Published On: Thu, Feb 1st, 2018

Bancor Smart Tokens Looking to Solve Cryptocurrency Liquidity

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Cryptocurrency Liquidity can be defined as the process by which an asset is converted into fiat currency based on demand. If you are not satisfied with this definition than liquidity can also be defined as an asset bought or sold on the open market when the price is relatively affordable.
In light of the above, discounts or even premiums cannot be attached to an asset in the process of buying or selling it. What this means is that entry and exit is possible at any point within the transaction.
The issue of liquidity is not unusual when selling an asset. There is no basis of comparison between liquid and illiquid markets. Liquid markets are deeper, meaning that traders may find it difficult to exit the market.
For instance, Bitcoin is known to have experienced exponential growth since its inception over 9 years ago. In 2009, market analysis showed that Bitcoin was just 50 units. However, the volume of Bitcoin in circulation is presently well over 13,000,000 units. Cryptocurrencies are fraught with the issue of illiquidity.
What Impacts Liquidity?
Regulations: Government regulations have seriously affected cryptocurrency. Some countries have outlawed the use of cryptocurrency, while others have passed laws to support its usage. …

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