Crypto Exchange News

The Importance of Bitcoin and Ethereum for Crypto Exchanges

Crypto Exchange News – Ethereum (ETH) has received a lot of attention since its announcement at the North American Bitcoin Conference in early 2014 by Vitalik Buterin. As a natural consequence of its rising popularity, Ethereum has constantly been compared to Bitcoin (BTC), the first decentralized, digital currency. Ethereum and Bitcoin (BTC)  are critical to the financial stability of the Exchanges.

While both Bitcoin and Ethereum are powered by the principle of distributed ledgers and cryptography, the two differ technically in many ways. For example, Ethereum transactions may contain executable code, while data affixed to Bitcoin transactions are generally only for keeping notes. Other differences include block time (Ethereum transaction is confirmed in seconds compared to minutes for Bitcoin) and the algorithms that they run on (Ethereum uses ethash while Bitcoin uses SHA-256).

The Beginning of Change

The story of the cryptocurrency life cycle will be packed with lots of information that readers then would probably wonder if it all happened within two decades. We are (currently) greatness and we do not know it. Just as philosophers like Plato and Aristotle did not know how much of a effect their writings, works and speech will have on our generation and the ones to come. The trajectory which the Blockchain technology is going is noting short of Magic, greatness to be more reader friendly. This history can take any shape it wants but one constant thing that is sure never to miss through generations is the impact of Bitcoin and ethereum.

Bitcoin – the currency – is a technology for managing a lack of trust, just as all currencies are.[1] We use both formal and informal currencies when we want to exchange value with someone we don’t know and otherwise wouldn’t or couldn’t trust.

Bitcoins, like fine art and gold, only have value because we all agree they are valuable.[2] The value of Bitcoin rests on our trust that if we wish to transact our Bitcoins will be accepted by another member of the Bitcoin community.

Ethereum is an essential tool among many developers and entrepreneurs. They are used to create decentralized businesses which are not in existence prior. Ethereum Smart contracts are used for eliminating third-party users from various industries.

The Trust

This trust comes in three parts[3]:

  1. One, we have faith Bitcoins are an accurate measure of value; we can accurately and easily convert between Bitcoin and other measures, other currencies, or the value inherent in goods and services.
  2. Two, we have faith the demand for Bitcoins is sufficient in that we can use them as a means to exchange value when needed.
  3. Three, we have faith this demand will not change dramatically while we hold Bitcoins, so their value remains stable and allows us to use Bitcoin as a store of value. Our level of trust will determine how long we are willing to hold Bitcoins.
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Bitcoin (BTC)  is a cryptocurrency. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.[4]

Financial Sector

Both crypto have played an important pillar-to-post role in what we call the cryptocurrency sphere now. Their advent came to disrupt the financial Sector and the way we perceive money generally, but they have since gone out of their way to crest their importance on other sectors of the world. We therefore know that the crypto and Blockchain innovations are great and we cannot fully grasp what the future for bitcoin and ethereum will look like but we can talk about how both crypto are singlehandedly moving pillars in the crypto sphere. In this article, we’ll consider their importance to the various crypto exchange.

To completely understand the importance of bitcoin and ethereum to the various crypto trading platform, let’s see the crypto exchange as a business and both crypto, goods and services. With the current crypto trend, Imagine a physical crypto store, stocked with Cryptocurrencies but does not have bitcoin and ethereum in stock. Just imagine! It’s as good as empty. The following are the importance of both bitcoin and ethereum  to crypto trading companies.

Crypto Exchange Platforms

One of the most important activity in all crypto exchanges platform is the exchange of one crypto to another especially for day traders looking to take advantage of the dwindling prices. Often times, their central exchange is usually bitcoin or ethereum because the two are the most popular and will generally be accepted by almost all traders. Most cryptos conducting their Initial Exchange Offering (IEO) will not want to enroll on an exchange that does not have bitcoin or ethereum because it determines how fluid trading activities will be on the networ – Bitcoin and Ethereum for Crypto Exchanges.

gemini

The market capitalization of Bitcoin is $130.99 billion while ethereum holds about $19.14 billion. This means that a solid 60% or more of every digital asset traded by crypto exchange is either bitcoin or ethereum considering that the entire crypto market capitalization is currently around $197+ billion.[5] On many levels, this is importance. It means that a slight  change in the prices of any of the two crypto will cause a major shift in the crypto market exchanges. As much as investors are looking to the future and are trying to take advantage by investing with up and coming crypto project, having bitcoin in ethereum in their Exchanges portfolio is very important to maintain stability.

