The ethos of crypto-currency is inclusion. It opens the financial door to many unbanked and gives access to financial products that were previously reserved only for the elite.
That’s why South African-based crypto-currency exchange OVEX is taking a stand against an insidious factor that sits smack in the centre of the road of allowing newbies, or retail investors, from entering the seemingly elitist world of crypto-currency investment – the “order book".
What is the order book and why does it confuse new investors?
The first thing that new investors see when trying to trade on an exchange is a confusing set of numbers on something called an “open order book”. This constant stream of numbers represents a sort of digital ledger, showing all the open (not-yet-executed) orders for a particular currency trading pair, such as Bitcoin/rands (or BTC/ZAR).
In simple terms, think of a bunch of people trying to sell their Bitcoin for ZAR. Each person asks for a certain price, and then buyers (bidders) will bid on the price they’re willing to pay. Eventually, a match is made – or not. This is what drives the market price up or down.
The open order book can be quite daunting and strikes fear into any new investor’s heart because they’re afraid they might make a mistake (which they might indeed), and because no price is guaranteed until the order goes through. All they wanted to do was buy some crypto-currency!
The reason trades are done this way is because most exchanges penalise buyers for taking liquidity away from the exchange. These are called “market taker” fees. Running an open order book minimises the exchange’s loss of liquidity because it waits for bid-ask prices to match instead of taking liquidity from the exchange itself.
Worst of all, in an open order book system, large orders are aggregated, resulting in slippage.
That’s why it took a crypto-currency exchange with a unique approach to disrupt this system, doing away with the need to aggregate orders altogether, and simply executing orders immediately at the quoted price.
How OVEX was able to democratise crypto-currency trading in South Africa
Only a crypto-currency exchange of such immense liquidity would be able to offer a buy-sell trading tool that doesn't take a cent in fees and which completely replaces the open order book.
Other exchanges charge what are called maker and taker fees, which are additional fees per trade for adding or taking liquidity from an exchange. OVEX waivers these nasty fees – something previously unheard of.
To give you an idea of the immense volume of OVEX’s liquidity: OVEX is able to offer high-volume clients a “trade now, pay later” credit line of R100 million to large investors, no questions asked. Prices for a trade are settled even before the customer’s money is in their OVEX account.
The crypto-currency exchange manages close to R1 billion in high-interest earning accounts. The volume traded through its servers by third parties is over R3 billion a month. The exchange has so much liquidity that it was recently revealed that trades of over $1 million received a 3% more competitive price at OVEX compared to other South African exchanges.
And it was this same liquidity that allowed OVEX to completely do away with the open order book and replace it with something as simple as a buy/sell, request for quote (RfQ) trading tool.
The RfQ tool works exactly like a new investor would expect – they type in how much Bitcoin they want to buy, receive a quote and then all they have to do is click “accept quote”. The trade is executed instantly and there is no need to sit and stare at an open order book wondering if there will be a seller willing to take that trade.
In other words, OVEX does not penalise crypto-newbies for not knowing how to trade on an open order book. New traders can simply buy/sell crypto-currency with the tightest spreads and zero trading fees, exactly like the pros.
OVEX’s goal is to democratise finance and ensure that wealth-creating opportunities, as well as access to credit, are equal. The RfQ tool it developed does just that, offering the same quality of service to retail investors that OVEX’s white-glove concierge service offers to large-volume investors, asset management companies and brokers.
At OVEX, everyone has access to the playing field, no matter their means. Trade like the pros today at www.ovex.com.
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