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This is the second part of our three-part coverage of some of the most prominent cryptocurrency exchanges. If you have not read the first part, check it out here.
Bitfinex
Bitfinex is another of the many exchanges based in Hong Kong, and handles just under half a billion dollars worth of transactions every day. Unfortunately, Bitfinex has not had it easy as of late. It was subject to a massive hacking operation in 2016, in which it lost around $70 million in Bitcoin. Last year, it was accused of manipulating the value of Bitcoin by using a stablecoin called Tether. Finally, it is not possible for US traders to use Bitfinex due to regulatory issues. Nevertheless, traders are not required to provide any form of identification in order to use the exchange.
Bithumb
Bithumb is a smaller exchange based in the South Korean capital of Seoul, and handle transactions worth just over a quarter billion dollars in a 24-hour period. Bithumb is a bit different from most other exchanges in that it only allows for fiat money to cryptocurrency exchanges. In other words, you cannot trade one crypto token for another at Bithumb. Another reason the audience for this exchange is smaller is that only traders local to South Korea can use it. The only fiat money allowed is the South Korean Won. Just this Wednesday, on June 20th, Bithumb announced that it had been the victim of a hacking incident resulting in losses of around $31 million in cryptocurrency tokens.
UPbit
A fellow South Korean exchange handling similar transaction volumes as Bithumb is UPbit. Like Bithumb, UPbit is only available to South Korean traders and subject to strict South Korean regulations. As with many other South Korean exchanges, UPbit has been the subject of much scrutiny from the government. The exchange was created late last year and is the product of Kakao Corp., which is a mobile provider in South Korea, and Bittrex, which is an American cryptocurrency trading website.
HitBTC
Going back to Hong Kong, we find HitBTC, which is in a similar league to Bithumb and UPbit in terms of transaction value. The exchange was created back in 2013 and brands itself as the most advanced platform of its kind. Some of the features traders have access to on HitBTC include advanced algorithms and a rebate system. While HitBTC does not allow users to trade using fiat money, they are able to purchase Bitcoin using their credit card — provided their bank allows for it. Although there are few regulations, new Japanese regulations have caused HitBTC to suspend their services for Japanese residents.
ZB.COM
This exchange, which was founded late last year, focuses mainly on the Chinese market. Also clocking in at a quarter billion dollars in daily transactions, ZB.COM also available in English for non-Chinese users. Inviting a friend onto the platform will net users a 10% discount on transaction fees. It is, however, a requirement to provide some form of identification in order to trade on the platform. As the exchange is registered in Samoa, it is not regulated.
The driving force behind the cryptocurrency market is of course trade, and that trade takes place on the many cryptocurrency exchanges. We are going to have a look at some of the most popular exchanges in this three part series. Have a look below and see if you are trading on the right exchange.
Coinbase
Coinbase is located in San Francisco, California, and is a comprehensive platform that functions like an exchange, a digital wallet, and a range of tools traders can use to conduct their business. It is a very popular platform among beginners due to its simply design and ease of use. More advanced traders can use Coinbase’s sister platform GDAX (soon to be Coinbase Pro). With over 20 million people using it, it is considered to be one of the most prominent exchanges, and is valued at more than $1 billion. Having already partnered with companies like Overstock and Expedia, Coinbase has plans to expand into the Japanese market.
BitMEX
BitMEX is a cryptocurrency exchange based in Hong Kong, and processes around $2 billion worth of transactions every day. For better or worse, the platform is very reliant on Bitcoin, as all profits and losses made from trades are converted into Bitcoin. This means that even if a trader buys and sells cryptocurrency tokens other than Bitcoin, any eventual yields are dependent on the value of Bitcoin. BitMEX calls their unique system ‘leveraged contracts’, ‘futures contracts’ and ‘perpetual contracts’. Although the exchange is based in Hong Kong, it is registered in the Seychelles, which means it is subject to very little regulation.
Binance
Not constrained by a single location, Binance is a series of cryptocurrency exchanges spread out across several Asian countries. Although it only came into being last year, Binance already processes $1 billion worth of transactions every day. Rather than having a separate platform for advanced users, traders can switch between ‘beginner’ and ‘advanced’ modes when using the platform. What also makes Binance special is that it has its own cryptocurrency token called Binancecoin (BNB for short). Although BNB tokens are not a requirement for users of the platform, traders who hold BNB tokens receive a discount on transaction fees.
OKEx
Another exchange based in Hong Kong is OKEx. Processing over $1 billion worth of transactions every day, the exchange has announced plans to expand to the Maltese market. As with Binance, OKEx has its own token called OKB, and similar to Binance traders can get a discount if they hold OKB tokens in their digital wallet. As opposed to Binance, however, owners of OKB tokens also get the right to vote on company issues, and access to fiat and margin trading. One of the drawbacks of OKEx is the restricted areas. It is not possible for traders in countries like the United States and Hong Kong to use the platform.
