Topic: The crypto exchange industry is saturated - Agree or disagree? (Read 10027 times)

So battling it out means we should all tart establishing all manner of exchanges that will make the exchanges becomes more than the market itself? It is this battling out idea that made poloenix lost. When Poloenix was reigning, there were little exchanges around to battle it with them, and until we started having too many exchanges that took their users that they became weak until Bittrex and binance came to topple.

So I think the exchange market is too saturated for now and we really need to see less exchange, if it is not saturated, why are we having people separating good exchanges to bad ones.

That's unlikely

If we take a look at regular exchanges (even just currency ones), there are a lot more exchanges across the world than half a dozen. In fact, every self-respecting country has a currency exchange, either a separate one or as a trading floor at a bigger one. People will always want to convert crypto to local currencies and thus there will always be demand for local crypto exchanges making this option available. In a sense, we should expect more exchanges to appear if crypto gets universally regulated in 5 years


It is not the volatility itself which is the object of so much criticism but rather the market rigging and manipulation that are leading to it and the cause of it

It's not saturated. Let them battle it out. You cannot be 100% certain that Binance will remain the top exchange in the next 10 years.

Years ago, I never thought Poloniex would be displaced by Bittrex. This is just proof that anything can happen. You never know.

You have made a point here and that is the trait of the best option in the market usually. Binance grew from one user to having more than 90% of the crypto users now and the credit goes to the management and the services it has been offering. Actually they never compromised on quality and behind Binance, is the brain of Changpeng Zhao.

That does now not mean that the number of exchanges should be more than the number of traders themselves, how many people do we have in this trading market now that everyone wants to open exchange?That is why majority of the new ones end up not getting volumes because there are no plenty new investors.

The new investors we have would rather stick with a well-known exchanges while the existing investors will have no reason to swap to a new one, so I see all these companies trying to also go the line of exchanges wasting their time because we already have enough at hand.

It is better for the market to be that way so as to avoid manipulation since different platforms have different and independent market movement from one another. Also, this lessens the risk of a lot of users losing funds in an event of a hack. Imagine if a single exchange were to lose a ton of its holdings in a single sweep, the users would be the ones who would suffer the consequences. Even if new exchanges popping out are offering no new features at all, they at least help spread the coins out there, so it's definitely okay too, provided that these exchanges abide by the laws in order to not pull off exit scams easily.

Okay, that's right. But if Futures have never been popular it is because the majority of investors were waiting, and still are, for more regulations and a clearer framework, I suppose. It's also funny but the volatility of BTC has been the most used criticism and since Futures are exactly for this...

How would you able to describe on how that new Binance exchange in the past did able to take the top spot as of this moment?
You cant conclude that new exchange doesn't have the chance because if people would able to see new exchange possible unique feature and good
service then there would always be a tendency.

It depends because business do involves with success and failure.It do just matter on how you do handle it.

Bitcoin futures have been around for a couple of years already

And I can't say they are wildly popular presently. Indeed, if major derivatives exchanges massively weigh in (couple that with a more benign attitude toward crypto from the regulating bodies like the infamous SEC), this may change a lot. In fact, it may change everything. But if nothing is set to change in this department in 5 years time, Bitcoin derivatives are not going to become any more popular than they are now


That's my point. Crypto exchanges are a hell to withdraw to fiat in general. Bitfinex and its fiat adventures speak louder than a thousand words

There is a lot of exchanges but the bad part is there is not enough competition. I mean there are some small exchanges that make their money from adding obscure coins that nobody except that community wants to trade and they have like 5 thousand dollar volume total but hey that makes them another 50 bucks so they add it anyway, add 100 coins like that and you get 5 grand per day.

Look at all the top exchanges and difference between them and the small ones are huge so there is no real competition, you are either in the top 5 or you are a small exchange no matter what. Instead of starting more exchanges maybe people should try to focus on acquiring companies.

A small company could acquire a smaller exchange and then combine the powers together, then it can buy another small exchange with the money it makes and continues to grow like that and become one of the big exchanges, until that happens another new exchange means nothing.

Well, investors think the exchanges are making a lot of money.
If we agree that competition is a good thing, why not let come in and compete with other exchanges. I guess the ones with usefull products will be at the top

There'll be more shitcoins than ever by then and the heavyweight exchanges will be far more discerning than they are now. I'm pretty shocked at the junk they're still willing to list.

