Crypto Investing #30 – Why I Don’t Trust Any Cryptocurrency Exchanges

This is Tai Zen again, I’m broadcasting from a Starbucks in the city of Boston, Massachusetts in the state of Massachusetts. It’s on the Northeastern coast of the United States. In this video, I’ve got my buddy J.W. behind the camera and we were talking about how the exchanges operate.

And I just want to share with you my thoughts on why I don’t trust any of the Cryptocurrency exchanges. I don’t care if they have a license, I don’t care what they say about it. We are still in the early ages, the early stages of Cryptocurrency investing and trading.

And what happens is, let’s say if you go to coinmarketcap.com and you go to the Ethereum market and you look at it, Poloniex has 56%- 57% of the trading volume of Ethereum. And then you have the other exchange which is called Kraken, and they control 20% of the trading volume of Ethereum on their exchange.

So you add up just those 2 exchanges alone, they control about 75% of all the Ethereum trading in the world on just those 2 exchanges. It’s a $600,000,000 asset, that I don’t really care about, but I do care about is this.

What I do care about is that there is nobody overseeing them, there’s no laws, no regulations overseeing them. So what happens is these exchanges are put together by guys that want to make money, that’s the only reason why they open these exchanges.

They’re not doing it for charity, they’re not doing it for nonprofit, they’re not doing it because they want to change the world, they’re doing it for purely for profit reasons. There was $18,000,000 worth of Ethereum traded today, imagine you’re an exchange that is responsible for half that volume, now at the peak, Ethereum’s trading at $30,000,000 – $35,000,000 worth a day of volume.

Imagine an exchange that’s responsible for even at the low now of $18,000,000, and at the high of around $35,000,000, if you take half of that volume, that’s about $17-18,000,000 worth of Ethereum being traded every day. I want you to imagine an exchange that’s controlling that much volume.

And what happens is that any time they can buy or sell at any time, they get to see everyone’s orders in the order books, you and I don’t, but they see everyone’s orders, they can see where everyone stops are at and they can trigger it just so that they can collect the transaction fees from you.

And that’s you might call that a conspiracy theory for me but in my opinion, I don’t see any evidence of why they would not do it. If trading is slow, the market is not very volatile, they can easily go in there and look on their books to see what everyone’s stop orders are at or buy orders at or limit orders at, they have enough Ethereum in their inventory to go out there and create an individual account outside.

Let’s just say that I’m one of their shields or I conspire with them and I collude with them and nobody knows that, and they give me millions of Ethers and I go on there on purpose and sell it and push the price down and run everyone stops, you guys would not know that.

Now obviously I’m going to tell you now I would never do something like that to hurt other people’s accounts. But there are people out there that will do that for money. So you always have to keep that in mind, I just want to share that real quick with you.

They’re closing up the Starbucks here so I going to end this video. So just remember that we use these exchanges and everything, but don’t ever for once think that they have your best interests in mind.

They don’t want to be seen as fraudulent or scamming or anything like that, but every chance that they have to make money off of the customers because they make it off of the transaction fees, they’re going to do that.

So don’t ever for once think that Poloniex or Kraken or Coinbase exchange or any of Bitfinex none of these are out there to serve you, they are there to make money.

Now they’re not going to do anything that they can be caught on so that they won’t get in trouble which just always keeps them in the back of their mind that they can see everyone’s orders and there’s absolutely no reason why they don’t profit off of it. So thanks for watching this video, I’ll see you in the next video.

 

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