Crypto Exchanges Are Dying, But They Won’t Fade Away

When I last looked there were 350 cryptocurrency exchanges and there were probably a lot more after I last counted them. During the crypto bubble they were popping up everywhere.

Now they are dying away.

Hardly a week goes by without another exchange pulling the plug. Recently it was CoinExchange.io.

The reason is not too complicated; many of the flashy coin projects that spewed into the crypto space in 2016 are dead and have no reason to trade or for that matter to exist at all. The exchanges have little business to sustain the cost of staying open.

The world doesn’t need another bitcoin. Well it probably does, but it doesn’t need another 2,000. There are lots of cryptocurrencies out there but when you strip the Ethereum tokens out of that universe, there are left perhaps 30 cryptocurrencies of a scale that would be considered listable were they a stock. At most, there are 150 relevant distributed cryptocurrencies.

This does not make for an ecosystem with more exchanges than there are listed coins.

The regulatory walls are also closing in on these upstart exchanges. It is obvious to anyone but a fool that it doesn’t take much to get a cryptocurrency exchange owner busted at a U.S. airport for breaking all sorts of nasty local U.S. laws. Local rules in many countries are also no cakewalk. Many of the closing exchanges are simply too afraid to continue trading under ever-increasing regulatory pressure, meaning there will be an ongoing shrinkage in the exchange space for a fairly long time to come.

Happily, cryptocurrency exchanges are not going away. There are already enough big exchanges to deal with the needs of the “industry” for a long time to come.

The same goes for altcoins.

Coins that do the job of bitcoin must have a limited appeal. There is room for a few dozen doing the job of bitcoin, in the same way as there is room for the yen, dollar, yuan and euro but not so much for the like of the reis, ruble…

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