CRYPTOCURRENCY EXCHANGES–Leading cryptocurrency exchange Binance is thriving despite 2018 seeing a massive downturn in pricing for cryptocurrency. As alluded to last month by Arthur Hayes, co-founder of exchange BitMex, the falling price of cryptocurrency has yet to dampen the growth most exchanges are seeing throughout 2018. While investors scramble to secure their funds and find profit in the bear market, exchanges continue to win through their model of trading fees and other miscellaneous charges such as for withdrawals. Compared to traditional brokers, such as E-Trade, Charles Schwab or other stock picker portals, the fees imposed on crypto-based transactions are minuscule, often costing users less than a quarter of a percent of the total value transferred.
Ben Delo, who founded BitMex alongside Arthur Hayes in 2014, made headlines earlier in the week when it was revealed by The Daily Mail that he had become the youngest self-made billionaire in Britain’s history, and the first “bitcoin billionaire” to emerge in the United Kingdom. Clearly, despite the tug-of-war capital flowing in and out of the industry of cryptocurrency, exchanges and their employees are managing to flourish in the uncertain landscape of the market.
Binance, currently ranked number one among cryptocurrency exchanges by daily trade volume, has told Bloomberg it expects to turn a profit of $500 million to $1 billion by the end of 2018. Despite the exchange facing significant technical difficulties throughout last week, which brought trading to a halt and raised the ever-present concern of a hack (and also gave investors the iconic response “funds are safu”), Binance CEO Changpeng Zhao told Bloomberg the company netted 300 million USD in revenue through the first half of the year, with the customer base growing past 10 million users.
— CZ (@cz_binance) July 4, 2018
While other exchanges such as Coinbase have boasted a higher customer base, Binance has managed unreal growth through the first year of its existence. Zhao founded the exchange in July 2017, after raising 15 million USD through an ICO. The company now experiences an avegrage turnover volume of 1.5 billion USD daily, with the customer base growing from a reported 2 million users to start the year.
Given the murky landscape of cryptocurrency exchanges, the lack of regulation and the potential for government crackdown in many countries around the world, the competition for trading platforms has been scant compared to the profit to be made. In addition, established exchanges such as U.S. based Coinbase have struggled to capitalize on demand, being accused by Business Insider of having insufficient resources to handle their customer load as well as a 134 pages of complaints filed with the SEC.
Compared to Coinbase, which offers four cryptocurrencies to buy and sell, Binance is a near-industry leader in cryptocurrency selection for trade. However, it suffers from the ease of use and accessibility that other mobile-based platforms provide to customers. As it stands, the average investor just getting into cryptocurrency will find some difficulty navigating to Binance, even if the registration process itself is fairly simplistic. But, that only reveals how much room the exchange has left to grow, and the untapped customer base it can expand into.
With the acceptance of cryptocurrency exchanges as banks and financial institutions in South Korea, and the looming possibility of regulation in a number of other countries, the landscape of exchanges could swell as companies and entrepreneurs look to capitalize on the massive trading profit.