Articles on crypto trading, market making, liquidity, arbitrage

Independent initiatives that analyze crypto exchanges liquidity and quality

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Volume is flawed metric of crypto exchanges liquidity. Because of wash trading practices of many crypto exchanges as well as token issuers, using trading volume as a basis of comparison is misleading. Many exchanges have problems attracting professional market makers and are trying to make shortcuts on the way to attract retail investors. Moreover attracting professional investors requires investments in crypto exchanges system development with stable and performant APIs so they could connect their algorithmic trading systems.]

There are more and more independent initiatives that are taking a closer look at what constitutes a high quality crypto exchange. Three major ones are Blockchain Transparency Institute, CryptoCompare Benchmark and Cointelligence Report. I also take a quick look at the Bitwise report for SEC from March 2019.

 

Read more about our tool for measuring crypto exchange quality – Liquidity Analytics Dashboard

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Blockchain Transparency Institute

BTI concentrates on analyzing crypto exchanges data feeds to spot wash trading mechanisms and provide the real volume metric which is cleaned out of suspicious activities.

BTI identified 17 of the CoinMarketCap Top 25 crypto exchanges to be over 99% wash traded. This one number alone shows the magnitude of the problem, as well as how volume is a false measure.

According to BTI Report crypto exchanges which are faking their volumes use a variety of different tactics to try and swindle investors. These tactics include buying twitter followers and likes, filling up fake order books, mirror wash trading the largest exchanges with real volume, and trying to disguise their wash trading using various bot settings to not affect price. On many of these exchanges trading high volumes closing the spread would make the volume plummet as the trading bots had no room to wash trade with themselves. Welcome to the wild wild west of no regulation and surveillance.

BTI finds that “all crypto exchanges combined are currently reporting around $50 Billion in daily volume on CMC. After removing all the wash traded volume via our algorithms the accurate number is around $4-5 Billion. About 88-92% of daily trading volume is fabricated depending on the day. Bitcoin’s daily trading volume is about 92% fabricated, which is in line with the space as a whole when comparing our findings to top data sites reporting wash traded volumes.” 

And further “On our list of the top 40 largest exchanges with actual volume, Bitcoin’s volume is about 65% fabricated. Almost all of this fabricated volume comes from OKEx, Bibox, HitBTC, and Huobi. Of the top 25 tokens by market cap, Tron and Ethereum Classic are the highest wash traded tokens on our list at 85% fake volume each and coming in at #24 and #25 of the most wash traded tokens.”

Top 10 cryptocurrency exchanges according to real (not wash traded) volume by BTI

  1. Binance 
  2. Kucoin
  3. Liquid
  4. Huobi
  5. Coinbase
  6. OKEx
  7. Bitfinex
  8. Upbit
  9. Kraken
  10. Bitstamp

CryptoCompare

CryptoCompare’s Exchange Ranking methodology utilises a combination of 34 qualitative and quantitative metrics to assign a grade to over 100 active crypto exchanges. Metrics were categorised into several buckets ensuring that no one metric overly influences the overall exchange ranking. Each crypto exchange grade is derived from a broad due diligence check using qualitative data, followed by a market quality analysis that uses a combination of order book and transactional data.

Due diligence check comprises of 6 main categories that attempt to qualitatively rate each exchange on the basis of:

  • Geography
  • Legal and regulatory metrics
  • Calibre of investment
  • Team and company quality
  • Quality of data provision
  • Trade surveillance

Although at Empirica we believe in numbers, I like the qualitative approach, as it’s also possible to prove a correlation of metric like number of employees and business size of the exchange, therefore proving this way it’s quality. 

Another important factor is Market Quality. Crypto compare measures the market quality of each exchange using a combination of 5 metrics (derived from trade and order book data) that aim to measure the:

  • Cost to trade, 
  • Liquidity, 
  • Market stability, 
  • Behaviour towards sentiment
  • “Natural” trading behaviour

Exchanges were rated based on a combination of 9 of the most liquid BTC and ETH markets.

It’s worth taking a closer look how CryptoCompare report approaches Spread and Liquidity metrics:

“Generally, those exchanges which offer incentives to provide liquidity through either low or negative maker fees will achieve the tightest spreads. Due to the spread being calculated using the best bid and offer, it is misleading to use it as a sole gauge of liquidity and therefore as the market cost to trade; it must be used in conjunction with a depth

measurement to find the likely transaction price for any given size of transaction.”

 

Good point. And liquidity:

“Market depth is the total volume of orders in the order book. It provides an idea of how much it is possible to trade on crypto exchange, and how much the price is likely to move if large amounts are traded. An exchange with greater average depth is likely to be more stable (i.e flash crashes are much less likely) and allows trading of greater amounts at better prices.

We consider the depth up to 1% either side of the mid price. 

Depth = E(depthUp+depthDown)/2

Where depthUp is the total volume that would be required to move the price by 1% upwards from the mid price, and

depthDown is the total volume that would be required to move the price by 1% downwards from the mid price.”

 

Top 10 crypto exchanges according CryptoCompare quality benchmark:

  1. Coinbase 
  2. Poloniex 
  3. Bitstamp 
  4. bitFlyer 
  5. Liquid
  6.  itBit 
  7. Kraken 
  8. Binance 
  9. Gemini 
  10. Bithumb 

 

Cointelligence Rating System

Cointelligence is the most qualitative rating of crypto exchanges from the above. The methodology of the team was to manaully open accounts on all analyzed crypto exchanges and check from the user perspective the core aspects of beeing an exchange customer. The aspects cover:

Usability – covers KYC process, the quality of exchange website, extent of features and how easy it is to get a human answer from support staff. 

Performance – functionalities and historical robustness of exchange matching engine, fees height, trading instruments like futures contracts and margin trading.

Team – analysis of the available information about management team behind the crypto exchange, especially business and technical experience of C-level staff, including person responsible for exchange’s security

Risk – information on past hacks, insurance status, account security layers but also regulatory status of cryptocurrency exchange. Based on the geographical location of the exchange headquarters and registration any potential run-ins with the local law or any sign of authorities involvement.

