Bithumb Becomes the Largest Cryptocurrency Exchange Thanks to Incentivized Trading

By Prashant Jha

Bithumb, the South Korean cryptocurrency Exchange, has become the largest cryptocurrency exchange with $1.2 Billion worth of trading on a daily basis. However, surprisingly the number of visitors on the platform is on the decline.

The November exchange review done by CryptoCompare shows a steep rise in the trading volume of Bithumb from $323 Million in Sept-Oct month, to a whopping $1,2 Billion in Oct-Nov. A massive 2895 jump, however, another intriguing discovery shows a decline in the daily visitors by 20%.

The strange discovery is not limited to just Bithumb, but other exchanges like Coinbene and CoinTiger shows a similar rise in trade volume although the daily visitor traffic is decreasing.

The observation in case of Bithumb turns a little stranger when we compare the trade volume to daily visitors against other exchanges. To give you perspective, Bithumb the largest crypto exchange has a trading volume of $1.2 Billion with 5,000 unique daily visitors. Binance, another major player in the exchange market has its daily user count at 67,200 while the trading volume remains at an average of $600 million.

The Probable Causes of the Surge

The most certain reason for the surge is being attributed to the recent acquisition of shares by the Singapore-based BK Global Consortium for $350 Million. The new partners have reportedly implemented a “series of airdrop competitions, raffles, rebates, and other programs” to attract the non-Korean users towards the exchange.

Another prominent reason for the phenomenal rise is the implementation of the controversial trans-free mining model by the exchange. The new mining scheme rewards certain investors with “Bithumb Cash” in exchange for trading specific volumes. The report states,

“A volume increase on an exchange, combined with a decrease in visitors may point towards incentive programs such as competitions, trans-free mining, rebate programs or similar.”

 

The Incentivized Trade Festival

The report published by Cryptocompare made some exciting revelations putting some light to the irregular trading volumes on the exchange. The Bithumb exchange reportedly orchestrated “Super Airdrop Festival” and “Special Gift” leading to such high irregular trade volumes. The Exchange carried out a bonanza offer guaranteeing 120% fee payback promotion, which led many users on the Exchange to wash trade against themselves to gain that extra 20%.

The above observations surely give a broader insight for such a surge in trade volume in a brief period. However, these Ponzi schemes have led to its delisting from the Aggregate Pricing Index (the CCC AGG). If Exchanges like Bithumb wants to maintain its dignity in the eyes of the general public, these kinds of schemes need to be out of the picture. The Crypto Exchanges are always under the scanners of law agencies, and these kinds of news not only put the Exchange under the scrutiny but all of the crypto worlds.

Final thoughts

The recent surge in trade volumes is nothing more than data manipulation and emptying loads of additional goodies to look good on paper. If the trails of visitors do not add up to the surged volume, the so-called success is not going to last for long. Bithumb and other Exchanges need to understand that, or else they would only give it in the hands of authorities to be mowed down or cut short.