct positive impact on your revenue increase. Cart Abandonment Rate = 1 - transactions completed / transactions initiated * 100 How is it used? Cart abandonment rate differs between online retailers, but the average is around 71%; the range is usually around 60% - 80%. It all comes down to how optimized your check-out process is. For example, Amazon implemented the “buy button” to reduce clicks that customers have to make before finalizing the purchase. 4. ROAS - Return on Ad Spend ROAS is a marketing KPI that measures how much you are spending on your ads. For example, you have a $1000 budget for a PPC campaign. You then measure how many times a customer clicks on the ad lead to a purchase. After that, you can determine sales generated through that specific campaign. Say you made $4000 in sales, meaning your ROAS is - $3000 / $1000 = $4 - every $1 spend on advertising you made $4. How is it used? This E-Commerce metric is essential to track if you want to drive higher profitability and sales for your business - to make sure you aren’t overspending in marketing vs how much you earn in sales. 5. ROI - Return On Investment This metric in % describes the ratio between the budget invested and the sales generated. It indicates the efficiency of a campaign in terms of profitability. For one it looks at the ROS (return on sales) and the other from the investment turnover. ROI = profit ($4000 - $1000) / $1000 * 100 How is it used? It can be used as a figure to measure profitability and performance, to check whether the profitability targets of a marketing campaign were achieved. 6. CAC - Customer Acquisition Cost CAC is a metric in $ that shows what you have to pay to win over each new customer? If your business spent a total of $10,000 a month on all marketing costs, including any overheads linked to winning new leads like commission or salaries, and gained 1000 new customers - the CAC would be $10. How is it used? Commonly analysed with Customer Lifetime Value metric to see how much value is generated by new customers. It can help to improve your marketing ROI and profitability. The average is $47 but varies largely across industries - with retail and consumer goods companies being one of the lowest: $10 and $22 respectively. 7. Bounce Rate This E-Commerce metric measures the success of your web store by tracking the % of visitors who viewed a single page on your site and left the site without visiting any other pages. Meaning: the customer landed on your webshop, failing to convince the buyer to make a purchase. How is it used? A high bounce rate can indicate that your site is not engaging enough to keep customers on the site, or there is something wrong with the page. The in E-Commerce is between 20% - 45%, anything above that, it would be wise to check why that could be. average bounce rate 8. Time On-Site Time on site shows how long on average a customer spends on the site. For example, your page had 1000 views, 500 exits and 100 minutes of time spent on site, the average time spent would be 100 / (1000-500), and then 100 / 500 = 0.2 min. How is it used? This indicates that customers haven’t properly engaged or found the site engaging enough to lead to a purchase or any further activity. The average is around 2 - 3 minutes for any site, and in E-Commerce, it should be longer, as it takes longer to make a purchase. 8 Most Important Customer KPIs 1.   Customer Lifetime Value Combines conversion rate, average order value, and returning customer rate KPIs all in one metric in $. It shows how much money a single customer brings to the business during their customer lifecycle. Customer Lifetime Value = average sales amount * number of purchases per year * customer retention time How is it used? This KPI can very well indicate the overall health of your E-Commerce business, as it combines all of the most important KPIs in one. 2. Customer Retention Rate Customer retention rate is calculated as a % and shows the share of the visitors or customers that the business has retained over a given period, to measure customer loyalty. Customer Retention Rate = number of active users / the number of active users across a given time period * 100 How is it used? A high customer retention rate ensures continuous revenue from existing customers, who generally spend more than average and also recommend your brand to others. According to , increasing customer retention rates by only 5% can increase revenues by between 25% - 95%. research by Bain & Company 3. New Customer Share Shows the number of customers as a % that are completely new to your site compared to the share of the returning customers. For example, 32% of your customers are new to your site and 68% are returning customers. How is it used? Tracking how many new customers your business is gaining is an important metric to see if your business is also attracting new customers. Returning customers are great as they bring in most of the money, however, you can’t keep relying on them. This could lead to stagnation of the business. 