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The Evolution of Cryptocurrency Trading Platforms

Traders Magazine Online News, February 21, 2019

Swamini Kulkarni

While the average Joe was quick to jump in the cryptocurrency bandwagon, the more seasoned traders were quite wary of them. The volatility of Bitcoin, arguably the most prominent cryptocurrency globally, was evident to many who have had prior experience in trading off the stock market. Nonetheless, they chucked the golden rule book for trading out the window and invested thousands to millions of dollars on Bitcoin and other cryptocurrencies during mid-2017, a time in which the prices started going up astronomically. By early December 2017, the prices had gone up by 700% and made the headlines on every prominent newspaper outlet. However, the high was only short-lived as the values plummeted towards the end of 2017. The drop rates were constant throughout 2018 and reminded people that trading in such a volatile commodity was definitely not a full-time profession.

What has changed since December 2017?

In order to minimize the volatile nature of cryptocurrencies, platforms that traded on them began to evolve and thread the fine line between privacy and transparency. This had led to leading crypto exchanges operating in the U.S., Europe and globally to collect personal information from traders. More than often, they are done through loyalty programs that promised benefits in exchange for compliance with new KYC and AML rules. These requests are usually accompanied with promises to protect the collected data. However, the line is pretty darn thin as sharing your personal information with trading platforms might result in inadvertent loss of such information to other vendors, hackers, or government agencies. Nonetheless, maybe giving up a certain amount of privacy is the right thing to do, as it increases the stability of cryptocurrencies and still preserves the underlying principle of shared ledger and decentralization. Thankfully, there are still exchanges that allow users to swap digital coins without requiring a verified account.

Evolution in the face of hacks and thefts

There have been various major hacks on cryptocurrencies, which has had a direct impact on users in the cryptocurrency community with many suffering major losses or even losing all of their investments. In 2014, more than 85,000 Bitcoins were stolen, which accounted for around 80% of all Bitcoin transactions. The incident was known as Mt. Gox and was immediately followed by a 35% drop in Bitcoin price. In 2016, hackers stole 120,000 Bitcoins from the cryptocurrency exchange platform Bitfinex soon after they had just implemented multi-signature wallets with the goal of improving fund security. This resulted in many nascent users to turn their back on cryptocurrency and resulted in massive sell-offs in the market.

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