The future of crypto exchanges

[The Sceptical Chymist]

I've been interested in crypto since 2014 or so, and between then and now I've seen major changes across the cryptocurrency exchange landscape.  There used to be a website wesellcrypto.com that sold bitcoin, doge, and a few other altcoins for PayPal.  Circle used to be one of the easiest ways to buy and sell bitcoin (at least in the US).  KYC wasn't required by most exchanges. 

Well, Circle and wesellcrypto.com are both out of business, KYC is becoming standard, and there have probably been more changes in the past six years than I can recall.

But what I'm really wondering is how many exchanges are going to be in business in 2030, ten years from now.  I've said in other threads that I expect there to be a good deal of consolidation, with big exchanges buying out smaller ones, and lousy exchanges like Yobit and many others simply ceasing to exist.  Are any of you expecting something similar?  I don't know how many crypto exchanges exist globally (and I'd appreciate it--perhaps with some merits--if someone could provide a number), but I think there are way too many right now.

One thing I'm hoping is that exchanges don't stop providing 24/7 service.  It drives me nuts in the stock market that you can only trade between 9:30am-4pm M-F.  That's an archaic system IMO, and I hope it changes in the future.

I'd like to hear your opinions about where exchanges are headed, so feel free to disagree with me and whatever else you'd like to do.

[1713923695]

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[1713923695]

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[o_e_l_e_o]

I don't know how many crypto exchanges exist globally

Coinmarketcap list in the region of 380 exchanges: https://coinmarketcap.com/rankings/exchanges/
Coingecko say 410 at the top of their pages, but list 367: https://www.coingecko.com/en/exchanges

It's impossible to put an accurate figure on, though, especially if you consider every two-bit token swap service an "exchange". And some of the exchanges on both those lists have $0 volume in the last 24 hours. So I would say that somewhere in the region of around 300 semi-major and active exchanges seems like a reasonable educated guess.

As you say, many small exchanges will cease to function, but many more will pop up in their place. We saw it during the ICO craze, and it seemed every day on here there was a new exchange, just launched, running a signature campaign, just to exit scam or disappear a few months later. We are seeing it again now during this DeFi craze. Even easier to launch an "exchange" now when you only need to support a bunch of meaningless tokens and don't even need to accept bitcoin. I agree there are far too many exchanges (and far too many coins), but unfortunately I don't see that number reducing substantially any time soon.

My hope over the next 10 years is that we continue to see the growth of decentralized, peer-to-peer exchanges. I think Bisq in particular has a bright future, given that it is the only exchange I am aware of which is fully open source and developed by the community.

[Darker45]

For the next ten years, while the market is fast expanding globally, the number of exchanges will certainly rise as well, notwithstanding the rising consolidation and the certain death that a lot of the smaller ones would eventually meet. This is because the pie has exponentially grown in size, so much so that there is always a slice of the market, however small, left to the smaller ones, enough for them to continue operating.^[1]

Of course, the competition would also grow tighter and the few giants that we know today would continuously acquire weaker ones. But I am still seeing more and more exchanges developing, especially local ones, over the next decade and beyond as crypto is also gradually being legally accepted by many countries.

Apart from this, and notwithstanding the timely death of ICO, there will always be new coins or tokens to arrive in the market contributing to the rising of more and more exchanges. Cryptocurrency is not only the trend itself, it has in fact created several smaller trends. There was the ICO of assorted crypto projects before, there's the DeFi right now, there's the growing popularity of NFT tokens, and so on. In other words, there will be unending flow of new cryptocurrencies to the market bringing with them new sets of technological innovations. So I think the market will always have something new which the crypto supporters will be crazy about.

Finally, I guess almost all the major exchanges are already offering 24/7 global support.

[1] Well, we have yet to recover the global crypto market cap ATH which was reached in early 2018 but it would be easy to accept that we are actually on the path to a trillion dollar industry.