4. Churn Rate Shows, as a %, how long are customers staying with your brand before leaving or canceling your services over a certain time period. It is the opposite of new customer acquisition, showing how many people rather than join or are gained. Churn Rate = customers who left over a given time period/customers at the beginning of that given time period * 100 How is it used? How important this is for your business really depends, for example, for a subscription-based business model this would be critical, as it determines the profitability of that business. If this is a concern, the focus should be on how to increase customer retention rates and how to win new customers. 5. AOV - Average Order Value This metric shows the average spend or the average basket size in $ when the customer places an order and is extremely important to track. How is it used? This KPI is a very useful indication of how to optimize your assortment’s pricing and marketing strategy. By increasing the AOV, it will have a direct impact on the revenue and profitability. It goes hand-in-hand with the product assortment strategy. The higher your AOV, say $45, the more space you will have to play around with the marketing spend in order to acquire new customers. 6. NPS - Net Promoter Score measures how much are existing customers willing to promote your products or services to others. Net Promoter Score It is a customer loyalty metric measured by asking just one question: “On a scale of 1-10, how likely are you to recommend XXX company to your friends?”. It is evaluated from scale 1-10, the results are clustered to either promoters (scale 9-10), passives (scale 7-8), or detractors (scale 0-6). How is it used? NPS is a popular metric for evaluating how a company is perceived by customers. Active listening and good feedback allow higher customer loyalty rates that lead to higher organic sales growth through by-word-of-mouth marketing. 7. CSAT - Customer Satisfaction Score Is usually also measured by asking one question: “On a scale of 1–5, how satisfied were you with our service/product today?” This can be asked after each purchase to gather detailed feedback. CSAT = number of satisfied customers / total number of responders * 100 How is it used? CSAT is a metric that, similarly to the NPS score, indicates how satisfied your customers are. But this time, not just overall satisfaction with the company, but with your products or services, often asked after each purchase. This data can be then used for improvements. 8. First Response Time Measures how long it takes for a customer service team to respond to a customer query in either minutes, hours, or days, depending on the efficiency. A study by found that in customer service. Salesforce a third of respondents felt more positive towards companies that offered a quick first response time Average First Response Time = time spent sending the first response/number of tickets sent as a first response How is it used? If your average response time is 3 days, you may want to look into why that is and how to improve the speed. A slow response can result in a decline in customers and in turn decline in revenues. To improve this, think about automation - chat-bots, live-chat, knowledge bases, or thorough FAQ pages for customer self-service. 5 Most Important KPIs for Assortment Optimization GMV & NMV - Gross & Net Merchandise Value 1. GMV & NMV - Gross & Net Merchandise Value GMV is the total value of your webshop sales, it measures the value of your products sold times the number of transactions. Simply put - a pair of jeans selling on your site at $100 was sold on the site 100 times - $100 * 100 = $10,000. NMV has all the operational costs deducted. How is it used? GMV and NMV are two essential e-shop KPIs - if you are an E-Commerce business selling t-shirts, this KPI shows if your sales are growing or decreasing. It is usually measured by looking at either week-over-week, month-over-month, or year-over-year figures to see growth or decline in sales. 2. Net Profit ($) and Net Profit Margin (%) Net Profit in $ is the profit of your business made after you deduct all operating expenses, including taxes and interest. Net Profit Margin measures the profitability of your business as a %. Net Margin shows how much profit was generated from every $1 in sales. How is it used? It is really the most important KPI along with EBITDA to show how profitable and healthy your business is financially. 3. EBITDA Or Earning Before Interest, Taxes, Depreciation and Amortization measures the overall profitability of the business. EBITDA - sales minus all operational costs, however, doesn’t take away the cost of tax or debt (unlike Net Margin). EBITDA =  Net Profit + Taxes + Interest Expense + Depreciation & Amortization How is it used? This e-shop KPI is used to measure profitability, it is useful when comparing the profitability of one company against another, as it excludes external differentiating factors. It shows the health of a company's operations and available cash flow. 4. STO - Stock Turnover Rate Is a KPI that indicates how fast your products are selling, whether and when you need to restock them. It shows how many times your business has sold and replaced the total inventory in your warehouse over a given period. How is it used? Monitoring your stock turn will help estimate when you need to place reorders and in which quantities. The average ratio for E-Commerce shops is anywhere between 4 - 10 but totally depends on the product. Keeping your stock at these levels, you can make sure you have enough not to run out of stock, but at the same time not to run into any overstock in the warehouse. 