South Korea’s new cryptocurrency exchanges are issuing their own coins (tokens) one after the other.
Despite being latecomers to cryptocurrency market, they have applied trading mining model that was used by FCoin to be the biggest exchange in the world at the moment. Their goals are to gain market shares as quickly as they can. Large foreign exchanges such as CoinBene and Bit-Z are also starting to issue their own tokens.
According to industries, few new cryptocurrencies such as CoinZest that started its business last June and Borabit (Bankor) that started its business early this month have started to gain users based on tokens that they have issued on their own. Nexybit that is planning to start its business sometime this month is also planning to issue its own tokens that are mined through transactions.
Coins that are issued by exchanges usually take on characters of commission discount or mileage that is shared through an Airdrop event. Trading mining method that distributes profit earned by exchanges based on amount of possession of coins has recently started receiving spotlight.
FCoin is a well-known cryptocurrency exchange that has made significant progress in a short period of time through trading mining. In just two months since its establishment in May, it has surpassed large global exchanges and it is placed as the number one exchange based on volume. Its average daily volume is about $3.56 billion (4 trillion KRW) according to CoinMarketCap.
FCoin’s platform token called FT is issued every time a member of FCoin trades cryptocurrencies. FCoin’s members receive entire or some of commission as FT. This structure allows members to receive more FT tokens as they participate in more trades. If 10 billion FT tokens are issued, 51% of them are distributed back to FTCoin’s members. 80% of commission earned by FCoin after distribution of FT tokens are distributed to FCoin’s members as cryptocurrency based on amount of FT tokens they have. FCoin allows its members to earn profit through investments as well as participation in trades.
Chinese exchanges such as Bit-Z and CoinBene have also applied trading mining models and have increased their volumes. It is heard that OKex and Binance have also started to promote their exchanges that are based on trading mining.
However, there is a good amount of concerns towards trading mining method as well. Although exchanges can gather members quickly at first through expectations towards high distribution rate, critics say that it is difficult for them to maintain value of their tokens for a long period of time. FCoin’s FT token was once valued more than dollar, but its value is currently at about $0.23. Critics say that trading mining is nothing more than a Ponzi scheme.
Fact Coinrail is planning to issue its own coins to compensate for damages that its members had faced through a hacking incident is another reason why South Korean people are showing negative views towards trading mining method.
Large South Korean exchanges such as Bithumb and Coinone are also staying away from issuing their own coins. Although Bithumb once tried to issue its own coins back in April, it completely withdrew from this plan due to possible side effects such as intervention by brokers.
Staff Reporter Park, Jungeun | jepark@etnews.com