Because of that there'll be a truly vast subsect of shitcoin exchanges for people to drown in all the shit they could ever want.

I don't know either, but at this point I don't think any new exchange that pops up is going to put Binance (or Poloniex or Coinbase) out of business or even take much of their business away from them.  Binance and the others I named are established exchanges and, all things considered in this crazy world of crypto, are the most trusted.  So yeah, the new ones are just hoping to make money (duh) but I don't expect any of them to survive long-term and wouldn't trust them not to eventually pull a "we got hacked!" exit scam.

How many exchanges are there, anyway?  I've only used a handful and haven't really sought out any others.

Also, I've said this before: I expect that in about 5 years or so, the crypto exchange space is going to be severely consolidated, and there will probably be only 3-5 exchanges around, and they'll all be regulated by governments and will probably be more trustworthy than the ones around right now.  If an exchange like Binance had enough capital, I would expect them to perhaps try to buy out some of their competitors--sort of like what's happening in the US in the pharmacy business.  Walgreens is buying Rite Aid, and Rite Aid had already bought out Brooks Pharmacy, and CVS and Walgreens have already bought out most of the independent pharmacies in the country.  That's just what happens in business.

Arbitrage isn't really worth it, by the time you get your funds transferred over it is already too late.  Arbitrage is good for selling physical goods in different markets but not so much for crypto trading.  Plus a lot of orders on exchanges are completely fake.

We need to have a large number of exchanges because that will help us to get more profit from crypto. But that is only for people who have good skills in arbitrage trading, and he can use the chance to buy low in one exchange and send it to another exchange which has a high price. That will be making another profit as we know that the price in many exchanges will not be the same. But still, there is a risk that we need to pay, especially if we are missing the time in the transaction.

Exactly as you said, binance from an exchange with very low reputation has started to rise over time and become the number one exchange in the present time, poloniex as a prestigious and powerful exchange in the past, it only has the outer shell in this period, everyone has abandoned it soon. And these events have proven that the exchange industry is still highly developed and competitive every day because we should know that the number of users will increase over time and the profits that exchanges can earn are immense, there is no saturation here

To be honest, the crypto market is not going to be a little saturated even in the nest decade. This is like any other market and you still just 2200 coins out there and some projects going on. I believe that this dilute market will move towards a saturated market in future when there would be so much coins and so many good options for investment. The fake or impotent coins are not worth investing and you could easily exclude them.

Less than two years ago Binance didn't exist. Now people have 'Binance' tattooed on their scrotum and name their children after it. The CEO does of course have track record but it was still brand new.

Once upon Poloniex lorded over everything. Now its owners sit crying in its empty offices.

I wouldn't underestimate how ephemeral tastes can be.

I currently think that these are investments with long-term returns. You mention the swap, I agree at the moment but in 5 years?
In the short term, as improving the user experience yes I fully agree. Then they may have also other priorities such as security or compliance, and also their partnership, with banks or others. idk. In general, this is where the weaknesses are regarding exchanges.

At the same time at the UX level, what more is needed to add? I am not an extensive user, but for example:
*the withdrawals/deposits: you mean fiats or cryptos? Both are independent of the company. And if your withdrawal hits your bank account in 24 hours, isn't that enough?

High TXs fees for cryptos: to not get people (newbies) starting to say 'I don't get my payment from XXXX company' and all the useless support tickets opened.
High TXs fees for fiat: I'm not used but in my case, it costs me 0.09€ per bank transfer and hits my bank within 24h and often the same day.
*APIs I have no idea and no use so can't comment

You mean these hungry looking exchanges will topple binance? I doubt. I am not against the opinion that there will be greater companies that may come up with better ideas that will make their system better than binance,after all binance met some exchanges on ground before topping them to become the best, but companies that will succeed in overtaking binance will be companies handling their projects with passion and not for profit alone unlike the ones we have now.

Binance Is one company I have seen that has the common characteristics with Facebook. They are both very dedicated and always go for the best, they have very great strategies which allows them plant products that will never cease to be relevant.

Lack of vision, lack of understanding of the blockchain industry and lack of ideas is what is pushing all of them into creating exchange platform that is of no use yet to this market.

Competition? They know they cannot compete with these top exchanges that are available, they were only hoping they will get the newbies, forgetting that it is still the old users that will recommend exchanges to these newbies, and because they hear that there is so much money in exchanges.

