Crypto Exchanges Overwhelmed by New Issues

Steve Kanaval - June 14, 2019

The responsibility shifted during the crypto winter whereas regulators slid the vetting process for new coins to the exchanges themselves, this piled high the responsibility they were already dealing with in the fast-changing world of cryptocurrency trading.

Think about the task as head of one of the 200 crypto exchanges.  You need to fund the development of a blockchain based matching engine for those coming to your site, have a safe and secure hot wallet, you need liquidity and you need to list multiple currency pairs in order to exist.  Then, you need to survive a 70-90% selloff in the underlying assets.  Finally, once the smoke clears the regulators say you need to vett any new coins that come to your members – this is the role of the exchanges in Q2 2019, and it is a daunting task.

The evolution from IPO to ICO to STO to IEO reflects a changing macro investing asset class where the world is dubious of the stock market.  They are concerned about the 4 technology stocks driving the stock market, and they know instinctively that stocks should not have a ten-year run without some sort of disaster. This brought the rise of Bitcoin in 2008, as the Lehman Brothers and Bear Stearns failures showed the vulnerability of equities – enter Bitcoin.

We are a decade in now to an era where fiat currency will disappear like the landline, the taxi cab, and a phone booth. All money will be held in some sort of digital format with the rare paper dollar appearing for payment like a doubloon.

These are the early days of crypto where acceptance is low and volatility is high.  Greed turns quickly to fear and new coins blur the lines similar to the Dot.com explosion of 1996 where 90% of the companies failed in a year.  The similar part of the crypto move will be that many of these public blockchains will survive and flourish and end up like Amazon, Microsoft or Apple.  The technology era of the 1990’s is alive in the IEO market of 2020.

 

 

 

Steve Kanaval

Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80's. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90's managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio's in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published many articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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