5. Return Rate Especially important e-shop KPI to track, as shipping costs are much higher than for traditional brick & mortar shops. Each item has to be shipped and then returned separately. Return rates are also higher online, as customers can’t physically see or try the items, and order several items. How is it used? It really depends on the business model and product, however in E-Commerce, for clothing, anything around 30% - 40% is ok. For cheaper items, it is lower and for more expensive it gets higher. For items like jeans, for example, that are difficult to fit, it can be over 60%. In order to track this by-product, gather reviews and customer feedback to then analyze. To sum up All in all, being aware of all of these KPIs may seem like a lot, and if you are just starting out, it doesn’t make sense to focus on all of them. Some KPIs are essential, but for some, there is a need to narrow it down and make sure you are tracking the right KPIs, and first define where your focus is. It is also important to make sure your employees are to monitor and analyse the most KPIs important in their area of expertise, to maximize the overall performance of the company. properly trained The past years have placed a lot of pressure on the retail sector, increasing the competition online. And extremely rapid growth comes with further challenges and opportunities, so it is important not to lose focus on which operational areas your business should focus on and drill down to the most important KPIs to take timely action.

21 Important KPIs to Leverage to Optimize Your E-Commerce Sales

After 7 years working as Senior Data Manager at Criteo and as Head of Data at Payfit, and after interviewing 200+ data leaders for user research, I am starting to have a good overview of data stacks in action. So, by popular demand, I’m dropping here and there some advice on the trends I observed. Earlier in March, I had two different calls: one from a former colleague, now head of data at , and one from a friend, now head of data at . Both had taken a new job and had to build a complete data stack, from scratch! I assume this could interest others. Here is the piece of advice I gave them. Swile Cajoo Before we start, here is a Decision Matrix that you can use for benchmark purposes: Ease of Use Integration in Cloud environment Community & Documentation Governance Capabilities Pricing To keep things simple, we’ll just follow the data, from source to reporting. Data Warehouse Where you store your data for analytics needs A data warehouse is a place you store and organize your data before analysts use it My recommendation is simple: If your dev stack runs on Google Cloud, then go for BigQuery (BQ) If your dev stack runs on AWS, then go for Snowflake (SF) Here are a few reasons. Redshift was indeed the first big player on the Cloud Data Warehouse market, but it means they’ve made mistakes that followers could avoid, and they haven’t changed much for the last few years. Redshift has a poor UI/UX, especially for end-users (data consumers). BigQuery and Snowflake are quite similar in terms of features and pricing models (based on usage: BQ bills you by scanned data, Snowflake bills you by query time). A slight difference is that the first one is stronger when the whole stack is run on Google Cloud while the second is slightly more “Analytics” focused, making it a perfect match for AWS users. Snowflake is heading towards being a full data platform (multi-cloud, Snowpipe, jobs, data share, python/js functions) with a friendly user interface. BigQuery’s strength is its integration within the Google Cloud systems: read/write from GCS, IAM rights management, billing, Google Spreadsheets native integration, …) Ingestion Get Data in your Data Warehouse Stitch and Fivetran are extracting data from all your business sources and bring them to your Data Warehouse For data originating from a SaaS, use or . These two companies do a great job at maintaining these data dumps for their thousands of clients, and their pricing is linear as well as predictable. The sources they can retrieve data from is numerous, check these and . StitchData Fivetran here here You may want to cherry-pick some tables to ingest yourself, for frequency reasons or whatever. Make sure to leverage the numerous open-source taps made available . here Want a mix between the fully managed and the fully homemade? Check . You’ll have to host it but it comes with the necessary bunch of features, sources, and destinations. Airbyte provides similar features, depending on the plan you’re on. But focuses more on event tracking, it’s a must-have to sync