[noorman0]

Coinmarketcap list in the region of 380 exchanges: https://coinmarketcap.com/rankings/exchanges/
Coingecko say 410 at the top of their pages, but list 367: https://www.coingecko.com/en/exchanges

My analisys: More than that, maybe 2000> exchanges have opened up to this day.
I've been in a paid competition to find the addresses of exchanges around March 2019. https://cryptocoinsinfo.net/exchanges
Some of them may have closed due to scams or have not progressed.

Exchanges growth tends to follow the current trend. Even though it is not really needed, developers are still interested in creating new exchanges with the confidence that it will become large.

As happened during 2019, the current trend was IEOs after Binance first introduced the program (IEO Bittorent January 2019) ended with great success. Then new exchanges spranged up to be part of this trend.  

2020 is defi trend, DEX growth is a lot more for now, and some CEX even launched its DEX version.

In the coming years, there may be a trend of local exchanges serving only local users. Or each new project will have their own exchange. Who knows? Just look forward to what will be the following trends in the crypto space. What is clear is that exhcanges fate still depends on the user's interest.

[joniboini]

In the coming years, there may be a trend of local exchanges serving only local users.

This is already happening and it's not a trend imo, it's probably essential for the users to exchange/swap their crypto to fiat easily. Not that surprising since the majority won't use DEX or P2P transactions, at least for the next few years.

Bithumb is already owned by Huobi now. I won't be surprised if exchanges are buying each other in order to expand their services and make more money.

[crwth]

There will be many aspiring new developers and teams that would want to dominate the exchange scene, and no matter what you do, there would still be exchanges popping up. I think the question is who will remain, as you said. No matter what the big exchanges do, they would always have the upper hand now that they have established their dominance. I don't think buying out exchanges would be worth their time unless something a small exchange invented could benefit the dominant one.

I don't think the dominant once right now would cease to exist, but those unfamiliar exchanges will have a hard time continuing their service. So it's best to stick to the largest ones like Binance and possibly dedicate your trading there. It's probably not going anywhere.

I would depend on the best exchange with trading volume and active users for sure. Plus the reputation and reliability.

[o_e_l_e_o]

My analisys: More than that, maybe 2000> exchanges have opened up to this day.

I don't disagree. As I said above, during the ICO craze in particularly there were new exchanges being launched daily. However, many of these were either created only as an easy reason to launch a meaningless token, to pump a specific token, or as an outright scam altogether. If you consider exchanges which actually support real trading with fiat or between coins, then the number is far lower.

I don't think buying out exchanges would be worth their time unless something a small exchange invented could benefit the dominant one.

It might be, when it comes to regulations. As time goes on, more and more countries are going to force more and more regulations on to centralized exchanges. When it comes to a country that a large exchange does not serve, but with growing interest in bitcoin there is now a large market there they want to capture some of, then it might make more financial sense for them just to buy out a smaller exchange which already complies with all the relevant laws.

[Slow death]

let me consult my crystal ball... here is what my crystal ball said to me:



the more time passes and institutional investors enter this market and companies like paypal enter this market, that market will become very regulated and centralized. The riches love laws that make their assets safe and of course they have pulled their influence on governments so that governments begin campaigns to regulate that market.

hundreds of exchanges will disappear because they will not be able to keep up with the evolution of laws and licenses that governments will implement and others will not be able to survive because they will not have enough funds and management to have physical offices and manage support workers

so far I would say that we are playing children's games, because it is still normal for exchanges to freeze people's funds and they are hardly punished, but in the future this will change... and the laws will be strict for exchanges and the biggest nightmare of exchanges will be central banks

[electronicash]

it could be the case as its whats going on. tron bought polo. binance buying other projects and even CMC. there was an article from cointelegraph that paypal is going to buy bitgo. this isn't confirm base on that article but paypal may really be considering this option if they want to be in the game.

[The Sceptical Chymist]

For the next ten years, while the market is fast expanding globally, the number of exchanges will certainly rise as well, notwithstanding the rising consolidation and the certain death that a lot of the smaller ones would eventually meet.

I'm not so sure about that, especially since government regulation is tending to become more strict.  I think the days of anybody starting up a crypto exchange at will are coming to and end, and I think exchanges like Yobit--that are apparently completely unregulated--are going to disappear.

the more time passes and institutional investors enter this market and companies like paypal enter this market, that market will become very regulated and centralized. The riches love laws that make their assets safe and of course they have pulled their influence on governments so that governments begin campaigns to regulate that market.

