By Roberto Al-Hunaiti, CEO of ParamountDax
With more than 200 crypto exchanges on the Internet, trading cryptocurrency is certainly a fast growing trend. Many people are hesitant to start using crypto exchanges, due to negative media stories, and frequent issues and challenges faced by exchanges, but there are solutions to problems within the cryptocurrency exchange industry. Here are some examples, and ideas of how the industry can solve them:
High fees for trading are the norm for many cryptocurrency exchanges. With every trade someone makes on an exchange, a specific percentage of their order activity is taken as commission for the trade even if they are trading with a loss. This therefore becomes a money-making option for exchanges, without the community getting a share.
The way to both tackle such high charges and retain paying customers is to offer an incentive for those who wish to take part. This can include a referral scheme or profit sharing programme, as a way for a trader to get those around them involved and make some extra profit out of an exchange.
- Customer Support
When users of cryptocurrencies get stuck with anything on the platform or want to find out more about user features, they go straight to customer support contacts for advice or resolution of their issue. Adequate resources for customer support is something that’s definitely lacking within many cryptocurrency platforms, as too many growing exchanges don’t scale up their resources for the amount of users they serve.
Some exchanges address this by employing a customer service provider, with the ability to handle hundreds of queries at once, resolving problems without completely decimating the company’s resources and people.
Security breaches are common in the industry and frightening for owners of cryptocurrency platforms as they can mean that personal information of those using a platform can be compromised. People are losing life-shattering amounts of money due to scams and fraud, something that needs to be tackled to protect those investing in coins.
Two-factor authentication is an existing and well-used security measure, requiring the user to enter an email address and/or phone number upon sign-up. The exchange then sends the user a text or email with a code to enter when they log in, further confirming their identity.
Another option is cold storage, where all the important data is stored securely offline, reassuring users that it won’t be tampered with. Some cryptocurrencies have introduced single transaction withdrawal, needing multiple signatures from exchange founders before a transaction goes through. If a hacker were to access the exchange’s systems, the user would have time to halt any further progression.
For any platform today, but in particular cryptocurrencies, the user-friendliness of a system is critical to creating a perfect user experience. With complicated pages and users needing to scroll down to find what’s needed, customers will look elsewhere if a site is hard to use.
A single-page interface is the answer, allowing everything to be accessible from one place, allowing users to look at the market charts as well as the order book, vital for them to make a transaction. Making it easier for the user will make it easier for the exchange to give the user an unrivalled experience.
Both small and large exchanges have fallen victim to shrinking liquidity, as a sudden influx of cryptocurrency transactions has meant the value of these transactions have lessened. Exchanges are experiencing server slow-downs and more technical issues. All of these problems combined are threatening the existence of exchanges with smaller user bases.
A collective pool server comprising of an order book shared amongst various different exchanges is a way for exchanges to work together and solve this ever-imposing issue. This means that if one exchange doesn’t have enough liquidity, it can use the collective pool to still allow transactions to be executed.
Clearly, crypto exchanges do have issues, many of which can ultimately have a negative impact on users. However, these are very simple to solve. More and more exchanges are embracing these solutions, using innovative security features, simplifying their user interfaces, and providing appropriate customer support. This will help cryptocurrency exchanges grow and become more widely accepted.