your marketing campaigns with user activity. Think of Segment as the big ears listening to what is happening on your website/app. It also demands an ongoing tagging plan. An alternative is which does not integrate that well with other data sources but does not require a tagging plan Segment Contentsquare Do not worry, there is still plenty of DE work to do: you’ve got ingestion pipelines to build for all your data. If your PROD is in NoSQL (such as Mongo), then you’ve got the transformation to do before ingesting the data in your data warehouse. If your PROD is already in a SQL format, then you can dump all needed data in your analytics warehouse, and directly move on to the next paragraph production Transformation From raw data to model/reports ready Like any raw material, you want to transform it to deliver value. Use DBT to transform data. First things first, (note the L now in the middle). In recent years, storage costs decreased to a point (< $30 per Tb/month) where you can now load all raw data in your data warehouse, and then do the transformation in SQL. Keep in mind that storage in SF and BQ is as cheap as S3 storage is, it’s computing that costs money. ETL is dead, long live ELT Now, putting the spotlight on what became the obvious tool in 90% of the data teams I’ve talked to: the notorious . There is even a new job title that comes with it: . DBT is open source, quite easy to set up, and comes with a bunch of interesting features oriented on quality, such as unit tests. DBT Analytics Engineer The general idea is to load all your data in your warehouse, then use DBT to create your datamart ie: refined data, ready to be used for analytics purposes. As a side note, DBT is not a scheduler, you’ll still have to schedule it. It’s your scheduler who’ll launch the DBT executions… which naturally leads me to the scheduler section below. One last note: end of last year Google , it’s now free and well-integrated with Big Query, but the community is not that big. acquired Dataform Scheduler Run job 1 then run job 2 In any transformation process, there is a schedule. Things have to happen in a certain order. Use Airflow for data transformation scheduling. The market standard for scheduling really boils down to Airflow, the question is which deployment setup you want? You can go for: Self-Managed: dockerized airflow Managed: AWS version / GCP Version Fully-Managed: Astronomer Astronomer helps you get off the ground faster. But there is a cost for that… Data Viz Make your shiny dashboards Once you have a high-value dataset, you will want to show the output in the sexiest and most understandable way. Data visualization with , , or is the best option. Tableau Looker Metabase This one is tough, as competition is fierce within this segment. This will also be the only part your business users will see, out of the whole stack you are building. Strong options are , , or . I know that there are a lot of other options out there, that’s just my opinion Tableau Looker Metabase I’ll make a dedicated article on the matter, but to start, go for Metabase. First, on the data Viz side, it’s simple and straightforward, it takes a few minutes to go from a table to a dashboard. Keep in mind that for a while your dashboards will be simple, as you need to educate the different teams. Oh, and it’s free as long as you host it yourself. Data Discovery Find, understand and use data faster High-value datasets or analyses are useless if no one knows they exist. Make sure people do. Castor is the tool for that. Do you think that data discovery is only for people with too much data or many people? Did you know that after a few data dumps from Stitch or Segment, you’ll already have hundreds of tables? On top of that, I’m quite sure that the first data analyst or engineer you’ll hire will make their own data documentation on a google doc or else. Wouldn’t it be better to have that info accessible to everyone and especially to the second hire? At Castor, we provide just that! is a data documentation tool for the Notion-Figma-Slack generation. Or data-wise, for the Fivetran-Looker-Snowflake-DBT aficionados. We designed our catalog to be . Castor easy to use, automated, delightful, and friendly Want to check it out? and we will show you a demo. Reach out to us

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There are three ways to go. The third one is the quickest and most fruitful. You’ve probably reached some Jedi level at crypto trading and now want to jump onto the next level — from a trader to a cryptocurrency broker. So you might wonder: Where to start and how to get there? If this is precisely what’s on your mind, stick with me. Today I’m going to cover three (3) alternative ways to become a cryptocurrency broker and dissect the PROS and CONS of each. : one of them is the best from the effort/revenue ratio perspective. Spoiler Let’s dive in! What is a crypto broker, and how is it different from a stockbroker? Let’s start with a stockbroker. A is a securities market professional who executes orders in the market on behalf of clients (retail or institutional