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Crypto Liquidity Problem: Is There Really A Solution?

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One of the most significant problems facing new exchanges and smaller decentralized exchanges is liquidity. Liquidity refers to the volume of assets.

One of the most significant problems facing new exchanges and smaller decentralized exchanges is liquidity. Roughly defined, liquidity refers to the volume of assets within a market, and affects how much trading of an asset can be executed. Small exchanges and startups often suffer liquidity issues simply because inadequate levels of an asset are available to them.


According to Encrybit, 36% of people are concerned about the liquidity an exchange has before signing up to trade on it. To compound the problem, small order books and large bid/ask spreads can slow trading down or bring it to a grinding halt, in some cases, further driving away customers who bring more liquidity.

 

It’s not all bad news, however. The last year has witnessed some significant developments for exchanges, including the recent Blockchain Exchange Alliance partnership with ONEROOT and the announcement of Blockstream’s Liquid sidechain for the Bitcoin blockchain.

 

One idea for solving the liquidity issue faced by small exchanges would be to decouple from BTC and ETH pairings and instead offer a greater range of fiat and stablecoin pairings, which would allow people to purchase specific tokens without the need to buy BTC or ETH first. Complexity is a known factor that inhibits crypto adoption. Simplifying the process would bring more liquidity to the market.


Another idea, proposed by the BXA/ONEROOT partnership, is to create a network of exchanges with shared liquidity. To put this into context, BXA is the majority shareholder of Bithumb, South Korea’s largest decentralized exchange. With a shared liquidity pool of that size, small exchanges that join the alliance would benefit from Bithumb’s and each other’s liquidity and order books. ONEROOT has spent the past year developing the technology and tools for the BXA to provide this service.


A big turn off for liquidity providers (i.e., market makers) are the unappealing fees that some exchanges charge. Market makers have been around since trading began and are highly necessary for developing or enhancing liquidity on an exchange. Some exchanges are well aware of their necessity and have created more appealing offers. For instance, ETERBASE has a zero fee market maker program to ensure liquidity when they launch.


The acquisition is also a potential solution. There are over a hundred exchanges, and crypto assets are divided up between them. Therefore, liquidity is divided too. If exchange owners have such big egos that they don’t want to partner up, as in the solution proposed above, then maybe it’s time for good old acquisition to come into play. Instead of competing for liquidity, perhaps some of the better off crypto exchanges could buy it.

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Adoption: Courts in France adopt blockchain technology

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The NCC or National Council of Clerks of France have finally tested a blockchain technology-based solution for the courts of the country.

The NCC or National Council of Clerks of France recently made an announcement that they have finally tested a blockchain technology-based solution for the courts and are now prepared to launch it throughout France. The National Council of Clerks is a representation of the clerks of the corporate and commercial registry in around a hundred thirty-hour workplaces in France. The workplaces depend upon one another for sharing important data.

 

The goal of NCC France

The NCC is determined to streamline and position the latest information technology that capitulates something that is known as ‘the single version of the truth’. The data tracks an organization’s growth, dissolution, change of location etc. The sharing of data amongst each other was earlier a big challenge for the NCC.

 

The project based on blockchain technology had an aim of rapid cycle times and precision of information. In the pilot phase of the project, the National Council of Clerks in France was able to lessen the timing of registry operation involving a lot of days to just one day.

 

According to the president of France National Council of Clerks, Sophie Jonval, the project based on blockchain technology is an outcome of the partnership with IBM. IBM who is already an expert in blockchain technology and cryptography has been serving as a technological partner.

 

According to the NCC, the project shall be rolled out in the 1st half of 2019 and the project shall ensure a transparent and improved dynamics of the interactions between the clerks.

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HSBC Bank Looking to Expand Blockchain Platform Voltron in South Korea

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HSBC, the largest bank in Europe is searching for banks in South Korea for launching Voltron, it's blockchain platform as reported by the Korean Times.

HSBC, the largest bank in Europe is searching for banks in South Korea for launching Voltron, it’s blockchain platform as reported by the Korean Times.

 

HSBC Voltron:

The Voltron platform delivers a more quick method to process and settle invoices using by using permissioned blockchain technology. The permissioned blockchain stops the transactional data from being shared with everyone but instead, the data is shared with only consented users. The platform decreases the time that is usually required for the total process.

 

According to Joshua Kroeker, the innovation director of HSBC, the platform would mostly impact the process timing. Thus the transparency which comes with blockchain, as well as the rapid flow, would help the banks in managing their working capital as well as their cash flows. Kroeker reached out to the banks in South Korea to partner with their blockchain platform i.e. Voltron for the letters of credit.

 

HSBC’s blockchain platform was initiated in 2018 and is currently partnered with seven banks namely Standard Chartered, Bangkok Bank, BNP Paribas, ING, CTBC Holding, SEB, and NatWest. The platform is still in its pilot stage however, it shall soon be launched commercially.

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World’s biggest Blockchain ETF on London Stock Exchange

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The world's biggest blockchain ETF is scheduled to be launched by Invesco on the London Stock Exchange by Invesco, a large investment management company.

Cryptocurrency enthusiasts around the world have been curiously waiting for a bitcoin ETF to be approved by the SEC or any other potential government in the world. However, before a bitcoin ETF, the world’s biggest blockchain ETF is scheduled to be launched by Invesco on the London Stock Exchange. Invesco is a large investment management company that has more than $800 billion in assets under management.

 

World’s biggest Blockchain ETF

At the launch, the Blockchain ETF will invest in a portfolio of forty-eight companies including the CME Group, a US exchange which had earlier launched bitcoin futures on the exchange and Taiwan Semiconductor Manufacturing, a company that supplies crypto mining machines. Other companies are those that have an exposer to the blockchain technology.

 

The Blockchain ETF will be based on a proprietary scoring system made by Elwwod Asset Management LLP. According to Bin Ren, the chief executive officer at Elwood, the blockchain goes past cryptocurrencies. He mentioned that although blockchain technology is mostly being used by financial companies, it will be implemented in a vast range of industries soon.

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