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Why Bittrex Lost Its Edge, The Critical Mistakes Of Token Sales And How To Get Listed (Interview)

                                                            Bittrex Global ist der internationale Zweig der US-Börse Bittrex mit Sitz in Seattle, Washington.  Sie hat ihren Sitz in Lichtenstein und wird von der dortigen Finanzmarktaufsicht registriert und beaufsichtigt.  In den ersten Jahren des Cryptohandels und bis zum Bullenlauf 2017 galt Bittrex als eine der führenden Börsen, und die Gründer wollten ihre Token unbedingt an der in den USA ansässigen Börse notieren.

Chris Sinkey is the Chief Business Officer and Listing Director for Bittrex Global for non-US users.

At the Paris Conference Blockchain weeks in April CryptoPotato sat down with Sinkey for an insightful chat about the history of Bittrex, the current state of crypto exchanges in terms of security and regulation, and the future of token sales.

Sinkey told us, “It became clear that it made a lot of sense to separate our user base between US and non-US due to regulatory clarity.

This is what awaits you in this article

Bittrex and Bittrex Global: What’s the difference?

Sinkey announced that in search of regulatory clarity, they formed the new international entity called Bittrex Global and based in Lichtenstein, where the company is registered and also regulated.

Both companies (Bittrex and Bittrex Global) “have a relationship to date from a technical standpoint.” In other words, Bittrex supports engineering backend, trading infrastructure, matching engine, Walletintegrations and new product development from Bittrex Global.

Additionally, the level of integration between both companies, along with strict anti-money laundering compliance, allows for a common pool of liquidity unlike what other exchanges like Binance do:

“Other exchanges, like Binance, do the opposite. They came to the US with the same infrastructure, but they created a US stock exchange.

The difference is that our order books are shared with Bittrex US. […] So since both markets are available for trading, in one Bitcoin– Order book a US client to be the counterparty for trading with a European client. This is because all clients on our platform are KYC certified and we have a very strict and compliant AMPLprocess.”
Why Bittrex Lost Its Edge, The Critical Mistakes Of Token Sales And How To Get Listed (Interview), Crypto Trading NewsChris Sinkey, Bittrex Global CBO. Twitter

Bittrex: From the top exchange in 2017 to lagging behind

Bittrex was one of the best exchanges in the world by trading volume in 2017, but it was also this year when it started to lag.

Sinkey addressed this and recalls that the industry was very different then than it is today. He told us it was “wild” when he joined Bittrex in 2017, in the midst of that year’s legendary, insatiable bull run.

“Shortly after I joined Bittrex, it was the largest exchange in the world by trading volume and number of markets. And the demand for accounts at that time was so great that the price of bitcoin rose from two to three thousand, then to $17,000, $18,000 and $19,000.

One of our servers supporting new account registrations was having trouble handling the load. We had to throttle our new users.

This is actually one of the reasons why Binance has been able to grow. Because the users who couldn’t access Bittrex had to go somewhere. Binance was the new exchange back then. They had just done their ICO the summer before and were really starting to gain popularity.”

Sinkey said the reason other exchanges have gained so much market share in subsequent years is because of the amount of capital they raised and invested in marketing.

He told us that Bittrex made a conscious decision to remain fully private and self-funded. The crypto exchange has never raised leverage or launched massive VC-funded marketing campaigns. Instead, he says, the company has focused on its long-term strategy of strict regulatory compliance and reliable custody practices.

“We are very happy to be in Lichtenstein and Bermuda. So we also have Bittrex Global Bermuda and we have a Digital Assets Business Act license – a DBA license from Bermuda. We have found that working with regulators is fantastic.”

In terms of custody, Bittrex offers some of the best collateral in the crypto exchange industry. The company’s three founders are cybersecurity professionals with backgrounds in Microsoft, Amazon and Blackberry.
Why Bittrex Lost Its Edge, The Critical Mistakes Of Token Sales And How To Get Listed (Interview), Crypto Trading NewsBittrex Global, logo

Which tokens will be listed (and delisted)

Coin listing guidelines are a major friction point within the cryptocurrency community, and we wanted to learn more about Bittrex’s approach.

Sinkey told us they “taken the approach of supporting the long-tail of crypto assets rather than trying to be selective and trying to decide which project will be a winner or not a winner. We like to let the market decide.”

However, he also made it clear that they have a strict compliance and due diligence process, as well as a technical review process.

“We divide our listing process into three pillars: legal, compliance and technical. A legitimate project with a desire to push a new crypto, we’ll look into it and walk you through our process. If they pass these three stages of due diligence, we will list them.”

As for the delisting, the CBO told us it’s “almost always related to liquidity — it’s almost always related to a market that doesn’t show demand from our user base for a long period of time.” Or there is no liquidity provided by any institutional market maker or supporting liquidity for that market.”

The Biggest Mistake When Selling Tokens

During our conversation, Mr. Sinkey offered some advice for new crypto startups trying to raise funds through token issuance. His MBA from London Business School shines in this part of our interview.

He believes the biggest mistake teams make when raising funds is that “they confuse the difference between stocks and commodities.

“99.9% of the offerings we make are utility tokens. These are trade goods. When a team goes to the market to raise funds, instead of distributing their token to token holders, they structure their pre-sale and go to market with a public sale to raise funds Users can use the token in their ecosystem, that they build up.”

This in turn is the main reason why most projects fail. He believes teams should raise money and sell equity to accredited investors in the right way. Later they should distribute their token “in such a way that the benefit is made possible in an ecosystem”.

“That’s probably the biggest mistake, that I think a lot of smaller, younger teams don’t really understand the differences there. Nor why and when they should choose which path for what. They end up overselling the token.

This creates far too much supply and far too many sellers. Because most people bought for investment purposes as opposed to supply purposes. Then the token price craters and the project dies.”

His advice is to structure the pre-emption right. This requires the team to truly understand what they are trying to achieve and “only come to market with a pre-sale of your token when necessary”.

Sinkey argued that teams should only sell as much as they need to and to the right buyers. This brought him to his other point:

“Choose your buyers wisely. If you’re pre-selling and you have a B2B token, why sell it to retailers who can never use it for utility purposes?

If your business is B2B by nature, go to customers and sell the token to them or do a proof of concept with them and put it in their hands and see if your platform is useful.”

Source: Crypto News Deutsch

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