$14bn. trading volume: trans-fee mining, risky but rewarding?

02 Aug, 2018
by Paula D. Baciu
$14bn. trading volume: trans-fee mining, risky but rewarding?

A new mining practice is taking blockchain communities by surprise and some exchanges (yes, exchanges) are already making the most of it. BitForex counts among them, with a reported trading volume a few times higher than that of Binance: $5 billion.

You’ve surely seen these exchanges in the Coin Market Cap (CMC) charts - ghostlike appearances that seem to have taken the market aback literally overnight. And you might have heard about the changes CMC has planned for them.

BitForex is one of these platforms, and it has just surpassed the common sense boundaries of trading volume - $14 billion earlier today, according to Crypto Globe, which dropped to $5 billion at the time of writing. More than 98% of the volume resulted from transactions with the pairs used for mining: BTC/USDT, ETH/USDT, BCH/USDT

The source of this expanding confusion is a new mining method that rewards traders for performing transactions on the respective exchanges. But this method is highly criticised. While it provides some nice profits for day traders, it is at the same time vulnerable to market manipulation and automated trading (using bots). Some exchanges claimed that they will give back as much as 80% of the profits yielded from transaction fees to their users which arose additional questions. The CEO of Binance, for example, pointed out that no exchange could operate using only 20% of their transaction fees and suggested that these platforms probably manipulate token price in order to function.

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