What problems are cryptocurrency exchanges facing today?

Blockchain / Finance / Start-Ups / Technology / October 5, 2018

Cryptocurrency exchange – It’s a marketplace where buying and selling of digital assets take place. Prices of these digital assets are decided based on market demand and supply. Cryptocurrency exchange marketplace is popular for its high volatile nature. Cryptocurrency exchange is considered a delicate marketplace where a slight movement in demand causes change in valuation. That’s not it! In cryptocurrency industry, ‘word of mouth’ also plays major role in the change of valuation. For instance – Let’s assume some business has invested ‘a million’ in Ethereum last week and also had the Media to talk about it across popular social media platforms plus forums. It won’t take longer for the Ethereum’s value to upsurge by the very next morning. So far is the basic of cryptocurrency exchange marketplace.

How does the exchange business work?

To begin with your first trade, the specific exchange will ask you to create a user account, where you will need to deposit an initial sum of cryptocurrency for activation. Out of 200 trade supporting cryptocurrency exchanges in the world, only 8 exchanges accept fiat currencies and that too USD, EUR and CAD only. This leads to a long conversion procedure from fiat to crypto through traditional financial institutes, leaving the prospective traders waiting for days or weeks. Well, this surely counts as a drawback of most cryptocurrency exchanges today.

Prevailing problems in cryptocurrency exchanges

Exchanges are primarily a centralized entity. They are considered the government of digital money world, who decide the ultimate market valuation. From past couple of years, many reports have claimed loss of funds, user accounts hacked, lower liquidity, drawn-out conversion procedure, and slow transactions. Since the cryptocurrency industry is utterly on the mercy of manipulated price by the ‘whales,’ certain other factors (mentioned above) need to be fixed.

Below we discuss the factors causing the formation of Bitsmo cryptocurrency exchange –


Liquidity is considered one of the major problems that’s prevailing in current crypto exchanges and it is usually caused due to the nature of investors and traders. If you analyze through circumstantial events, cryptocurrency players remain passive until Twitter and Reddit pass the indication to start buying and selling. This leads to a poor liquidity in the market since exchanges are heavily dependent on customers’ investment to pay the ones who have already invested.

Cybercriminals are super active

Cryptocurrency market has, since its inception, been plagued by hacks and fund loss, pulled off by cybercriminals. There’s been several major hacks and heists so far that put this industry a step behind in the pace. Despite the increasing number of hacking case, there is lack of precautionary measures. Or if there are measures, most of them create tailbacks to hamper the crypto trading process, leading to a trade-off situation between efficiency and security. Generally, processing a transaction on blockchain is incontrovertible, and in such case, if the fund is stolen, there’s no or little chance of retrieval. There’s a dire need for each and every exchange to improve their security framework as to stay one step ahead of the hackers always.

Delayed transactions

You can say, delayed transactions have now become an untreatable plague. Whether you are to open an account or verify your identity; make a deposit or withdraw from your saving – today’s exchanges give you the worst of experiences ever. There is a dire need for blockchain to speed up its transactions because a speedy service saves you time to try for more opportunities.


Fast matching engine: It’s important that exchanges improve their Matching engines to speed up the transaction process. Be sure that your matching engine is capable of processing close to 10MM transactions per second. Remember, each improved feature and facility of your exchange leads to more liquidity.

Full regulation

Having the platform fully regulated through KYC and AML both sounds impressive. Each exchange must implement KYC and AML processes via either third-party integration or in-house procedures.

Quantify liquidity

A better liquidity can be expected when an exchange keeps its transactions and procedures transparent. Investors would love to make an informed investment, for which providing an ‘order book’ is a good idea. Order booklets the traders understand the latest trading market and choose the most popular cryptocurrency-pair for the investment.

Fast fiat-to-crypto conversion

Complex and delayed procedures are never welcomed. As an investor, you will always like to go smooth and fast, hence no opportunities are ever missed. Out of 200 cryptocurrency exchanges around the world, only 8 exchanges accept USD, EUR, and CAD, which leaves the traders with no better choice, but converting via traditional financial institutes. The conventional fiat-to-crypto conversion is time-taking; therefore, exchanges must upgrade their currency acceptance for payment purpose.

Secure storage

Poor or vulnerable security system is an increasing concern amongst exchanges. Whether due to lack of knowledge or low budget, many leading exchanges have been unable to keep their users’ money safe and untouched. Over the years, there’ve been many reports claiming users’ fund loss and hacking cases. Exchanges are in dire need to upgrade their security systems as of NASA, NSA or CIA. The exchange fund must be stored in ‘cold storage.’

Customer support

Last, but not the least, poor customer support service adds to the prevailing problems of current cryptocurrency exchanges. Not many exchanges can provide multi-lingual customer support effectively, but the one with efficiently handling all queries in multiple languages does call for success.

Bitsmo as a solution –

Bitsmo is soon launching their own cryptocurrency exchange, which will be more advanced and feature-rich. However, why just another cryptoexchange platform, when the market is full of exchanges! An important concern, isn’t it? Above we have exhaustively discussed the prevailing problems of current cryptocurrency exchanges – Bitsmo aims to give a check to all.



ICOStream Team

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