 

This way Contelligence analyzed 85 crypto exchanges, but only 15 is rated with good quality mark, lead by Liquid and Gemini. 

Top 10 cryptocurrency exchanges by Cointelligence by qualitative criteria 

  1. Liquid (Quoine)
  2. Gemini
  3. Binance
  4. Bitstamp
  5. Gibraltar Blockchain Exchange
  6. OKEx
  7. Bittrex
  8. itBit
  9. Kraken
  10. ABCC

Bitwise report for SEC

Bitwise analysis is based on detecting wash trading patterns in public marked data published by crypto exchanges. Out of 81 exchanges they have analyzed in March 2019 only 10 were identified as be free of wash trading practices. These exchanges are:

  1. Binance
  2. Bitfinex
  3. Kraken
  4. Bitstamp
  5. Coinbase
  6. bitFlyer
  7. Gemini
  8. itBit
  9. Bitrex
  10. Poloniex

Bitwise identified that only 4,5% (about $275M daily) of officially reported volume (eg by the public sources like coinmarketcap) is the actual volume. The rest is wash traded.

The Bitcoin market is more orderly and efficient than is commonly understood. The 10 exchanges trade as a uniform, highly connected market. They form a singular price. Average deviations from the aggregate price for the ten exchanges is well within the expected arbitrage band when you account for exchange-level fees (~30 basis points), volatility and hedging costs. Arbitrage is operating well. Sustained deviations (defined as deviations >1% that last more than 100 seconds) appear as single white lines on the graph below. The graph demonstrates that the ten exchanges trade at a single unified price.

So although the message about the amount of wash traded volume is alarming, the report shows that the real crypto market is quite concentrated, ordered, efficient and well performing. The rest is just noise.

 

 

Read more about our tool for measuring crypto exchange quality – Liquidity Analytics Dashboard

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Algorithmic crypto trading: market specifics and strategy development

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By Marek Koza, Product Owner of Empirica’s Algo Trading Platform

Among trading professionals, interest in crypto-currency trading is steadily growing. At Empirica we see it by an increasing number of requests from trading companies, commonly associated with traditional markets, seeking algorithmic solutions for cryptocurrency trading or developing trading software with us from scratch. However, new crypto markets suffer from old and well-known problems. In this article, I try to indicate the main differences between traditional and crypto markets and take a closer look at a few algorithmic strategies (known as trading bots on crypto markets) that are currently effective in the crypto space. Differences between crypto and traditional markets constitute an interesting and deep subject in itself which is evolving quickly as
the pace of change in crypto is also quite fast. But here I only want to focus on algorithmic trading perspectives.

 

Read more about our tool for market making strategies for crypto exchanges  – Liquidity Engine

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LEGISLATION

First, there is a lack of regulations in terms of algorithmic usage. Creating DMA algorithms on traditional markets requires a great deal of additional work to meet reporting, measure standards as well as limitations rules provided by regulators (e.g., EU MiFIDII or US RegAT). In most countries crypto exchanges have yet to be covered by legal restrictions. Nevertheless, exchanges provide their own internal rules and technical limitations which, in a significant way, restricts the possibility of algorithmic use, especially in HFT field. This is crucial for market-making activities which now requires separated deals with trading venues.

 

DERIVATIVES

As for market-making, we should notice an almost non-existent derivatives market in the cryptoworld. Even if a few exchanges offer futures and options, they only apply to a few of the most popular cryptocurrencies. Combining it with highly limited margin trading possibilities and none of index derivatives (contracts which reflect wide market pricing), we see that many hedging strategies are almost impossible to execute and may only exist as a form of spot arbitrage.

 

 

 

 

 

 

 

 

 

 

 

 

As for market-making, we should notice an almost non-existent derivatives market in the cryptoworld. Even if a few exchanges offer futures and options, they only apply to a few of the most popular cryptocurrencies. Combining it with highly limited margin trading possibilities and none of index derivatives (contracts which reflect wide market pricing), we see that many hedging strategies are almost impossible to execute and may only exist as a form of spot arbitrage.

 

DECENTRALIZATION

The above-mentioned facts are slightly compensated for by the biggest advantage of blockchain currencies – fast and direct transfers around the world without banks intermediation. With cryptoexchange APIs mostly allowing automation of withdrawal requests, it opens up new possibilities for algorithmic asset allocation by much smaller firms than the biggest investment banks. This is important due to two things. Firstly, there is still no one-stop market brokerage solution we know from traditional markets. Secondly, cryptocurrencies trading is distributed among many exchanges around the world. It could therefore be tricky for liquidity seekers and heavy volume execution. It implies there is still much to do for execution algorithms such as smart order routing.

 

CONNECTIVITY

A smart order routing strategy GUI

Another difference is direct market access for algorithmic trading. While on traditional markets DMA is costly, cryptocurrency exchange systems provide open APIs for all their customers that may be used without upfront prerequisites. Although adopted protocols are usually easy to implement, they are often too simplistic. They do not usually offer advanced order types. Besides, order life-cycle status following is cumbersome and trading protocols differ among exchanges since each one requires its own implementation logic. That makes a costly technical difference compared to traditional markets with common standards, including FIX protocol.

 

MARKET DATA

Fast, precise and up-to-date data are crucial from an algorithmic trading perspective. When a trader develops algorithms for cryptocurrencies, she should be aware of a few differences. APIs provided by crypto-exchanges give easy access to time & sales or level II market data for everyone for free. Unfortunately, data protocols used in the crypto space are unreliable and trading venue systems often introduce glitches and disconnections. Moreover, not every exchange supports automatic updates and an algorithm has to issue a request every time it needs to check on the state of a market, which is difficult to reconcile with algorithmic strategies.

The APIs of most exchanges allow downloading of historical time & sale data, which is important in the algorithmic developing process. However, historical level II data are not offered by exchanges. We should also notice that despite being immature, the systems of crypto trading venues are evolving and becoming more and more professional. This forces trading systems to follow and adapt to these changes, which adds big costs to systems’ maintenance. In the following sections I overview a few trading algorithms that are currently popular among crypto algo traders because of the differences between traditional and crypto markets listed above.

