The Fabriik ecosystem provides a great resource for investors to buy, trade and hold all digital assets regardless of their value. When it comes to digital currency, there are two options that fit all investor types. Digital exchange and OTC (Over the Counter) platforms. Knowing which one to use for your digital asset investing is important. So, what’s the difference?
On an OTC desk, trades happen between two parties setup through a broker. This type of transaction provides more privacy because it does not exist in public domain. While OTC desks mainly facilitate fiat-to-crypto and crypto-to-fiat, some OTC desks support crypto-to-crypto asset swaps. Since trades on an OTC desk take place independently of the market, they don’t directly affect the liquidity of the asset. The trade has a fixed price which is agreed upon in advance and the broker is responsible for executing the trade at that value, therefore liquidity and slippage are not considerations when trading on an OTC desk. For those investors wanting to sell or trade larger quantities of digital currency in a single transaction, an OTC desk is usually the best option.
Exchanges are a marketplace for traders to buy and sell digital assets including cryptocurrencies. Exchanges support many different coins and show the current market prices of those they list. It’s quite common here for fiat-to-crypto and crypto-to-crypto trades. A trade is executed when the exchange observes that there is an overlap between a seller’s asking price and a buyer’s bidding price. Unlike an OTC desk, transactions done on an exchange are considered public. Fees and commissions are set by the exchange and can vary with the type of digital asset traded. An exchange is a great place for new investors who aren’t ready to drop large sums into the digital asset arena.
It’s important to use a trusted regulated exchange like Fabriik. When a trader puts their digital assets on an exchange, they are technically no longer theirs. Essentially an “IOU” is given for the asset until it is removed from the exchange after the trade. Exchanges act as custodians of your assets. This can be very problematic in circumstances where exchanges are hacked or simply shutdown. Storing assets on a regulated exchange acting as your custodian or in a non-custodial wallet like MoneyButtonare the safest ways to protect digital assets. Using an OTC desk, crypto assets are owned throughout the entire trade. Transferring ownership can happen instantly upon the actual exchange between the two parties. Here, the investors are solely responsible for each trade and investors must ensure their chosen broker is reputable and trustworthy.
