By Nathaniel Whittemore & Clay Collins

Introduction

The crypto space is a peculiar mixture of idealists and opportunists; of true believers and rampant speculators; of HODLers and traders. What these groups have in common is the business of belief. Those low time preference folks who care about building the financial infrastructure for a new age need the speculators to provide capital to help networks grow. The speculators need the narratives, the memes, and the long-term vision of the other group to make their bets pay off. 

For all their differences, these groups share a common infrastructure in the exchanges. Cryptocurrency exchanges were the first and remain the most important businesses built around crypto protocols. Their job is to make the business model of belief work. Yet they are more than just utility platforms for acquiring, selling, and gambling with crypto. Exchanges represent some of the most iconic brands in the crypto space and are led by some of the best known and most debated figures in the industry. 

What it means to be a crypto exchange has changed wildly since the early days of bitcoin. In many ways, the history of crypto exchanges tells the story of the evolution of the industry as a whole. Exchanges are businesses, and opportunistic ones at that. As we watch them shift, change, and evolve, what we’re really watching is a rapid response to the changing demands of crypto markets. 

That evolution is head spinning. In the early days, exchanges were simply trying to provide the most basic infrastructure necessary for buying and selling bitcoin. Today, exchanges are locked in a rapidly evolving battle for global supremacy, competing to stand out by offering ever-greater leveraged trading (or, on the other hand, greater compliance). 

Which exchanges lead the global pack and why can be revealing. Take, for example, the shift from the long-tail ICO-era dominance of Binance to leveraged trading on BitMEX during the 2018 bear market. It wasn’t random chance that caused the shift from “When moon?” to a platform where one of the CEO’s favorite sayings is “Good traders swing both ways.” It was exchanges adapting to the needs of a different time. 

We’ve organized this history of exchanges into a set of phases. Each of these phases tells the story of what it took to compete as an exchange at that time and what cycle the larger market was in. 

We start not at Binance or Gox or even the very first exchanges like BitcoinMarket.com but back before bitcoin was even invented.