 

SMART ORDER ROUTING

Liquidity is and most probably will remain, one of the biggest challenges for cryptocurrency trading. Trading on bitcoin and etherium and all other altcoins with smaller market capitalisation, is split among over 200 different exchanges. Executing a larger volume on any type of assets often requires seeking liquidity on more than one trading venue. To achieve that, cryptocurrency traders may apply smart order routing strategies. These follow limit order books for the same instrument from different exchanges and aggregates them internally. When an investment decision is made, the strategy splits the order among exchanges that offer best prices for the instrument. A well-designed strategy will also manage partially filled orders left in the order book in case some volume disappears before the order has arrived at the market. This strategy could be combined with other execution strategies such as TWAP or VWAP.

Empirica algorithmic trading platform front-end app (TradePad) for crypto-markets.

 

ARBITRAGE

The days when simple crossexchange arbitrage was profitable with manual execution are over. Nowadays price differences among exchanges for the most actively trading crypto-assets, are much smaller than a year ago and transactional and transfer costs (especially for fiat) still remain at a high level. Trading professionals are now focused towards using more sophisticated arbitrage algorithms such as maker-taker or triangular arbitrage. The former works by quoting a buy order on one exchange, based on VWAP for a particular amount of volume from another exchange (the same instrument) decreased by expected fees and return. A strategy is actively moving quoted order and if the passive gets executed, it sends a closing order to the other exchange. As the arbitrage is looking for bid-bid and ask-ask difference and maker fees are often lower, this type of arbitrage strategy is more cost-effective.

Triangular arbitrage may be executed on a single exchange because it is looking for differences among three currency pairs which are connected to each other. To illustrate, let us use this strategy with BTCUSD, ETHUSD and ETHBTC pairs. This strategy keeps following order books of these three instruments. The goal is to find the inefficient quoting and execute trades on three instruments simultaneously. To understand this process, we should notice that ratio between BTCUSD and ETHBTC should reflect the ETHUSD market rate. Contrary to some FX crosses, all cryptocurrency pairs are priced independently. This creates numerous possibilities of using triangular arbitrage in crypto space.

 

MARKET MAKING

Market making should be considered more as a type of business than as just a strategy. The main task of a market maker is to provide liquidity to markets by maintaining bid and ask orders to allow other market participants to trade any time they need. Since narrow spreads and adequate prices are among the biggest
factors of exchange’ attractiveness, market making services are in high demand. On the one hand, crypto exchanges have special offers for liquidity providers, but on the other hand, they require from new coins issuers a market maker before they start listing an altcoin.

These agreements are usually one source of market maker income. Another one is a spread – a difference between a buy and a sell prices provided to the other traders. The activity of a market maker is related to some risks. One of them is inventory imbalance – if a market maker buys much more than sells or sells much more than buys, she stays with an open long or short position and takes portfolio risk, especially on volatile crypto markets. This situation may happen in markets with a strong bias, or when market maker is quoting wrong or delayed prices, which will immediately be exploited by arbitrageurs. To avoid such situations, market makers apply algorithmic solutions such as different types of fair price calculations, trade-outs, hedging, trend and order-flow predictions, etc. Technology and math used in market making algorithms are an interesting subject for future articles.

 

Read more about our tool for market making strategies for crypto exchanges  – Liquidity Engine

Crypto market making

 

SUMMARY

Fast developing crypto markets are attracting a growing number of participants, including more and more trading professionals from traditional markets. However, the crypto space has its own specificity such as high decentralization, maturing technology and market structure. Compared to other markets, these differences make some strategies more useful and profitable than others. Arbitrage – even simple cross-exchange is still very popular. Market making services are in high demand. Midsized and large orders involve execution algorithms like smart order routing. At the end of the day to embrace the fast changing crypto environment, one needs algorithmic trading systems with an open architecture that evolves alongside the market.

 

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Article on FXALGO

 

3Commas – A technical review

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As we know, over the past several years, we have witnessed a real computer revolution. We have practically all available solutions replacing us with computers. These are already such advanced technologies that are already able to make a decision for us, and what’s more, they do it faster and more efficiently than man. It is particularly visible in trading, where several years ago all decisions were made by man. Now Traders are equipped in computer programs who are able to do all the work. However, the market is flooding with information on how many new programmes have been hiring by financial institutions recently. But what about us with retail traders? How should we deal with this situation? It remains for us either programming learning or uses trading bots (free/paid) from the Internet. There are really many of them when you looking for information on the web. That’s why I decided to check 3Commas in this short article. One of many users and additionally paid TradingBots. Let’s have a look at one of them – 3Commas. They were started in 2014, there are over 120,000 users currently being served with transaction volume in the tune of $60 million being handled every day, supported 23 exchanges- data from 3Commas website. You can trade on all exchanges from one single interface from 3commas’ window. Up to date, they support Bittrex, Bitfinex, Binance, KuCoin and Poloniex, Bitstamp, HitBTC, Cex, GDAX, OKEX, Huobi, YOBIT.

 

How well do 3commas trading bots work?

 

On the website, we can read that: “3commas is a cryptocurrency trading bot that provides a wide range of tools and services for users to choose from. It performs real-time market analysis using powerful algorithms for getting you the best trades possible”. Sounds interesting? Is this the right place to find a solution for retail traders? 3Commas offer a few types of trading bots: Simple, Composite, Short, Composite short. You can choose which one you want it depends on your individual approach to the market. At the moment available is almost 90 trading bots. Does quantity mean quality?       

Browsing information about bots, I wonder why the best strategies work only 30 days. How to trust this kind of bots with short history (just 30 days history)? How do I find out how it behaves with high market volatility? I don’t know. I couldn’t find this kind of information on the 3Commas website. For institutional investors or professional retail investors, this kind of question is fundamental. If you invest money you should know how much you can earn at what possibility of loss. That’s why it’s better for your wallet, to wait for a strategy with a long history to know what to expect.

Can I make a profit on real market with 3Commas?