ones). Stockbroker functions are usually carried out by brokerage firms that are regulated, insured, and subject to regulatory body scrutiny. stockbroker A stockbroker is a between buyers and sellers. The latter simply can not transact with each other otherwise than through a broker. To access markets, a trader must first set up an account with a broker and deposit some bucks in it. When a trader wants to do some shopping, he has to instruct the broker on what orders should be placed on his behalf. mandatory middleman Now, for a . crypto broker The idea behind crypto brokerage is the same — intermediation in trades. But with crypto, however, unlike traditional stock brokerage, . As we know, crypto exchanges allow users to transact directly. All you need to do is open an exchange account (no broker required), make a deposit, and there you go! using a broker is optional Here comes a question: Since crypto enables kinda DIY trading, what’s the point of crypto brokerage then??! Let’s make some “crypto exchange vs. broker” comparisons to answer this. Cryptocurrency exchange vs. Broker Spoiler: Both are brokers but solve different tasks. Here is the thing: Most existing crypto exchanges are basically brokers. Look at the key range of services they offer: matching buyers and sellers having custody of clients’ funds (save for decentralized crypto exchanges), and transactions clearing The similarities to brokerage are undeniable, don’t you agree? Of course, there are some examples that operate differently. By those, I mean a few “blue chips”, major crypto exchanges that align themselves more closely with the conventional stock exchange model. In particular, they segregate brokerage, custody, and clearing functions and outsource them to strategic partners. However, in today’s crypto market, such a “classical” exchange set-up is more an exception than a rule. Now let’s get back to our favorite “standard” g̶r̶e̶y̶-̶t̶y̶p̶e̶ crypto exchanges. Those are exchanges and brokers all-in-one package. And usually, they operate under a broker or a broker-dealer license, save for the exchanges registered somewhere in a free-trade offshore paradise. Those don’t bother with any licensing. What’s the sense of having two brokers at a time? Short answer: for better liquidity and convenience of trading. I bet you’ve already noticed that the crypto industry has a siloed structure. On the one hand, we have multiple stand-alone trading venues: CEXs, DEXs, hybrid exchanges, and semi-exchanges (those that aggregate liquidity but do not execute orders on their sides). All live according to their unique rules and act like independent sovereign states. On the other hand, by now, there currently exist more than 18k cryptocurrencies and hundreds of blockchain protocols, most of which are (i.e., different in design and not interoperable). To get better exposure to global crypto liquidity, a trader must open several accounts on different exchanges, deposit them with funds, and manage them all simultaneously. heterogeneous It’s extremely inconvenient. In today’s crypto finance paradigm, this problem, known as , is the biggest challenge and bottleneck, preventing crypto from mass adoption. crypto liquidity fragmentation I detailed this in my article “ ” — highly recommended to check out. What is Web3 Liquidity Aggregation So, a crypto broker’s job here is to help clients overcome this problem and give them one-gate access to deep and diverse crypto liquidity consolidated from multiple exchanges and providers. It is essential for professional and institutional traders. Another killer feature of brokerage could be providing clients with the possibility of getting into crypto trading using their fiat funds only and without bothering with fiat/crypto conversion on their own. Institutions highly demand it. Who can become a crypto broker? Apparently, not anyone. Only high-powered professionals in this industry can, as brokerage implies responsibility for other people’s money. So here is the basic MUST-have package: prominent expertise/qualifications/good years of experience in trading top-notch fast and secure infrastructure sophisticated team impressive trading capital high-ROI network: established and trust-based relationships with clients, exchanges, liquidity providers, payment gates, and the like killer marketing and business development capabilities. What about a cryptocurrency broker license? Is it required? Non-trivial and pretty nuanced question. If you plan to play in some white-glove jurisdictions, chances are that you will be required to get authorized or licensed. For example, in the US, as a “ ” or as a (crypto asset secondary services provider) in Australia. money transmitter CASSP However, it’s worth noting that even in those jurisdictions, there are also no clear, holistic policies that directly regulate crypto brokerage and licensing. Whether you need a license for your crypto brokerage business or not — shall be determined individually by your lawyer. And, of course, obtaining a license is not a fast-paced process. You must be patient for a year or two before getting there. How to become a cryptocurrency broker? Finally, we got there! 