The cryptocurrency market is now valued at over $2 trillion. Bitcoin is the most dominant, controlling roughly 50 percent of the sphere’s valuation.
Talent attraction and retention are critical parts of investment management, as many investors flock to certain funds simply because of who manages them. Now that the pandemic is essentially over, fund managers are looking to the future, which means managing the return to the office, among other challenges. The Importance Of Effective Investment Management Leaders Read More
But it wasn't always like this. If anything, Bitcoin had been dismissed as a vehicle of money laundering in the early days. Not surprisingly, few businesses want their name associated with cryptocurrency and Bitcoin for fear of reprisal. The Silk Road scandal even made it harder for Bitcoin, and the stain after Ross Ulbricht is what the sphere tries to clean to this day.
However, less than 15 years since the demonstration of utility, Bitcoin, and crypto have grown in stature. Bitcoin alone is more valuable than some of the world's leading blue-chip companies. At the same time, the sphere's infrastructure is now more sophisticated, comprising regulated companies providing services such as software hosting and even market making, and accepted as relevant laws continue to be formulated for the betterment of the sphere.
Cryptocurrency Exchanges Are Central To The Revolution
At the center of this revival is the critical role of cryptocurrency exchanges. These are ramps allowing funds to freely enter the ecosystem while also enabling investors to cash out. While cryptocurrency exchanges can offer other services like lending and borrowing, they facilitate the trading of digital assets for other cryptocurrencies and sometimes fiat.
However, not all exchanges allow the trading of crypto for fiat and vice versa. Instead, this is only a feature enabled for regulated, centralized exchanges. Over and above all, exchanges are intermediaries. Therein, they allow traders to acquire (liquidate) digital assets. For their role, they generate revenue from fees and commissions.
Centralized Versus Decentralized Exchanges
There are two main types of cryptocurrency exchanges. Decentralized exchanges (DEXes) are peer-to-peer, decentralized, and guided by smart contracts classified as a DeFi protocol. There is no intermediation and often allows the trading of tokens depending on the blockchain they are launched from.
For example, a DEX on Ethereum will only allow the swapping of tokens complying with the blockchain's tokenization standard. The state of DEXes, especially on liquidity and price discovery fronts, has been evolving to meet the expanding trader's needs and close the gap with competing exchanges. In recent years, the widespread use of Automated Market Makers (AMMs) and incentivization have seen DEXes grow exponentially. Some of the leading DEXes like Uniswap on Ethereum now move billions in daily trading volumes, surpassing certain centralized exchanges.
Centralized exchanges, or CEXes, are the common and popular ramps. Although they might be the antithesis of blockchain and community, the centralization of CEXes has lowered the threshold for new users, therefore, accelerating the adoption of crypto and blockchain. The most popular cryptocurrency exchanges like Binance and Coinbase allow direct crypto to fiat purchase, helping channel funds from the traditional world to crypto. Unlike DEXes, CEXes have simpler user interfaces, are scalable, processing hundreds of thousands of transactions every second, and are relatively safe.
In recent years, hacks have reduced, and most exchanges are regulated in their area of operation, injecting confidence among traders. Besides regulations, exchanges—unlike earlier iterations—are insured. In cases of theft, affected users are compensated.
Building Towards A Solution, Filling The Consumer Demand Gap
Despite the $2 trillion in cumulative crypto valuation, crypto adoption is still low. Research findings show that acceptance is low, at two percent. However, there is substantial adoption intention reading from the level of consumer demand—which is also comparatively low--, net transactional benefits, and accessibility influence.
The latter's increase will help shape the level of consumer demand, which will drive adoption. To this end, cryptocurrency exchanges will be the pulse, being the necessary infrastructure allowing the use of BTC and crypto in day-to-day transactions and helping drive liquidity in the space, tapering volatility.
Accordingly, users—including retailers and institutions—can easily set up cryptocurrency exchanges to bulwark and build a solid base for the sphere while also riding on the growing demand for crypto can tap maximum benefits from the business opportunities offered by the increasing demand for crypto trading.
There are different approaches for entrepreneurs seeking to carve out a decent market share despite the increasing completion. CoinMarketCap (CMC) data shows that there are 421 unique cryptocurrency exchanges—and the number could be higher. From June 2020, the number of exchanges has grown 23 percent from around 340. Many more are being developed from scratch or via white label cryptocurrency exchange providers.
Top-3 White Label Cryptocurrency Exchange Providers
While developers can build from scratch, releasing a proprietary, customized cryptocurrency exchange meeting their specific objective, this approach may be resource-intensive, requiring experts and finance outlays. Alternative routes provided by white label providers slash the time allowing the exchange to operate and onboard users immediately after setup.
HollaEx by bitHolla is open-source, allowing users to start their own crypto exchange using their quick to launch white-label solution, effectively connecting any partnering business with the potent blockchain world. The exchange can be hosted locally on a computer or on the cloud where hosting and service management is available for a fee wherein automation lowers the threshold for building and eliminating coding requirements saves time. To counter the challenge of illiquidity, the kit has a Liquidity Network option which aids in building up the liquidity of popular markets such as BTC/USDT or ETH/USDT amongst others..
Alternatively, there is Hashcash Consultants, which operates Paybito. Besides offering white label cryptocurrency exchange services, they provide a wide range of other blockchain solutions like utility coin offerings, cryptocurrency development, and coin listings. The provider is distinguished by its support of leading fiat currencies and several cryptocurrencies, including stablecoins. On the security front, Hashcash Consultants' exchanges have integrated bank-level security to protect against hackers.
Velmie is also another option for users. The company has been delivering technology solutions for over 15 years and was one of the first to provide enterprise blockchain solutions to the financial industry. Their white-label digital asset trading platform is customizable and secure, developed using a modular architecture tuned to allow crypto-to-fiat transactions.
Cryptocurrency as a sub-sector of the financial industry is now finding a base as regulators and governments endorse the underlying technology. With increasing clarity, the demand for digital assets will only increase, creating more business opportunities for entrepreneurs and traders.
While building an exchange from scratch can be an option, using a white label cryptocurrency platform can provide a faster way out in hitting the ground running. The developers of these platforms recognize that proprietary technology development, especially around a suitable trading engine, might take longer, is more expensive, and could even fail as developers build a solution that may not meet the demand of users.
This option allows users to get to the market faster with the assurance that the solution might not fail as developers have the necessary experience in releasing a breed of solution that's tested to be workable. By creating opportunities for entrepreneurs, the industry also benefits from more liquidity as supported assets find more exposure.