I think your crystal ball is probably right on that one, and that also leads me to believe that there are going to be a lot fewer exchanges in existence in the next 10 years or so.  But the truth is that I have no clue as to what's going to happen; bitcoin has surprised me more times than I can count at this point, so I've learned that anything can happen.

If institutional investors (and corporations like MicroStrategy) retain their interest in bitcoin, I'd also expect a few more futures exchanges to pop up.  I'm not sure how much volume Bakkt is doing these days, but the demand for bitcoin/crypto derivatives is probably going to grow rather than shrink.

[stomachgrowls]

Expect for more exchange platforms would really be requiring KYC later on when government do impose such regulation yet they wont really be having any options to ignore
or reject because that will surely cost their exchange business.So in the end they would most likely to comply just like on what those recent exchange had been done.

Im anticipating that they would be gradually required or need to comply if they would like to continue.So us users would really be mainly affected with this specially to those
who do value too much when it comes to their privacy.

I cant say that DEX will really boom out on that case because centralized exchange is different when it comes to fiat-crypto transactions.Talking in 10 years time
then its no surprise that all of them will ask out KYC into its users.

[Darker45]

For the next ten years, while the market is fast expanding globally, the number of exchanges will certainly rise as well, notwithstanding the rising consolidation and the certain death that a lot of the smaller ones would eventually meet.

I'm not so sure about that, especially since government regulation is tending to become more strict.  I think the days of anybody starting up a crypto exchange at will are coming to and end, and I think exchanges like Yobit--that are apparently completely unregulated--are going to disappear.

I cannot provide you the exact statistics but I am almost 100% certain that despite KYC becoming a strictly legal standard among exchanges their number is still rising. Regulatory demands from the authorities have doubtless increased in the past half a decade or so and yet the number of exchanges is still rising.

Yes, there used to be a time when exchanges are more free and KYC was an alien thing and was more abhorred, but it seems to me that regulations are also construed as Bitcoin or crypto becoming legal and therefore accepted in the mainstream financial sector as opposed to staying in the underground. This builds up confidence and security among many traders and investors.

Moreover, crypto trading is dynamic and has produced more and more products and services. There used to be a time when there was only spot, P2P, OTC, and the classic trading. Leverage trading then followed. And now we are having derivatives like options and futures and contracts. And possibly in the near future we will finally be allowed to buy and sell Bitcoin ETF as well. And who knows what else are in store in the future for crypto traders? For sure, innovations and new trading products are brewing right now.

All this signifies different trading platforms. This is certainly another reason for crypto exchanges to flourish and multiply in the next decade or so.

[XZERO1]

I don't think we got anything more than 20 centralized exchanges by 2030 and all of them will require KYC at the time (no matter your trading and withdrawal volume) and only 2-3 of them will be relevant and popular and most wouldn't use the rest unless they have to, still there are going to be some exchanges that exist apart from these 20 here and there but they are just going to be straight up scam and they won't get as much attention, that being said I think by 2030 DEX is going to be used even more and compete very closely with top centralized exchanges.

Now the difference in volume between top centralized exchanges and decentralized exchanges is too much but I expect the difference in volume to be minimized and we see at least one DEX in top 3 exchanges, in coinmarketcap Uniswap is ranked 46th in their top volume ranking while as a matter of fact if you remove the fake volume from many of these centralized exchanges Uniswap would be at least in the top 15 in real trading volume so that wouldn't be hard to imagine them or any other DEX to get to top 3 in 10 years from now.

Just looking at their top exchanges in volume in the last 24 hours I see names like Upbit that was caught having fake volume of more than $200 billion just 2 years ago in Korea and I still doubt they are any different now, the same thing about having fake volume and liquidity goes for Gate, BitZ, HitBTC and many others which says a lot about the legitimacy of these rankings.

This is the chart that shows the difference in volume between Binance, Coinbase and Uniswap and I'm using this chart specifically just because all of these 3 exchanges have real volume.

