This week the BitMEX team has published a lengthy in their official blog on the issue of competition with the bitcoin Core software project. Having analyzed the capacities and development of the project under consideration, the BitMEX team has found clear differences between the ways of competeing with it.
One of the main conclusions is that belief in bitcoin Core’s exclusive ability to affect is a misconception, so, even if something happens to bitcoin Core, if it is hacked or deactivated, it won’t have a huge impact on bitcoin.
Types of competing projects
Researches has defined the main approaches to competing with the Core project and united them in three main categories.
The first type defined is competition between chains. In this very case we are speaking about projects that are trying to change the consensus rules. For example, soft and hard forks can be included into this category. Nevertheless, such an approach can be considered to be rather risky as due to it the existing coin may be splitted into two separate chains.
This method can be implemented only with active support of a wide audience or through introduction of a new coin, otherwise, the existing threats may negatively influence the stability of the coin leading to the lack of confidence in it.
The second approach is competition between independent implementations. It presupposes a new trial to implement bitcoin excluding the usage of the core code. This approach includes utilizing the potential and opportunities of another programming language. As the first rype, this one is also rather risky as it may result in an accidental chain split in case even of a slight difference in approaches to the consensus behavior.
But it’s worth mentioning that this great number of clients is a very important benefit from the perspective of omitting/fixing bugs that were found in dominant implementation.
There is also the third type mentioned. All other competing software project that do not work neither with the consensus rules changes nor with the codebase reimplementation are included into this group. According to BitMEX, these projects are not so risky and controversial as those that are described above.
BitMEX new client
To compete with bitcoin Core, BitMex Research has announced its own new client called bitcoin BitMEX Research. There are no plans to introduce consensus changes that could lead to a strong necessity to conduct a hard fork or to try to repeat the implementation the protocol through rewriting the codebase.
The company offers a software fork of bitcoin Core which can be included into the third group of “Other competing software projects” and is rather safe as it doesn’t have any risks that can be brought to the network with the projects of other two types.
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When you’re trading digital assets, speed matters — particularly so if you’re engaged in high-frequency trading, when every millisecond counts. Executing orders a fraction of a second ahead of the market can mean the difference between profit and loss. New data reveals which cryptocurrency exchanges are the fastest — and which are struggling to keep up.
Also read:
Speed Analysis Shows Significant
Variation Between Platforms
Data provided by shows marked differences in the speed at which six leading cryptocurrency exchanges fulfill orders. The derivatives exchange looked at three major spot exchanges: Bitfinex, Binance and Coinbase. It also examined three major crypto derivatives exchanges: , Okex and its own platform. It should be noted, however, that Deribit has an incentive to share its analysis, as it recorded the fastest order execution in tests.
The most liquid pair on each exchange was tested to determine the time it takes to add a limit order and execute a market order. Most of the exchanges that were tested failed to achieve either task in under 10 milliseconds, with Okex faring the worst.
Speed analysis for Bitmex
Order speed doesn’t normally concern retail investors, who aren’t reliant on split-second execution when buying and selling assets. However, it matters a lot to professional traders, particularly on Wall Street, and increasingly in the cryptocurrency markets, too. On derivatives exchanges such as Bitmex and Deribit, where cryptocurrencies such as BTC can be traded with up to 100x leverage, timing is everything. And for trading strategies dependent on a fast response to market news, order speed can prove crucial. Many financial brokers base their entire business model around high-frequency trading, relying on algorithmic trading aided by low latency, high speeds and high order-to-trade ratios.
Logarithmic results for all six exchanges tested
Derivatives Exchanges Are Quicker Than
Their Conventional Counterparts
Deribit has invited interested parties to its speed analysis data and inspect it for themselves, to verify its findings. Describing its methodology, the platform wrote:
We measured the time from the initial request until the confirmation that the order had been placed. To compensate for network delays outside the control of the exchange, we recorded the latency for a trivial API request. The duration for these requests was subtracted from the duration of the order requests. The remaining time is assumed to be the true execution
time for a request.
The exchange claimed that it conducted all of the tests on machines that were situated as close as possible to the exchanges in question. The results were as follows:
Binance’s average order execution delay was 37.2 milliseconds, with 0.1 percent of orders executed within 10 milliseconds.
Bitfinex’s average order execution delay was 156 milliseconds, with 0 percent of orders executed within 10 milliseconds.
Bitmex’s average order execution delay was 1.11 seconds, with 13.4 percent of orders executed within 10 milliseconds.
Coinbase’s average order execution delay was 33.0 milliseconds, with 0.2 percent of orders executed within 10 milliseconds.
Deribit’s average order execution delay was 6.1 milliseconds, with 89.6 percent of orders executed within 10 milliseconds.
Okex’s average order execution delay was 127 milliseconds, with 0 percent of orders executed within 10 milliseconds.
Speed analysis results for Deribit
Competition between exchanges is fierce, especially among those that offer the high risk and reward cocktail that is derivatives. While there’s a lot more to successful margin trading than speed, its significance is sure to grow as competition intensifies and traders are forced to fight for that all-important edge.
Do you think speed matters on derivatives exchanges such as Bitmex and Deribit? Let us know in the comments section below.
Images courtesy of Shutterstock.
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