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A recent survey carried out by blockchain-based data exchange company Insights Network has revealed that Binance is still the people’s choice in regards to their favorite exchange.
Despite this, there remains widespread concern over several factors concerning the current status quo of cryptocurrency exchanges.
Cryptocurrency exchanges are now part of the global economy. They are a testament to the growth the cryptocurrency industry has experienced over the years.
The success of Bitcoin created a platform through which cryptocurrency exchanges could establish themselves. The 2017 crypto boom gave the industry more cryptocurrencies to trade, which significantly increased the trading portfolios in most exchanges.
Moreover, the 2017 boom was an incentive for more cryptocurrency exchanges to open shop.
Cryptocurrency exchanges now operate globally due to the growing demands of cryptocurrency exchange services worldwide.
Their increase has also prompted governments, such as the Japanese government, to create regulations through which these exchanges operate within their borders.
The increase in cryptocurrency exchanges also resulted in a relative rise in network hacking. Many exchanges, thus far, have fallen victim to hacked networks, which have resulted in user data being compromised. In the worst cases, some exchanges have suffered massive losses as a result of the hacks.
This article looks at the cryptocurrency exchanges through the eyes of the crypto community.
The majority of users are actively trading and most cite security of funds as their most important aspect when using exchanges | Source
The cryptocurrency exchange market is expansive. Each trader has their cryptocurrency trading preference.
Some traders prefer Contract for Difference (CFD) trading while others stick to exchanges. The method of trading selected depends on the purpose of the trade.
Mostly, traders who buy to hold, prefer exchanges while those who are looking to cash in on a rising or falling commodity usually prefer CFDs.
The diversity in trading options shows how active the cryptocurrency market is.
From the data provided by Insights Network, more than half of cryptocurrency traders prefer exchanges.
As aforementioned, exchanges are preferred by those, who are buying to hold and sell at a future date.
Most of the traders participating in exchanges are in the market for the long-term.
The cryptocurrency industry is still in its infancy. There is always a lot more growth expected in the industry, especially in terms of adoption, in the coming years.
Some of the coins being traded are tokens for projects that haven’t yet picked up as hoped by their developers.
Thus, most traders participating in exchanges are purchasing promising cryptocurrencies.
These traders hope that in the next few years, the cryptocurrencies would have gained significant value to justify their investment.
Withholding in mind, most traders look for exchanges that are considered safe by the cryptocurrency community. This explains the results obtained by Insights Network.
The active market will mostly settle for safety over any other offering. Given the loss experienced so far by the industry, it doesn’t come as a surprise that traders want their assets safely kept.
Binance was chosen as numero uno, but many felt still enough is not being done to combat user funds security flaws | Source
The need for safety assurance determines the platform traders will choose to trade-in.
For new players in the market, Binance and Coinbase are considered the safest bets. Despite their hacking history, both platforms are perceived as established as and potentially more reliable than newer exchanges in the market.
Further, their operation in the US gives them more credibility, thus the considerable following. It also must be mentioned that both Binance and Coinbase execute their services accordingly.
Given the amount of money held within exchanges, their security systems must be robust. The number of hacks experienced yearly is injurious to the overall wellbeing of the cryptocurrency industry.
Exchanges are mostly used by traders to hold their digital coins; thus, having an insecure platform would be counterintuitive. These sentiments are echoed via the survey as more than half of the respondents feel that more security work needs to be done by the exchanges.
In their years of existence, cryptocurrency exchanges have experienced enough to inform them of what the market wants.
However, there are some crucial areas users feel the exchanges need to improve on.
High withdrawal and trading fees were cited as users biggest complaints when using exchanges | Source
Security is covered extensively in this article as it appears to be the primary concern of most users.
The other primary concern is in the high fees charged by some of the exchanges.
One of the advantages of blockchain or blockchain-related technology in fintech is the low frictional cost while conducting transactions.
Exchanges are failing their users by charging high trading and withdrawal fees.
The problem of high fees translates to other drawbacks that are preventing the expected rise of the industry. By failing to meet user expectations, cryptocurrency trading recommendations reduce, thus reducing the adoption of cryptocurrencies.
With fewer numbers in the industry, other problems arise, such as inadequate liquidity.
Meeting user expectations is quite crucial in the success of the cryptocurrency industry.
Beyond user expectations, user experience and perception are also crucial. Cryptocurrencies may have to ditch their “disruptive” approach and adopt a more relaxed tone with the majority.
Already, cryptocurrency die-hards are within the community; it is time that the industry attract more traders to keep the industry thriving.
Cryptocurrency exchanges have come a long way; however, there is still much room for improvement.
It is encouraging to see that most cryptocurrency holders regularly trade within these exchanges. Thus, their trading needs must be met by the service providers.
In terms of security, a lot needs to be done by the exchanges and the industry. For more people to come into the trading community, they will need assurance that their assets will be safely kept.
Lastly, a holistic approach is likely required while setting up cryptocurrency exchanges. Users need to have a better experience in these exchanges, experiences that will attract more users to decentralized platforms.
#CryptocurrencyExchange #Binance #Coinbase #InsightsNetwork
Disclaimer: Please only take this information as my OWN opinion and should not be regarded as financial advice in any situation. Please remember to DYOR before making any decisions.