[o_e_l_e_o]

I cant say that DEX will really boom out on that case

I think there is plenty of space for both CEXs and DEXs to develop over the next 10 years.

There will be a lot of new users in crypto, which will presumably, over time, follow much of the same split between CEX and DEX as we have already seen. However, as time goes on, I suspect there will also be a not insignificant number of CEX users who make the transition to using DEXs. CEXs are already infamous for being hacked, losing deposits, freezing accounts, reporting to authorities, and generally having terrible customer support and making their users jump through hoops just to access their own coins. Over time, more and more people are going to get fed up with losing access to their coins or having to give up every tiny detail of ther lives, and so move towards DEXs instead.

As more and more laws and regulations are passed, the privacy invasion from CEXs is going to get progressively worse. In addition to the ever more invasive KYC, I wouldn't be surprised if users have to start telling them where each withdrawal is going and what you are planning to use it for, before you are allowed to withdraw.

DEXs will absolutely grow in terms of both number and volume over the next 10 years.

[Slow death]

the more time passes and institutional investors enter this market and companies like paypal enter this market, that market will become very regulated and centralized. The riches love laws that make their assets safe and of course they have pulled their influence on governments so that governments begin campaigns to regulate that market.

I think your crystal ball is probably right on that one, and that also leads me to believe that there are going to be a lot fewer exchanges in existence in the next 10 years or so.  But the truth is that I have no clue as to what's going to happen; bitcoin has surprised me more times than I can count at this point, so I've learned that anything can happen.

If institutional investors (and corporations like MicroStrategy) retain their interest in bitcoin, I'd also expect a few more futures exchanges to pop up.  I'm not sure how much volume Bakkt is doing these days, but the demand for bitcoin/crypto derivatives is probably going to grow rather than shrink.

until a few years ago governments did not care much about bitcoin and exchanges, institutional investors and payment processors like paypal looked at bitcoin as a joke that would end early, they did not see the potential of bitcoin. But with each passing year and the bitcoin community grew a lot, many exchanges started to emerge and the bitcoin price started to increase a lot, it started to attract the attention of central banks and governments and as you can imagine: government and central banks = laws and licenses

It is inevitable that in the future few people will be able to create exchanges due to laws and licenses

[The Sceptical Chymist]

let me consult my crystal ball... here is what my crystal ball said to me:
<snip crystal ball wisdom>
so far I would say that we are playing children's games, because it is still normal for exchanges to freeze people's funds and they are hardly punished, but in the future this will change... and the laws will be strict for exchanges and the biggest nightmare of exchanges will be central banks

I forgot to check in on my thread here, and I appreciate everyone's opinion.

You're quite right, Slow death.  The fact that there are so many unregulated exchanges that can scam their customers and get away with it does mean that the exchange space hasn't fully evolved yet.  I'd be tempted to say that once Yobit is put out of business, then there might be some order setting in. 

What I'm not looking forward to are those things in your crystal ball, though I don't mind if exchanges have to be accountable to whatever government their operating under.  Unless that happens, we're going to keep seeing shit like Mt. Gox, Cryptsy, and all the other exchanges that disappeared with their customers' funds.  Coinbase, for example, wouldn't be able to do that and get away with it.  There would be huge lawsuits and government action taken if they tried an exit scam.  But with an exchange like Kucoin or some of the smaller ones?  Sometimes we don't even know where they're based.

[magneto]

I've been interested in crypto since 2014 or so, and between then and now I've seen major changes across the cryptocurrency exchange landscape.  There used to be a website wesellcrypto.com that sold bitcoin, doge, and a few other altcoins for PayPal.  Circle used to be one of the easiest ways to buy and sell bitcoin (at least in the US).  KYC wasn't required by most exchanges. 

Well, Circle and wesellcrypto.com are both out of business, KYC is becoming standard, and there have probably been more changes in the past six years than I can recall.

