The Blockchain Bitcoin & Crypto Weekly CXO Briefing is all you need to know, each week, jargon free for CXO level business leaders and investors who will use this technology to change the world. Each week we select the 3 news items that matter and explain why and link to one expert opinion.
For the intro to this weekly series, please go here.
Story 1: Binance Eyes One Billion in Profits This Year
Decrypted: Currently, there are 190 exchanges, compared to 70 exchanges three years ago, in March 2015. Every day, billions of dollars are being bought and sold on cryptocurrencies exchanges.
Cryptocurrency trading is anticipated to increase exponentially, as 200 million investors are expected to enter the market by 2024, while experts predict, the total market cap will reach $1 trillion by the end of 2018.
Naturally cryptocurrency exchanges have grown, as they are hubs where people buy and sell cryptocurrencies. Over the last year, exchange volume and user numbers have increased exponentially, with Binance leading the pack and reaching daily trading volumes of $1.4 billion.
Our take: Since 2017, the market has grown a hundred times, with the average daily trading volume jumping from $150 million to $15 billion, based on data from Coinmarketcap. With predictions about market growth, it’s expected that the average trading volume will reach $150 billion per day.
Cryptocurrency exchanges, which facilitate trading among different types of cryptocurrencies, as well as fiat currencies, are generating millions of dollars in profit daily and signing up thousands of users.
The top 10 exchanges are generating as much $3 million in fees a day, or heading for more than $1 billion per year, according to estimates by Bloomberg. The trades transacted are very high value and can take up to thousands of smaller transactions to be processed.
According to BitInfoCharts, the average trade value of BTC on 1 January, 2011 was $24.82. Five years later, on January 2, 2016, this amount had increased exponentially to $3,010. By November 5, 2017, it peaked at US$180,441 and on March 20, 2018 it was $49,258.
Asia-based exchanges dominate the global crypto trading market. Tokyo-based Binance, which recently announced a new location in Malta, tops the ranking with $3.4 million in daily revenue. Its founder, Zhao, recently claimed to have accumulated $2 billion in wealth in less than a year.
I remember in the late-90s portals were all the rage, everyone wanted to be the one-stop shop for all their users browsing needs. Cryptocurrency exchanges are the portals of the cryptocurrency economy.
While in 2017 we witnessed a huge interest in cryptocurrencies, with people flocking to cryptocurrency exchanges, still the number of users of cryptocurrencies is infinitely small. Currently, its estimated that there are only 20.2 million users of cryptocurrencies around the world and there are several reasons for this.
Most platforms do not provide proper education and knowledge that is necessary to help novice crypto investors. Most people have difficulty understanding how to manage and secure their cryptocurrency keys and are intimidated by the user experience on most exchanges. Until now most countries around the world have not taken a clear position on how to regulate cryptocurrencies, leaving retail investors with questions about the security of their funds and vulnerable to potential scammers.
The dominance of centralized exchanges is only a transitional period until decentralized technology matures. As the market grows, centralized or decentralized exchanges will need to adapt, going the extra mile and offering much more than just a trading platform.
Story 2: ‘A new era for capital markets’: The Swiss stock exchange is launching its own cryptocurrency exchange
Decrypted: SIX, the company that operates Switzerland’s stock exchange, announced the launch of a new digital asset exchange platform. The SIX Digital Exchange (SDX) will be the first market infrastructure in the world to offer a fully integrated end-to-end trading, settlement and custody service for digital assets.
The SIX Digital Exchange will provide services for issuing and trading digital assets in a safe and regulated environment. To provide these services, SIX is using distributed ledger technology, enabling the secure and transparent handling and recording of all transactions and smart contracts for digital asset trading.
Since SIX is regulated as an operator of Financial Market Infrastructure (FMI) by FINMA the Swiss authority, SDX is expected to adhere to the same standards of oversight and regulation.
Our take: Switzerland’s principal stock exchange announced that it is building a platform for the trading, settlement, and custody of digital assets. The announcement follows reports of government officials working on giving crypto businesses access to banking services.
SDX promises that its ecosystem will be safe for issuing and trading digital assets, and enable the tokenization of existing securities and non-bankable assets to make previously untradeable assets tradeable.
The SIX Stock Exchange, which has a common trading space with Deutsche Borse AG and Eurex, is the third-largest stock conglomerate after NYSE Euronext and NASDAQ OMX and has a turnover of $ 1.5 trillion.
Jos Dijsselhof, CEO at SIX said:
“This is the beginning of a new era for capital markets infrastructures. For us it is abundantly clear that much of what is going on in the digital space is here to stay and will define the future of our industry. The financial industry now needs to bridge the gap between traditional financial services and digital communities. This is the role that we at SIX can play.”
SIX is is building a bridge between the traditional financial services and digital communities. Its in a unique position, because it already operates the entire securities and payment value chain for Switzerland, and its in the position to create a digital ecosystem, allowing existing and new market participants to develop them.
The Swiss exchange is not the first to present a similar initiative. Back in 2015, the Australian Securities Exchange (ASX) had announced it would be adopting blockchain technology, as its post-trade processing platform for clearing and settlement.
While this is important piece of news, we should not to get too excited. The official announcement by SIX, doesn’t mention whether it will support the direct trading of cryptocurrencies. Things like this take time and patience, something most crypto-investor don’t have.
Story 3: Ethereum Scaling Solution Raiden Releases Last Testnet Before Launch
Decrypted: Two years after the release of its first proof of concept, the Ethereum payment channel Raiden has launched a second testnet.
According to the project’s announcement, Raiden sees this testnet as an opportunity to work out a few minor issues, and screen for any remaining bugs before its promised mainnet Red Eyes release.
The latest release features a minimal implementation of the scaling solution that will allow the trading of ETH tokens on off-chain payment channels. This particular testnet is the last one to test the technology before going live.
Our take: The Raiden Network is an infrastructure layer on top of the Ethereum blockchain. Raiden is an Ethereum based payments channel project that intends to reduce traffic on a blockchain, increasing the potential transaction rates and lowering fees.
Scaling has been a problem with the Ethereum network, confirmed by Vitalik Buterin in the past. Seeking to overcome some of the scaling issues faced by Ethereum and other blockchains, the release date for the implementation is not yet confirmed. However, the Raiden team plans to remain close to its original promise of a summer launch.
Compared to the last testnet, deployed last year, the new release is an early implementation of what the mainnet should be. Red Eyes will be classified as a condition channel which signifies the transactions having spot on it are away from the most important Ethereum blockchain.
Lefteris Karapetsas, core developer of the project said:
“this new testnet network is an early implementation of the mainnet release itself and features newly rewritten smart contract code and payment channels that are recoverable in the case of an accidental closure.”
Raiden and its team are trying to ensure that the mainnet launch happens only once the kinks in the network are repaired. The main aim of the software is to make it run on par with the other technologies, so that scaling can happen simultaneously between both the application and the network.
Raiden raised over 109,000 ETH in a crowdsale in November 2017, but marketing has been sparse, with minimal from the project in the recent months.
Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Bitcoin & Crypto (BBC) Weekly CXO Briefing each Monday.
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