So it was with some confusion and not a little shock that the market reacted when the company announced on 17 December 2019 it was dropping trading in everything bar Bitcoin.Bitcoin has long been used as a shorthand for the entire cryptocurrency industry.Speak to anyone not acquainted with cryptocurrency about your passion and you’ll find they’ve likely at least heard of Bitcoin, even if they don’t know precisely what it is.Ethereum? Maybe.
Ripple? Possibly.Any one of the other 5,000+ cryptoassets like Tezos, Quantum, Bitcoin Private or Monero? Not a chance.The Big Why If you want to become the first place new investors turn to when they want to buy Bitcoin — even if as they become more sophisticated they might want to buy Bitcoin Cash, or Cardano — why not become the home of Bitcoin? If you’re in the market to buy a Mercedes, you are more likely to go to a specialist Mercedes dealer for their expertise than a car salesman offering you thousands of different brands to choose from, after all.At time of writing Bitcoin also has 66.2% market dominance, which means that the vast majority of buying and selling in the cryptocurrency market happens with Satoshi Nakamoto’s original coin.
Traders who want to get in and out of positions quickly for a price they are happy with will choose Bitcoin over more thinly-traded coins every time.So it makes some sense in principle that Coinfloor CEO Obi Nwuso would take the decision to hone in on the single most popular and most liquid market to sell into.Nwuso’s rationalisation goes much deeper than liquidity or perceptions, though.Coinfloor used to trade Ethereum and Bitcoin Cash pairs against fiat currency, but beginning January 3 2020, both have been culled from his exchange.
The Ethereum problem Nwuso’s first major concern with Ethereum was that it is undergoing such a period of rapid change, as it transitions away from a Proof of Work consensus mechanism and towards a Proof of Stake algorithm — at which point it would become ETH 2.0 — that it was not worth the trouble and expense of educating his staff on the issue.His second problem was that he saw a significant and ultimately unnecessary expense building an exchange capable of trading Ethereum if its planned series of hard forks throughout 2020 split the community to the extent that more Ethereum chains began to run alongside one another.
This is already happening, of course.
Currently the world’s eleventh-largest cryptocurrency by market cap, Ethereum Classic (ETC) is the first Ethereum blockchain, while the second-largest Ethereum (ETH) is the result of a 2017 hard fork away from the originally agreed consensus rules.ETH 2.0 “could take years to complete,” Nwosu explained to Coindesk, and introducing ever more confusion into the mix would generally not be good for business.In a 17 December blog post Owuso wrote: “No other cryptocurrency currently comes close to Bitcoin’s track record, industry support, or brand recognition, so focusing on Bitcoin made perfect sense.” Simple is best In October 2018 Coinfloor became the first cryptoexchange to win a DLT license to trade in Gibraltar.While mulitple licenses have become common for exchanges in the 18 months since, Coinfloor was something of a pioneer in this regard.On the face of it, and as the crypto market grows in complexity, maintaining these licenses appears simpler if your company is trading with a single cryptoasset than with 5,000, and each of which could be categorised differently under new laws as a security token, an exchange token, a utility or commodity token.
Along with Coinbase, Binance and CEX.io, it is also one of the handful of cryptoexchanges that has been allowed to enable the UK’s powerful Faster Payment Scheme, which allows users to make near-instantaneous bank transfers to and from its platform, vastly reducing payment times and improving real time liquidity.It’s just business Coinfloor claims to handle the majority of UK-based cryptocurrency trading although the statistics are a little difficult to separate out.Owuso and his team have taken a number of steps recently to offer greater transparency into the Coinfloor platform to improve trust and attract more new users.This is a sensible move given the repeat exit scams, scandals and horror headlines that unprofessional exchanges seem to generate continually.
One of these steps is the ‘ Provable Solvency Report ’, which Coinfloor will apparently release once a month starting January 2020.
In the first report, Owuso reports his exchange “holds 3,815.4219 XBT [Bitcoin] on behalf of its clients.” That would put the Sterling value of Bitcoin held by Coinfloor at £26,800,462.55.In reality this is a tiny amount, compared the industry giants Coinbase and Binance.Owuso has said he wants Coinfloor to “strengthen its position as the UK’s number one Bitcoin exchange”.If the company has done its market research, and all anyone wants to buy is Bitcoin, why offer anything else? Written by .