In closing, there are other cryptocurrency doing very fine in terms of their project and market capitalization and this is a good mark for the crypto community but the importance of bitcoin and ethereum cannot be denied. While bitcoin holds the record of the first known crypto and topping all crypto table, ethereum remains the most resourceful digital asset creating a platform that allows other crypto project come to life using smart contract protocols.

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One of these Crypto Exchange platforms is the GeminiLast month (November 2019) was considered as leader according to the latest cryptocurrency Exchange Benchmark report from CryptoCompare [9] , a company in digital asset data. With a refined methodology, the new report now offers market participants and new entrants the most comprehensive, granular and reliable source of information on the best digital asset trading venues. Gemini takes the top spot with a total score of 78.

 

The Marketplace Opportunity for Cryptocurrencies

Bitcoin and other cryptocurrencies face a marketplace that is ripe for disruption. The payment systems in the U.S. and the rest of the world are in dire need of overhaul. Many of today’s payment systems are considered slow, error-prone and expensive relative to performance in other high-tech industries. In January, 2015, the Federal Reserve released a paper [6]  outlining their goal to “improve the speed and efficiency of the U.S. payment system from end-to-end over the next decade.” Desired outcomes include:

  1. Speed: A ubiquitous, safe, faster electronic solution(s) for making a broad variety of business and personal payments, supported by a flexible and cost-effective means for payment clearing and settlement groups to settle their positions rapidly and with finality.
  2. Security: U.S payment system security that remains very strong, with public confidence that remains high, and protections and incident response that keeps pace with the rapidly evolving and expanding threat environment.
  3. Efficiency: Greater proportion of payments originated and received electronically to reduce the average end-to-end (societal) cost of payment transactions and enable innovative payment services that deliver improved value to consumers and businesses.
  4. International: Better choices for U.S. consumers and businesses to send and receive convenient, cost- effective, and timely cross-border payments.

Anti-Money Laundering (AML) / Know Your Customer (KYC)

Such a system would need to have important roles for banks and credit unions, support the fundamental banking functions such as lending and demand deposit accounts, and support Anti-Money Laundering (AML) / Know Your Customer (KYC) requirements. It would need to be able to start small and scale with demand. And it would need to have the full endorsement of the central bank [7] .

Examples – Bitcoin and Ethereum for Crypto Exchanges

Examples of crypto use cases [8] :

  • Bitcoin, which is becoming an investible asset class like unallocated gold, has the potential to become a store of value that is natively digital, generationally relevant, and an alternative to traditional asset classes.
  • Ethereum has enabled Initial Coin Offerings (ICOs) as an alternate means of raising capital. The ICO space suffers from fraudulent activity and a lack of governance, accountability, and investor protection afforded by regulated capital markets. But ICOs represent an important innovation, providing new pathways and more efficient flows for capital from a significantly wider group of investors.
  • Litecoin has been used to transfer the equivalent of $99 million for less than $1 of transaction fees9 within minutes. This transaction could have been initiated by anyone located anywhere around the world without the need for any intermediaries or third parties. While transaction times were still fairly slow compared to a Visa or a MasterCard transaction, this example represents a significant improvement compared to the speed and accessibility of existing cross-border payment rails such as wire transfers.
  • Tokenization the creation of natively digital tokenized representations of traditional (and emerging) assets that are issued, traded, and managed on a blockchain can reduce friction and overhead costs associated with the issuance, transfer, and management of traditional assets such as securities, commodities, and real estate assets. Cryptoassets that are tokenized versions of traditional assets could also fit well within existing regulatory frameworks, which may mitigate some regulatory uncertainty surrounding newer cryptoassets. Tokenization of traditional assets could also help increase liquidity, codify rules and regulations, and increase transparency throughout the asset lifecycle.
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The Crypto landscape and token economy
The Crypto landscape and token economy [8] 

 

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Bitcoin and Ethereum for Crypto Exchanges