 

Let’s see, how 3commas trading bots work. As a retail trader, I would like to try one of these 90 strategies. I choose for my example one “Simple Long Strategy” and I opened Paper Account. Pairs: USD_BTC, USDT_LINK, USD_LTC. Target profit 5%. On 3Commas website we can read the short description: “Simple Long Strategy gives you the possibility to make price increases”- information from 3Commas website. It looks simple to buy a lower price and sell higher price. The bot opens new deal according to one of the conditions that are available for selection during the creation. After that, it immediately puts a coin for sale. If the price rises and the order gets filled, the profit goal is achieved. In case of a price fall, the bot places safety orders below the purchase price every X%. Every filled safety order is averaging the buy price, and it makes possible to move the TakeProfit target lower and close the deal without losing profits in the first price bounce. 

My strategy has been worked for 14 days. Completed 15 orders and give me $0.16 profit ($10.000 balance). Strategy performance results and statistics below.  

3comma trading list

3comma statistics technical review

 

3 comma trading view technical review

 

Whether the profit is big or small I leave the answer to you. The rate of return is positive (+0,16$), therefore we should be satisfied (really  ?). My “New Bot” did not lose money. Of course, everything was happening on the real market but money was virtual. You should also know that is possible to change strategies parameters at any time and can adapt it to your current needs but I did not do that because left my 100% decisions to the bot. 

The main purpose of trading bots is to automate things which are either too complex, time-consuming, or difficult for users to carry out manually. Good trading bots can save a trader time and money by collecting data faster, placing orders faster and calculating next moves faster. In my case, I just set the parameters and Trading Bot did the rest but is it enough to tell that the strategy is good? Please rate it yourself.  Meanwhile on the market situation looks very interesting for my example (charts below). The market moved up, how I expected. As you can see from the charts below I could earn more money in this period of time. 

3comma trading review

3comma tradingview

You also need to know that 3Commas is not for free. They have four subscription plans: Junior from €0 (your total balance across all accounts is $750 and no bots), Starter €24 (without limits for trading, no bots), Advanced €41 (Simple bots), Pro €84 (Simple, Composite Bots). The interesting thing is that you don’t know how much you can earn but you immediately know how much you have to pay!! Profits are potential but costs are fixed.

How safe is 3Commas?

3Commas don’t go into too many details regarding the security protocols that they choose to employ, however, it’s worth remembering that you don’t actually hold any funds on the platform and your trading bots are not able to make withdrawals from your linked accounts.

Similar to other trading bot platforms, your trading bots connect with your exchange accounts via API and then proceed to carry out automated trades on your linked exchanges. While this process takes place, users aren’t required to make any cash/crypto transfers to external accounts and simply need to provide their API keys which are generated by their exchanges.

These keys provide the trading bots with restricted access to user accounts strictly to conduct trades and do not grant the bots with any withdrawal rights. This also means that if your account becomes compromised, and some hackers were able to gain control of your trading activity, they still wouldn’t be able to directly access your exchange accounts in order to make withdrawals. However, the standard personal security rules of crypto still apply, as they could still have a detrimental effect on the funds held in your exchange accounts. Hackers have been known to obtain API access to exchange accounts, and commander the bots to purchase high quantities of low-value coins that the hackers have already previously purchased. After artificially inflating both the demand and price of said coins, the hackers then sell off their personal holdings for a profit, leaving the compromised account owners holding funds in the low-value coins.

 

3Commas has made a positive impression. It is also worth mentioning about Key Features:

  1. Technology – Automated trading takes place via API integration with cryptocurrency exchanges and the bot works around the clock with any device and users can access their trading dashboard on desktop and laptop computers. The team have also developed mobile apps for both Android and iOS
  2. Tools – The platform provides a good range of trading tools and in addition to the automated bots and performance analytics, users are able to create, analyze and back-test crypto portfolios and monitor the best performing portfolios created by other users. In addition, users can engage in social trading and follow and copy the actions of other successful traders.
  3. Functionality- 3Commas utilises a web-based platform, and features an easy to use and intuitive user interface that includes a wide range of functions and detailed analytics. Users can make use of short, simple, composite, and composite short bots, and set stop loss and take profit targets, as well as customise their own trading strategies.

Strong points of 3 Commas Bot Platform

  1. Emotionless, fact-based trades make sure that decisions taken are taken entirely based on the ideal conditions with little room for doubt, instinct, and human error. This reduces the intensity of the decision-making process and helps to take logical and high-profit decisions.
  2. Good exchange connections.
  3. The Smart Trading option that makes use of ‘trailing take profit’ keeps the user away from a loss when trading. Since it is designed to stay in the loop and adapt itself to the market, it is an intelligent solution to make as much as possible with a trade.
  4. Easy to set up for beginners, making sure that newcomers can navigate the 3Commas bot and make trades without any hassles.
  5. A well-laid-out dashboard and visualization of data allow the users to keep track of everything that is happening while boosting their appeal and ease of use.
  6. The free access offers a great trial so that users can make full use of the platform.
  7. A large number of exchange offers a wide array of information centres, making sure that your decision is well thought out with multiple inputs.
  8. The fact that users can refer and copy portfolios of successful traders.

Weak points of 3 Commas Bot Platform

  1. Security protocols are not explained with great clarity, raising concerns about whether the trades are truly secure. Users can, of course, enable the 2-factor verification for additional security, but the fact that not much is said about it leaves room for concern.
  2. The plans change regularly and might prove to be a bit confusing to say the least with 3Comms’ paid plans, commission plans, and a mix of both.
  3. The balance has to be filled up for commission, which may be a hindrance for many users.

Using trading bots for trading makes life easier. It can save traders a lot of time but will give it earn real money? Popular trading bots available to individual investors (regardless of whether paid or free) have one basic problem, namely the speed of response to changing market conditions, as well as the speed of placing and sending orders. This is not their strength. You will not find any information about latency, what is the maximum number of orders that can be sent  per second. Using low latancy software will give you advantage on the market over retail bot users. Therefore, institutional investors have an edge on the market.

But retail bots are good place to start education on how automation on the markets can work. 

