Yes, first mover advantage is really important, still, if a smaller exchange comes out with something innovative, develops it and then a bigger one does the same thing after, the bigger one is still the one with the advantage because it has more exposure. But I guess that's just how the world works.
One other thing that I wanted to know and you replied are the factors that can differentiate each exchange while they all have the same thing and potentially even the same features. So they're the following:
- Costumer Support (Help provided to the clients)
- Interface (pleasing, efficient, nice to use)
- On/Off ramps (spreads)
- First Mover Advantage (this would be one more incentive to keep exchanges innovating)
Does anyone know of something more? In resume, it's the
costumer experience. The one who can provide the best experience wins, but I would like to separate that into several parts as to know what the clients will evaluate and base their opinion on! I think the Exchange's own community matters too so I'll add that
- Community (useful members, trollbox)
Anything more?
@Stan You contradicted yourself I believe. All exchanges can have shared marketing since they are based on the same platform. However to achieve shared order books in order to increase market depth and liquidity - and this is just the most awesome thing - you can't have exchanges competing with UIAs to see which one offers to lower spread.
What they can offer is a bigger variety of offers. For example, exchange A offers the top 10 cryptos. Exchange B offers the top 4 but with multiple other assets from their own businesses that are offering nice returns. Then it's up to the costumer to decide which one to use.
But if we have exchange A with A.BTC and exchange B with B.BTC competing to offer the smallest spread on BTC price, they won't be having shared order books. I guess that, itself is another factor client's might take into consideration.
One other question is: What incentives does an exchange have to offer bitBTC, with shared order books, than issuing their own UIAs? For bitBTC they need to have a huge amount of collateral. That may prove itself challenging for an exchange. Imagine they have 1000 BTC profit. They can create what, 500 BTC? their btc supply will be cut in half. If one costumer wants to deposit BTC on an exchange running on OpenLedger, how can he do that with bitBTC? If no more bitBTCs are created, there's not enough supply.
The exchange can't just create one bitBTC per BTC sent there. So how will one exchange handle that? I think we should have the answers in order to promote shared order books and be ready to help if any wants to join.
If a costumer deposits 100 btc, the exchange can't create 100 bitBTC. It can only create 30-50 right? How will that be handled? Client's won't ever accept their BTC to be temporarily not available..... What's the solution? An exchange already has to have a large pool of bitBTC to keep up with deposits right? Then:
- How can we get an exchange to create such an amount of bitBTC?
- What if costumer's deposits are more than the exchange's reserves of bitBTC?
Could we get around this with some marketing move? Here in Portugal there was an awesome service of movies and tv series streaming, however since so many wanted to join they restricted access, only the ones joining during the first years could access it. Could we do the same? For starters I doubt most would accept it, however,
- That would help us create a brand and distinguish ourselves as a "top" exchange
- We're the safest exchange and have the best services so only a select few could join
- If someone wants to join they would have to pay a fee
That seems to go against the concept of crypto and adoption itself.. It could be both a huge marketing move or a huge marketing failure. Not to mention with time other decentralized exchanges would appear and as the market gets competitive, people will always go for the option which is free and does not restrict it's users. We would need to be at the top of the exchange world to ever consider doing that. However I don't see any other option atm...
Exchanges, even if they don't charge clients, would need to restrict deposits at some point in time. And success could be the cause of this. The more successful it is, more costumers want to join in, which means more deposits, but how can an exchange keep up with all the deposits if each deposit require a 150%-200% collateral?
Can any business in the world even be profitable enough so the profits can compensate for that? Even if that happened, what would be left for the exchange owners? I just don't see an exchange placing 500k in collateral to create bitAssets with the constant need to increase the amount in collateral to have bitBTC and bitAssets. That doesn't seem like an incentive at all. And without that, we
cant have shared order books which would be one of the biggest things I've seen.
What will they do then? All use OPENBTC? That's not backed by anything. There's a risk there that the owner of that asset messes up the market. Meaning we're not that trustless.