Small Cryptocurrency Exchanges Will Soon Die in Batches, Predict Analyst
As of June 22, there are more than 11,000 crypto exchanges trading 1,604 cryptocurrencies, with the total crypto market cap shrinking to less than $300 billion, according coinmarketcap.com.
According to data, the top 10 crypto exchanges rake in as much $3 million in fees a day, or heading for more than $1 billion per year.
Witnessing crypto exchanges emerge as one of the biggest winners of the crypto frenzy, new crypto exchanges continue to spring up. Under the flourish is the pursuit of profit.
While industrial analysts predicted that a plurality of small-sized platforms had to face the danger of closure soon for their inability to attract users.
A Chinese exchange named 86BEX has recently shut down shortly a week after it went live, claiming the platform kept losing money and suffered from investors’ divestment since its launch.
As a previous report by 8btc, the Matthew effect becomes more obvious in this sector during the bear market – the top 14 cryptocurrency exchanges by daily trading volume account for 73% of the total turnover. That means, the rest exchanges have a share of only 27% in total, which brings about challenges to small exchanges in terms of scale and security.
As assistant executive of 360 security (a Chinese internet security giant) commented on the recent crypto hacks, basically all the blockchain security companies currently cannot meet the need of exchanges and blockchain projects in terms of security; On the other hand, lots of blockchain projects and crypto exchanges invest only thousands of dollars in security defense, but once hack occurs, the loss would be millions even billions of money.
The latest attack on Bithumb causes it losing $30 million which could be easily covered since it currently has $450 million in its pocket; While for small exchanges, it might be a very different story.
In an effort to attract users, crypto exchanges are recently making innovation by adopting the mode of “trade-driven mining” and “dividend distribution”, CoinEx and BigONE have ridden the trending, which leaves newcomers less space to play in the game.
Blockchain projects shall bear in mind their mission of decentralization and benefiting the mass, rather than pocketing millions without practical applications, Otherwise, the emergence of flooding exchanges and crypto tokens might be another flash in the pan.