It’s not always effortless to be the fresh kid on the block(chain).
Since it appeared online about a month ago, fresh cryptocurrency bitcoin specie has bot under scrutiny from users, miners and investors, all intrigued by how this very first large-scale hard fork ter the flamante bitcoin network will affect them.
But it’s maybe the consumer-facing businesses, namely the exchanges, that are most under pressure to make a decision, given the software development time, costs and regulatory burdens that go into supporting any fresh cryptocurrency with a unique blockchain.
Some, however, came to a conclusion quick. kraken and Bitfinex, two popular exchanges, embraced Bitcoin Specie instantaneously after the split.
According to Jesse Powell, kraken’s founder:
“kraken wasgoed one of the few exchanges to say early on that wij’d support bitcoin metselspecie for both funding and trading. Many exchanges were primarily undecided about the extent of their support and some even said they wouldn’t support it at all. Now more exchanges have come around to say that they will support it, tho’ some have said the support may not come for several months yet.”
Powell’s comment takes a jab at Coinbase, the largest U.S.-based exchange, which originally came out strongly opposed to listing bitcoin contant. But spil bitcoin contant continued to look successful and after many of its users complained, some even filing a lawsuit Coinbase did an about-face.
Now, the exchange says it’s working to support the currency by January 1. According to an August Trio blog postbode, Coinbase determined to support bitcoin contant “based on factors such spil the security of the network, customer request, trading volumes and regulatory considerations.”
The varying degrees of acceptance and support for this fresh cryptocurrency represent deeper divisions te the bitcoin community, specifically about the vision for the future of bitcoin (and cryptocurrency te militar) and what will make the market most stable while permitting it to grow.
“Everybody has their own opinions on the viability of differing models,” said Entorno Santori, fucking partner at Cooley LLP, and the leader of its fintech practice.
That debate, and questions about whether an exchange will “onboard a fresh cryptocurrency and how many people will actually want it, have created some acute divisions ter the desirability of bitcoin specie,” he said.
For kraken, who generally stayed out of the scaling debate spil it wasgoed happening around the beginning of August, the response wasgoed plain.
Powell said, “Wij thought that the bitcoin contant fork wasgoed pretty likely to be successful and dreamed our clients to benefit from it spil much spil possible, which means letting them trade the fresh tokens spil soon spil possible.”
Plus, the exchange eyed it spil a way to increase their own revenue.
“There can be a lotsbestemming of price volatility around a fork and this presents a phat trading chance. Wij te fact had a rather large influx of fresh clients who signed up at kraken and deposited their bitcoins with us prior to the fork so they could get their bitcoin contant and trade around this major event. Of course, wij benefit too if there is a lotsbestemming of trade volume so it can be a win-win for us and our clients.”
While many of kraken’s users instantly sold all their bitcoin specie, Powell said, “for every seller, there’s a buyer,” pointing to the bitcoin contant price not just holding up, but leaping recently to more than $700.
“There are even ‘big-blockers’ out there who think bitcoin metselspecie will eventually degeneración regular bitcoin, and very likely some of thesis folks sold all their bitcoin for bitcoin metselspecie,” Powell contends.
Risk or prize?
While the trading volume and revenue gleaned there seems like a positive for exchanges, there are other things, spil Coinbase mentioned ter its postbode, exchanges voorwaarde be wary of.
According to Calin Calianu, a Bitcoin Alfabet contributor, the exchanges “weren’t sure what wasgoed going on. They were jumpy. Originally exchanges were requiring Ten to 20 confirmations on blockchain until deposits could be marked spil cleared.”
Recently, however, the early adopting exchanges like Losbreken and Bitfinex diminished requirements to Ten or fewer confirmations. Yet, Powell said, that isn’t surprising since it’s always bot quick to support fresh tokens with its “let-the-market-decide view.”
But Calianu, who supports bitcoin specie’s mission, told CoinDesk:
“Others are being a little more cautious. It isn’t the safest currency to use. There’s one big miner that, if he dreamed, could totally attack the network.”
He continued, stating the factoring of the risk contra the prize also characteristic of the size of the exchange.
“Some are taking the larger risk of supporting bitcoin specie because they’re smaller and want to attract business [whereas] Coinbase is big and doesn’t see it spil a risk they want[ed] to take. They want to see very first if it’s worth their investment, if it’s going to go anywhere,” Calianu said.
While there could be some ideology still at play, it could also be exchange’s lack the technical expertise required to support fresh cryptocurrencies, which take a certain amount of software development. (That is, unless they’re tokens built on top of the ethereum toneel).
Powell explained kraken had to add support for the fresh currency pairs that needed to be enabled, spil well spil support for deposits and withdrawals ter the fresh token.
“At kraken, wij are fortunate to have the technical capability to list fresh assets fairly quickly, however it is by no means trivial,” he said. “Most likely the most time-consuming part of the process is adding the fresh funding gateways, because wij are very careful about that and have many custom-built security features te our wallet systems.”
Calianu seconds that, explaining that development costs can be quiebro expensive. He predicts to implement support for bitcoin metselspecie could cost anywhere inbetween $200,000 if the developers were indeed efficient and $1.Five million.
Exchanges “don’t want to spend the money and the several weeks development time, and then have the thing vanish the next day,” he said.
Beyond the technical infrastructure alterations, Powell points out that te the case of a fork, his exchange has had to determine answers to a bevy of other major questions, including: which trading pairs it will suggest, how soon after the fork it should enable trading te the fresh pairs, how margin trading would be treated across the fork, and how soon after the fork kraken would enable deposits and withdrawals ter the fresh token.
“At this point,” Powell admits, “wij don’t have a set policy about any of thesis things, and look at it on a case-by-case ondergrond spil the forks come up.”
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake te Coinbase and kraken.
The leader ter blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a stringent set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests te cryptocurrencies and blockchain startups.