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  4. A large number of advantages are particularly relevant for retail investors which are greater with Crypto exchanges in comparison with traditional exchanges. So traditional exchanges should begin to move or face the fate with the dinosaurs. It will not be long until we start by getting to see we have and ideas of crypto exchanges deployed for stock, bond, currency and options trading. This does not imply stocks ought to become blockchain-based tokens, but alternatively that tokens enable you to represent stockholdings pretty easily and transacted blockchain style.
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  10. 1. Fractional purchasing
  11. With crypto exchanges, you can buy whatever fraction you desire of the asset. This implies if you need to invest $523 in bitcoins that can be done that. You don't need to purchase a whole bitcoin, you can get any fraction of computer (e.g. 0.003 BTC). This gives small investors more flexibility as well as makes it easier to make balanced portfolios with any amount.
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  13. With traditional exchanges, you have to buy a minumum of one stock and you'll buy only whole numbers. This could not a difficulty for big-time traders but retail investors may find it too lumpy. A Google or Amazon stock is trading for north of $1.000 so that it is a huge commitment, not to talk about the $325k Berkshire Hathaway stock.
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  15. There's really no reason at all with this except the fact once stock certificates were paper documents that couldn't be slashed into smaller pieces. Nowadays fractional stock trading is perfectly feasible and is implemented quickly through tokenization of stocks.
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  17. 2. 24x7 trading
  18. With crypto exchanges, you can get then sell 24x7. Needless to say, exceptionally web sites are down or even the blockchain is entirely backed-up. This is convenient for retail investors who will be usually working or busy once the information mill open. Additionally, it levels the stage when it comes to having the capacity to respond to news for example the China ICO crackdown.
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  20. With traditional exchanges, you are tied to the "market hours". Similar to any local physical store vs. Amazon. Of course, institutional traders get all sort of "pre-market" and "post-market" trading is not open to retail investors.
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  22. Again, "market hours" designed a large amount of sense when real citizens were exchanging the pit. Nowadays there is no reason to never allow 24h trading because the "pre and post" markets show. Needless to say, if some are allowed inside the "pre and post" they have an unfair advantage on everyone else and can desire to maintain their own rules.
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  24. 3. Instant Settling
  25. With crypto exchanges, you should buy and then sell on instantly. The exchange takes care to instantly settle determined by their custody of crypto assets and formalize the change as quickly as the blockchain allows. This is natural, once you hit the button there is a asset.
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  27. With traditional exchanges, your order is processed and then there is a long settling process (currently T+2 or two days from close). Nevertheless there is normally no issue with, it allows High Frequency Traders advantages over us common mortals.
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  29. There's two problems to allow for instant settling with current stock market infrastructure. First, you will find there's technology problem. Even though the blockchain allows instant settling, previous technologies have to go by way of a convoluted process of checking and rechecking. Second, the multilayered value chain which made sense inside the old school takes necessary more hours compared to the direct style of crypto exchanges.
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  31. 4. Transparent order-books
  32. Crypto order books are totally transparent in lots of exchanges like Kraken or Poloniex. You can see the depth with the purchase and sell side of each market in each in the assets you're trading. This means you can understand how the market looks as well as what may happen should you place a large order.
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  34. In traditional exchanges, you don't see order books as being a retail investor which can be proprietary for the exchange and can be sold as being a value added. The matching of order books is definitely an important advantage for market makers. This can be the main purpose of the so-called "dark pools" that investment banks have formulated.
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  36. Transparent order books will be a results of competition and consumer expectations on the one for reds. But they also need modern technology infrastructure that will manage the increased information volume.
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  38. 5. Modern and secure interfaces
  39. Crypto interfaces are viewed as from the net and mobile perspective, with security as being a key feature. They may be light clients in browsers or smartphones. They may be accessed easily through the unit and use high tech technology. This permits simplicity of use, speed and intuitive customer experience.
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  41. The original interfaces We have experienced remain full applications in a desktop setting with clunky interfaces and long load times. This probably is related to legacy applications that should be updated but should be secured and evolved slowly.
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  43. Evolving to a new application interface will likely be challenging as it will demand agile practices and frameworks that are second-nature for brand new entrants but take courage and conviction from existing incumbents.
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  45. 6. Direct-to-investor
  46. Crypto exchanges deal directly with retail investors and still have few others players in the value chain beyond themselves. If you are with an exchange you might be directly actually talking to your custodian, your marketplace, your agent, etc... As a result sense inside a world through which decentralized trust decreases the needs for intermediaries. There are a few exchange mechanisms for example Shapeshift which are even more direct and merely connect you to the other side in the trade.
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  48. Traditional exchanges have a large list of players. They have brokers, that connect to the exchange on your behalf. They've got custodians, taking proper your assets. This made sense inside a world without blockchain in which decentralized trust was complex. Now exchanges grapple with the question of going direct and bypassing their partners, just like consumer goods companies when eCommerce was starting.
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  50. In the Blockchain-enabled world there's decentralized trust and so it is not necessary a lot of actors to generate trades secure. This will likely probably choose to use a progressively leaner value chain model.
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  52. 7. Variable and transparent fees
  53. Crypto exchanges have transparent and frequently low fees. These are transparent because being direct there is nowhere to cover up, so it will be very obvious exactly what is the exchange charging. Crypto fees range from 0,10-0,30% for the extremely expensive but convenient Coinbase with 1,5% to 4% fees.
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  55. Fees in traditional brokers are hard to be aware of as they most often have a variety of components. They are often low for bigger trades, but tend to typically total $1 to $7 per trade which is often pricey for some transactions.
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  57. Fee schedules are caused by cost and competition. With blockchain type infrastructure cost will be reduced very significantly. Simultaneously, increased competition will represent a secular trend of shrinking fees for retail investors with ETF and crypto exchange fees is the defacto standard this agreement others converge.
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  61. Overall, it appears like an antique shift through the previous model wonderful its legacy limitations towards the model which a new technology enables. Due to the already digitized nature of exchanges and stocks, bonds and options don't be surprised movements to begin fast along with the plunge to be swift. Similar to classifieds inside the newspaper industry compared to the slower shift to e-commerce. Regulation can be a hurdle, but financial authorities seem open to far better, fair and quick transaction methods. The exchange that moves quicker can probably consume the lunch of competitor exchanges. Comparable to brands like Schibsted launched digital classifieds across Europe and dominated the course. So traditional exchanges should face a whole new reality and find out that they are likely to take their level towards the new gold standard.
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