There specific counterparty risk larger exchanges

Bitcoin-Like Protocols and Innovations 429

BOX 21.2 Some Key Approximate Bitcoin Statistics • 60,000 transactions per day, or 40 per minute, or 400 per 10-min block.

according to : 672 on Mt. Gox, 701 on Bitstamp, 708 on BTC-e, 700 on Bitfinex, and 1088 on LocalBitcoins. The prices quoted on 1 min later: 672 on Mt. Gox,

700 on Bitstamp, 711 on BTC-e, and 741 on Huobi.

For all its potency, the Bitcoin protocol is merely a mechanism for validating and passing around bitcoins. Converting it into usable services requires the creation of a whole range of complementary capabilities. There is already an emerging constellation of service providers who aim to create a role for themselves by making the process of managing bitcoins more useful and convenient for users. The following is meant to be an illustra-tive rather than a complete list of innovations being developed, and the highlighted providers are again meant to be illustrative rather than necessarily the leading ones in each area.

430 Handbook of Digital Currency

The larger exchanges, such as and the recently bankrupted of Japan, operate bitcoin markets on a continuous basis, with the exchange assuming the counterparty risk. Before transacting, market participants need to fund an account at the exchange with the currency they wish to sell: depositing bitcoins if they wish to dis-pose of bitcoins or depositing fiat currency if they want to buy bitcoins. Exchanges typ-ically accept both market orders (buy/sell transactions to be executed at the prevailing market-clearing price) and limit orders (to be executed if the price reaches a certain threshold). Once transactions are completed, users can withdraw their newly acquired currency: sending bitcoins to their personal bitcoin wallet if they bought bitcoins or transferring money to their bank account if they sold bitcoins. Transacting at the exchanges is relatively quick, but depositing and withdrawing cash in a user’s account at the exchange can take longer, depending on the interbank money transfer arrange-ments in each country.

Bitcoin exchanges would need to operate in every jurisdiction where bitcoins are used, though in practice, they tend to operate very thin markets in developing countries. has developed a white-labeled platform for creating Bitcoin exchanges and aims to partner with locally licensed players in developing markets in order to accelerate the spread Bitcoin exchanges.