A lot of them want to develop on already existing ideas without adding any spectacular or better functions. They also need to understand that the market will only require more exchanges when it gets bigger than this, but for the moment, the top exchange we have are more than enough to serve the current market.

It is like the law of diminishing returns

If you are looking for something really unique, the fact that it hasn't been implemented yet pretty much proves that your effort may not be worth the while (and money) put into it. Okay, you add some fancy feature (like currency swaps or whatever) and how many people are actually going to use it? In other words, you would get better returns for a buck invested if you just make everything better and smoother - user experience and things like this (e.g. faster withdrawals and deposits, more complete and elaborate api, etc). As I'm inclined to think, that's where improvements should be made if you want to beat the competition

Right not exceptionally but I was mainly thinking about a feature that others don't have. Well like you posted and for the same reasons. Why should I use another exchange while I've already the ones I stick with. Only for something that I don't have. Me too I don't get it how it works so no use for me but if I'm correct Kraken also has it.

Yes, I agree, I also see that I think the crypto exchanger saturation is caused by a number of things, one of which is because there are many traders who are floating and cannot turn their funds on the exchanger

If you look at the number of coins on the coin market cap site, you might not find anything more than 2200. You hardly have 2200 crypto assets in the market and majority of them are worth nothing and majority of them have no supply record. There are great funds available for investment in a digital token that can give back so the crypto market is super dilute right now.

Inconvenient ? Why ?  Have you try using them ?  Imo its not a bad idea to have different exchanges so that we traders can choose if what suites them  .  some traders dont stick on a single exchange but they love to buy and sell on different exchanges so that they can earn some profit because every other exchange have different price list  .

In fact, you don't need something exceptionally original

All you have to do is offer margin trading, provided it is done in a reliable and consistent way. How many exchanges are offering this right now? I know about Bitfinex and Bitmex, though I couldn't come to understand how it works with the latter (read, it is likely something shady intended to take your money in a semi-legal way). And I'm not sure that freely available trading engines (like the ones mentioned here) offer this feature or it is actually usable

Any crypto exchange can do that only if they provide all the required features and tools for the users and the most important thing is its security. When recently running exchange start focusing on these points in future it can become a leading exchange. Even Binance got hacked so if another exchange with 100% comes in action then it can outdate the Binance and other leading crypto exchanges, no doubt.

I agree with you. I trust multiple stock exchanges and are trading only on them. I do not understand why we need such a large number of exchanges, because it is really inconvenient.

Most of them are just using TradeSatoshi or similar turnkey software that allows you to create an exchange in a matter of minutes. It's become incredibly easy to make an exchange. Attracting real trading liquidity is a different matter though.

Heck, for that matter, most of OKEx's volume is fake. Hundreds of crappy exchanges inflate their volume in a pathetic attempt to attract traders. I don't think most of them believe they can compete with the likes of Binance. I think they're just trying to make a quick buck. I agree it's getting saturated.

Exactly, new exchanges appear because of profit that is still considerable. That is also the reason why are there so many scam oriented exchanges and greedy and naive users always fall for the same trick thinking every new exchange will give them opportunity for revolutionary profit.
But only few users are actually careful about legitimacy, trustworthy and security when they pick up the exchange. That is why some awareness about that should be raised and honestly new exchanges are not needed anymore.

The main reason for more exchanges keep emerging is simply because the amount of profit they could make building a decent profit and majority of them are not having any license to run these exchanges and it is easiest way to make money with the amount of trades being carried out in several exchanges and they commission they earn with every trade, if you have the basic coding skills to create a decent UI you will get users to trade and that is why you see many exchanges coming up, people should understand what their security features are before trading and we all know how these exchanges are under attack all the time from hackers, so exchanges without good security features will get hacked, so be cautious where you trade.

I think we do need that saturated market for the future, I have lived in a not saturated exchange world and its not as sunshines and rainbows like you imagine. When I first started there was not that many places you can buy and sell altcoins, most of the places were usually fiat to bitcoin or bitcoin to fiat which meant that altcoins were a second citizen. Then cryptsy came up and poloniex and bittrex, these are very old but bittrex was not used too much at all and poloniex had very little amount of coins in it. Cryptsy was the place everyone loved and used, like today's binance but back in the day when we had fewer people.