But what I'm really wondering is how many exchanges are going to be in business in 2030, ten years from now.  I've said in other threads that I expect there to be a good deal of consolidation, with big exchanges buying out smaller ones, and lousy exchanges like Yobit and many others simply ceasing to exist.  Are any of you expecting something similar?  I don't know how many crypto exchanges exist globally (and I'd appreciate it--perhaps with some merits--if someone could provide a number), but I think there are way too many right now.

One thing I'm hoping is that exchanges don't stop providing 24/7 service.  It drives me nuts in the stock market that you can only trade between 9:30am-4pm M-F.  That's an archaic system IMO, and I hope it changes in the future.

I'd like to hear your opinions about where exchanges are headed, so feel free to disagree with me and whatever else you'd like to do.

Definitely. With the influx of institutional money, it's inevitable that exchanges are becoming more and more mainstream, and thus far more regulated. Most countries around the world also have their eyes on the taxation revenue prize, which means that more draconian regulations will also be commonplace.

I don't think that there is a chance that 24/7 service will discontinue though. That would be ridiculous.

Though, one trend that I foresee that may sound odd is actually a convergence between traditional stock exchanges and crypto exchanges to create a unified "asset exchange" - with stocks being traded 24/7 alongside cryptos. Certain CFD platforms such as eToro are already morphing into this mould.

[Darker45]

~snip~

Though, one trend that I foresee that may sound odd is actually a convergence between traditional stock exchanges and crypto exchanges to create a unified "asset exchange" - with stocks being traded 24/7 alongside cryptos. Certain CFD platforms such as eToro are already morphing into this mould.

This is not a foresight anymore as this is already happening. This still seems a bit odd, though, because it has not yet turned into a really big trend. But, yeah, the evolution is gradually happening and not just among crypto platforms but also with stock platforms. Hybrid platforms are increasing in number. And I believe this is going to become much bigger overtime.

You mentioned eToro, for example, and then there was FTX and just recently Bittrex. As a matter of fact, it has been more than a year since Abra has actually offered company shares in fractions to the users of their crypto mobile wallet.

[as.exchange]

This is probably one of the most informative and good threads about exchanges

We absolutely agree with the points made above, that now there are way too many exchanges in the space, which is mainly due to the availability of open-source and cheap solutions (which all consequentially get hacked and users lose their money). The reason for those exchanges to launch is because it's usually more profitable than doing ICOs or DeFis. The point that in the next 10 years or so there will be only few exchanges left is very reasonable, and we also expect the same due to the following reasons:

1. Some of the exchanges are launched for the single purpose of scamming people, which includes both CEXs, and DEXs (unprofessionals think it's impossible to scam there, but do you really believe that all those recent hacks are strange coincidences?)
2. Most of the new exchanges fail to realize how to run an actual business, and think that just launching + making campaign will bring millions of customers
3. Another biggest group of exchanges (DEX & CEX) are launched by immature people who don't even realize how financial products work (like many of new derivative DEXs), but due to good marketing attract a good deal of user base, which will eventually realize what they bought in, and will leave them
4. Another big group of exchanges are running IEOs, own tokens, or start to turn to DeFi for no actual reason... "just because everyone is doing it" so they believe they also need to do so, but by adapting the wrong business model they just dig their own grave  
5. Other exchanges might be good on the above points, but weak in security, therefore they eventually get hacked and have no way of recovering reputation or compensating customers
6. Others launch exchange simply to run there another new sh*tcoin from some ICO/TGE/etc. - so they will die fairly quick too
7. If you exclude all exchanges described above, the left ones are probably the good ones, with good product, security, marketing and who do care about users, but some of these ones will get killed by compliance and regulations simply because "they are in the wrong place (legal jurisdiction)"
8. And finally among the left ones, the few big ones will be either buying out each other, or engaging in hardcore competition

So to conclude, most of the current exchanges (even the ones that look so awesome from marketing) will fail, and the big players won't even need to buy them out - they will go out of business by themselves in the long-term But in short-term, we will see new levels of hype about useless DeFis being implemented everywhere for no purpose, and more immature and unknowledgeable people launching new exchanges - just like was in the first wave with ICOs, then with CEXs & IEOs in the second wave, and now with DEX & DeFi in the third wave.