Huobi
Huobi is another pan-Asian exchange, originally founded in China and now with offices in Singapore, Japan, Korea, Hong Kong, as well as the United States. The latter is interesting, as the platform is currently not available to US traders due to regulatory issues. Nevertheless, Huobi is divided into Huobi OTC, where users can trade fiat money for crypto tokens for free, and Huobi Pro, which is similar to the more advanced trading platform offered by Coinbase. Huobi is about to launch a cryptocurrency ETF called HB10.
Hackers are having a field day with the cryptocurrency market. Another South Korean cryptocurrency exchange has now been hacked. This time, it was Bithumb, which is based in the South Korean capital of Seoul. More than $30 million worth of cryptocurrency tokens has been stolen. This comes hot off the heels of the Coinrail hack that happened recently.
Bithumb grinds to a halt after the hack
The exact amount the hackers got away with, as reported by Bithumb, is $31.56 million. This comes out to approximately 35 billion won, which is the local currency. As a safety measure, the cryptocurrency exchange has stopped all deposits and withdrawals until the situation is under control. The exchange has also issued a statement saying that it would compensate all customers who lost part or all of their funds.
As with the Coinrail hack, the cryptocurrency market as a whole has suffered from this hacking incident. Right after the hack was reported, the value of Bitcoin fell by 2% down to $6,600. This is a continuation of the very bad year 2018 has been for Bitcoin, as well as other cryptocurrencies like Ethereum and Ripple. Bitcoin has not been able to progress much since its all-time 2018 low in February.
Cybersecurity expert says hacks are part of the cryptocurrency market
Wall Street Journal interviewed Yo Kwon, who is the the head of a cybersecurity firm specializing in blockchain projects. Kwon mentioned that cryptocurrency exchanges being hacked is bad for the industry as a whole. However, he also pointed out that because the hacks happen so frequently, it has pretty much become part and parcel of trading in cryptocurrency.
The reason why this hack is a bit different than the other is that Bithumb is one of the biggest exchanges in the world. As a matter of fact, it was the exchange with the highest trading volume this time last year. South Korea is, despite their tough regulation of cryptocurrency, the global leader in cryptocurrency exchange. Bithumb recently lost its top position to another South Korean cryptocurrency exchange called Upbit.
Hacking remains a huge problem in the cryptocurrency space
Altogether, cryptocurrency traders and investors have collectively lost more than $1.4 billion due to hacks over the past four years. Fortunately, there are organizations working on reducing the number of attacks. The Asia Securities Industry & Financial Markets Association (ASIFMA) is one of the organizations that have laid out a series of best practices for cryptocurrency exchanges.
ASIFMA reported that the “lack of due diligence and independent insight” were the main reason the hackers could gain access to the cryptocurrency exchanges. Because the industry as a whole is relatively young, many exchanges lack the experience it takes to prevent these kinds of hacks.Hopefully, as the market matures, these kinks will be ironed out.
What do you think can be done about the hacking incidents? And why are cryptocurrency exchanges especially vulnerable compared to other digital organizations? Leave your comments in the section below!
Educational material about cryptocurrency has already been introduced to several universities around the world, and it is now also possible to take a degree where you specialize in crypto-finance. Now, however, some are debating whether or not the future of cryptocurrency is so certain that it would be wise to start teaching it in schools.
From university to high school to…?
Among the American universities offering courses in crypto-finance is the University of California, University o Pennsylvania New York University and Stanford University. Countries like the United Kingdom has also begun offering the classes at places like Cambridge University for students studying finance.
Back in the United States, there has been an increase in demand from high school students that the teachers educate them on the world of cryptocurrency. So strong is the enthusiasm for this subject that the students are happy for it to be taught as a non-curricular educational session. CNN interviewed a high school teacher from New Jersey, who mentioned that cryptocurrency is now part of his Business and Personal Finance course.
Has the time come for cryptocurrency classes in schools?
As the trend only seems to go in one direction, the conversation has naturally fallen on whether or not schools should include cryptocurrency in their curricula. Nate Flanders, the owner of a cryptocurrency trading platform, notes how coding languages are becoming more relevant in today’s society. Studying the coding behind blockchain would, therefore, be very beneficial to students.
Flanders is not alone, as the CEO of Mandela Exchange also is of the opinion that coding should form a much larger part of a school’s curriculum than it does now. Some of the coding languages he thinks there should be more focus on including Java, C++, and Python. He does not believe the schools are far off. With there already being a movement to implement programming languages into school systems, it should only be a short step further to offer blockchain courses.
The volatility of the cryptocurrency market is creating uncertainty
One of the main factors holding cryptocurrency back is the extreme volatility of the market. Although Bitcoin has been around for a decade, it is still considered to be in its infancy. And it is easy to see why. With the popular coin having plummeted in value in 2018, it is anything but a stable currency or asset. It is then easy to understand that many would be hesitant to include courses on a phenomenon that might not be around in a few year’s time.
Many have criticized the volatility and think it is a sign of a Ponzi scheme. Christian Ferri, however, is of a different opinion. As the CEO of blockchain advisory company BlockStar, he believes that volatility is not only an inevitable phenomenon in any economy, but that is is also a good thing. Why? Because every savvy trader will be able to take advantage of all the ups and downs there is in an economy. The only question is who will make a profit and who will lose out.