When cryptsy got "hacked" and closed we were left with just two exchanges and a lot of coins missing. Today even if binance is closed we can find a way to comeback much better thanks to all other exchanges.

To cope with exchanges such as binance, you need to have a lot of money to start with. Not all exchanges are interested in becoming as big as those currently in the top. And to reach the top, the idea must be more than original and offer an attractive product to attract people.
It's possible to see a new corner on the top in the future, it could be a  company already established with resources (ie banks)

Possible but not very likely overall


That's even less likely

Properly built distributed decentralized exchanges need their own infrastructure built from scratch (including a special blockchain). There are but few such in the wild (for example, BitShares), and we can't actually say they enjoy wild success and huge popularity. They are still heavily centralized, only on a different level, i.e. on the blockchain level. The entities behind these exchanges are controlling their respective "private" blockchains, which is not very far from regular exchanges like Bitfinex or Binance, if you ask me

What are think about saturated exchange is that we have few that are really doing the business and many trying to manipulate and scam. So it is not saturated yet.


I'm thinking having a physical office will be a function of the outcome of regulation. If exchanges are not regulated, such stationed office might not be realistic just like the icos.

I can answer this question:

Have you seen who are the owners of the new exchanges?

Have you seen the resources of the new exchanges?

Here's what I think about the new exchanges:

They are copy/paste of exchanges that already exist

Do not have any innovations.

They are not ready for the regulations.

they do not have a physical office

Its creators have very weak or nonexistent marketing campaign

Don't say that new exchanges will surpass the current big exchanges because binance proved it wrong when it was relatively new but managed to climb up to the most preferred crypto exchange because of what? Their customer support and security to the funds but recently their security badge got shattered due to the hack on their hot wallet but they managed to repay all those lost amounts.

Even big ones fall thats true, but in this case I think binance is here to stay, they are doing amazing work on every field, business, marketing, promotions, and price of their token is just a proof of that. Anyway I dont think that exchange industry is saturated, that just looks like that cause cryptocommunity is still small, but with more people joining there will be a need for even more exchanges than we have now. Just many of them will not get to the level where is binance, but for sure they will try to do their best on this market.

Why are you so confident that new exchanges can't topple Binance?  Companies don't last forever and they can easily be overtaken by newcomers.

Saturation just means more competition which should hopefully bring us better service as they all try to undercut each other for lower fees.

I do not think there is saturation happening in the crypto market but only from exchanges (Binance, Okex, Huobi ....). Because big exchanges have investors, big organizations speculating? This seems unfair to the next generation advanced crypto exchange solutions built. Specifically as Xbase. In commerce or business, if you refuse opportunities, abandon ideas or stop development. You will not be successful. If Apple does not have its own unique characteristics, it will not be able to create its own special spaces and specialties in the world. 

I'm not suprising if theres a lot of new exchange site will introduce in the market since cryptocurrencies are being popular all over the world, but I dont think if this new exchange site will compete to the big exchange site in the market, and I dont agree that what OP said that new exchange site cannot surpass big exchange site because the time will come a new exchange site that has a capability to bring user a good services and friendly exchange site like what Binance did for a couple of years.

The best exchanges do change from time to time. Sometimes better exchanges emerge. Before Binance there were other big exchanges. Binance rose and now it's among the big players in the industry. One has to try and, if his strategy is good and the stars align right, the exchange can become big.

Bitfinex was not the same after the hack. Binance almost fallen after the hack. Poloniex and Bittrex did the KYC "force" in the bad way. There are events which, if handled incorrectly by the big players, can make them unattractive anymore and people will choose something else.

Choice is good. Competition is good. Don't underestimate them.

In the future, there will be many more new exchanges that will launch because they have a different reason to do that.
They know that it will difficult to compete with the existing exchanges because they were already bigger than them.
They only targeted the local people because they know that they need time to make their exchange bigger.
At that moment, I don't think that money will be their reason to launch the exchanges, but I think they need to gain trust from people so they can become bigger in the future.
But we don't know if the market now becomes saturated because of many new exchanges in out there and makes traders confuse to choose the right exchanges.
Traders will find out by themselves of the right exchanges that will suit them.

Every industry is saturated and that's perfectly fine.Competition is a good thing.
Do you want some kind of crypto exchange monopoly to dictate the crypto prices and trading fees?

