When cryptocurrency was still in its infancy, the only available digital currency was Bitcoin, and back then, it was the only digital currency that mattered or at least the one that businesses offered. Of course, with the rising demand the need came for alternatives, which in this case, is Ethereum: A Russian-made digital currency that rivaled Bitcoin.
As time passed by, Bitcoin and Ethereum both earned their respective names in the community, with Bitcoin leading and Ethereum following close behind. However, altcoins such as Litecoin, Dash, and Ripple soon picked up their paces, and the question is: How do these coins fare in a public trade exchange?
A quick glance at adding coins to an exchange
Werner van Rooyen of Luno, an international exchange explains the process behind the addition of another digital currency into an exchange platform.
“We have to look at the four different resources a new currency will drain when we come to deciding on adding another one. There are the technical resources; adding the new currency into the back-end (and making sure it’s done securely), including send/receive wallets, integrating it on an exchange etc, is vital and needs to be done properly,” Van Rooyen says in an interview.
The international exchange recently added Ethereum to its roster, as Van Rooyen explains that the process for decoding such services is also affected by how much resources it will take for the company to provide it in the first place.
Van Rooyen then explains, “We also factor in the operational resources; securing customer funds by moving most of it between a live hot wallet and an offline cold storage environment. And there are also community resources; educating customers on the actual use case and why the currency matters and being able to assist customers with their queries. Finally, design resources; how to fit an increasing amount of random currencies in an app that has been designed to be elegant and easy to use.”
Now, with all these considerations, the company must consider from their own end that there are still things to put into place, such as external factors which are considered when it comes to analyzing a coin.
“We also think that if you add a digital currency and you don’t have reasonably high transaction volumes —low liquidity— you’ll just be wasting your time since customers won’t be able to effectively buy or sell a reasonable amount of digital currency. And they’d probably get a bad exchange rate to boot,” Van Rooyen details further.
Bitcoin Cash and Bitcoin Gold
Challenges have recently been plaguing the community as a myriad of forks and proposed forks are being pushed more and more. Bitcoin Cash and Bitcoin gold are such examples of results from these developments, with the former being bombarded with problems such as bad management and security issues, while the latter is getting called as an airdrop instead of a hard fork. These statements are agreed upon by Van Rooyen, saying that the reasons for Bitcoin Gold’s exclusion from Luno are numerous, while the inclusion of Bitcoin cash is due to its rising demand, mainly because of the price of Bitcoin dropping momentarily.
“Most people start their digital currency with Bitcoin, but those of our customers who already have Bitcoin have been asking us for a while to add it, so adding Ethereum and Bitcoin Cash were driven by demand from our existing customers,” Van Rooyen says.
Saturation in the market
Meanwhile, an enormous amount of ICOs are cropping up, each and every one trying to be the next big thing in cryptocurrency. Most of these are left in the dust, while others are prepared to do anything to keep their heads up in the water.
Getting included in an exchange is coveted by all of these coins, and Van Rooyen states that developers have come knocking at their doors, all trying their luck to be part of the exchange.
“We have had a lot of requests from many coin developers to add their tokens with us. Some of these might have potential in the long run, but many of them appear to be outright fraudulent. We have been offered free exposure and premined tokens, but we have declined all these requests,” he explains.