🎉 So far, there are three actionable ways to do it: To kickstart a regulated stand-alone crypto broker To get a crypto broker franchise, and To become a liquidity network broker. Let’s dissect each briefly. 1. Launching a regulated crypto broker It’s the toughest way. Especially if you plan to target users from “first-world” countries. As with any professional intermediation dealing with 3rd parties money, you will be obliged to comply with multiple regulatory, technical, financial, HR, and reporting requirements to keep your business going. I’ve briefly outlined some of those above. The path to obtaining the license will depend on the types of products you want to offer (spots or derivatives) and the geographics you plan to serve. As you might have guessed, there are no universal guidelines for that. In an overgeneralized way, here are the boxes you will have to check: capital sufficiency (usually a large amount of capital c is required) office presence, i.e., you will need to relocate some of your team members to the country issuing the license the core team having relevant professional qualifications (especially applies to CEO, Head of Trading, Assistant to Head of Trading, etc.) insurance reliable and secure infrastructure sufficient AML/KYC/financial monitoring policies implemented, etc. Now let’s assume you’ve successfully passed all that — what’s next? I bet it won’t be mind-blowing for you that the license is just a part of the deal. It won’t automatically bring you clients and generate revenue. Along with being authorized, you also have to be a killer marketer and seller to bring high-dollar clients on board. Actually, it’s not easy to convince them that it’s safe to entrust you with their money. Additionally, you will need to be a kickass business developer to get profitable, sustainable partnerships with exchanges (for 0 fees, preferably), liquidity providers, banks, payment gates, and the like. You have to have the ability to persuade clients. Sounds like a hell of a job, doesn’t it?🤯 Now I anticipate a Quora-type question here: Can I set up a non-regulated crypto broker without bothering with all this license thing? Well, there is always a workaround. ̶I̶t̶’̶s̶ ̶c̶r̶y̶p̶t̶o̶,̶ ̶b̶a̶b̶y̶!̶ For example, you can register your broker somewhere in a free-trade zone like Seychelles or Saint Vincent and the Grenadines and cut off the US and other markets with powerful securities watchdogs. However, this approach is far from being wise and sustainable. First, you are always at risk of legal punishment for such experiments. Second — which is IMHO even more important — you will have a hard time attracting clients and strategic partners. No license — no trust. That’s it. Reasonably saying, even a pseudo-license obtained somewhere in Mauritius will make a difference. Summing it up, here are the pros and cons of this way. Let’s start with the . CONS It’s a long, sweaty, and expensive way — while you’re dealing with all this legal complexity, you can easily miss out on the market opportunities. It’s really easy to end up “ideally compliant” but unable to earn. Because while you’re putting all your efforts into the paperwork, your potential clients are already with your competitors. After everything is done with the license, only heaven knows how long it will take you to pass the break-even. It is a cash-burning business — especially at the beginning — most of your spending will go to marketing and sales and meeting license “continuing” obligations. Make sure you are resilient and funded enough to take such a brutal challenge. PROS With time, it can turn into a . Because a white-glove regulated brokerage is precisely what professional big guys need in trading. If you are diligent in sales, marketing, business development, and fortune, you have all the chances. Everything just needs to click. cash-generating machine Summing it up, the complexity of kickstarting a regulated crypto broker is pretty similar to launching a regulated crypto exchange. That means it’s BRUTALLY HARD. Think twice to make sure you can handle it. 2. Crypto Broker Franchise (Crypto Sub-Brokerage) Compared with the regulated crypto broker, a broker franchise is a much easier and quicker way to get into the crypto brokerage business. However, it’s not quite a brokerage in its classical sense. In the conventional market, a broker franchisee, also called a sub-broker, is someone who enters into a partnership with a broker (a franchisor) to bring them new clients. Essentially, a sub-broker is an of a broker, selling their products and services to clients. agent In other words, while a broker is a middleman between buyers/sellers and exchange, a sub-broker is the middleman between a broker and an investor. Why is it easier to get started as a sub-broker? less legal complexity and qualification requirements. You just need to have some certificates on hand (each time depends on the jurisdiction). no extensive investment is needed no requirement on being registered as a trading member of an exchange, etc. While being