Everything one needs to know about DASH

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What Is Dash? Dash is a linguistic mix of the words “digital” and “cash.” It is an instant-transaction, privacy-centric, digital money dependent on the Bitcoin computer software. It launched since XCoin, later shifted to Darkcoin, and eventually settled Dash. A significant Dash cryptocurrency advantage is that Dash transactions can remain anonymous (like money transactions). Dash […]

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Do traditional exchanges see Blockchain as an opportunity?

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Distributed ledgers technology also known as Blockchain, offers a new way to data management and sharing that is being used to propose solving many inefficiencies affecting the financial industry. Technology experts, Fintech start-ups, banks and market infrastructure providers are working on underlying technologies and its potential use in the industry. However the journey of such transformation may take long. In this post we will focus on the benefits and architectural changes Blockchain could bring to capital market, and some example from such appliances across exchanges around the world.

The potential benefits of Blockchain technologies could cover different process within different stages in capital markets. In order to expose why capital markets would pursue to Blockchain technologies its worth taking a look at the benefits across pre-trade, trade, post-trade and security servicing.

Pre-trade:

Blockchain technology will establish more transparency on verification of holdings. Additionally it reduces the credit exposure and making Know-your-customer way simpler.

Trade:

For this stage, Blockchain technologies provide a more secure, real-time transaction matching and a prompt irrevocable settlement. Blockchain could also help automating the reporting and more transparent supervision for market authorities, we could add higher standards for anti-money laundering.

Post-trade:

In this regard it eliminates the demand for central clearing for real time cash transactions, reducing collateral requirements. Blockchain technology enables quicker novation and effective post-trade processing.

Securities and custody servicing:

Distributed asset ledgers with flat accounting structures could remove some of the role which custodians and sub-custodians play today. Custodians’ function might change to that of a ‘keeper of the keys’, managing holdings data and ensuring automatic securities servicing operations are done correctly. To that end we could also add advantages such as common reference data, simplification of fun servicing, accounting, allocation and administration.

Nasdaq has become the forefront of blockchain revolution, they have and are currently involved with many blockchain jobs. To name these endeavors, it started with Nasdaq Linq blockchain ledger technology. Linq is the primary platform in a recognized financial services firm to show how asset trading could be managed digitally through the usage of blockchain-based platforms. Nasdaq has continued more to blockchain, showing that, it is working to develop a trial utilizing the Nasdaq OMX Tallinn Stock Exchange in Estonia which will discover blockchain technology being used as a way to reduce obstacles preventing investors by engaging in shareholder voting. The intention is to boost efficiency in the processing of purchases and sales of fund units and also to make a device ledger — a place which currently is primarily characterized by manual patterns, longterm cycles and newspaper driven processes.

Read more about Nasdaq activities in Blockchain here.

London Stock Exchange developed to simplify the tracking and management of shareholding information, the new system plans to make a distributed shared registry comprising a list of all shareholder trades, helping to open up new opportunities for investing and trading.

Read more about LSE and IBM activities in Blockchain here.

Australian Securities Exchange (ASX), is all about the replacement of this system that underpins post-trade procedures of Australia’s money equity marketplace, known as CHESS (the Clearing House Electronic Subregister System). ASX is working on a prototype of a post-trade platform for the cash equity market using Blockchain. This initial phase of work was completed in mid-2016. In December 2017 ASX completed its own analysis and assessment of the technology which included:

  • Comprehensive functional testing of the critical clearing and settlement functions currently performed by CHESS
  • Comprehensive non-functional testing (scalability, security and performance requirements) for a replacement system when deployed in a permissioned private network
  • A broad industry engagement process to capture users input on the desired features and functions of a replacement solution
  • Third party security reviews of the Digital Asset DLT based system.

Read more about ASX procedure here.

The Korea Exchange (KRX), South Korea’s sole securities market operator, has established a new service where equity shares of startup businesses may be traded on the open marketplace. The Coinstack platform will offer record and authentication options for your KSM by checking against client references which have already been provided to the platform by Korean banks such as JB Bank, KISA, Lottecard, Paygate in addition to others.

Deutsche Börse Group has developed a theory for riskless transfer of commercial bank funding through an infrastructure based on distributed ledger technology. By combining blockchain technology using its proven post-trade infrastructure, Deutsche Börse aims to achieve efficiencies while at exactly the same time investigating possible new business opportunities enabled by this technology.

Read more about Deutsche Börse Group activities in Blockchain here.

Japan Exchange Group: IBM had teamed up with Japan Exchange Group, which works the Tokyo market, to begin experimenting with blockchain technology for clearing and other operations. IBM says it expect the technology will reduce the cost, complexity and speed of settlement and trading procedures.

About us

Empirica is a Wrocław-based company that supports many local IT initiatives. Empirica is offering solutions such as Automated Cryptocurrency Trading Software implemented by major institutional investors in Poland, market making software, portfolio management system framework, crypto trading bots and trading software development for companies from capital and cryptocurrency markets.

The evolution in ERC20 and the era of ERC223

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The ever evolving Ethereum Blockchain brought to Cryptocurrency and ICO investors a new gift, the ERC223 a new standard for tokens created on Ethereum. Up until now the newly created tokens on Ethereum public Blockchain should have followed the ERC20 convention. This by all means was a huge success and relief for both token owners and the investors for that token. ERC20 makes sure the behavior of the token on Ethereum is standard with a defined common list of rules. The ERC223 is an improvement of ERC20 protocol, and is backwards compatible to ERC20, meaning every wallet and software that supports ERC20 does work with ERC223. So to get a better picture from this improvement, maybe its better to breakdown how these tokens are created and lets start with the ERC20 tokens.

ERC20 and how does such tokens are created? 

