Cryptocurrency exchanges are the main place where true cryptocurrency fans can easily buy and sell their assets. However, modern cryptocurrency exchanges would not have appeared without predecessors in the traditional stock market - such sites as Nasdaq or NYSE - which serve as a workplace for traders and investors who invest their money in stocks of various companies.
These investments are placed in the form of securities, which may be stocks, bonds, or something else. By investing in stocks, investors secure ownership of the company and receive income, depending on how well it works.
But where did the idea of the stock exchange come from, and why did the developers decide to apply it to cryptocurrency?
Oddly enough, the official stock exchange only appeared in the 1500s, although similar organizations existed earlier. Some historians claim that even in ancient Rome there was something similar to the stock market. The first "real" stock market appeared in Belgium in 1531, although there were no shares there. In those days, stock brokers personally met with potential investors who invested in bonds and other instruments.
Only in 1600 the first shares appeared, with the help of which the East India Company got the opportunity to travel around the world and earn money on it. The fact is that sailing to new lands was a risky and costly venture. An unsuccessful trip means losses for those who financed it, and in this case they were the governments of Great Britain, France and Holland. To limit the financial risks of the main state sponsors, outside investors were allowed to invest their money, in fact, offering a share of future income for financial participation in the expedition. Of course, expeditions very quickly became larger and more profitable. Some investors even invested in several ships in case one of them failed. Many investors do this in the stock market today. However, despite the fact that the availability of demand contributed to the exchange of shares, there was no official, centralized stock exchange as such. For some time, coffee houses played the role of the stock exchange, since it was here that brokers and investors met to buy and sell shares.
In the end, everyone understood what was happening. One after another, new companies appeared that sold tons of shares, earned a ton of money and promised their investors big profits. But, as you might guess, many of these companies failed to succeed, and investors lost money. It was then that strict rules appeared, for example, in the UK, when the government banned companies from issuing shares until 1825.
Interestingly, the first stock exchange in London appeared in the late 1700s. But due to the ban on the circulation of shares, the exchange's income was small. Despite all this, in America in 1817 was established New York Stock Exchange (NYSE). America quickly turned into a stock market power, as it is today, although at that time no company was allowed to enter the market with listing, listing fees and other exchange principles and rules. However, this did not stop novice entrepreneurs from quoting their offers. Due to the lack of competition and its location in a sufficiently developed city of New York, the New York Stock Exchange has become and remains one of the most stable world-class stock exchanges.
However, with the advent of new technologies, NYSE's leadership in the securities market could not last forever. In the end, someone had to challenge the world leader, and this daredevil in 1971 turned out to be the National Association of Automated Quotations for Securities Sellers, or NASDAQ, a little less than 200 years after the creation of the NYSE.
NASDAQ generally offered the same tools as the NYSE, but at the time of its inception, it managed to "recognize the role of electronics in stock trading." In fact, the association has completely switched to the use of computers. All transactions had to be made electronically, which distinguished it from Wall Street, where people communicated with each other to buy and sell shares. This, of course, simplified the process of buying shares and made it more accessible to everyone.
This bet on the future paid off pretty quickly. The NYSE was forced to adapt, eventually teaming up with Euronext to create the first transatlantic stock exchange in history. Despite this, in October 2004, the NASDAQ showed a higher average trading volume than the NYSE. However, the NYSE is still the most powerful platform in terms of market capitalization, although more companies are registered on the NASDAQ.
Today's stock markets are becoming digital, although many of them still represent physical companies from around the world. What will be the next step? Undoubtedly, this is a digital asset auction! The era of cryptocurrency exchanges begins.
Having come a long way from trading in coffee houses, cryptocurrency exchanges are the most technologically advanced representatives of trading platforms. Firstly, they are a kind of global platform that anyone can access from anywhere in the world, and at any time, since they work around the clock, seven days a week. Secondly, cryptocurrency exchanges operate in decentralized networks and use blockchain technology to register transactions. But the most important thing here, of course, is that cryptocurrency exchanges do not work with traditional stocks - they trade thousands of untested and volatile assets with almost zero legal support.
Shane Solidor, Director of Global Business Development, Digital Asset Management FBG Capital, in his Forbes interview explained the benefits of cryptocurrency exchanges. He noted that these platforms “include” all the additional processes that are required for traditional exchange trading. In other words, conventional exchanges do not store money for traders, and do not eliminate the need for a stock broker.
Cryptocurrency exchanges is not only a platform for trading cryptocurrencies, but also a platform where users can store their funds and automatically place applications for purchase or sale. In some sense, the exchange acts as a stock broker and even charges a transaction fee almost the same as the fees charged by traditional brokers. Since exchanges are based on the same principles that are the foundation of Bitcoin and other cryptocurrencies, they allow investors to control most of the trading process.
Studying the history of stock exchanges, it should be noted Kickex. This is an innovative cryptocurrency exchange from the project. Kick ecosystem, which has implemented a number of functions introduced by traditional exchanges. These include, for example, complex orders that provide investors and traders with sliding and double stop orders to optimize the trading process. The exchange also has its own system of smart cashback for commissions up to 100% and a referral program Kickref for additional user earnings by inviting new members to the exchange and building referral networks.
However, in terms of listing there are differences. In the world of traditional stock exchanges, most companies conduct IPOs and then apply for listing on a site like NYSE. In the cryptocurrency space, these platforms are arranged a little differently, although the method of initial offer of coins (ICO) for launching a project in cryptocurrency is not very different from IPO. Most cryptocurrency exchanges do not have a proper process for reviewing listing applications for ICO-financed projects. Some platforms, such as Coinbase, are quite selective, which cannot be said about other exchanges. Individual cryptocurrency projects can turn out to be massive fraud. Cryptocurrency exchanges hardly enforce regulatory restrictions, so fraudsters can bring fictitious assets to the site and simply appropriate the funds of investors.
Like cryptocurrency assets themselves, cryptocurrency exchanges are still in their infancy. We will have to solve many problems, especially in a space with such a low level of regulation, which is accessible to anyone who has a computer or smartphone and an Internet connection. However, stock markets and exchanges also had their own growth problems, and many would agree that they are still far from perfect. But someone should be at the forefront of breakthrough technologies, and now cryptocurrency exchanges are leading this process.