Recently, Bitbns, one of India’s leading cryptocurrency exchanges, announced that it will build a bridge for other exchanges to interact with its platform. The move has been praised by many as a step towards reducing fragmentation in the cryptocurrency ecosystem, but it has also been met with skepticism from traditional exchanges.
The bridge will essentially act as a digital tunnel that enables other exchanges to access Bitbns’ liquidity pool. This means that if a user places a buy order on another exchange that is not matched on that exchange, the order will be redirected to Bitbns’ platform, where it will be matched against orders from Bitbns’ users.
The move has been seen as a positive development for the industry because it addresses a common problem: fragmentation. Currently, there are hundreds of cryptocurrency exchanges around the world, each with its own liquidity pool. This means that when a user places an order on one exchange which is not matched, they have to move to another exchange in order to complete the trade. This not only creates friction, but also increases the risk of price manipulation and collusion.
The issue of fragmentation has been a longstanding issue in the industry, and many have attempted to solve it. However, most attempts to build bridges between exchanges have not been successful, largely because of a lack of trust and the fear of security breaches.
This is where Bitbns’ bridge is different. The exchange has a strong track record in the industry, having been in operation since 2017. It has also implemented a number of measures to ensure the security of its platform, such as two-factor authentication and cold storage for its users’ funds.
In addition to its reputation and security measures, Bitbns’ approach to the bridge is also unique. The exchange has stated that it will not charge fees for other exchanges to use its platform, and will instead make money from the trading fees generated by the matched orders. This is in contrast to other exchanges, which have attempted to charge high fees for access to their liquidity.
The move has been met with praise from many in the industry. Nikita Sachdev, co-founder of cryptocurrency asset manager Luna Capital, called it a “great initiative” and said that it “represents a positive step towards improving liquidity in the market.”
However, not everyone is convinced. Traditional exchanges, in particular, have been wary of the move. Some have raised concerns about the security of the bridge, while others have questioned why Bitbns is offering the service for free.
One traditional exchange executive, who wished to remain anonymous, said that “Bitbns’ bridge is an interesting concept, but we have concerns about the security of the platform. We also question the motives behind offering the service for free.”
Despite the skepticism from some quarters, Bitbns’ bridge is seen as a positive development for the industry. It has the potential to reduce fragmentation and increase liquidity, which will benefit both users and exchanges. The success of the bridge will depend on whether other exchanges are willing to trust Bitbns and use its platform, but if it does gain traction, it could be a game-changer for the industry.
