OTC vs Traditional Crypto Exchanges
The cryptocurrency market is still in its emerging stages as trading volumes are yet to be comparable with the traditional markets of stocks and commodities. As an entity that is associated with a new technology, adoption is fundamental in this present stage of development.
What Are The Cryptocurrency Gateways?
The gateway systems that allow access into the ecosystem of blockchain and cryptocurrency today are cryptocurrency exchanges and Over The Counter (OTC) trading platforms. These gateways allow users to buy, sell and invest in cryptocurrencies and by extension, blockchain technology.
The two kinds of gateways mentioned above play significant roles that are governed by different kinds of rules in providing liquidity and access into the cryptocurrency ecosystem.
While exchanges function by facilitating liquidity, providing transparency and maintaining market price, OTC platforms simply connects the parties that are involved in trading. OTC platforms offer some extended level of flexibility for investors and traders alike. It gives users the opportunity to acquire even digital assets that are yet to be listed on traditional exchanges.
What Are The Conditions Between Exchanges and OTC?
The process of listing on exchanges can sometimes be very cumbersome. Depending on the exchange, a digital asset must meet certain requirements such as the number of active holders and distributed volume. Expensive listing fees are also required in most cases, and sometimes the platform users will vote on which asset is to be listed on an exchange.
OTC platforms like Vertex.Market provide the opportunity for investors and traders to have access to such coins and assets that are yet to be listed on exchanges. This gives an early advantage to hodlers who may want to benefit from the eventual value appreciation through increased adoption after listing or launch.
Typical exchanges enforce a standardized system where products traded must match certain set out criteria. This is why in the cryptocurrency ecosystem, it is common to classify exchanges into different classes. It is not particularly so with OTC platforms. With OTC platforms there is a greater room for flexibility as transactions are usually a bilateral process between the parties involved.
For an emerging market, the cryptocurrency environment requires every flexibility it can afford for now, as long as risk is properly managed. A very important factor that must be considered at this stage is the product’s rate of adoption.
Ease of accessibility always plays an important role in determining how easy it will be for a new product to find its way into the mainstream. The options created by having both typical exchanges and the OTC market operating at a vibrant level opens up the gateway for all classes of participants to enter the market. And this for now, is an essential factor that cannot be overlooked as the novel innovation tries to touch base.