Dark pools are generally private exchanges whose operations and transactions occur outside the standards of systems such as NASDAQ or NYSE. Dark pools allow companies and investors to trade large amounts of economic assets anonymously. These exchanges and platforms do not have any transparent order booklets accessible to the public, but they have advantages that make them more attractive to investors. For example, buying and selling financial instruments extensively and in large volumes without considering tracking or tracking is one of the most attractive parts of these platforms.
Advantages of Using a Dark Pool
- Due to the anonymity of large transactions, the direct effects on the market and the psychological atmosphere are practically eliminated.
- Pricing on trades bases on the average possible asking price, which is the best option for buyers.
- There is no reduction or increase in the final cost, and the whole transaction is done at a predetermined cost.
Because of these benefits, bitcoin dark pools and other digital currencies are growing and rapidly gaining market share. Most exchange offices provide their customers with a dark pools system for an exorbitant fee. So in the cryptocurrency and dark pools ecosystem, it works the same way as traditional markets. In this way, transactions are done in very large quantities and volumes without direct effects on the digital currency market, so the market practically fluctuates very sharply.
Bitcoin Dark Pools and Standard Dark Pools differences
Bitcoin Dark pool is different from traditional dark pools. For example, bitcoin dark pools require a cross-chain transaction that can be done between multiple blockchains. Many exchanges offer currency pairs that use to buy and sell on this type of platform. Second, dark pool orders are different in both cases. Instead of matching the buy order, an MPC protocol activates for matching. In this way, an order divides into several smaller sub-orders known and connected under a specified protocol. Dividing a large order into several smaller orders increases security.
Bitcoin Dark pools use digital authentication methods and protocols to determine fair pricing and eliminate price manipulation compared to regular dark pools. In addition, future developments in cryptographic authentication could make the process of bitcoin dark pools even easier than it already is.
The bitcoin dark pool is so effective in illiquid markets that large trades do not affect market trends. For example, if you place a large order in a digital currency market, the market is likely to be turbulent. But if such an order registers in the dark pools, such a problem will not occur.
Many people do not consider the use of bitcoin dark pools appropriate and think that the number of trades will be reduced from the main market, but if we look at it more closely, it is one of the best ways to trade very largely not hurt to the main market.