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Michael J. The following article originally appeared in CoinDesk Weekly , a custom-curated newsletter delivered every Sunday exclusively to our subscribers. Within its presentation seeking approval from the Securities and Exchange Commission for a bitcoin-based exchange-traded fund ETF , Bitwise included one slide with a screenshot from Coinbase Pro showing a mere 0. This supports one the key arguments in favor of cryptocurrencies: that by cutting out the many financial intermediaries needed to execute trades in the traditional financial system, this technology achieves impressive efficiency and cost reduction for market participants.
Ironically, it also convincingly makes the point that to achieve that potential, there needs to be greater regulation of crypto trading. For example, daily turnover in the U. Consider also that bitcoin exchanges are typically open to retail investors, whereas Treasurys are almost entirely traded by institutional investors moving very large amounts of money.
In traditional markets, size dictates liquidity, which in turn determines price efficiency. But this data shows that bitcoin is capable of highly efficient outcomes at a much lower scale. All of those efficiency gains occur because bitcoin eliminates the fee-charging trusted intermediaries that carry out a variety of back-office execution and settlement processes within the legacy financial system. All those annoyingly cumbersome and costly know-your-customer procedures might actually be worth it.
In those cases, price discovery is an illusion. Coinbase and other exchanges that are competing with Bakkt for the potentially very large institutional market will, of course, disagree with this assessment. The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Image via CoinDesk archives. Read more about Disclosure Read More The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Levine Bradley Keoun Dec 18, Year in Review Markets Daily.
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The cryptocurrency one of many is at the center of a complex intersection of privacy, banking regulations, and technological innovation. Today, some retailers accept bitcoin, while in other jurisdictions, bitcoin is illegal. Cryptocurrencies are lines of computer code that hold monetary value. These lines of code are created by electricity and high-performance computers. Cryptocurrency is also known as digital currency.