They are places for sellers and buyers to meet and agree on an exchange of a good. But what’s interesting about exchanges is that they have grown so abstract and big and inaccessible. The infrastructure built around exchanges have largely been left only to institutions and governments to participate, manage and control.
In this article, we will demystify the exchange and show why we think recent advances in technology have changed the exchange model. We will explore how the exchange has become much more open and free for anyone to build and run their own digital marketplaces, their own exchange.
Depending on who you ask the origins of the exchange can go back as far as the 1200s on a bridge in Paris. However, the consensus on the internet says that the first exchange was started in Amsterdam in 1611 by The Dutch East India Company — unsurprisingly the largest company in the world at the time, valued at over 7 trillion dollars by today’s value.
Many countries followed suit, marking the beginning of the institutionalization of exchanges. Despite mass adoption, participating in the exchange was largely left only to powerful and vetted individuals, marginalizing most of the public from the profits inside.
Detailed is a timeline of how trading exchanges have evolved:
As we can see from the timeline, exchanges in recent times have evolved rapidly thanks to computers, the internet, and now open public blockchains and their digital assets. But the basic concept remains — Exchanges are just gathering grounds (digital gathering ground today) for buyers and sellers to meet.
Still, when people think of exchanges, what first comes to mind is the New York Stock Exchange (NYSE) and the NASDAQ which have become inaccessible and complicated places.
Both of these exchanges combined are valued at $39 trillion USD. For perspective, the next biggest stock exchange down is in China, valued at a measly or not so measly… $5.9 trillion USD.
Exchanges are gigantic. Economies are literally dependent on them and because of this interdependence, they are ruthlessly protected and regulated. This protectionism has made it unthinkable to open an exchange because of the extreme costs and complex procedures that one must go through.
But change is slowly occurring — exchanges are no longer only for special places that men in suits control.
There are now countless exchanges globally, and some of the crypto exchanges boost larger volumes and activity than some countries own national exchanges. The truth is competition approaches from all directions and today a single motivated individual can now launch their own trading empire from their bedroom.
How is that even possible? To answer that, we must tell the story of how crypto exchanges really become a thing.
Back in 2011, an exchange called Bitcoinica launched, an operation based in New Zealand. This little exchange created a huge vipers nest in the crypto ecosystem but was the ultimate catalyst for more crypto exchanges.
Bitconica was a loosely coded exchange website built by Ryan Zhou (AKA Zhou Tong). Ryan spent much of his formative years in Singapore, before coding up Bitconica in New Zealand at the ripe young age of 17.
Fast forward to August 2012, the exchange Bitcoinica was attacked, resulting in 46,703 BTC lost. Today that loss would be valued at $379 million (1BTC = USD $8,120).
Bitcoinica’s freely distributed codebase demonstrated that there was a feverish global demand for digital marketplaces and for what was only known as World of Warcraft money, Bitcoin.
One such player that noticed the potential was Jean Louis van der Velde a Dutch entrepreneur who, at least initially, built his first crypto platform using the faulty code from Bitcoinica and infamously created what we know today Bitfinex.
Bitfinex got popular but along with that a load of security and scaling issues occurred and thanks to the Bitconica codebase the exchange inherited a boatload of problems and hacks to boot. Urgent upgrades were required.
Bitfinex again outsourced their technology to a white-label exchange provider but failed to integrate the system. Bitfinex did manage to upgrade their technology on their own.
The story of Bitfinex perfectly illustrates the turbulence one must endure to operate a global marketplace but more importantly showed us that it was now possible to run your own exchange operation without permission.
So where are we today? Are exchanges really that easy to launch?
There are interesting exchange solutions out there, the most common of which are the white-label cloud exchange solutions, where you’d just connect a bank account and focus on the operations, offloading all your technology upkeep to a third-party provider.
The other option is a DIY style starter pack, where the exchange technology code is handed over and development can begin from that crypto toolkit.
Much of the open-source exchange code out there is obviously questionable, and we only need to review the history of Bitcoinica to see that but the industry has matured and there are viable options available with significant improvements in security protocols.
HollaEx creating an alternative exchange software
At HollaEx we’ve recently released our own white-label exchange, a quick-launch kit which can be accessed through a command-line interface (or via cloud), once the launch command has been sent the exchange will automatically set up on any computer.
Starting an exchange with HollaEx is simple, with all parts modularized adding a variety of customized components to your exchange can be done inhouse. For operators that don’t have the tech team handy, they can add exchange features simply by installing plugin apps into their exchange.
Streamlined and flexible, the HollaEx comes with the added frontend web client as well as the admin source code, allowing anyone to rebrand their exchange.
HollaEx also includes the means to add customized token and coins. Once added these digital assets can be paired against USDT to create markets so that others can buy and sell the digital assets on your own exchange, which then can be used to build entirely new tokenomics system.
The big advantage is that all the complex logic inherent in exchanges are now a non-issue and allows the exchange operator to focus fully on their business model and generating new profit revenue streams..
To conclude, the global nature of exchanges today are something to take a step back and marvel at.
Still, somewhere, somehow there is a man in a suit who’s gonna make you pay for the privilege of running an exchange. HollaEx’s open exchange kit changes that — In the hands of motivated individuals HollaEx allows anyone to start their marketplaces from anyone on the globe.
As HollaEx’s CEO, Mr. Beikverdi explains:
“HollaEx is built like WordPress. WordPress made websites to create and share. We’ve made it easy for anyone to start their crypto exchange platform on their website.
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