The idea that it costs to list cryptocurrencies on exchanges might not be your first thought when browsing through lists of coins and tokens, yet a report out yesterday highlights that not only does it cost to do this, it costs an awful lot too.
An exchange will make money when people use its service, in order to get people to use its service it needs to have the right currencies available. On the flipside, creators of currencies need to have their currencies available within all the popular exchanges, therefore this is a catch-22, who needs who the most?
Well, according to a report by Next Autonomous, it seems that the currencies need the exchanges more, with cryptocurrency exchange listings costing up to $3m a go. They do put this fee down as an estimate, stating that “We don’t know these numbers with certainty, but suspect the order of magnitude to be roughly in line with today’s reality” but we should remember that last month, Business Insider posted a similar report with similar findings and that ICO’s hosted on cryptocurrency exchanges cost around $1m from the outset.
Okay so this report isn’t really based on any hard evidence and admits that most of their calculations have been made up from word of mouth accounts but as I have mentioned there are plenty of other figures available online that reflect Next Autonomous’ sentiment.
So why spend so much money on an exchange?
The beauty of the internet is that we can use it to market our own products independently of any other groups or organisations, the same goes for cryptocurrencies, you don’t technically need to pay an exchange between $1m and $3 to help launch your currency so why do companies do it?
As the report argues:
“There is a natural rank order for these exchanges — sometimes a token will need to be listed on a small unknown one before making it up the food chain to an exchange with bigger volume.”
Unfortunately, it just seems to be the case that you must make this investment with an exchange in order to invest in the future of your currency. They do offer a great leg up onto a level in the cryptocurrency world that is otherwise very difficult to reach. Exchanges know this which is why they get away with applying such heavy tariffs onto their services.
Yes, the exchanges know they need to list the currencies in order to operate but in the grand scheme of things, the currencies also know they need the exchanges in order to grow at the rate they need to grow to be taken seriously.
See the full report for yourself here: https://next.autonomous.com/thoughts/crypto-exchange-listing-fees