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Because making money doing fraud when running an exchange is easy, and making money without doing fraud is hard. You accept cash from credit cards with risk of
by throwaway4good 6y ago
Because making money doing fraud when running an exchange is easy, and making money without doing fraud is hard.
You accept cash from credit cards with risk of clawback etc., transaction costs for money major cryptos (bitcoin, ethereum) are through the roof, you need lots of users to make a liquid market plus cost of infrastructure and development.
I don't see how an exchange is making money unless it charges ++% pr. transaction or does something that invites fraud and sudden collapse like keeping all crypto in a single wallet.
- rspeele 6y ago> I don't see how an exchange is making money unless it charges ++% pr. transaction As far as I know, they all do. An exchange's users foot the bill (plus a premium) for on-chain transaction fees if they want to withdraw their coins to a private wallet. But not only that, the real money is in fees for trading coins on the exchange. You slap a little bitty 0.25% fee on every trade, and all of a sudden the jillions of day-traders trying to make money swapping BTC for DOGE or whatever other altcoin-of-the-day and back are a firehose of cash. Those trades are just taking place in your database, not on-chain, so your costs for servicing them are tiny. Running an exchange should be like running a casino: a license to print money. Of course, stealing all the money on the table at once is tempting too...
- alienalp 6y agoMost exchange don't accept credit card. And even if they accept they charge additional fees. Almost all exchanges charge users for transaction costs and most of the time more than the real cost itself. Most of the new exchanges runs their own bots to put liquidity.