Thoughts On The Current Cryptocurrency Exchange Situation

At present, coinmarketcap.com lists just over 200 different cryptocurrency exchanges, it seems that the old saying is true “during a gold rush, the people who make the most money are the people who sell the picks and shovels” - the same can be said for crypto exchanges: the exchanges are the ones who will always make the money, regardless of if people are buying their cryptocurrency, or selling (the exchanges make money on fees for buying, selling - and sometimes on deposits and withdrawals). This is no doubt why we have seen such massive numbers of exchanges spring up over the past couple of years as they all try to capitalise on the cryptocurrency “gold rush”.

I personally think that only a handful of exchanges will survive longterm, and these will be the exchanges with large financial backing, an already large existing user base and those that follow the rules and regulations of governments around the world. In the USA, that would be exchanges like Coinbase (and perhaps Poloniex will see a revival after being acquired by Circle), or in Australia exchanges like CoinSpot - as you might know, Coinbase and CoinSpot are both fiat exchanges, so they need to be legitimate, otherwise banks and payment processors will not go near them.

I also think that decentralised exchanges will become a bit more popular, but I don’t think they will ever reach the scale of the huge exchanges such as Coinbase. After all, people will need to be able to deposit their fiat somehow - unless of course, the whole world moves away from fiat, but that’s a whole other story for another time.

Of course there are “centralised” exchanges that don’t have anything to do with fiat, such as Binance that have been wildly, successful. Although Binance has mentioned that they will be creating a decentralised exchange - it will be interesting to see what come of that.

One thing is for sure, we’re likely to see more and more exchanges continue to pop up over the next few years until it reaches some sort of tipping point and they aren’t as profitable to run and the giants just take over.