Why are the World’s largest Digital Currency Exchanges all Chinese?

Why are the world’s largest digital currency exchanges all Chinese?

Hello, my classmates from Sina Finance University, I’m Cai Kailong. Welcome everyone to listen to “Ten Lectures on Digital Currency”.


Why are the world’s largest exchanges opened by Chinese people?

This is an interesting phenomenon. Before explaining this phenomenon, let us first understand the characteristics of digital currency exchanges. It is no exaggeration to say that in the digital currency ecosystem, the exchange is the jewel in the crown and the most shining one. Because it is at the hub position in the entire ecosystem.


It is like our portal search website in the information society. Generally, people want to search for something, they can go to Baidu, Google, this kind of information search portal.


The exchange is the entrance to the digital currency. If you want to get in touch with the digital currency, in addition to mining by yourself, there are relatively few people who mine on your own, and they usually buy it through the exchange.



It can be said that the digital currency exchange is the bridge between the traditional world and the virtual world.


Because no matter what form the digital currency is, its value must be reflected in the transaction.


The most efficient way to trade is to trade publicly on the exchange, so the function of the exchange can be imagined and it is in a very important position.


Of course, digital currency exchanges are also the same as traditional financial exchanges. They have some common functions. For example, the main function is to match the occurrence of transactions, find the price of the transaction object, and provide the liquidity of the transaction object. This is the three of ordinary exchanges. Great function.


There are also digital currency exchanges, but since the things that are traded are digital currency, digital currency exchanges have other functions that ordinary exchanges do not have. For example, it is all-weather and borderless.


Generally, exchanges have rest periods. For example, the Shanghai Stock Exchange and Shenzhen Stock Exchange both have rest periods, and both have time for market opening and closing. For example, the futures exchange has its own market opening and closing time.

Image showing Digital Currency Exchanges


The closest thing to all-day trading is foreign exchange trading, because foreign exchange trading involves different holidays and different time zones in each country, so it is close to all-weather, but it also has rest periods.


There is only digital currency, which is traded 24 hours a day, seven days a week, which is a very interesting feature of it.


The second is that it is borderless. Any traditional exchange has borders, such as which country it is in, for example, which country is the currency of which it trades, but in the field of digital currency, national borders are broken .


It is not said that this is China’s Bitcoin or the US’s Bitcoin, it is the world’s Bitcoin. It is born without borders, which is its uniqueness.


At the same time, another very important feature is the digital currency exchange, which is currently not in a mature regulatory stage. In the world, there is a real regulatory system, or a license system, and now only Japan and South Korea.


Of course, there are some small non-mainstream countries we won’t talk about, because they are actually selling licenses, and their supervisory capabilities are not enough.


But we said that the major digital currency countries have exchange licenses, only Japan and South Korea.



But their supervision is still very immature, and it is still in continuous improvement.


Except for these two countries, other countries have no mature supervision.


Therefore, many digital currency practices are very irregular.

Unlike our traditional digital currency, it is generally only possible for state-owned or large companies to apply for such a license.


The third feature, in addition to the all-weather borderlessness mentioned just now, and the lack of supervision in the second feature, the third feature is that digital currency exchanges are extremely opaque and generate a high degree of monopoly.


For example, how opaque is it?

We have a dedicated independent third-party digital currency trading company called the coin market. Its task is to collect the transaction volume of each exchange and the price of the variety on the transaction.


A scholar made an analysis of the trading volume it collected, and he found that most of the exchanges’ trading volume was fake, and more than one-third of the exchanges had the suspicion of falsely reporting their trading volume. You can see that the trading volume can be faked. What an opaque market is this.


At the same time, it is a highly monopolized market. The first few major exchanges and the top ten exchanges account for more than 90% of the trading volume of digital currencies. This is an extremely monopolistic market.


The strong is Hengqiang, in the ordinary world’s traditional financial world exchanges, it is impossible to happen.


Another feature of the exchange is that its profits are very high.



Let take an example. Let’s take Binance, the world’s largest trading volume. Binance was established in less than a short year, with only 200 employees and the second quarter of its establishment, in October 2017. The profit in December was as high as $200 million.

Think about it, the second quarter of the establishment of 200 employees, only 200 million US dollars in profit.


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