Structural and functional problems with the Cryptocurrency markets

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The cryptocurrency markets are in their infancy – and accordingly suffer many problems that time and technology will resolve. Some of the problems include:

  • Despite the claims of blockchain’s revolutionary technology, it takes far too long for transactions/trades to clear the chain.
  • Opening an account with many crypto exchanges can be a time consuming and frustrating experience.
  • It takes an excessive period of time for deposits to be posted to an account.
  • While coins can be safely held in hard wallets, hard wallets can become lost, stolen or damaged.
  • While coins can be sorted securely on hard wallets, what protects the flat balances at the various exchange from hackers or exchange bankruptcies?
  • Hard wallet depositories are akin to burying Gold in the backyard. It is an irony that cryptos represent the most advanced internet/financial/commercial technology, yet crypto traders are storing millions of dollars on a USB device. REALLY?
  • The bid/offer spreads at many exchanges are far too wide. It is often difficult and time consuming to “cross the spread” (buy at the offer or sell at the bid).
  • The price of the same coin varies considerably from exchange to exchange. This makes charting extremely difficult.
  • Good luck receiving guidance from an exchange’s help desk. In fact, has anyone even spoken by phone to a support person at any exchange?
  • The transaction fees at some exchanges would add time to Bernie Madoff’s sentence.
  • It can take forever to withdraw funds from an exchange – many exchanges limit the amount of each withdrawal and intentionally hold customers funds as long as possible.
  • Moving coins from one exchange to another (either directly or with a hard wallet as the pivot) can be a time consuming activity, preventing aggressive arbitrage operations.
  • The web site/trading platform of some exchanges crash when a trader most needs to place an order.
  • The cryptos are far too volatile. The volatility will prevent wide commercial/institutional acceptance over the long haul.
  • The lack of unified price settlements will also prevent commercial/institutional acceptance.

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