a broker requires extensive permissions and certifications, being a sub-broker allows you to carry out similar functions much smoother and without worry. What about the crypto broker franchise? In crypto, the concept of a sub-broker has not been widely introduced so far. In most existing examples (PayBito, PCEX, etc.), franchises are offered by crypto exchanges, not brokers. Though we remember that crypto exchanges are, in fact, brokers, do we? So the same logic here: a crypto sub-broker brings new leads to a franchisor crypto broker for a cut. it’s a relatively easy way to enroll in this business — see above why. PROS: : it’s hard to find clients. Most crypto traders prefer to buy-sell crypto on their own or through brokers rather than seek the assistance of a sub-broker franchise. CONS 3. Crypto Trading Network Broker (or a Network Broker) It’s the most optimal way of doing crypto brokerage, implying the best effort/outcome ratio. To be clear, a network broker is not an established term. I just crafted it for the convenience of explanation. Hope you like it. So, here is what it means. Remember, we earlier touched upon the problem of — the biggest bottleneck of the current crypto finance paradigm? crypto liquidity fragmentation Nice if you do. As we know, where there is a challenge, progress occurs. A few prominent and well-funded projects are currently working on solving the crypto liquidity fragmentation problem. Instead of launching yet another killer crypto exchange with siloed trading, the best minds look towards creating trading networks that aggregate crypto liquidity from various desynchronized sources and enable instant, safe, and cheap cross-blockchain transactions. Each of those projects offers its unique solution for different types of users. In general, the concept of a crypto liquidity network implies: one-account access to crypto liquidity consolidated from exchanges and other liquidity providers participating in the network aggregated price feeds instant and low-fee cross-chain transactions, suitable even for HFTs interconnection between all types of participants, and interoperability between heterogeneous blockchains. If it sounds too nerdy or boring, here is the end benefit of a trading network in simple words: fast, diverse, and cheap global crypto trading from one account. How can a trading network be beneficial for crypto brokers? I’ll explain it, taking as an example. Yellow Network Yellow is a decentralized Layer-3 peer-to-peer trading network that enables: global cross-chain trading with real-time settlement communication and financial information exchange between crypto exchanges, brokers, trading firms, and other types of network participants. Have you ever heard about (electronic communication network)? If not, it’s a computerized system that automatically matches buy and sell orders for securities in the classical stock market. So think of Yellow as a decentralized ECN for digital assets. ECN With a trading network like Yellow Network, a broker can: start brokerage without the need to fit extensive qualifications — all you need is to pass through some KYC verification and integrate with Yellow Protocol. Quickly to global aggregated crypto liquidity. Get one-gate access from other brokers through B2B (Broker to Broker) liquidity channels. A broker peering with another broker on the market will display orders from the other broker in his order book. It will allow a broker to extend his offer and increase the overall liquidity available for his users. Peer liquidity or operate in a non-custodial manner. Choose a custodian Comparing network crypto brokerage with other types previously covered above, it turns out that: network brokerage is easier to kickstart than a regulated stand-alone brokerage business, and unlike crypto sub-brokerage, network brokerage is scalable, independent, and has unlimited revenue-generating potential. For more detailed information on how to jump into the brokerage business with Yellow and what perks you will get — check out Yellow Network Whitepaper. And traditionally pros and cons here. easy, profitable, and scalable. PROS: honestly, I see no cons here. But if you spot some, please let me know about them in the comments. CONS: Final thoughts There are three alternative ways to become a cryptocurrency broker, including a non-conventional one that is purely “crypto native” — i.e., liquidity network brokerage. The last seems to be the most time-/cost-effective shortcut to this activity. One important fact here: crypto brokerage is not crowded yet. You will definitely find your perfect spot in this market if you act fast. Choose the best way for you, and see you in crypto trading!👋 If you want to learn more about brokerage with Yellow Network, don’t be shy to ask your questions in . P.S. Yellow Telegram By for Yellow Network. Julie Plavnik

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Solution To Value Agregation

