Today, you can buy, sell, or swap different cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC) on a cryptocurrency exchange. Each year, cryptocurrency exchanges earn billions of dollars from trading commissions and withdrawal fees. In 2018, Bloomberg said that the ten largest cryptocurrency exchanges earned almost $3 million per day in profit (see graph below).
Cryptocurrency exchanges are the “killer app”
At this time, cryptocurrency exchanges are the “killer app” of cryptocurrencies. The trading volume for cryptocurrencies continues to increase (see graph below from CoinCheckup.com). These are good businesses because they scale. But what is the future for cryptocurrency exchanges?
The new features for cryptocurrency exchanges
There is great competition between the different cryptocurrency exchanges. Some exchanges give incentives to get new traders, such as a specified amount for a newly launched token. But to stay in business it is necessary to retain traders.
For an exchange to retain traders it is necessary to have more features. What are these features? Here is a list.
- more fiat deposit and withdrawal options
- better customer service
- more liquidity
- derivative products, such as futures and options
- insurance coverage protecting cryptocurrency deposits
And what will be end result? It will be good for cryptocurrency traders, because the result will be lower trading costs.
