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Cryptocurrency Exchanges Of The Future

|Includes: Covesting USD (COV-USD)


The most acute problem most cryptocurrency exchanges are facing now is security.

Unfortunately, clients' assets are not well-protected, which does not only put assets at risk, but is also very damaging for the industry.

Covesting is making a serious attempt to take safety standards in cryptocurrency trading to the next level.

I believe that if you want to learn something, you should learn it from professionals. I was lucky to learn trading at Saxo Bank, where I saw that trading is not about speculations and chasing enormous returns (though it is part of trading, I have to admit). I am absolutely confident that trading, if done in the professional way, can be a positive financial experience compliant with strict standards.

Cryptocurrencies are only starting to gain popularity as a financial asset, and despite all bans and criticism around the globe, I, as a used-to-be employee of the online trading pioneer, strongly believe that we need to embrace new technologies, not reject them, we just have to approach them professionally from the very beginning.

I believe many cryptocurrency exchanges fail, first and foremost, because they do not develop a system of standards. While in finance, a system is very important, this is the industry where you cannot ignore anything, be it security risks or simply the interface. I believe it is not that hard to build an effective cryptocurrency exchange, and this is my idea of a cryptocurrency trading platform of the future.

Registered In Jurisdiction With Strict Standards For Blockchain Companies

Many crypto exchanges do not realise the importance of the registration in a proper jurisdiction. However, there are several reasons why this factor is very important. First, this is a sign you are really serious about your business and willing to offer high-quality services. Customers will take this factor into account more and more often, as enthusiasm around cryptocurrencies is gradually abating and is often replaced by disappointment. Customers will choose crypto exchanges that are able to protect their assets, after all, no one wants to lose money. Second, if a country is ready to embrace new technologies and introduces strict standards, this means it is likely to create favourable conditions for your business to develop, such as infrastructure and governmental support, and this innovative approach will help you achieve better results.

Let’s consider the example of Gibraltar. This small nation promotes itself as the EU domicile of choice for financial services, and it was one of the first countries in the world to introduce regulations for blockchain-related companies. Its DLT regulatory framework stipulates that companies must focus on the interests and needs of customers, support forward-looking risk management practices, protect client assets, ensure effective corporate governance and prevent financial crime risks. No surprise cryptocurrency startups willing to establish serious business are flocking there.

Providing Strong Protection Against Hacks

Even the most well-known cryptocurrency exchanges sometimes fail to ensure adequate protection from cybersecurity risks. As a result, clients lose millions, cryptocurrency reputation is damaged, while markets collapse. $500 mln was stolen from Japanese crypto exchanges this January alone. This situation is not beneficial to anyone, and now, when we already have a certain record, we should know how to protect ourselves.
Each crypto exchange simply must introduce as strict security measures as possible. In finance, where you work with money, it is better to do too much than fail to do enough. Each exchange is supposed to have at least cold storage, with the keys totally offline, out of reach of hackers, multi-cluster system architecture, full data encryption, 2-factor authentication, and anti-DDoS protection.

It is important to regularly hold audits by reliable security companies, this investment will help exchanges continuously improve their security systems. If all exchanges perform this measure, this will be an enormous contribution to overall strengthening of protection against hacks.
Also, bug bounty campaigns are a great idea, when community members could suggest you what loopholes your system has and what could be improved.

Providing 24/7 Multilingual Support

Strangely enough, many crypto exchanges ignore this simple factor, while a full-fledged support to customers could make their operations much more effective. First, a strong support team shows your commitment to the client. It is the support team that contacts clients of your company after the purchase, and clients form opinions about your business based on the quality of support they receive. A well-trained support team of professionals can encourage clients to choose your company in future as well and recommend it to others. Second, your support team can contribute significantly to your business development, as all errors and bugs are plainly visible to them. So if your recruit motivated and skillful people as your support team, they could become the driver of your business. It is important to make your support team multilingual and provide support in the 24/7 mode, as cryptocurrency markets, just like New York, never sleep.

Being Serious About Recruiting The Right People

Yes, most cryptocurrency exchanges are startups, and financing could be rather scarce. But, just as Warren Buffett said, the stock market is a device for transferring money from the impatient to the patient, and here we should not be driven by the impatience to get immediate results, but rather be chasing long-term goals.

There are experienced people on the market, who are tired of bureaucracy of corporate giants and looking for innovation and revolutionary spirit. If you are persistent in your search, you can find them, while you can attract them by setting out clear goals and explaining the great idea behind your company, if you have any, of course.

Young inexperienced professionals could also be a great pick with their passion for learning and ambitions.
Do not hire people just because you want to start as soon as possible, have a clear strategy in your head and do not be lazy to look for the right candidates.

User-Friendly, Simple And Comprehensive Interface

Cryptocurrencies are fintech, after all, so technologies should be at the highest level. Apple’s success is in many respects due to its user-friendly interface, and once you start using Apple (NASDAQ:AAPL) products, you very soon grab the concept even if you are not that much into IT. Cryptocurrency exchanges should do the same with their layout, making it easy to understand and adding the most necessary functions, such as the exchange, the liquidity aggregator etc. A one-stop source is a solution of the future.

I hope to see a more proactive and positive attitude towards cryptocurrencies all over the world. And, of course, this depends on industry players considerably, on our determination to raise our standards and show our customers we can be trusted.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.