ERC20 protocol allows token owners and developers to create a token that complies with common, essential behavioral rules. The standard is now very popular, specially among ICO investors and their communities. Thanks to ERC20 investors can be certain that the following statement can be true if the token is ERC20:

  • Technically tokens can be accepted by almost all exchanges
  • Tokens are transferable, and all Ether wallets will automatically store the newly created tokens
  • Transactions using that token is done smoothly

A token is compliance with ERC20 if the developer of the token contract implement the following interfaces:

  • The token name with function name, it returns the name of the token.
  • The token symbol with function symbol, it returns the symbol that token will use.
  • The token decimal places, function that returns the unit8 decimals the token uses.
  • How much the owner want to start off with: function balanceOf, it returns the account balance.
  • The amount of tokens in circulation: function totalSupply, it returns the total token supply.
  • The transfer value: function transfer (address _to, unit256 _value), this function is in charge of the transfer events. the function should revert a transaction if the sending account _from does not have sufficient balance.
  • The transfer from: function transferFrom, this function is used for withdrawal workflow, it allows contracts on the Blockchain to transfer tokens on token holder behalf.
  • The crediting permission, function allowance (address _owner, address _spender), it returns the amount which the buyer (_spender) is allowed to withdraw from the owner (_owner).
  • The events: with function transfer (address indexed _from, address indexed _to, unit256 _value) its triggered when a token has been successfully transferred and function approval (address indexed _owner, address indexed _spender, unit 256 _value) this must trigger on any successful call.

 

What did ERC223 has added to ERC20 and what are the advantages?

Initially the idea of ERC223 came to play when the amount of lost tokens on Ethereum Blockchain went sky rocketing, this was due to lack of possibility to handle incoming transactions. Ethereum Blockchain is a leading network for number of lost tokens. Top 8 ERC20 contracts with losses will come up to approximately 3 million USD worth of tokens. how does this happen? once an ERC20 token is sent to a contract that is not designed to work with that ERC20 tokens, the contract will not reject the tokens because the contract does not recognize an incoming transaction. Consequently the token will get stuck the that contract balance. ERC223 will allow users to only send their tokens to either wallet or contracts with the same transfer function, this way it prevents the loosing of the token. ERC223 introduces the function transfer (address _to, unit _value, bytes _data). This function transfers tokens with invoking the function tokenFallback in _to, only if _to is a contract. This will allow the smart contract to actively handle sent tokens. Whereas when an ERC20 token is transferred, the token contract is not notifying the receiver that the transfer has occurred, to that end the address receiver has no possibility to handle the incoming transaction and therefore no way to reject not supported tokens.

A seamless token transfer is another advantage of ERC223 over ERC20. An ERC20 transaction between a regular (not a contract) and contract are two different transactions. There two functions need to be triggered, first the approve function on the token contract and latter the transferForm on the other contract (the receiver). ERC223 has addressed this more efficiently by allowing to use the same transfer function. ERC223 could be sent by only calling the transfer function on the token contract with no if the receiver is a regular address of a wallet or a contract. Due to this shortcut another advantage that ERC223 has is the gas cost, ERC233 consumes almost half as much as an ERC token.

So as discussed above ERC223 advantages over ERC20 comes down to the following points:

  • provides a possibility to prevent accidentally losing tokens
  • Allows users to transfer tokens anywhere (owned address or contract) using one function
  • allows contract developers to manage incoming transactions, contract developers could implement contract in a way that only works with some specific tokens incoming and handling them in a specific way which could also each tokens could be handled in a specific way.
  • ERC223 consumes almost half gas as ERC20

Currently is not possible to upgrade existing ERC20 token contract to ERC223, but if you are planning to create your own maybe its a good idea to go with ERC223.

About us

Empirica is a Wrocław-based company that supports many local IT initiatives. Empirica is offering solutions such as Automated Trading Software implemented by major institutional investors in Poland, market making bot, wealth management software framework, crypto trading bots and trading software development for companies from capital and cryptocurrency markets.

 

 

Bitcoin

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What’s BITCOIN?

Bitcoin is known as virtual money, but a much better term is cryptocurrency. Unlike actual cash, there are not any coins or paper money formally produced. No government entity determines how much and when to discharge it in the world. Bitcoins are made digitally by individuals as they solve complicated math problems with their own computers. In most senses, it’s truly decentralized.

Among the intriguing things about the virtual money is that all trades are saved and printed publicly. The money is traded by means of a huge peer-to-peer network which encompasses the whole globe. When there are not a great deal of rules concerning Bitcoin, you will find a few, and this also assists with creating bitcoins a real currency that functions just like “normal money”

 

BITCOIN EXCLUSIVES

Next, we are going to have a look at a few of the ways which Bitcoin is different than conventional currencies. It is these differences which make Bitcoin this kind of potent potential. Nobody individual, government or corporation controls the Bitcoin network. This is not the sole difference, but so let us peek at some things which are exclusive to Bitcoin.

Bitcoin vs. Traditional currencies

  1. Bitcoin is decentralized

As it functions as a peer-to-peer system, all trades and confirmation of trades are done by several folks in the network.

  1. Bitcoin is virtual currency

Another thing which sets Bitcoin aside from conventional money is the fact that it is virtual. Rather, all bitcoins exist within virtual space. As a consequence, that you can not visit an ATM and withdraw bodily cash. Conventional currency which may be published when governments choose to publish more. To distribute the production of bitcoins being introduced into the planet, the amount that are made by “mining” will half each four decades. It follows individuals will continue to have the ability to make them before the year 2140. At that moment, no fresh bitcoins will be generated and the present design will enjoy the advantages of lack – i.e. getting more precious.

So as to save the block string of trades in consecutive Purchase, Bitcoin trades aren’t reversible. Furthermore, a Bitcoin trade can take ten minutes or longer to confirm. That is different compared to other currencies that normally procedure trades in seconds and allow for turning a fee to a credit or debit card.

  1. Bitcoin isn’t ubiquitous

In many areas, you’re going to have the ability to exchange your countries money for invoices of the country you are visiting. And regardless of where you go on the planet, you are likely to have the ability to exchange your money for services and goods. Bitcoin has not yet been adopted by the entire world at large. This will change in years to come as more companies start to take Bitcoin for repayment, but for now it is a gap that matters to lots of individuals.

 

Good and Poor of Bitcoin

As it is decentralized and normally has reduced prices for trades, a lot of men and women have started to take note and become enthused about this and other cryptocurrencies.

Another thing to notice is that a few People today worry about that controls the Bitcoin network. The fact is that because it utilizes peer reviewed technology, no 1 individual or business can have the Bitcoin network. This might seem frightening to some while it is exciting and revolutionary to others.

