https://www.peterlbrandt.com/wp-content/uploads/2017/12/Crypto.jpg 413 640 Peter Brandt https://www.peterlbrandt.com/wp-content/uploads/2016/03/Factor-Research-Trading-Services-300x79-300x79.png Peter Brandt2017-12-13 11:38:052017-12-15 11:43:37Structural and functional problems with the Cryptocurrency markets
The cryptocurrency markets are in their infancy – and accordingly suffer many problems that time and technology will resolve. Some of the problems include:
- Despite the claims of blockchain’s revolutionary technology, it takes far too long for transactions/trades to clear the chain.
- Opening an account with many crypto exchanges can be a time consuming and frustrating experience.
- It takes an excessive period of time for deposits to be posted to an account.
- While coins can be safely held in hard wallets, hard wallets can become lost, stolen or damaged.
- While coins can be sorted securely on hard wallets, what protects the flat balances at the various exchange from hackers or exchange bankruptcies?
- Hard wallet depositories are akin to burying Gold in the backyard. It is an irony that cryptos represent the most advanced internet/financial/commercial technology, yet crypto traders are storing millions of dollars on a USB device. REALLY?
- The bid/offer spreads at many exchanges are far too wide. It is often difficult and time consuming to “cross the spread” (buy at the offer or sell at the bid).
- The price of the same coin varies considerably from exchange to exchange. This makes charting extremely difficult.
- Good luck receiving guidance from an exchange’s help desk. In fact, has anyone even spoken by phone to a support person at any exchange?
- The transaction fees at some exchanges would add time to Bernie Madoff’s sentence.
- It can take forever to withdraw funds from an exchange – many exchanges limit the amount of each withdrawal and intentionally hold customers funds as long as possible.
- Moving coins from one exchange to another (either directly or with a hard wallet as the pivot) can be a time consuming activity, preventing aggressive arbitrage operations.
- The web site/trading platform of some exchanges crash when a trader most needs to place an order.
- The cryptos are far too volatile. The volatility will prevent wide commercial/institutional acceptance over the long haul.
- The lack of unified price settlements will also prevent commercial/institutional acceptance.
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