In the beginning, there was Bitcoin, and in those simpler days, everyone wants a piece of it, and everyone who was in the business was offering it. Then came along Ethereum, as a rival, exchanges ummed and ahhed if it was a legitimate enough to work with.
Ethereum has earned its stripes and is easy to find, trade and buy/sell, but not on all exchanges. But what about other altcoins? How does Litecoin, Dash, Ripple, even Dogecoin, PutinCoin and other such ridiculous coins make it to a publically traded exchange?
Werner van Rooyen, from International exchange Luno, explains to Cointelegraph just what goes into adding another coin to an exchange platform
The complexity of adding a currency
Just recently Luno has added Ethereum to their stable and for Van Rooyen he explains that the decoding process is all about the resources it takes on the company in providing the service.
“We have to look at the four different resources a new currency will drain when we come to deciding on adding another one,” Van Rooyen tells Cointelegraph. “There are the technical resources; adding the new currency into the back-end (and making sure it’s done securely), including send/receive wallets, integrating it on an exchange etc, is vital and needs to be done properly.”
“We also factor in the operational resources; securing customer funds by moving most of it between a live hot wallet and an offline cold storage environment. Community resources; educating customers on the actual use case and why the currency matters and being able to assist customers with their queries. Finally, design resources; how to fit an increasing amount of random currencies in an app that has been designed to be elegant and easy to use.”
Of course, that is the considerations that the exchanges must consider from their own side, but there are also the external factors to consider when it comes to looking at a specific coin.
“We also think that if you add a digital currency and you don’t have reasonably high transaction volumes —low liquidity— you’ll just be wasting your time since customers won’t be able to effectively buy or sell a reasonable amount of digital currency. And they’d probably get a bad exchange rate to boot,” Van Rooyen says.
Bitcoin Cash vs. Bitcoin Gold
More challenges faced by exchanges recently have been the plethora of forks and proposed forks. Bitcoin Cash and Bitcoin Gold have recently emerged, and there was contentiousness about the support of the former before and through its launch.
Meanwhile, Bitcoin Gold has been called more of an airdrop than a hard fork, and thus there has been less concern or demand for it. These sentiments are echoed by Van Rooyen who states that Bitcoin Cash’s inclusion was driven by demand, while Bitcoin Gold’s exclusion on Luno has other factors.
Bitcoin Gold was – and still is – plagued by bad management, security issues and code that isn’t available for public audit,” Van Rooyen said. “Most people start their digital currency with Bitcoin, but those of our customers who already have Bitcoin have been asking us for a while to add it, so adding Ethereum and Bitcoin Cash were driven by demand from our existing customers.”
A bloated market
The amount of ICOs cropping up, all claiming to be the next bigger and better Bitcoin is astounding, and they are all trying to run in the same race. That race is saturated and many stumble along the way, but others do anything they can to stay on their feet.
Of course, making it to an exchange is the upper echelon for a new coin, and Van Rooyen mentions that they have been approached many times by developers trying to get onto the large exchange.
“We have had a lot of requests from many coin developers to add their tokens with us. Some of these might have potential in the long run, but many of them appear to be outright fraudulent. We have been offered free exposure and premined tokens, but we have declined all these requests.”