Caption: Chaintimes History Bitcoin was the discovery of either an individual or a group of people with the pseudonym “ ”. Satoshi wrote the whitepaper (a paper that presents a problem and provides a solution) in 2008 called “ ”. Satoshi Nakamoto Bitcoin: A Peer-to-Peer Electronic Cash System Satoshi’s vision was to build a globally accessible digital currency (cryptocurrency, i.e. cryptographically encrypted currency) that was not backed up by any government. The decentralisation allows this new currency not to be impacted by monetary policies (actions by central banks to manage the money supply), limits any exposure to third parties (such as banks where we hold cash), the payments are immune to inflation/deflation and payments can be borderless i.e. all you need is a mobile device. In summary, your information is safe and cannot be tampered (censorship-resistant), you own and control your assets (self-sovereign) and you can get value from contributions (open ecosystems). Today there are a lot of different cryptocurrencies/coins such as Ethereum, Monero, etc. and each one of them is trying to solve a problem, but the most dominant one is still the Bitcoin (BTC) itself (almost 70% market capitalisation of the crypto market). There is a total maximum of 21 million bitcoins that can ever be mined of which 85%+ has been currently mined as of the . 24.08.2019 A Web of Blocks Similarly to the world wide web (www) and to sending an email, a bitcoin transaction can travel from one peer to another, but this time through blocks i.e. ledger entries. These blocks allow data to be stored and recorded (ledger) and when linked together they form what is called a chain of blocks i.e. a blockchain. Data is encrypted through hash codes which can be defined as cryptographic verification functions with a fixed length whilst their ID is linked with the previous block that can be called or referenced. Caption: Simply Explained Therefore, a user can send a bitcoin or a fraction of a bitcoin to another user by knowing his or her public key. The transaction will then travel through blocks (hash discovery) until it reaches the receiver. All the transactions will be recorded in the series of block transfers, i.e. through the blockchain, which can be defined as a transparent database or a shared public ledger. In this way adjustments can be verified, and the spendable balances can be adjusted for each wallet (receiving addresses), therefore the rightful known owners can know their balances. Caption: Sysjolt The Mechanism Every bitcoin account has the following elements: A 256bits long, to ensure that the owner of this address can receive funds; Public key A or seed used to sign transactions, i.e. a secret piece of data (similar to a password — never to be relieved); Private key Ability to process transactions through a process called . Mining Private keys provide a mathematical proof that they come from the owner of a wallet. Mining uses a consensus mechanism that confirms all pending transactions and allocates them into the blockchain. In this way the transactions are in a chronological order, neutral and allow various computers to agree on the state of the system. The rules prevent previous blocks from being modified and also create a competitive lottery that prevents any individual from easily adding new blocks consecutively to the Blockchain. Mining in Detail To mine bitcoins, you need a software program. This specialised software programme searches for a solution to a difficult math problem. This solution is also referred as or proof-of-work, a solution that is hard to be found but easy to verify. PoW The difficulty of the mathematical problem is automatically adjusted every time a solution is found. The solution is broadcasted, and everyone knows about this newly found solution that exists, and with this new information packaged the result is a new “block” every 10 minutes. The miner is then rewarded with a block compensation, i.e. bitcoin fractions of gets distributed among the peers depending on their hash rate contribution to the process. 12.5BTC The reward can also be impacted due to the level of complexity i.e. in a process called halving, whereas through a programmed bitcoin feature the block reward is cut in half, and it occurs every four years (210,000 blocks) once that number is crossed. Each block contains a block hash that represents the work that has been done by the miner; in other words, this is the proof-of-work. Credit: Binance How to buy your first Bitcoin? In order to purchase your first Bitcoin someone needs to be able to sell you one, or you can decide to mine your own one if you have the right software and computer hardware. Some of the best places to buy Bitcoins: https://localcoinswap.com https://paxful.com https://bisq.network Businesses that accept Bitcoin: https://coinmap.org/welcome https://coinmap.it https://spendabit.co https://99bitcoins.com/bitcoin/who-accept s https://purse.io https://paywithmoon.com https://www.bitrefill.com https://www.egifter.com https://www.gyft.com https://bitcoin.travel Also, a special thanks to https://bitcoin.org for its resources (a bit outdated but still a decent starting point) for educating people about bitcoin.

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