3 meaningful aspects every crypto exchange should focus on
The crypto industry is still young and immature. A lot is yet to be done for blockchain to change the world for the better. While blockchain has a potential to answer large-scale questions regarding decentralization, transparency, and impeccable security, small yet significant changes should already be implemented by crypto exchanges themselves.
Crypto Exchange Ranks spoke with three different industry experts about the image of a perfect crypto exchange. We interviewed a professional trader, a crypto enthusiast, and a NEM Ukraine representative regarding the crucial features that crypto exchanges should strive for.
Meet the interviewees:
- Volodymyr Hryshakov
CER Senior Research Analyst/Professional Trader
2. Teejay Chin
Healthcare Professional/Crypto Enthusiast
NEM Ukraine Kyiv Leader/Individual Investor
CER: What factors do you take into account when choosing an exchange?
VH: Nowadays, the most significant factor when it comes to choosing the right exchange is its security because there are many precedents of crypto exchanges’ major security breaches resulting in users’ funds being stolen by hackers. I would consider the number of listed coins, trading platform UX, fee policies, withdrawal limits, and mobile apps availability.
TC: The factors I take into account when choosing an exchange are security, customer support, user-friendliness, and volume.
YK: The priorities are reliability and safety. When we talk about exchanges in the world of decentralization, they still are these needed intermediaries, these cryptocurrency nodes, which I, and the community of crypto traders in general, would like to trust. This concept of trust includes the number of users and the feedback they give. Also, the geographical location of an exchange is important — this should ideally be the United States or Japan since in these jurisdictions local governments and regulators are willing to solve problems with fraud and scam.
CER: In your opinion, what aspects/features modern crypto exchanges lack?
VH: Modern crypto exchanges evolve steadily, but, to my mind, practically all of them have something to improve or add. Some of them lack intuitive UI, some have inconvenient charting tool and many of them don’t provide native mobile or desktop applications.
TC: In my opinion, modern crypto exchanges lack multiple things depending on the exchange. Generally, they lack proper security. They also lack a user-friendly interface. Many exchanges seem cluttered with promotions of various tokens and it’s sometimes distracting. If someone has never used a crypto exchange before, their initial experience will be difficult in my opinion and based on personal experience. Exchanges also lack good customer support. This is a known limitation in crypto, but most exchanges lack fiat pairings and bank integration. Some of these issues are easily fixable, whereas others may take a bit more time.
YK: Unfortunately, there is so much to do with the functional. On the internal web platforms of the most popular exchanges such as Binance, Bitfinex, Bittrex, a newcomer needs to break their heads in order to understand how to place different types of orders (the diversity of which can be seen only on Bitfinex only). In addition to the exchange experienced traders usually use the functionality of third-party services that connect to the exchanges via APIs (like Coinigy or 3Commas). So, what prevents exchanges from developing internal functionality and why they leave it so poor — is a question for me. Just recall the old platform — Metatrader where you could immediately open a position to establish a stop loss and take profit in a few clicks and you will understand what I mean.
CER: What is the most widespread crypto market manipulation according to you?
VH: For now, the crypto market is fairly immature and, because of that, it is vulnerable to different kinds of manipulations. The most common of them are information-based, such as FUD (fear, uncertainty, and doubt) campaigns and fake news; trade-based: faking trade volume (wash trade) and faking orderbooks (spoofing and layering); and “pump and dump” schemes which combine both information and trade manipulation.
TC: In my opinion, the most widespread manipulation is “paid shills”. What makes this an issue is when you have multiple major “social media influencers” shilling the same token around the same time period. This act of coordinated shilling is a manipulation in a sense because they drive the sector of our market that’s easily influenced to buy the said project/coin. Simply imputing “DYOR” at the end of a tweet just doesn’t cut it for me. There was one example most recently when about 5 big crypto influencers on twitter shilled a particular privacy token. What made this so strange to me was that they all promoted it within about 3 days of one another. In the end, about 1 month later, the project took a nose dive and a very bad turn. Typical investors reported losing thousands within seconds. Who’s to blame in this case? I believe everyone has a part; the team, the influencers, and the investors. Clearly, the crypto team paid these influencers to promote their project, but in the end, it turned into a coordinated “shill-fest” bringing a lot of the new investors to the crypto space.
YK: Manipulations are quite common. Working on a market with a capitalization of fewer than 0.5–1.0 billion dollars in the fundamental and technical analysis is quite risky and unpredictable. It’s very easy for some big players to create price spikes/failures due to the lack of certainty among other players. Besides, state leaders are constantly changing their attitude to cryptocurrencies, the related legislation, the channels that allow using crypto as a payment method, etc. So, the market is quite often stormy. The most common are combined manipulations — when current market-makers combine the deliberate failure of prices with some big crypto news in the background. Often, these schemes go against the figures and graphs suggested by technical analysis. Also, quite unpleasant events in this market are disruptions/manipulations inside exchanges: breaking API keys and suspicious movements with unusually wide price ranges for forcing “stop orders” of traders are another example.
Summing up, there are 3 aspects that can contribute to the broader acceptance of cryptocurrency and the overall development of the industry.
- First of all, the security of crypto exchanges.
No one wants to lose investments in a hacker attack. Every existing crypto exchange has to pay primary attention to application-level security, SSL/TLS connection, and domain security.
- Secondly, the user interface (UI). As long as CMC keeps changing its policy on crypto exchange ratings; probably, simplicity and convenience is the second most important parameter.
- Thirdly, the word of mouth. Marketing should be a trustworthy tool based on real facts and stories, not financial rewards.
Originally published in Crypto Exchange Ranks Blog