Seven Advantages Of Crypto Exchanges Over Traditional Stock Exchanges

These types of advantages are especially relevant for retail investors that happen to be superior served by Crypto exchanges in comparison to traditional exchanges. So traditional exchanges should begin to move or face the fate with the dinosaurs. It will not be long until starting to find out we have and ideas of crypto exchanges deployed for stock, bond, currency and options trading. This doesn't mean stocks need to become blockchain-based tokens, but instead that tokens can be used to represent stockholdings pretty easily and transacted blockchain style.

1. Fractional purchasing
With crypto exchanges, you should buy whatever fraction you want associated with a asset. What this means is in order to invest $523 in bitcoins that you can do just that. There's no need to buy a whole bitcoin, you should buy any fraction from it (e.g. 0.003 BTC). This allows small investors more flexibility as well as helps it be a lot easier to produce balanced portfolios with any amount.

With traditional exchanges, you need to buy no less than one stock and you'll obtain only whole numbers. This may not a difficulty for big-time traders but retail investors could find it too lumpy. A Google or Amazon stock is trading for north of $1.000 which makes it a huge commitment, never to speak of the $325k Berkshire Hathaway stock.

There is certainly really no reason at all with this except the fact once stock certificates were paper documents that couldn't be cut into smaller pieces. Nowadays fractional stock investing is perfectly feasible and could be implemented quickly through tokenization of stocks.

2. 24x7 trading
With crypto exchanges, you can get and then sell 24x7. Of course, exceptionally the websites are down or blockchain is totally backed-up. This really is convenient for retail investors who will be usually working or busy when the companies are open. Additionally, it levels the playing field regarding to be able to respond to news such as the China ICO crackdown.

With traditional exchanges, you're restricted by the "market hours". Similar to your local physical store vs. Amazon. Needless to say, institutional traders get all kind of "pre-market" and "post-market" trading is not open to retail investors.

Again, "market hours" developed a lot of sense when real people were trading the pit. Nowadays there isn't any reason not to allow 24h trading because the "pre and post" markets show. Naturally, if many are allowed within the "pre and post" they have got an unfair edge over average folks and may want to maintain their own rules.

3. Instant Settling
With crypto exchanges, you can buy and then sell on instantly. The exchange takes desire to instantly settle based on their custody of crypto assets and formalize the modification as soon as the blockchain allows. This is extremely natural, when you hit the button there is a asset.

With traditional exchanges, the transaction is processed its keep is really a long settling process (currently T+2 or two days from close). To find out normally not an issue with, it enables High Frequency Traders advantages over us common mortals.

There are 2 problems to permit instant settling with current stock market infrastructure. First, there is a technology problem. As the blockchain allows instant settling, previous technologies require via a convoluted procedure for checking and rechecking. Second, the multilayered value chain which made sense inside the yesteryear takes necessary added time compared to direct type of crypto exchanges.

4. Transparent order-books
Crypto order books are totally transparent in several exchanges like Kraken or Poloniex. You can view the depth from the exchange side of each one market in each of the assets you might be trading. Which means you can understand how industry looks and just what will happen should you convey a large order.

In traditional exchanges, you never see order books as being a retail investor which are proprietary to the exchange and can be sold like a useful. The matching of order books can be an important advantage for market makers. This is the main objective in the so-called "dark pools" that investment banks are creating.

Transparent order books might be a results of competition and consumer expectations around the either side. In addition, they need modern technology infrastructure that could cope with the raised information volume.

5. Modern and secure interfaces
Crypto interfaces are viewed online and mobile perspective, with security like a key feature. These are light clients in browsers or smartphones. They are often accessed easily from any oral appliance use high tech technology. This permits simplicity, speed and intuitive customer experience.

The original interfaces We have experienced remain full applications inside a desktop setting with clunky interfaces and long load time. This probably has to do with legacy applications that should be updated but must be secured and evolved slowly.

Evolving completely to another application interface will be challenging because it requires agile practices and frameworks which can be second-nature for brand new entrants but take courage and conviction from existing incumbents.

6. Direct-to-investor
Crypto exchanges deal directly with retail investors and have experienced before players inside the value chain beyond themselves. When you are with an exchange you happen to be directly speaking with your custodian, your marketplace, your agent, etc... As a result sense within a world where decentralized trust cuts down on the needs for intermediaries. There are many exchange mechanisms for example Shapeshift which might be even more direct and simply connect you to the other side with the trade.

Traditional exchanges possess a big list of players. They have brokers, that connect to the exchange in your stead. They've got custodians, taking care of your assets. This made sense inside a world without blockchain by which decentralized trust was complex. Now exchanges grapple with the question of going direct and bypassing their partners, comparable to consumer goods companies when eCommerce was starting.

Within a Blockchain-enabled world there is decentralized trust and therefore you don't need a lot of actors to create trades secure. This can probably decide to use a progressively leaner value chain model.

7. Variable and transparent fees
Crypto exchanges have transparent and typically low fees. They're transparent because being direct there exists nowhere to cover up, therefore it is very obvious exactly what is the exchange charging. Crypto fees range between 0,10-0,30% to the extremely expensive but convenient Coinbase with 1,5% to 4% fees.

Fees in traditional brokers are difficult to understand as they normally have many different components. They can be low for larger trades, but sometimes typically amount to $1 to $7 per trade that may be pricey for some transactions.

Fee schedules are due to cost and competition. With blockchain type infrastructure cost will disappear very significantly. Concurrently, increased competition will represent a secular trend of shrinking fees for retail investors with ETF and crypto exchange fees is the defacto standard to which others converge.

***

Overall, it appears as if a classic shift from the previous model with all its legacy limitations for the model which a new technology enables. In the already digitized nature of exchanges and stocks, bonds and options expect movements to start out fast and also the switch the signal from be swift. More like classifieds from the newspaper industry as opposed to slower shift to e-commerce. Regulation could be a hurdle, but financial authorities seem available to more potent, fair and quick transaction methods. The exchange that moves quicker often will eat the lunch of competitor exchanges. Comparable to the likes of Schibsted launched digital classifieds across Europe and dominated the category. So traditional exchanges should face a fresh reality and discover the way they are likely to placed their level for the new defacto standard.


Check out about Bitcoin Trading explore this useful site