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    Many of these advantages are especially relevant for retail investors which can be superior using Crypto exchanges compared to traditional exchanges. So traditional exchanges should learn to move or face the fate in the dinosaurs. It certainly won’t be long until we start to see the technology and concepts of crypto exchanges deployed for stock, bond, currency and trading options. This does not imply stocks must become blockchain-based tokens, but alternatively that tokens may be used to represent stockholdings pretty easily and transacted blockchain style.

    1. Fractional purchasing

    With crypto exchanges, you should buy whatever fraction you desire of the asset. This implies if you want to invest $523 in bitcoins that you can do just that. You don’t have to get a whole bitcoin, you can get any fraction than it (e.g. 0.003 BTC). This enables small investors more flexibility and in addition helps it be a lot easier to create balanced portfolios with any amount.

    With traditional exchanges, you have to buy a minumum of one stock and you can buy only whole numbers. This may stop a challenge for big-time traders but retail investors could find it too lumpy. A Google or Amazon stock is trading for north of $1.000 making it a major commitment, to never speak of the $325k Berkshire Hathaway stock.

    There exists really no reason with this except the fact that once stock certificates were paper documents that couldn’t be cut into smaller pieces. Nowadays fractional trading is perfectly feasible and is implemented quickly through tokenization of stocks.

    2. 24×7 trading

    With crypto exchanges, you can buy then sell 24×7. Of course, exceptionally web sites are down or the blockchain is totally backed-up. This is very convenient for retail investors who will be usually working or busy when the information mill open. What’s more, it levels the stage in terms of having the ability to react to news such as the China ICO crackdown.

    With traditional exchanges, you are restricted by the “market hours”. Just like the local physical store vs. Amazon. Obviously, institutional traders get all form of “pre-market” and “post-market” trading that isn’t accessible to retail investors.

    Again, “market hours” created a lot of sense when real people were buying and selling the pit. Nowadays there is no reason to never allow 24h trading because “pre and post” markets show. Obviously, if many are allowed within the “pre and post” they’ve an unfair advantage over ordinary people and may also desire to keep their own rules.

    3. Instant Settling

    With crypto exchanges, you can get and sell instantly. The exchange takes want to instantly settle depending on their custody of crypto assets and formalize the change as soon as the blockchain allows. This is extremely natural, whenever you hit the button you will find the asset.

    With traditional exchanges, your order is processed and then there is a long settling process (currently T+2 or 48 hrs from close). To find out normally not a problem with, it allows High Frequency Traders advantages over us common mortals.

    There’s two problems to allow instant settling with current currency markets infrastructure. First, there’s a technology problem. As the blockchain allows instant settling, previous technologies require through a convoluted means of checking and rechecking. Second, the multilayered value chain which made sense within the old world takes necessary more time compared to direct style of crypto exchanges.

    4. Transparent order-books

    Crypto order books are totally transparent in several exchanges like Kraken or Poloniex. You can observe the depth of the exchange side of each and every market in each of the assets you might be trading. This means you can understand how the marketplace looks along with what could happen in the event you place a large order.

    In traditional exchanges, you do not see order books as a retail investor which can be proprietary to the exchange and can be sold being a useful. The matching of order books is usually an important advantage for market makers. This is the main objective in the so-called “dark pools” that investment banks are coming up with.

    Transparent order books is a response to competition and consumer expectations on the one side. But they also need today’s technology infrastructure that will manage the raised information volume.

    5. Modern and secure interfaces

    Crypto interfaces are viewed from the net and mobile perspective, with security like a key feature. They’re light clients in browsers or smartphones. They may be accessed easily from any oral appliance use state of the art technology. This enables simplicity of use, speed and intuitive customer experience.

    The traditional interfaces We have experienced remain full applications within a desktop setting with clunky interfaces and long load time. This probably is related to legacy applications that should be updated but must be secured and evolved slowly.

    Evolving to a new application interface will likely be challenging because it will need agile practices and frameworks which can be second-nature for brand new entrants but take courage and conviction from existing incumbents.

    6. Direct-to-investor

    Crypto exchanges deal directly with retail investors and also have few other players in the value chain beyond themselves. When you are in an exchange you are directly conversing with your custodian, your marketplace, your agent, etc… As a result sense within a world in which decentralized trust decreases the needs for intermediaries. There are several exchange mechanisms for example Shapeshift which are more direct and just connect you to the other side with the trade.

    Traditional exchanges have a large list of players. They’ve got brokers, that communicate with the exchange for your benefit. They’ve custodians, having proper your assets. This made sense within a world without blockchain where decentralized trust was complex. Now exchanges grapple with all the question of going direct and bypassing their partners, similar to consumer goods companies when eCommerce was starting.

    In the Blockchain-enabled world there is certainly decentralized trust and so it is not necessary countless actors to generate trades secure. This may probably decide to try a progressively leaner value chain model.

    7. Variable and transparent fees

    Crypto exchanges have transparent and frequently low fees. These are transparent because being direct there exists nowhere to cover, therefore it is very obvious is there a exchange charging. Crypto fees range between 0,10-0,30% to the very costly but convenient Coinbase with 1,5% to 4% fees.

    Fees in traditional brokers take time and effort to be aware of since they normally have a number of components. They may be low for larger trades, but could typically figure to $1 to $7 per trade that may be pricey for many transactions.

    Fee schedules are a result of cost and competition. With blockchain type infrastructure cost will appear reduced very significantly. Simultaneously, increased competition will represent a secular trend of shrinking fees for retail investors with ETF and crypto exchange fees being the gold standard which others converge.

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    Overall, it appears as though a well used shift through the previous model wonderful its legacy limitations to the model which a new technology enables. Due to the already digitized nature of exchanges and stocks, bonds and options expect movements to begin fast as well as the switch to be swift. Similar to classifieds within the newspaper industry than the slower shift to e-commerce. Regulation could be a hurdle, but financial authorities seem offered to far better, fair and quick transaction methods. The exchange that moves quicker often will consume the lunch of competitor exchanges. Similar to brands like Schibsted launched digital classifieds across Europe and dominated the course. So traditional exchanges should face a new reality and see where did they will get their level towards the new gold standard.

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