This article will show a business that flourishes as new investors acquire the tokens offered by Startup companies and who want to receive capitalization from this new source to start up their ideas.
According to unnamed sources in the industry, cryptocurrency exchanges are charging between $50,000 to $1 million to list initial coin offerings (ICOs) on their platforms, as reported by Business Insider. As one might expect, many of those who spoke to BI were unable to name the specific exchanges they have dealt with.
As you know, exchanges wield a lot of power in the crypto markets and access to more prominent ones can mean the difference between success and failure for new projects. In the eyes of many, these seemingly high rates reflect a large power imbalance between exchanges and crypto projects. Michael Jackson, a partner at venture capital firm Mangrove Partners, said the following;
“Basically there are a lot of people who want their coins listed. The exchanges are where the liquidity is, it’s where the money is, so that’s where the power is just at the moment.”
Therefore, there is the ICO potential. For startups, ICOs offer a quicker and potentially more lucrative alternative to traditional growth methods like venture investment or going public. For investors, these tokens provide exposure to red-hot sectors and provide the ability to quickly and easily trade their stake in a project, something not traditionally possible with early-stage investments.
On the other hand, the problem is that in order to access this liquidity, companies issuing tokens have to get listed on at least one of the many cryptocurrency exchanges. Like stock markets, these online exchanges (based across the globe) offer a venue for people to trade tokens.
As is known, Take Oliver Bussmann has advised a number of high-profile cryptocurrency projects, like Ripple and IOTA, and is the president of Switzerland’s Crypto Valley Association, a public-private partnership promoting the region of Zug as a hub for cryptocurrency businesses. The former CIO of UBS, who now runs his own Swiss fintech advisory firm, told BI:
“If you prepare for an ICO, you have to prepare for a listing. It’s important to get access to liquidity. That means the bigger the exchange is, the more effort and also more cost to get listed.” That means that the new company in its first moments must have a Capital to invest in the promotion of Startup, otherwise the financing can be uphill.
When asked how much fees to list on exchanges are, he said: “At the lower end it’s $50,000, up to $1 million. I’ve heard that. It’s depending on the size of the exchange.”
Other sources in the industry have confirmed this price range, like Jackson: “I was doing a project, I will not tell you specifically what token and in which exchanges, and that was the stadium we were in.” The prices are considerable for a company that is just starting a business.
There are others, too: the CEO of one company planning an ICO told BI that they had been asked for $1 million by a top-tier exchange to list their coins. The company, as expected, declined to be named or to name the exchange or speak publicly about the issue, as the whole process is currently under a nondisclosure agreement. This is a subject that for many looks like ultra secret do not dare to speak in a media but that is the price to consider.
Do not forget the following, not all exchanges are equal. Not all exchanges are equal, so the range of rates varies a lot. Binance’s 24-hour trading volume, which is currently the second largest exchange in the world, amounts to $ 1.7 billion to this day (according to CoinMarketCap.com). Bitstamp, the tenth largest exchange worldwide, had a volume of $ 334 million, about a sixth of Binance.
This is important, as access to the “best” exchanges carries a premium: the bigger the liquidity pool, the higher the potential market value of a coin, and the higher the chance of success for a project. What is clear is that if you want a good exposure the company must place more money to promote this new token.
Therefore, “Good exchange means a high probability of good market fit, because you have access to liquidity and investors,” Bussmann said. “If you don’t get access to certain exchanges, then it’s tier two exchanges, which means access to investors is limited.” The more money goes to the promotion, the greater the capitalization that is achieved to reach scarce financial resources.
Having said all this, there are counterarguments: the exchanges aren’t doing too badly themselves. Bloomberg estimated earlier this month that the top ten exchanges are making as much as $3 million a day in fees, this based on calculations from publicly available volume data and trading fees.
Therefore, we must not forget that investments in computer equipment, specialized personnel, operating expenses of Exchanges should not be negligible, it takes a large working capital to start an exchange company, but it is worth this new industry.
In summary the blockchain-bitcoin technology is creating new opportunities to do good business, for that reason, it is mentioned that this technology will change the way of doing business, the new professionals will have great possibilities of earning a lot of money once the Exchanges is consolidated. It waits for new ads.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.