The demand for all variants of Bitcoin applications to be harmonious and be able success, most people that are involved realize that this and also have worked together to enhance the Bitcoin applications and community substantially in just a couple of short decades.

And that just might be what is equipped to assist Bitcoin grow much faster across the world. This may prove to be the fiscal system which brings the world together.

How Can BITCOIN WORK?

The basics you should know

Let us start by taking a look at the different items you want to get a cryptocurrency working. We are going to begin with the fundamentals and then move to more details about what you will have to begin.

The transaction – the very first thing that you want to think about using a digital currency is the trade – that the true exchange of value from 1 individual to another. Though this might seem easy, in several ways it can be simple to devise a trade to attempt and cheat the machine. With physical money, transactions are regulated by banking associations that affirm they are not forged and therefore are unique.

A serial number – to prevent people seeking to forge trades or reuse them with virtual money, you require a means to connect a special serial number to every individual and each trade too. Bitcoin does so by utilizing a personal and public encrypted secret. These hashes are utilized to create certain transactions are not replicated in the system and there is no way to cheat the system. When Bitcoin was set up, it had been understood that banks might be taken from the image entirely if a peer reviewed network was produced to confirm the transactions between two things. This decentralization of fiscal transactions is among the largest reasons so many clever men and women are becoming excited about Bitcoin.

Bitcoin Mining – The following bit is necessary to create Bitcoin work. When it’s too simple for trades to be confirmed, folks may program robots to flood the system with verifications, which makes it tricky to really check the transaction. To fight this, the notion is to make it computationally tough to check the transaction. This assists battle against the bad guys while at precisely the exact same time offering a means to reward individuals who provide up computing ability to check the transaction. The computational mystery needs to be tough enough to make it impossible to hack on simple enough to still enable individuals to resolve in a reasonable period of time.

Create a private and public key that’s unique for you. This can be used to move bitcoins for you also as enable you to move bitcoins to other folks in the network.

Speech if you would like to get BTC from somebody else on the community. At precisely the exact same time, you may use a different Bitcoin address created so as to cover services or goods.

The following step is a trade being created when the real swapping of BTC happens between a seller and buyer. This can be added to the block series where others are going to check the trade (by solving the mathematics problem) and publish particulars of this trade publicly.

 

The Way to OBTAIN BITCOIN

Recognizing how Bitcoin functions may be intriguing to some, but there are actually a couple of ways that you can lawfully get bitcoins – regardless of where you reside on the planet. Provided that you have an online connection as well as the Bitcoin software installed, then you are likely to have the ability to start using this digital money. The best news is that it is really rather simple to start to develop your Bitcoin wallet should you’ve got a little spare time.

First, It Ought to Be noted that it is really tough to buy bitcoins It is quite simple to issue a chargeback on charge card. If a person purchases BTC using a charge card then reverses the fee, it is really hard to prove to the credit card companies the trade actually occurred.

It is important to keep in mind that the worth of a single BTC is quite volatile at this time, which means you probably don’t need to spend everything you’ve got in this digital money. At precisely the exact same time, the prevalence of Bitcoin is increasing across the world and a number of people happen to be getting wealthy by building up big heaps of bitcoins virtually through method and means we will explain below.

Regardless of which kind of computer you are running, there is likely to become an installer app to get you up and running in almost no time in any way. Many men and women find it takes about 5 to 10 minutes to acquire a Bitcoin customer installed and attached to the community.

Make certain that you take your time to discover a client you are familiar with using. Most are extremely similar, but a few have a few additional bells and whistles which may make it much easier for you to begin.

Even though you might have the ability to discover a service which delivers a high degree of safety, it is not exactly the exact same level you would have if you set up the applications in your computer in which you have full control. Coinbase is among the very popular online Bitcoin wallets today.

Whichever you decide on, once it is set up the next step is simple. You will Create a private and public key. This is the Bitcoin speech which will enable folks to send BTC to your accounts. As soon as you’ve got your own Bitcoin wallet installation, you have a couple of distinct choices about the best way best to accrue BTC on your wallet.

Bitcoin Exchanges

Bitcoin exchanges were not about when Bitcoin first came out, but they are now an essential component of the way the entire Bitcoin ecosystem functions. There are exchanges which have Bitcoin among other digital currencies on the internet in addition to marketplaces that deal exclusively by BTC trades.

It is intriguing to note that some of those marketplaces will maintain a balance For you – out of your Bitcoin wallet – to be able to make it simpler to conduct transactions. Deciding on the ideal Bitcoin exchange is important when you would like to remain safe rather than risk losing your BTC equilibrium because of a scam or technical issues.

Security — the most essential aspect that you wish to consider is safety. In case a Bitcoin exchange is fresh to the world wide web and is lacking contact info, this is a great indication that they probably don’t care a lot about the safety of your private info. Fortunately, if you spend any quantity of time around the numerous Bitcoin forums and communities on the internet, you will see which exchanges suffer from issues and then exchanges are advised. As an instance, some Bitcoin exchanges may not let you withdraw money into a US bank accounts. It is a fantastic idea to ensure whatever market you are considering using has a means that you convert your BTC to the regional money safely and easily. In 2013, a few people started complaining about the amount of time that it required MtGox to move funds into the US, therefore it is a fantastic idea to once more hit on the forums and attempt to gauge public opinion about any trade you are considering using. Then let us have a glance at a few of the main Bitcoin Exchanges currently working. New ones are emerging all of the time, but it is usually a safer bet operating together with a single which has been in existence for some time and has managed to accumulate a history of being reliable and fair.

CoinBase — This is among the hottest Bitcoin exchanges right now. They give the capability to move money to US bank account. That being said, if you reside elsewhere in the world, you might not be pleased about being unable to move funds to the regional bank accounts.

MtGox — At once, MtGox was accountable for the vast majority of all Bitcoin trades on the Planet. This has changed lately as they have run into some legal issues in various nations around the world, but they are still an extremely popular Bitcoin exchange which a lot of men and women utilize on a daily basis.

