Lately, new exchanges gained a lot of attention with their new trading models. Some suspect scams behind these “models”, others take them for a legitimate marketing strategy in a highly competitive market. However, you should be wary of what people are trying to sell you. Here are some facts that should make you think if you trade on CoinEx or FCoin.
Be aware of the difference between tokens and coins
FCoin already misleads people with the name of its cryptocurrency. It is FCoin Token (FT). Is it now a coin or a token? A difference that newcomers in cryptocurrencies won’t be aware of. A coin runs on its own blockchain whereas a token relies on the blockchain of another cryptocurrency like Ethereum. The most popular and common standard for tokens is the ERC20-standard. Both FCoin Token and CoinEx Token rely on it. This is important for the following reason.
What is Trade-Driven/Trans Mining?
CoinEx wants to convert all its transaction fees into its own CET (CoinEx Token) and 80% of those fees will be distributed to the users on a daily basis. The amount you will receive is determined by how much trades you made that day. But what exactly is mined in this process? If you guessed it’s just a marketing name for something that has not really anything to do with mining, you are completely right. As the name CoinEx Token suggests it is just a token, not a coin with its own blockchain. CET is based on the ERC20-Standard which means it is of course premined. So what is mined in trans/trade driven mining? Nothing. There is no mining, no benefit and no innovation.
An exchange token has no value outside of the exchange
Keep in mind that an exchange token has no value outside of its own exchange. You can leave all your exchange tokens on the respective exchange. No need to bother with cold wallet storage or Trezors and Ledgers or whatever you rely on. Because when Binance e.g. gets hacked, your exchange token will have no value too. You only need those tokens for trading on an exchange. Its the only purpose they will ever have. Now, if an exchange token comes up with a new trade model that you can only participate with if you don’t pay fees with their own token, that should make you really wary.
Trade Driven Mining is Greed Driven Trading
FCoin exchange and CoinEx exchange promise you to get rich. But in reality, they are magical change money machines that turn your legitimate and valuable cryptocurrencies into worthless shitcoins. The new trading model is nothing but an open invitation to a snowball system. An exchange can’t hand out an unreasonably high number of fees forever. CoinEx already announced that it will stop this policy after a while to repurchase its by then probably worthless token. Of course, it can be profitable to be early on a snowball system and eventually people who profit from it will defend it. But it’s better to stay away from it. They might commit the CoinExit before you cash out.