I get it. Running a crypto exchange means you have to think about a million different things at the same time.
- You have to worry about hacks and security of investor money.
- You have to think about growing the exchange and profitability.
- You have to think about marketing yourself and staying relevant in a saturated market.
I get it. The thing I don't get is why crypto exchanges are lousy at providing reporting tools to manage your folio.
Cryptocurrency exchanges are in the business of numbers, so why do they lack the tools to manage them?
Financially, it would be in there best interest to do so.
Basic ( and Boring ) Financial Reporting
I've road tested a lot of exchanges and the thing I always find to be lacking are the financial reporting tools. Which I find to be very odd.
The focus of coin exchanges is on the front end, UI and UX and order book. And the back end is always limp in its offering, which again I find to be really strange. Even Binance sucks at numbers reporting.
The reason I find this to be strange is because if you had a suite of reporting features, pie charts and profitability calculators, investors can better manage their portfolios. Which, in turn, benefits the coin exchange as traders would be able to trade better.
If I owned a crypto exchange, I'd focus just as much on the back end as the front end. And go beyond the scant settings you find. In my mind, you would want your traders to "set up shop" on your exchange and do their calculations on your platform as opposed to doing them elsewhere. You want to keep them "on site".
You would think that crypto exchanges would offer a plush set of tools so you can track your monthly profits, pie charts of your holdings and dare I say it, FIAT conversions of all your trades no matter what pair you used.
CoinSpot, the Australia FIAT-to-crypto exchange that I use to offload my worthless paper dollars into crypto, has a bare bones account of my trades... but none of my FIAT deposits show up in the list. Prompting me to contact support to gain access to them. Which is extra work for me and work for their support team. To gain access to information that should be there already.
Accounting is Sexy
Crypto exchanges could really lift their game in the crypto-tax reporting area. But I doubt they ever will as the accounting side of trading is probably an afterthought. But as I said, a solid set of tools would probably encourage more trading if you could get an accurate overview of your profitability and losses.
If some genius out there did the numbers, you probably would find that providing proper portfolio management tools would be highly profitable for a crypto exchange. Providing these features would have some effect in terms of user retention, repeat custom and brand loyalty. Thus adding up to extra profits in the bank.
The lack of back end accounting support by crypto exchanges has created a big opportunity for someone else to profit from. Traditional accounting software companies and crypto startups like TaxBit will fill in the gap. A gap left by a lack of development in the one key area that traders need most. A set of numbers that tell you how exactly you are doing while you drink your morning coffee.
Thanks for watching,
Brendan Rohan - Indie developer of 'next gen' natural medicine from Melbourne, Australia
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Until financial reporting tools drive customers to an exchange they will never be built out. Reporting tools facilitate compliance with legacy centralized systems. Additionally, there are third party tools, which take care of this need quite nicely.