High Trading fees is a Major Barrier on existing Cryptocurrency Exchanges
Go back in time when things weren’t online as we have now and the traditional methods were firmly established. Almost every process including land deal, bank transfers, sending letters had a huge amount of brokerage to be paid off. This is because of many middlemen present in the process. The advent of Internet made things fast and easy. All we had to pay is for the internet connection.
Aiming our attention on bank transfers, back in 2009, an individual or group of people under the name “Satoshi Nakamoto” shook the world with its revolutionary invention.
A virtual currency based on decentralized system which eliminates the need for middlemen like bank and financial organizations. So, one thing was for sure, the monetary transactions were going to become fast and easy. Although, the network fees still prevail. Even if the system is decentralized, it takes efforts to perform the transaction securely and accurately. Hence, just as the internet fees are to be paid for sending an email, the network fees are to be paid while transferring cryptocurrencies.
As you must be aware, the highly volatile nature of cryptocurrencies has made it a tradable asset. Cryptocurrency trading platforms, better known as exchanges are blooming because of this reason. It is the time for centralized exchanges and the “Brokerage” or “Commission” is added in the form of “Trading fees” in addition to the basic network fees.Let’s see how these “Trading fees” have become a menace for crypto traders.
Why is High Trading Fees a chief hurdle?
You must be thinking that what is the proof behind assigning high trading fees as a major issue on existing trading platforms. We have a convincing answer to your query. In case, you haven’t heard about, Encrybit is an upcoming Cryptocurrency Exchange platform.
The team at Encrybit aims to deliver an improvised and secure trading platform and revamp the way you trade cryptocurrencies. To fulfil its aim at the fullest, the research team at Encrybit had conducted an online survey to cumulate the traders’ perspective on prevailing cryptocurrency exchanges.
The survey participants were inquired on major issues faced while crypto trading and 37% responded with high trading fees.
Let’s get back to our question “Why”?
It is no longer obscure that blockchain is the technology behind cryptocurrency. When a transaction is initiated, it is added with other transactions occurring at the same time to a block. Then the miners solve the puzzle and the block is attached to the chain. This how a chain of blocks is formed, hence the name blockchain. Now, miners will need to a fee as a part of remuneration of their efforts, resource costs and electric power. Miners are rewarded with some coins and transaction fees. This is the network fees we were talking about at the beginning.
At present, cryptocurrency exchanges are the platforms where the maximum number of crypto transactions occur. In exchange for their service for providing a platform to trade, a couple of fees are charged to the trader naming trading fees, withdrawal fees, deposit fees, etc. Exchanges have made this a high profit earning business which resulted in over-priced trading fees.
This creates an awkward situation because the traders cannot achieve their expected returns as a larger chunk goes off in trading fees. You can imagine how worse the case would be for day traders.
Survey reveals the severity of the situation
The number of exchanges is exploding uncontrollably. Each exchange will abide by its terms and conditions and this ensures varying trading fees. Bittrex and Binance, the two popular crypto exchanges have a fixed amount of trading fee on every trade. Whereas another popular exchanges naming Bitfinex, Poloniex and Kraken have implemented a maker and taker fee model.
In addition to the views received, another analysis by BitInfoCharts states that on an average $28 is the fee paid per cryptocurrency transaction. If you have a glance at some tweets or Reddit forums, some traders have complained about paying trading fees equal to 40% of the transaction amount.
Encrybit’s vision to Moderate Trading Fees
Cryptocurrency is fancied to bring down the transaction costs. But the profit-earning nature of present platforms does not comply with the purpose of crypto’s invention. If this continues, the team at Encrybit foresees the future of crypto trading in danger. The intellectual minds behind the goal of delivering a powerful exchange are deep admirers of crypto. And it is because of this, they are willing to keep the spark of crypto trading alive. It made them get focused and dedicated towards their goal to offer an exchange which adheres to the traders’ choice.
It is apparent from the survey results that the crypto traders and enthusiasts demand an exchange with moderate trading fees. In this regards, the upcoming Scion of crypto exchange promises to have a transparent fee structure. No hidden charges for sure. This does not indicate to have things available for free. As explained above, network fees are payable for any of the cryptocurrency transaction.
You might find Encrybit on a slightly higher note compared to some of the existing exchanges. But using the Encrybit tokens will be beneficial and will cut-down on fees up to 50%. This is because Encrybit focuses on well-functioning of the exchange without any trouble to be faced by the traders.
On the onset, a minimal fixed trading fee will be charged per trade and with the passage of time, the trading fee will be classified according to maker-taker, volume and promotions. This way, the traders will be charged as per the trade making it fair for everyone.
High trading fees are not the only concern with today’s trading platforms. It is one of them.