Jaron Lukasiewicz has been a blockchain and cryptocurrency entrepreneur since 2012. He was the founder and CEO of the New York-based Coinsetter exchange which was acquired by Kraken FX in 2016.
Here are parts of his talk at HybridSummit 2017 (link to full video below), where he discussed the roles that exchanges play in the entire cryptocurrency ecosystem:
Even though cryptocurrency is decentralized, one must still go through a bank or traditional exchange to acquire it. If you are just starting out, you will need to use a cryptocurrency exchange if you want to buy your first coins.
Currently, there are numerous exchanges throughout the world, not just your standard Bitcoin exchanges. However, the biggest ones typically only offer the basic cryptocurrencies like Bitcoin and Ethereum for the simple reason that they are the largest and most popular ones on the market.
Finding the right cryptocurrency exchange
If you are looking for cryptocurrency exchanges to trade on, you might want to consider whether the exchange allows you to place a big order, and what kind of price you can get it for. Even if you don’t plan on placing an order of that size, the fact that the exchange will let you do it at a good price will certainly tell you that you are trading at the right place.
There are two types of exchanges. The first one is more for consumers. These exchanges offer easy buy and sell functions. You are most likely not going to get the best price at these exchanges, but it will be the most convenient option. Also, if you want to buy a small amount of cryptocurrency, that’s the way to go.
But there’s also a much more institutional back-end to the whole industry, and this is where full order-book exchanges come into play. In these types of exchanges, institutional investors and market-makers like to place bid and ask orders on to the order book, often for people who come from the big basic exchanges behind the scenes to pull their liquidity.
Closely related to the exchanges are the roles that traders play. Traders are individuals who are in the market to earn a profit for their own advantage. However, they play a more crucial role because they are the people who will typically create liquidity in the market. This allows those who want to buy cryptocurrency to do so at a good price.
Cryptocurrency exchanges will stimulate growth in developing countries
There are other exchanges that are also emerging which focus more on all the different types of tokens that are produced at an ICO. Different exchanges are entering from around the world to service that market.
These types of exchanges are typically focused on specific countries and target markets. If one is entering the crypto ecosystem with USD, they mostly will look for an exchange that offers payment options in USD. However, if one goes in with a different currency, they will need to use an exchange that service the local market.
That is one of the core focuses of HybridBlock, focusing on these different markets and allowing people to enter the cryptocurrency ecosystem with local payment options. I believe this is the next big opportunity because several markets lack local exchanges.
That’s why I really like to see companies that are looking to get involved with the local markets and bring Bitcoin and other cryptocurrencies to the local community.
This is especially important in developing Asian countries where the financial system isn’t normally encouraging to the population. Cryptocurrency provides an alternative to the whole banking system.
One thing that I’ve observed in many developing Asian countries, is that there are no great consumer banking solutions.
Markets like the Philippines excite me because of the role cryptocurrencies could play there. We see in the population that there are a lot of individuals who are under-banked. That may be even be up to 90% of the Philippines.
Cryptocurrency presents a new opportunity where individuals can have a de facto bank account. People will be able to hold their money in their cell phones or computers, and not in cash under their mattress.
There are an increasing number of options these days for people to buy cryptocurrency and store them securely. Going into these markets can become a disruptive force in a developing nation.
This is what’s interesting about HybridBlock. They are putting focus on these markets, particularly in Asia where there’s a need for this kind of service. HybridBlock is working on a concept where a fiat currency is given the features of a cryptocurrency.
For example, the Philippine Peso, when put on the blockchain, can be transferred by under-banked Filipinos amongst themselves. This creates an alternative to cash which will have huge implications on the banks in the Philippines and on the options that under-banked people have.
Given the size of the market in Asia and the opportunities that crypto can bring there, I believe that we can create companies that are going to be successful by providing value to the local population.
Learn about security before using a cryptocurrency exchange
While cryptocurrencies will change the way people all over the world buy and trade with each other, one thing that is not talked about much is the importance of security for both your crypto wallet and the cryptocurrency exchange you use. There have been many well-publicized hacks over the years since I entered in 2012. A great deal of money was lost from those security breaches.
This basically boils down to the way security works in Bitcoin and other cryptocurrencies. If you are holding your money in a Bitcoin exchange, for example, they will provide options to safeguard and protect it. I advise you to find out how you can use a Bitcoin wallet to ensure that you can control your own money.
If you are thinking of getting into the cryptocurrency ecosystem, it’s essential to ask questions about security policies, cold storage policies, and how hot wallets are set up.
This may be a bit complicated to some who are just starting to get into this space. However, I encourage you to learn about security the moment you get involved with cryptocurrency. That way, you can ensure that your money will be safe and protected.
Want to learn more about how the role of cryptocurrency exchanges? Check out the video of Jaron Lukasiewicz’s full presentation at HybridSummit 2017 here.