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Who Actually Makes Profit On Cryptocurrencies

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Crypto exchanges are becoming one of the largest beneficiaries of the cryptocurrency boom. Ten largest exchanges earn about $ 3 million a day as commissions, which means more than $ 1 billion in revenue per year, according to Bloomberg research based on CoinMarketCap data on trading volumes and commission information on exchange websites. The research based on the lowest commissions. 

daily profit, million U.S. Dollars
Daily profit of cryptocurrency exchanges, million U.S. Dollars

This is a very rough estimate, as it is almost impossible to find out which commissions offered to companies close to exchanges, and what, for example, discounts were for the most active traders. Given the daily volume of trading and the mentioned commissions, we can see that the top-10 exchanges earn billions of dollars a year. Although the figures are not accurate, the order of these values ​​shows that the cryptocurrency boom allows you to earn quite real money.

"Exchanges and transaction companies have become the biggest beneficiaries in this area because they allowed people to do transactions and operate in this growing industry," said analyst D.A. Davidson & Co,Gil Luria.

The Tokyo Binance and the Hong Kong OKEx have the largest volume of trading, it is about 1.7 billion dollars a day. If you consider that the commission is 0.2% (higher than the OKEx commission for the most active traders at a rate of 0.07%), Binance probably gets the most money in a day.

Asian Market

The next in the list are the Asian cryptocurrency exchanges such as Huobi, Bitfinex, Upbit and Bithumb. The daily trading volume on each of them ranges from $ 600 to $ 1.4 billion a day, the average commission is 0.3%.

According to the research, in general, Asian cryptocurrency exchanges operate more than half of the trade in cryptocurrency.

"The influence of Asia on the cryptocurrency trade can be explained by the mining concentration in the region, since the miners used low prices for electricity," co-founder Aelf Julin Chen said to the agency.

There are the interest of the young people in the region to innovations, consumers' love for mobile apps and even a developed game culture that stimulates virtual transactions among other reasons.

The popularity of Binance is remarkable taking into account that the company has begun to work in July of this year. The exchange can process about 1.4 million orders per second, which makes it one of the fastest exchanges on the market. Another possible reason for the sharp increase in popularity is the simple process of accrediting customers.

"They do not force users to pass the process of customer identification until the withdrawal of funds. This is a complex process. The exchange can lose customers in the two or four hours it takes. On Binance, the process of log in from the beginning of creating an account to entering money into the account can take less than 20 minutes," said Chris Slaughter, co-founder of the Samsa cryptocurrency investment platform.

Exchange Upbit, which is now in the top five in terms of trading volume, began operating in October. It is controlled by Dunamu Inc., which also owns the most popular Korean messenger Kakao Talk. Upbit trades over 120 cryptocurrencies thanks to a partnership with American Bittrex.

Private Ownership

All exchanges are private and operates less than a few years. This often means that it is difficult to find financial information or information about management.

HitBTC, the tenth on the trading volume of the cryptocuurency exchange, does not provide any information about management or locate of its co-founders.

Bit-Z, WEX and EXX, included in the top 20 in terms of trading volume, also do not provide such information. Bitfinex, one of the five largest crypto-banks, underwent more serious scrutiny, the Commodity Futures Trading Commission sent the company's agenda in December.

"More traditional institutions, such as banks and funds, most likely, at some point will begin to buy cryptocurrency platforms to ensure the strategic base in the market. It is not a problem. Finance companies will go there where there will be real cryptocurrency business revenues" — Slaughter said.

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