BTC-E — This site is located in an unknown town in Bulgaria, and that means you may be careful about maintaining any BTC here. The costs per BTC are usually a whole lot lower, but that is only because it requires a ridiculous quantity of time to validate that a trade. Nonetheless, it’s a choice you may look at based on where you live now.

Bitstamp — This market is comparable to CoinBase at a great deal of ways. The most important distinction is they do regularly work with individuals in countries aside from the USA, which makes it effortless to move BTC to overseas currencies. If you’re searching for a really international Bitcoin exchange, this is a great place to get started. We mean you could exchange different cryptocurrencies too. If your digital money investments go beyond Bitcoin, then you will want to check out Cryptsy.

BTer — With slow trade speeds and limitations on how big trades, this is not really recommended, however we believed they deserved a place on the list only because they do serve the demands of some men and women who utilize Bitcoin.

BTC-China — Some of the quickest growing Bitcoin exchanges — based on Wired magazine — is BTC-China, that has ramped up their attempts lately. By some reports, they have overtaken MtGox since the location where many Bitcoin trades occur on daily basis.

About us

Empirica is a Wrocław-based company that supports many local IT initiatives. Empirica is offering solutions such as Crypto Algo Trading Software implemented by major institutional investors in Poland, market making strategy, wealth management software framework, crypto trading bots and trading software development for companies from capital and cryptocurrency markets.

Ethereum

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WHAT IS ETHEREUM?

Dapps are computer applications that eliminate the need for intermediaries in any present centralized service by enabling anybody to rely upon an anonymous counterpart to execute the most varied kinds of agreements and deals at a 100% electronic method.

In Ethereum, programmers may also write business logic and arrangements in the kind of smart contracts, which can be implemented automatically when their requirements are satisfied by both parties and educated to the community. These contracts may save information, send and receive trades and also interact with different contracts, irrespective of any controller.

At first, the expression “smart contract” was used to describe using computer systems (or other automatic methods) which aimed to influence particular agreements.

As an illustration of a clever mechanical arrangement, we could mention a machine which sells soft drinks or snacks. When you put a coin or note on those machines, a computer system programmed to spot the amount received along with the selected product enforces an arrangement between the customer and the machine operator, executing an automatic purchase.

The dapps and intelligent contracts operate from the Ethereum blockchain, which had its first architecture conceived with a young Russian genius in the time in age 19, called Vitalik Buterin, who picked the subsequent name due to his white paper: “Ethereum: A Platform of smart contracts along with next generation decentralized software”

From “second generation,” Buterin describes the instruments added to his creation that in theory can resolve in an easy and objective manner a number of bitcoin’s blockchain constraints and thus usher in stage 2.0 of their cryptocurrencies.

Everyone can upload programs or smart contracts into the Ethereum network. The platform development group sought to make everything as straightforward as possible to amplify accessibility to technologies.

As an application programmer, you may need anti virus infrastructure to install and install your own applications. Anything which may be represented mathematically could be mimicked, ensured, and exchanged through Ethereum. Once being written in a programming language approved by the stage, just upload the code onto the stage, fill in the first variables and ship. Following that, the task becomes the stage, which within a couple of seconds converts the code into machine language, compiled in bytecode, and afterwards mined it’ll have the ability to run.

Once uploaded, the arrangement is going to be saved from the blockchain and other customers will have the ability to get it directly via the system or via any API (Application Programming Interface) designed to get it. Because of this, the arrangement, depending on the identification of these terms established inside, will automatically meet the assumptions specified there and may, as an instance, ship or receive numbers from 1 individual to another.

Additionally, like bitcoin, with that you don’t need to rely upon a lender or central ability to maintain your fiscal funds protected; from Ethereum your private data, identity, and capital will also be under your control at all times, given inside your wallet. And of course that their software are also protected from denial of service attacks, because of the nature of its technologies.

Whats Ethereum good for?

Most of the services we use today have one factor in common: they’re centralized. So, for Example, you hope that your bank can keep your money secure, be audited independently and honestly.

The same goes with Facebook, when you carry an image of your kids, once you send a document to the Dropbox or even once you go to an appointment in the hospital and enroll from the health network your personal medical advice. If you work as a developer, you have to file your application to a program shop and you risk getting it removed for the most trivial and varied reasons.

History has continuously shown this centralized model is flawed, but essential to ensure levels of confidence between counterparts. Nonetheless, this is complex and too costly for everyone involved.

Remember that everything that’s centralized makes it easier to strike because it provides one Purpose for a goal, including a website firewall.

Applications built on Ethereum don’t require your customers to trust developers with personal information or money. Back in Ethereum, your personal information remains yours your funds remain yours and your articles stays yours. Because it is decentralized, its most important benefits are that it is a transparent, hackerproof system that’s constantly live.

Since Ethereum permits you to start your own currency, you can make any kind of company stock on the stage or represent ownership of any object, such as a car or a house.

You can think of this as a programmable dispersed system. The fact that Ethereum is, by its very design, resistant to fraud and adulteration, means that it offers a fresh range of solutions to the daily problems which are currently solved at exorbitant costs. Voting machines, domain registration, registration of legal records, medical applications, transfer of goods, services, smart property and contracts between individuals, standing systems and financial derivatives. Everyone these programs can be produced on a network where users keep track of their funds and individual data constantly.

A DAO is composed of a couple of contracts and could be funded by a group of individuals with similar notions. A DAO operates completely independent and transparent of any human intervention, for example its original creators. A DAO will stay in the community for so long as it covers its survival costs and supply a useful service to its customer base.

Ethereum also allows programmers to create, for example, different decentralized markets, shop debt documents or guarantees of payments, transfer funds according to previous instructions (for instance, a Purchase / sell purpose or a prospective contract), and several other items which have been Devised, all this automatically, without an intermediary or counterparty risk.

About us

Empirica is a Wrocław-based company that supports many local IT initiatives. Empirica is offering solutions such as Cryptocurrency Algorithmic Trading Software implemented by major institutional investors in Poland, market making strategy, wealth management software framework, crypto trading bots and cryptocurrency software development for companies from capital and cryptocurrency markets.