The diversification of cryptocurrency exchanges is likely to take place soon. Many large exchanges will, by the end of the next decade, evolve into large ecosystems instead of separate trading floors.
Cryptocurrency exchanges are portals where ordinary people can buy bitcoins, ether, and other cryptocurrencies. It is the exchanges that bring cryptocurrency to the masses. See how many cryptocurrency exchanges have already appeared and how much functionality they have. Monsters, not otherwise.
Since the advent of the Mt. Gox in 2010, they are constantly evolving, adding services, trading pairs and functionality. Unsurprisingly, the development process will continue in 2020. Major exchanges are announcing new features designed to diversify their work and attract new customers.
As the decade progressed, it was possible to observe how large cryptocurrency exchanges behave like full-fledged ecosystems. The consolidation process means that only a handful of the largest exchanges may remain.
2019: DEX is still the future
What did the reviewers guess a year ago when they talked about 2019? Their most significant predictions involved decentralized exchanges (DEX). Numerous launches of similar exchanges were expected.
And so it happened. These include Binance, Huobi, Apollo, McAfee, DeversiFi, ICON, CoinEx, decentralized or semi-decentralized exchanges. Their owners expect an increase in demand for trading platforms that will allow users to have complete control over their cryptocurrency.
However, despite the increase in the number of such exchanges, they occupy a modest place in terms of trading volume.
“Everyone knows what the future is for DEX, but in 2020 the technology is unlikely to be advanced enough to support them and ensure ease of operation at the level of centralized exchanges. At the same time, almost all exchanges will move in this direction, ”said the CEO of the KuCoin exchange, Michael Gahn.
2020: diversification, depository institutions and newcomers
Next year, we will surely see the diversification of a number of cryptocurrency exchanges into new services with advanced functionality. Peter Ivanov, a representative of CEX.io, spoke about this and the plans of his exchange for 2020.
“We have several ideas. These include the CEX.io Direct tool, which will allow websites to embed payment systems that exchange cryptocurrencies for real money. There will also be a service of margin trading based on the difference of contracts, an aggregator platform for providing liquidity, a deposit storage service, a trading platform for corporate clients without intermediaries. "
Bitfinex CTO Paolo Ardoino also expects cryptocurrency exchanges to diversify. According to him, there will be a launch of exchanges with safe tokens, prediction markets, options for cryptocurrencies.
Something similar can be said about the OKEx stock exchange in Malta. COO Andy Cheng says the exchange will continue to develop trading services and expand its customer offerings. You can look forward to the emergence of new cryptocurrencies and the initial offer of exchanges (IEO) on OK Jumpstart.
In addition, OKEx is going to test its proprietary OKChain blockchain as early as early 2020. The decentralized exchange OKDex will also be launched.
Judging by CEX.io, Bitfinex and OKEx, other exchanges will diversify as well. Binance is launching an open-source blockchain development platform called Venus, and the futures platform has already been launched.
Huobi is going to introduce perpetual contracts, a kind of futures. This will happen in the first quarter. A source from the Coinbase exchange suggests that negotiations are underway to launch their own insurance company. Bithumb will launch an exchange-as-a-service platform by the end of the first quarter.
For the most part, this diversification will be an attempt to offer an expanded range of trading opportunities that would attract not individuals as investors, but organizations and corporate clients. Big money will come with them.
Ardoino and Cheng expect an increase in the number of institutions on cryptocurrency exchanges.
“If we want to achieve our goal of higher cryptocurrency adoption, we need more institutional investors,” says Ardoino.
However, regular customers will not be forgotten either.
“Currently, an agitation campaign is underway in South Africa and some European countries such as Russia and Turkey. Our goal is to create an international OKEx user community. ”
Michael Gahn states that KuCoin will bet on newbies who buy cryptocurrency for the first time. A lot of such people are expected in 2020 and beyond. For this reason, the platform wants to offer simplified trading and other services. Surely other exchanges will do the same.
Safety in 2020
What all cryptocurrency exchanges will definitely do in 2020 is security measures. Exchanges continue to hack, which has been experienced by Cryptopia, DragonEx, Bithumb, Binance, BiTrue, Bitpoint, Upbit. New safeguards are imperative.
Pyotr Ivanov says that his exchange is going to introduce new security mechanisms as soon as possible, since the previous ones become obsolete within six months.
The same thing happens on other exchanges and cryptocurrency-related companies. In light of its hack, Binance has promised to continue to fight to strengthen security measures in the future.
Paolo Ardoino expects cryptocurrency exchanges to introduce new defenses and policies to enhance the security of the entire ecosystem. We will see a lot of emphasis on cryptocurrency escrow services. The process is moving towards traditional finance, where exchanges and depository vaults are different companies. Sharing responsibilities in the future is inevitable in order to serve institutional investors.
In October, OKEx introduced the Global Self-Regulatory Organization (SRO). She will work to standardize security measures and policies that are critical to the growth and ubiquity of cryptocurrencies.
Crypto exchanges of the next decade
Looking in the long term, Pyotr Ivanov believes that many large cryptocurrency exchanges will turn into large ecosystems instead of separate trading platforms. This should happen by the end of the decade. He is also confident that integration between exchanges and traditional financial systems will increase in the next decade, which will increase the prevalence of cryptocurrencies among ordinary people.
Bitfinex and Paolo Ardoino think the same. He expects the cryptocurrency market to consolidate.
“In 2019, we saw that only a few large exchanges remained. They will be fully regulated, at the level of traditional financial exchanges. Essentially, cryptocurrency exchanges will evolve into hybrid digital asset platforms that offer a variety of products, including common stocks and commodities. These platforms will compete with popular exchanges like Nasdaq. "
He also predicts that retailers will trade cryptocurrencies on P2P networks based on Lightning Network technology.
KuCoin's Gang believes in the emergence of two types of exchanges. Some will be similar to traditional financial institutions. They will offer a small set of digital assets and professional services. Others will resemble Internet giants, where there are diverse services and multiple operational campaigns will drive traffic. KuCoin leans towards the latter option.
OKEx's Cheng believes decentralized finance will be one of the main topics in the next 5-10 years.He is also confident that an increasing number of non-traditional banking institutions will use decentralized platforms to work with the world of traditional banking.
On the other hand, existing banking giants can start using emerging technologies to hold their ground.
At the same time, Gan reminds that the world of cryptocurrencies is changing very quickly. "We don't even plan for a whole year, for a maximum of six months."
