Last week we unveiled ‘Altcoin Evolution’, the latest series from NewsBTC, which discusses the market-wide challenges that altcoins face when it launches. We take a bird’s eye view of a number of different challenges Altcoins face in the general market, starting with Accessibility.
Our framework for depicting these challenges is generally presented from the US consumer perspective as some of the exchanges, projects, etc. may not yet be accessible worldwide – which is the nature of the subject at hand. We will also look at these processes and challenges through the lens of a very casual to mid-level crypto-consumer – one who has a solid understanding of the broader landscape, but not necessarily the depth of the more advanced crypto-native consumers.
Mastering the challenges: making a purchase
Undoubtedly the toughest challenge for emerging projects – such as ECOMI (which we mentioned in Altcoin Evolution last week) or Dapper Labs FLOW tokens (from the creators of NBA Top Shot) – is accessibility. FLOW and OMI tokens are usually in the top 100 by market cap, which makes them big enough to be on the radar but not a major threat to instantly become a top 20 token.
Let’s look at the basics of securing this type of asset. The acquisition of the OMI coin includes, for example, setting up an account with Bitforex, Gate.io or OKEx, which are generally less well known compared to the mainstream players like Crypto.com, Binance, Coinbase, FTX etc.
Our team has bought some OMI tokens step by step to compare them to the major exchanges frequented by casual consumers. We used Bitforex in this case because it is reliable Crypto reputation and the ability to offer a generally wider range of altcoins than many exchanges, with over 150 tokens supported. We chose XLM to transfer funds to the Bitforex account in order to benefit from lower transfer fees compared to many other large tokens (fees can vary widely between different currencies, so it is advisable to do some research to determine which To minimize costs when looking at it to acquire the desired token).
Certain cryptocurrencies, like XLM, may also require more information than a typical wallet QR code. When a TAG / MEMO is delivered it must be used to avoid delays or even possible loss of transfer funds. You could think of the TAG / MEMO line as an apartment number while the QR code acts as an apartment building.
A difference to the Coinbase trading process is, for example, that you first have to transfer your money from your Bitforex wallet to a spot / trading account at Bitforex, which enables an immediate exchange on the platform. The next step required us to exchange XLM tokens for Tether, the dollar-pegged USDT stablecoin. After this conversion was done we were able to buy the OMI coin.
As you can see, there are a few more hurdles to overcome when compared to many of the streamlined purchasing processes that dominate mainstream markets. These extra steps, often not seen with simple BTC or ETH purchases on more popular exchanges, can place underrated restrictions on potential investors purchasing tokens – be it OMI or otherwise.
At its core, casual users are less likely to go to the trouble of learning about the process if they aren’t already familiar.
The prominent altcoin FLOW uses top notch partners to raise awareness, but the token needs more exchange support to improve accessibility for consumers. | Source: FLOW-USD on TradingView.com
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The Next “Accessible” Step: How Altcoin Projects Can Appease Large Exchanges
As crypto has gained legitimacy over the years, political frameworks have emerged for large exchanges how they support new tokens.
Let’s look at the big crypto exchange Coinbase. The company has historically implemented a core set of standards for issuers of crypto assets – the focus is on compliance with the core values of Coinbase, technology, compliance, market supply, market demand and crypto-economy. In January, however, the company introduced the Coinbase Asset Hub.
A short time later, in early May, Coinbase posted a guide to listing assets about the exchange on their blog page. The main sticking points mentioned on the blog included compliance with industry standards in the source code, the degree of centralization (which can determine the scope of possible agreements within the project) and the implementation of a real and workable use case (more on this in our next Section of ‘Altcoin Evolution’).
Even so, Coinbase is still looking to streamline the asset listing process even further. In a blog post in June, named Brian Armstrong, Coinbase CEO, one of three main opportunities for the company to “get more assets in Coinbase to work, faster”. That news came when the company announced plans to launch a DeFi.Crypto App Store‘.
Despite these fierce accessibility battles, the future generally looks bright for emerging projects looking to increase their notoriety. As the broader crypto space grows and matures, exchanges seek to streamline their processes – legitimate projects will likely get the platforms necessary to rise to the top.
In next week’s ‘Altcoin Evolution’ we will discuss one of the key sticking points that Coinbase names in its Listing Asset Guide – use case and value. We’ll look at the importance of these properties and how projects can bring them to life.
We meet next week!
Related reading | Polygon Acquires Hermez Network As They Will Enhance Ethereum Scaling Solutions
Charts from TradingView.com, image courtesy of Jerry Sena