How Blockchain.com Plans to Win in the $248 Billion Crypto Market

London-based marketplace Blockchain.com, which has created more than 40 million digital-asset wallets, is moving into the cryptocurrency trading space with plans to open a new exchange. With this new strategy, the company is hoping to grab it a bigger piece of the $248 billion cryptocurrency market, known for its scandalous record of hacks, thefts, fraud and mismanagement dating back to 2014, as outlined by Bloomberg. 

High Speed Crypto Exchange

Blockchain.com, which will operating its exchange called The Pit in London, plans to execute orders in under 50 microseconds, compared with 200 to 500 milliseconds at most crypto exchanges, and will offer Bitcoin, Ether, Bitcoin Cash, Tether, Litecoin and Paxos. Customers will reportedly be able to trade soon and can deposit funds immediately. Looking ahead, the company reportedly plans to quickly add additional tokens, pairs and products to its exchange. 

According to Blockchain.com, about 1 in 4 of all Bitcoin transactions originate with one of its wallets. The company allows users to keep digital coins in a wallet, as opposed to on an exchange. The company is run by CEO Peter Smith, who says that the new exchange is “an investment in the future of the crypto market.”

Smith indicated that the idea for the exchange came out of the cryptocurrency market’s rally and subsequent crash in 2017 and 2018. "What do we need to do differently next time? That’s when you start reinvesting,” Smith said. “We wanted to build a Wall Street or a Chicago-level matching engine,” he added, speaking to the technology that pairs buyers and sellers, per Bloomberg. 

The Pit will launch with the help of a broad group of market makers. 

“This project has been developed by an accomplished team with demonstrated experience in managing one of the largest userbases of crypto traders. The crypto ecosystem needs more exchanges that are striving for institutional-grade architecture, decreased latency, and more robust liquidity. We look forward to playing our part in developing The PIT into one of the leading trading venues,” said Cristian Gil, co-founder of global market maker GSR, in the press release. 

The “PIT Crew,” as named by Smith, is comprised of a new group of employees inside Blockchain.com and includes former finance and technology industry veterans from firms including the NYSE, TD Ameritrade, E*Trade, Alphabet, Goldman Sachs, UBS, Interactive Brokers, and Revolut. 

Smith did not offer insight into the banks working with Blockchain.com, but did say that only lenders will allow customers to deposit U.S. dollars, euros and British pounds on to the exchange. A feature called Blockchain Connect allows wallet holders to transfer funds directly to and from their Pit account. For a Silver Tier KYC account on The Pit, users will need a legal name, verified email, date of birth and address. The next tier up, the Gold Tier KYX, which offers higher trading amount and additional features on the wallet and the exchange, also requires a photo of a government issued ID and a photo of the applicant. 

The Pit’s servers will reside in London’s Equinix LD4 facility in London, one of the fastest and most reliable low-latency data centers in the world. The trading venue will be available in over 240 markets worldwide, including a number of U.S. states. 

Looking Ahead

Blockchain.com’s plan to launch a high speed crypto exchange for retail traders comes as the crypto world faces calls for more regulation, experiences wide price swings and faces criticism of manipulation. 

That said, Smith hopes The Pit will offer crypto traders a better and more reliable platform. “The current crypto exchange market is outdated, broken, and skewed against users. We got tired of waiting for a new entrant to deliver the performance today’s traders demand.”