2018 has been quite a disastrous year so far for most cryptocurrencies as all markets have lost significant value. For cryptocurrency exchanges, this also causes some concerns. It seems that a few companies are turning to rather unusual practices in an effort to remain competitive and generate revenue.

The Worrisome Exchange Trend of 2018

A lot of things are happening behind the scenes of cryptocurrency exchanges. Various exchanges actively urge startups to bring new users to their platforms. This process will help new coins to get listed. It is a very controversial business model which spills over to major trading platforms. For smaller altcoin exchanges, this is a rather common approach. It now seems OKEx and Bitfinex are jumping on this bandwagon as well.

How this development will affect the industry remains to be seen. The declining interest in Bitcoin and Ethereum creates dips in overall trading activity. As such, trading platforms need to resort to other means to rectify the situation. Going all-in on less popular tokens to create artificial interest cycles may not necessarily yield the best results.

Additionally, some exchanges resort to creating their own tokens. KuCoin, Binance, and others all have their native currencies. These tokens can be used to vote on new token listings or pay for trading fees. As such, they offer utility, yet they can also be seen as securities. The value of these tokens tends to fluctuate regularly, creating even more market volatility.


Unorthodox Strategies Are the New Meta

Resorting to unusual approaches can have all kinds of consequences. It seems to solidify the pump-and-dump nature of different cryptocurrencies. Especially when exchanges resort to listing new tokens in exchange for platform activity, a worrisome situation is created. Trading platforms are usually strict in terms of adding new cryptocurrencies. Turning back on this strategy is controversial and unorthodox.

For token issuers, getting listed on exchanges has always been problematic. In most cases, a steep listing fee needs to be paid. Startups need the money they raise for research and development. Spending several dozen bitcoins on an exchange listing seems to take a backseat in this regard. At the same time, not getting listed on trading platforms can be deadly for the longevity for new tokens and currencies.

Any conflict of interest in the cryptocurrency world needs to be avoided. At this rate, exchanges will run afoul of that unwritten rule in the very near future. Offering incentives to token issuers is not an ethical approach. Unfortunately, it seems to be the new normal in this day and age. Exchanges are the gateway to cryptocurrencies and need to adhere to best practices at all times. These recent developments paint a worrisome outlook in that regard.

What do you think about exchanges using unorthodox means to drum up business? Let us know in the comments below.

Images courtesy of Shutterstock.

Tags: , , , , , ,

Leave a Reply

We use cookies to give you the best online experience. By agreeing you accept the use of cookies in accordance with our cookie policy.