A crypto exchange is an online platform where users can trade their digital assets. Many companies have embarked on the launch of their own exchange offices. On the other hand, end users have accepted cryptocurrencies and exchange offices due to low commissions, compared to traditional institutions such as banks or Western Union.
How much do crypto exchanges earn?
The mentioned profitability and popularity of crypto currencies and exchange offices led to the fact that at the beginning of May 2018, exchange offices exchanged assets worth $ 17.5 billion per day (~ $ 17,000,000,000.00). If we take the average trade fee that the exchange offices charge (0.2%), we come to the data that the exchange offices realized a daily inflow of about 35 million dollars only on the trade commission.
The commission on trade is not the only way in which exchange offices earn money. There is also a deposit fee, a fee for withdrawing money, as well as a commission for the conversion of decree money.
Crypto exchange offices also make money on marketing by selling advertising space on their web platforms, and also taking a commission for listing crypto currencies, which is very important for, now numerous, ICO (Initial Coin Offering) projects. The value of these projects increases significantly if between 50 thousand and one million dollars are invested, in order for the ICO to be listed in the offer of one exchange office.
Some crypto currencies also have premium options, so users are not charged a commission on the trade, but they do charge additional options within the app. On the other hand, there are exchange offices that allow users to lend money to each other, for which they also charge a commission.
All this, in fact, only shows how profitable it is to run a crypto exchange.
There are two types of crypto exchange: centralized and decentralized exchange. Centralized exchanges "hold" the funds of all users on their servers, allowing end users easier trading and more options, while introducing certain restrictions, which, depending on what type of user you are, can be seen as both a positive and a negative attribute.
Decentralized exchange offices operate on a distributed ledger as well as the crypto currencies themselves, which means that the users themselves are responsible for their assets. On the other hand, the way in which centralized exchange offices function is contrary to the vision of the community that presented crypto currencies. As we have already mentioned, centralized exchange offices charge a commission for their services and retain all profits, while decentralized ones share profits with service providers, ie. profits are shared with communities.
At decentralized exchange offices, users can maintain their anonymity, while at centralized ones this is not the case. Since the centralized exchange office controls the assets of all users, it can at any time, arbitrarily or under pressure from another body (eg the government), take away the user's funds, or deny him access to them. Due to this, movements have emerged that advocate exclusively for decentralized exchange offices. The fact that with decentralized exchange offices the user has absolute control, has its negative sides.
If a user loses his private key, he loses access to his funds forever. In case you forget your password and / or lose your phone, you can easily recover your account and your funds in a few simple steps (unlike the guy that threw a hard drive with a key up to 7,500 Bitcoins). Availability is another parameter in which decentralized exchange offices have an advantage.
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