Influence of the confirmation of transactions at the trade speed in Cripto currency
Cryptocurrency has revolutionized the way we think about transactions and trade. No wonder with their fast, decentralized and safe way that many investors used digital currencies such as Bitcoin, Ethereum and other to buy, sell and act other properties.
However, one of the most important aspects of cryptocurrency trade is confirmation of the transactions. Although this procedure is crucial for the determination of the trust between parties, it can also influence the trade speed in different ways. In this article, we will examine the effects of confirmation of transactions on trade speed in cryptocurrency and examine its effects on market efficiency and liquidity.
What is a confirmation of the transaction?
The transaction certificate refers to the procedure with which the buyer sends a cryptocurrency in the seller’s wallet after he has agreed to buy it at a certain price. This certificate is usually carried out via a third party service provider, which is known as a blockchain network, such as Bitcoin’s Lightning Network or Ethereum Ether Gateway.
Influence of confirmation of the transport transaction confirmation
There are several reasons why the transaction confirmation can influence the trade speed:
- Increased latency : Confirmation of the transaction can introduce delays in the settlement process, which can lead to increased latency and slow trade speed.
- Higher fees : A high level of transaction confirmation can lead to higher fees for both customers and sellers and reduce their total profit margins.
- Reduced liquidity : Inadequate or delayed confirmation of the transaction can restrict the market participation, which reduces the availability of liquidity and the increase in the time required to settle the craft.
Case with regard to a high transaction confirmation
However, some can argue that a high transaction certificate is required to ensure security and trust in cryptocurrency markets, this approach has several defects:
- Reduced trading speed : A higher level of confirmation of transactions can lead to increased latency, which negatively influences the trade speed.
- increased costs : Inadequate or delayed confirmation of the transaction can lead to higher fees, which reduces the profitability of the vehicle.
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case in relation to a very low transaction confirmation
On the other hand, some claim that a very low confirmation of the transaction can improve the trade speed by allowing faster processing:
- Increased latency : A faster transaction certificate can lead to faster trading settlements and an increased trading speed.
- Lower fees : Lower transaction certificates can lead to lower fees and customers and sellers, which makes the cryptocurrency market more accessible to the wider spectrum of the participants.
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The best approach?
Although there is no solution for all sizes, the best approach seems to be a balance between certification of the transaction and the commercial speed:
- ** Use a standardized transaction certificate.
- Economic solutions
: The offer of an economic transaction certificate such as the charming or useful use of several blockchain networks can help to reduce the fees and improve the trade speed.
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