The growing popularity of cryptocurrencies can be easily considered as one of the most relevant business developments of the 21st century. The growth of digital coins has given a fillip to the whole crypto ecosystem with important players such as cryptocurrency exchanges, experts, investors, and analysts finding a prominent place in the industry.
Out of these stakeholders, the cryptocurrency exchange is one of the most critical links in the industry. It will not be an exaggeration to say that cryptocurrency exchanges are the gateway to digital assets, allowing the trading of digital assets to flourish at a desirable pace.
Development of Native Blockchain
Over the years, we have witnessed a considerable transformation in the cryptocurrency exchanges. Exchanges have become more sophisticated, and the application of technology has reached a different level altogether.
However, the most relevant change that has caught the attention of industry experts is that many cryptocurrency exchanges have now started developing their own blockchain. Just a couple of months back, Binance revealed the Binance Smart Chain (BSC) project, which will be used in addition to the existing blockchain used by the exchange.
Similarly, the OKEx cryptocurrency exchange announced earlier in March this year that it is in the process of developing its own blockchain. The blockchain called OKChain is an open-source, commercial blockchain that can enhance efficiency while bringing more effectiveness to the business. The company wants to contribute to the development of the blockchain industry, and its commercial blockchain project is a step in that direction.
Huobi, another important player in the cryptocurrency exchange category, is testing its own blockchain with trails now being entered in the test mode. The company announced developing its own blockchain around two years back, and now it is well on its way to achieving the target. South Korea based cryptocurrency exchange, Bithumb is also working at a frantic pace to develop its own blockchain after announcing the plan in November last year.
Benefits of Native Blockchain
It is quite clear that most prominent cryptocurrency exchanges are developing their own blockchain rather than being dependent on the smart contract technology of Ethereum. It is not difficult to ascertain the reasons behind this tendency. Most crypto analysts and experts agree that it is being done by cryptocurrency exchanges to retain their competitive edge over rivals while expanding their users’ base. It is also proving a highly effective strategy to reduce their over-dependence on the Ethereum smart contracts.
Analyzing this trend, the chief marketing officer of a smart contract platform Quran, Ken Misuma, posits that the development of its own blockchain provides a cryptocurrency exchange of flexibility to offer a wide variety of trading opportunities to customers. Further, the cryptocurrency exchange also becomes more flexible in terms of its usability besides gaining the capacity to control privacy during the transaction. One such platform, Bitcoin Era is providing automated Bitcoin trading to make a huge profit from it. Read the latest Bitcoin Era Review to know further more about it.
Giving more insights into the benefits of developing blockchain, the chief executive officer of LGO, a Europe-based institutional cryptocurrency exchange, Hugo Renaudin opined that from the perspective of operational cost and movement of funds, it is usually advantageous for any cryptocurrency exchange to have its own blockchain. In addition to realizing cost efficiencies, the exchange will list more assets for investors at a comparatively lower price, which is a plus for expanding the customer base while boosting overall profitability. Also, the ability to transfer tokens or digital assets across cryptocurrency exchanges is a proposition that keeps exchanges on tenterhooks all the time though this threat can be considerably contained with the help of native blockchain.
There is hardly any doubt about the growing tendency of cryptocurrency exchanges to develop their own native blockchain. The trend is growing at a healthy pace, although the principles behind the development of blockchain are different. This leads to a sufficient scope for future collaborations as every stakeholder in the cryptocurrency domain is working hard to their most significant share in the pie possible, and the development of native blockchain is just part of their strategy to become more competitive.