But it is entirely possible that some new small exchange will grow and outperform the large ones.
Well, or traders will use only DEX platforms, and top centralized exchanges will become unnecessary.

You have a point. However, let me add that maybe we have a saturation with unreliable and potentially problematic cryptocurrency exchanges as there seems to be a rush now to put up and introduce similar platform to take advantage of the expanding market. We are in the open market and so it is just natural that a healthy competition can ensue. As they are saying, the more the merrier the better. Of course, some of these players will wither under the sun and die a natural death due to lack of business. Let the fittest survive.

In conclusion, we have a saturation yes at some point but generally speaking there remains to be the demand for good, reliable, transparent, user-friendly and innovative cryptocurrency exchanges (and may I add a decentralized one but is convenient and offers the better experience that what can be found presently as I hate the current decentralized format).

I don't think new exchanges are trying to compete with huge and top exchanges but they all know how they could earn through it. The problem with new exchanges is they couldn't reach the expectations and the security which traders have been expecting from them.
They could start building their own exchanges but they couldn't surpass the reputation of top exchanges.

I don't think newcomers in the exchange industry want to compete with the solid exchanges. They are established already. What I am thinking is that it is a healthy competition. Each has its own feature that makes them stand out among others. People and clients are looking for exchanges that would satisfy what they are looking for like exemption for KYC, the trding fees and or withdrawal fees. They are comparing them to know what is best and user friendly to use.

History of bitcoins tells us that new exchanges will continue to emerge and replace the older exchanges as the most used exchange. Right now Binance is the best exchange, but in a few years, another exchange will probably have taken that spot.

It's not yet actually so saturated and i prefer it if there are more exchanges for many reasons rather than if there well few.
If there are more exchanges, it kills monopoly of the market which comes with a lot of disadvantages.
I will quote what I said some time back about the importance of having many exchanges in the crypto sphere

I agree. A lot of the newer exchanges really don't bring anything new to the table at all, and even if a newer exchange was released and had useful and unique features, I would likely not use that exchange initially solely for its lack of reputation unless the feature(s) were extremely useful or important. I primarily trade with Bitmex and Binance as I prefer to avoid KYC while trading, and unless radical changes happen to either of those exchange I do not plan on switching over to any other exchange.

I still think there will be other major exchanges in the future even though many of the newer exchanges don't offer anything new, though. Binance opened in 2017 if I remember correctly and it's now one of the biggest exchanges out there as of right now. There's still places where things can be improved, and if an exchange happens to adequately improve on areas where other major exchanges are weak and offer reasonable fees and good services, that exchange can grow to become bigger and bigger.

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there are 258 exchanges... maybe I saw it wrong, anyway I saw it here:

https://coinmarketcap.com/rankings/exchanges/3

this market is saturated with exchanges that provide low quality services

I don't think that market has been saturated. How many people are in the crypto industry right now? Not even 1% of the whole population? So there's still a lot of people who might enter the crypto industry and that is what these new exchanges might be targeting.

If there's more competition in the business then it will be good for us. And just like I said it's business, so obviously, they want to take advantage of everything and make some money out of this billion dollar industry, imho.

As what I have seen in the crypto market nowadays, new exchanges keep emerging. But why?

Is it because they want to compete with Binance, Okex, KuCoin, etc., and believe that they would surpass them?

In my opinion, there's no way that these new exchanges would surpass the big players in the market. Thus, it's already saturated no matter what "magic" or unique feature that they had.

There are two exchanges that I have encountered that they've launched their ICO before. I don't want to name them, but after launching their exchange, trading volume is zero to very less. You know why?

It's because most active traders are trading and arbitraging in established ones rather than trading on the new ones with no to very less volume at all. Correct me if I'm wrong, but investors and traders doesn't care anymore about the features. They just stick to big players like Binance with a lot of trading volume and activity.

No matter what their new features are, it has no to very less impact to investors and traders. In other words, creating new crypto exchanges are meaningless.

I just don't understand why are they still making their own despite they know that they can't topple Binance? Hoping to make a lot of money from listing and trading fees? IEO launchpads?

Do you guys agree that making our own crypto exchange isn't worth it anymore in today's market situation? Is it really saturated now?

I'm looking forward to your opinion or feedback regarding this one and I would appreciate it no matter if you agree or disagree. Thanks in advance.