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Crypto exchange Bitex’s new utility token aims to simplify trading in rupee

May 17, 2021, 17:50 IST
BCCL
  • The company will sell the token at a face value of Rs. 10 till June 1, while BTX lists on the exchange on June 4.

  • Like most new coins today, the Bitex Coin is also based on the Ethereum chain and will be the native currency for the Bitex exchange.

  • The coin is a utility token -- it has value, but it can’t be used to purchase another product.
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Crypto exchange platform Bitex, on Wednesday, announced its Bitex Coin (BTX) in over 50 countries. According to Bitex, which is based in the United Arab Emirates (UAE), the total support of BTX will be capped at 1 billion to be issued by Global Cryptocurrency Exchange, and 20% of this will be available for public sale through an Initial Exchange Offering (IEO). The company will sell the token at a face value of Rs. 10 till June 1, while BTX lists on the exchange on June 4, which is when a second round of public sale will begin.

Like most new coins today, the Bitex Coin is also based on the Ethereum chain and will be the native currency for the Bitex exchange. The company says it will help in “mass adoption of cryptocurrencies” by reducing hurdles in fiat currency to crypto conversion, bank related delays and high fiat deposit/withdrawal fees on platforms. The company said it will charge zero trade fee for BTX trading pairs, and 50% fee for trading with other cryptocurrencies.

What are utility coins?

The coin is a utility token -- it has value, but it can’t be used to purchase another product. In essence, you cannot go to a platform that accepts crypto payments and pay with BTX, at least for the time being. Utility tokens allow crypto exchanges like Bitex to increase their overall market share in terms of trading volumes, since they can be traded only on their own platforms. Platforms like WazirX and Binance also issue their own currencies.

Utility tokens can become full-fledged cryptocurrency in future, but there’s usually a fixed period for that.

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“A significant interest in cryptocurrencies has been observed since last year across India and around the world. Yet despite the mainstreaming of the digital asset, it continues to be concentrated among few investors and mass adoption is still at the periphery owing to several systematic challenges ranging withdrawal and deposit time, banking related delays among many others,” said Monark Modi, chief executive and founder of Bitex.

“Currently, high fiat deposit and withdrawal fee, custody of fiat funds and 2-5 days to process fiat withdrawals are other major deterrents to trading on cryptocurrency exchanges,” the company said in a press release on Wednesday.

But despite future use cases, the crypto industry has been largely settling into asset-based trading. While popular and mature crypto like Bitcoin and Ethereum still can be used as currency, it’s unlikely that smaller coins like BTX will grow beyond the asset stage. That is, it’s unlikely that they will be widely accepted as modes of payments in future, though one cannot rule them out either.

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