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The case for or against centralized exchanges is one of the longest-standing debates in the cryptocurrency world. Purists believe that a fully decentralized exchange (DEx) is the only solution. One challenge is that all trading platforms require liquidity, which has proven to be the most significant barrier for newly-formed DEx’s.
However, it’s worth examining the decentralization argument in light of the current state of the exchange market. Coinmarketcap now tracks 259 crypto exchanges, both centralized and decentralized, and the number is growing steadily.
For a market of around 36 million users, 259 exchanges represent a vast amount of choice. Even if you disregard exchanges with less than $1m in daily trading, there’s still more than 150 to choose from. Compare this to online retail, social media, or internet searches — all of which are dominated by single players so big, they don’t even need naming.
In contrast, the long tail of the crypto exchange market is what helps keep crypto prices subject to the laws of supply and demand. The entire crypto space remains free of control by central banks or major financial institutions.
Binance CEO Changpeng Zhao heads up one of the world’s biggest crypto trading platforms, and he is open in his recognition of the need for healthy competition in a flourishing crypto ecosystem. Recently, he tweeted his vote of support for a new exchange listing its token on the freshly-launched Binance blockchain.
The Challenge of Attracting Users
A buzzing crypto exchange market has another happy benefit for users apart from plenty of choice over where to trade. With so much competition, exchanges must stand out from the crowd. This means they are continually inventing new ways of attracting users and repeat business.
Perhaps the reason CZ is so zen about the idea of competition is that his exchange does better than most in this regard. Binance was the trailblazer of the exchange token, having launched its BNB coin in 2017. It’s become one of the most successful coins, having increased in value by over six times in as many months from December 2018 to June 2019. Since then, other exchanges, including KuCoin and Huobi, have launched similar offerings.
The Airdrop Contest
Newer exchanges also have some compelling offers designed to attract new users. Typically, a new trading platform will allocate part of its marketing activities to an airdrop contest. Individuals compete for the chance to win some free cryptos, usually by helping to promote the exchange. Winners use their winnings to make a few trades on the exchange. It’s a win-win scenario, as the users get some free cryptos and the exchange gets the promotional benefits plus an active user base helping to contribute liquidity.
XCOEX is one such example of a new exchange launching with its own airdrop contest. For the month of June, XCOEX is giving away $30,000 worth of Bitcoin Cash. Each day, one user will be selected at random and will receive $1,000 in BCH to their account.
To be eligible to participate, users must have an account with XCOEX with a minimum deposit of $20. Then, they should follow the XCOEX Twitter account, and join the XCOEX Telegram group. That’s it. Each lucky winner can then withdraw their funds once they’ve made a minimum of five trades on the XCOEX exchange platform.
XCOEX is a brand-new exchange, licensed in Estonia. The company aims to make it as fast, easy, and painless as possible to buy and sell cryptocurrencies. The interface is designed to be simple and intuitive, available via desktop or smartphone apps. The verification process is fast, so new users can be up and running in no time.
Fiat trades are supported, and users can make deposits or withdrawals using their bank cards. All major cryptocurrencies are supported with more altcoins to be added in time. Users have access to a free, built-in wallet and accounts are subject to 2-factor authentication to ensure security. Funds are held offline in cold storage.
Relatively speaking, the crypto exchange market is in a great place right now. The crypto markets are up, and new users are flocking in. This creates plenty of opportunities for new players to enter and seize their share of the growth in users. Meanwhile, with so many exchange options available, crypto enthusiasts are spoiled for choice.