Dark Side Of The Moon - And The Crypto Exchange Listings
(Source: forbes.com)

clicks | 5 months ago | Google AI sentiment 0.10 | comments: discuss | tags: cryptocurrency


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(Original link: forbes.com)

According to recent research from the Blockchain Transparency Institute (BTI), there’s a new concern in the still-nascent industry, and it doesn’t have to do with ordering vacuum sealed narcotics online. With more investors and traders getting introduced to the crypto markets, there are plenty of companies looking to sell their tokens. But the typical mainstreet investor, especially in the United States , isn’t able to purchase tokens specifically from the blockchain project releasing them, so they head on to the crypto exchanges.
Popular cryptocurrency exchanges like Coinbase, Binance and Gemini are how investors get access to cryptocurrencies, and trade them for fiat such as USD. That means new blockchain projects need to get their tokens listed on said exchanges, if they want to gain exposure to a wide audience of investors.
Of course, that’s not free in many cases.
When collecting data, the BTI found that the average blockchain project spent $50,000 last year on listing fees alone. In return, that $50,000 should pay for itself (and more) by making the coin or token available to a large number of investors. On the surface, the transaction makes sense for all parties involved.
Exchanges are able to watch their own bottom line and cover the costs of running the exchange, by charging a fee for new projects to have their coin listed - and in exchange, the project paying the fee sees substantial growth in the selling of their tokens or coins.
The larger an exchange is, the higher the fee. In fact, Business Insider research found that some exchanges can charge as much as $1 million per coin listed . And yet, not all exchanges are being completely honest with their numbers.
For exchanges to charge exorbitant fees for listing on their platform , they need an equally large number of users and daily volume. After all, what project is going to pay a high fee for an exchange that only has four active users on it? So what do you do as an exchange when you want to charge more for listing services but don’t move the same type of volume as exchanges like Coinbase and Binance?
It’s simple — you fake the numbers.
In their most recent report , BTI released data collected on some of the largest cryptocurrency exchanges in the industry. The report found that some exchanges in 2018 were using trading bots to wash trade on the exchange, to fake reported trade volume for prospective clients.
The results of the research indicate a disturbing reality for many exchanges, showing that much of their self-claimed volume was actually artificially created by the exchange itself.
From the report, even some well-known exchanges appear to be inflating their volume numbers.
All of this rather generous volume is used to justify higher listing fees from exchanges. Of course, there are still plenty of exchanges with legitimate numbers and high volume, but the point in BTI’s research was to illustrate the reality that there are exchanges artificially inflating volume to deceive blockchain projects and companies to justify higher listing fees.
In total, BTI estimates that $100,000,000 was stolen from the crypto ecosystem in 2018 because of false volume and high exchange fees.
Along with research on what exchanges have been inflating their numbers, the BTI released a list of “trusted exchanges” that don’t partake in such practices.
Some of the top exchanges on the list — like Binance — d id charge listing fees, but the BTI has already concluded that the exchange doesn’t falsify trading volume data. In fact, the research conducted shows Binance and Bitfinex have the highest amount of real trading volume.
With that in mind, there’s nothing wrong with an exchange understanding its value in the marketplace, and fees can actually act as a means of keeping low-effort projects from being listed. To a certain extent, having a small barrier to entry for listings can actually be a good thing for investors and users .
Also, Binance directs the fees to Binance Charity Fund (BCF), a venture aimed to provide relief and important funds to natural disaster victims and poor people.
Other exchanges implement processes for coin listings that don’t require fees to get on the exchange at all. For example, exchanges like Gate.io , Poloniex , and Bittrex have all opted for no-fee structures when listing new coins.
While each exchange handles listings differently, they all don’t accept payment to be added on the platform and instead prefer to research and decide on coin listings based on merit and community support.
In the case of Bittrex, that means a lengthy review process of any given cryptocurrency project that’s requested to be added to the exchange.
Bittrex employees spend time analyzing, researching and evaluating the merits of a currency and the supporting development team before adding anything new to the exchange. On the other hand, exchanges like Gate.io use a 3 month trial period for new coins on the platform that have been requested by the community.
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