June 18, 2020
The Future of Cryptocurrency Exchanges
March 17th, 2020 marked ten years from the launch of the first and now-defunct crypto exchange, Bitcoinmarket.com. Digital asset exchanges have come a long way from the rudimentary functionality that was offered on early exchanges like Bitcoinmarket.com and Mt. Gox. A steady stream of advancements in the way of security, user experience, features, and customer support has allowed traders to approach cryptocurrency with more confidence and a willingness to engage with the market. That being said, there is still a palpable gap in quality between the overall user experience of trading software that is built for legacy markets and software that is dedicated to trading cryptocurrency. In this article, these gaps will be examined and addressed to determine what cryptocurrency exchanges will need to implement in order to remain competitive in the next decade of digital currency trading.
The key areas that crypto exchanges need to innovate include:
– Automated and algorithmic trading
– Portfolio management
– Customer support.
Algorithmic and automated trading solutions
In order to remain relevant, digital asset exchanges need to expand the features offered that enable their customers to automate their trades. The overwhelming majority of volume that is generated in legacy and digital asset markets come from algorithmic trading bots. As automated trading takes more of the total share of volume, the need to use one in order to remain competitive increases. For institutional and retail traders alike, using a bot as opposed to trading manually comes with a number of benefits to both the traders and exchanges. To start, bots can trade more often and with less risk. It can be physically and mentally taxing for a human to pay attention to one or multiple charts for hours on end. Bots, on the other hand, are not hindered by these earthly limitations, they can trade continuously throughout the day. This allows a trading group or individual to generate much more volume than they otherwise could. Resulting in more revenue for exchanges and better liquidity for traders. Another important aspect of automated trading is the removal of human emotion from affecting the outcome of a trade.
There are two primary functions that automated digital asset trading and investing software have been built to perform. The first is automated and algorithmic trading. The second is the automated portfolio management.
There isn’t a lot of work that needs to be done by digital asset exchanges to provide automated trading functionality to their customers. There are dozens of projects that have already developed high-quality trading bots that come prepackaged with different strategies that traders can benefit from. It’s more a matter of integrating this technology directly into the trading platform. From the perspective of the exchange, all they need to do is establish a working relationship with automated trading bot companies and complete a little bit of backend development to incorporate that functionality onto their own platform. The exchanges that are connected to the most amount of bot providers will prove to be successful in the coming years.
Automated portfolio management on Crypto trading
Beyond automated and algorithmic solutions for trading, retail and institutional investors have a large appetite for automated portfolio management. The key difference between the two is that investments in a portfolio are generally held unchanged for a longer period of time relative to trade. Automated portfolio management software can provide customers with insights that would be very expensive to access. These include: which assets should be in a portfolio, how should each asset be weighted, and when you should rebalance your portfolio. All these important decisions can be made for a customer through the use of automated portfolio management software. Considering the desire to have access to automated portfolio management, it would be wise for digital asset exchanges to start initiating relationships with developers who are building these types of products. Exchanges that can offer automated portfolio management to their customers will have a leg up on the competition going forward.
Exchanges need to improve customer support
The final and arguably most important gap between legacy and digital asset exchanges is related to customer support. In an industry like finance and investments where you are taking custody of people’s hard-earned money, you have to approach customer support with the utmost respect for how important the task at hand is. Historically, major cryptocurrency exchange’s customer support efforts have been nothing short of abysmal. Customer support reviews for any major crypto exchange can reliably read like horror stories. This is entirely unacceptable. As mentioned before, when you are handling people’s money, you have an obligation to respond to customer inquiries in a timely manner. The leading cause of the general lack of customer support at cryptocurrency exchanges stems from staffing. Large exchanges simply refuse to hire an adequate amount of support staff to meet the demands of their customer base. This is mostly illogical as the monetary savings derived from not paying additional support staff are easily washed away by the opportunity cost of lost customers due to poor or nonexistent support. As an extension to staffing issues, large crypto exchanges offer no methods by which a customer can directly contact the exchange to inquire about their funds. A trader who needs supports staff is generally left to sending an email and hoping that it is addressed and responded to at some point. It is very clear that this is not a sustainable practice and no exchange that operates this way will ever achieve true mass adoption. Ten years from now, look for the top crypto exchange to be the one with the highest rated customer support.
if the article about us then it should start with “the future of crypto exchange with Beaxy” – then we write the advantages of working with Beaxy and further confirmation in theses. Since the article about future of crypto exchanges in general – that block is unnecessary here
The future of Beaxy
At Beaxy, we have a clear vision of the necessary path forward for digital asset exchanges and we are committed to being the change that we want to see in the world of cryptocurrency. In regards to automated trading, we are nearing the point where our customers will be able to trade on our platform through multiple different automated platforms. These include Hummingbot, Autonio, CryptoHopper, and many more. We are also enabling our traders to automate their portfolio management in collaboration with HolderLab, a premier portfolio management automation platform. As it related to customer support, Beaxy truly goes above and beyond every competing exchange. We offer 24/7 customer support. We allow and encourage our customers to contact us directly. We are available by chat, email, telephone, and video conference at all hours of the day. This is an unparalleled level of service in the cryptocurrency exchange industry and we have every intention of adequately increasing our support staff as our customer base expands. So, be on the lookout for exciting and innovative additions to the exchange. If you don’t have an account yet, you can complete your registration and verification in minutes at Beaxy.com