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0x Coin (ZRX) Cryptocurrency Guide
0x coin (ZeroX) has been making waves in the cryptocurrency space and causing a lot of excitement amongst investors. We’ll explain what ZRX coin is, what it does and why you might consider investing in it. TotalCrypto always encourages caution before making any cryptocurrency investments and we recommend you do your own research.
- 1 What Is 0x Coin?
- 2 Why Use 0x?
- 3 How Does ZRX Coin Work?
- 4 Important Concept: Liquidity & Order Books
- 5 How Has 0X Coin Been Able To Reduce On-Chain Transactions?
- 6 How Is The ZRX Coin Used?
- 7 The 0x Team
- 8 The Future Of 0x
- 9 The 0x ICO
- 10 Should I Invest In ZRX Coin?
- 11 How Can I Buy 0x Coin?
- 12 Conclusion
- 13 Resources
What Is 0x Coin?
The first thing to know is that 0x is also commonly referred to as ZRX coin. Often people will use either term, but they are talking about the same cryptocurrency. The 0x team describe their project as “an open protocol that facilitates trustless low friction exchange on Ethereum based assets”. What does this jargon actually mean? Well, we have thousands of different digital assets on the Ethereum blockchain right now. A classic example would be an ERC20 token.
These ERC20 tokens are digital tokens built on the Ethereum blockchain and are issued by cryptocurrency projects who have launched their own initial coin offering. 0x coin is actually an ERC20 token and over 500 different cryptocurrencies have issued this class of token. Essentially, ERC20 tokens are Ethereum’s solution for making a cryptocurrency quickly and easily.
With all these different digital assets built on Ethereum, it is actually very difficult for these different assets to communicate with each other. Put simply, 0x is trying to make it very easy to swap one Ethereum based digital asset for another. For example, swapping ZRX coin for Ethereum.
Now you know what 0x does, now you need to know what it actually is. Well, it’s what’s known as an ‘open public infrastructure’. This just means that 0x create the blueprint or method of exchanging one Ethereum based asset for another. It’s exceptionally important to know that 0x is not an application. Instead, the 0x methodology is used by different apps and platforms that want the ability to swap different Ethereum based assets. An example of a platform that might want the 0x solution is a cryptocurrency exchange.
Why Use 0x?
Now you know what ZRX coin does, you probably want to know what makes it better than what’s out there already? In a nutshell, 0x is all about making swapping assets faster and cheaper.
Ethereum pioneered the creation of the smart contract. This digital contract allowed for the peer to peer exchange of digital assets, without the need for a third party. Why is this important to know? Well, before smart contracts came around, cryptocurrency exchanges had to be centralized. This just means that the exchange had to be run by a third party, who oversaw the transaction. Pretty much any well-known cryptocurrency exchange like Coinbase, Kraken or Binance is currently a centralized exchange. The problem with this exchange type is that user funds are stored centrally and could be hacked.
However, cryptocurrency exchanges are evolving and the last few years have seen the rise of decentralized exchanges. On these exchanges, individuals actually swap digital assets peer to peer and there are no middlemen involved in the transaction at all. This means cheaper fees and better security guarantees.
Many in the cryptocurrency industry see decentralized exchanges as the evolution of cryptocurrency exchanges. 0x and their blueprint for swapping one digital asset for another makes it the ideal solution for this type of exchange to use.
How Does ZRX Coin Work?
Currently, the problem faced by decentralized exchanges is that inefficiencies in their design result in high costs being passed on to market makers. This makes decentralized exchanges a less attractive proposition to market makers and is why there is a low volume on these exchanges.
Why are costs currently high on decentralized exchanges? Basically, every time something is done on this type of exchange a smart contract is created to execute the command. This means that whenever users deposit funds, create an order or cancel an order, a smart contract is created. Every smart contract created requires a fee to be paid in Ethereum to make sure the command is processed.
This means that on a decentralized exchange, you will pay a fee to deposit on the exchange, a fee to swap a cryptocurrency and a fee to withdraw. These fees all add up and significantly reduces the attractiveness of active trading on decentralized exchanges. This creates a situation where decentralized exchanges offer greater security guarantees than their centralized counterparts. However, they fall well short when it comes to operating costs and offering access to a wide range of digital assets.
The ZRX crypto aims to solve these problems faced by decentralized exchanges through the use of off-chain relays. Basically, ZRX coin has found a way to move a significant number of transactions off-chain and finally settle everything in a single on-chain transaction. This means only one fee is paid for the smart contract, instead of paying for the creation of multiple smart contracts. Basically, fees now only need to be paid if two different cryptocurrencies are actually swapped; meaning that fees for creating or amending orders are now eliminated.
Important Concept: Liquidity & Order Books
Running an exchange is all about having what is known as a liquid market. Liquidity is just a way of saying that there is a lot of activity in a market. This means that an asset can be bought or sold quickly, without impacting on the price.
The easiest way of explaining order books and liquidity is looking at the betting market on the Betfair exchange. In a football game against the two unknown teams, Mbabane Swallows and Etoile du Sahel, let’s look at betting on the draw.
The order book is just the amount of money people are willing to bet on the draw or bet against it at a specific price. Here we can see that the people on Betfair are only willing to risk £19 at odds of 25 to 1 to bet against a draw. A speculator can come on Betfair and only get £19 matched at this price. However, another £22 is available at worse odds of 24 to 1 and £65 at 22 to 1. The amount of money on offer at different prices is the order book.
Liquidity matters because if we wanted to bet £5,000 on the draw for this football match at the current odds of 25 to 1, we are prevented form doing so. Instead, we can only take just £19 at the current odds and for the rest of our bet, we would either have to take ever decreasing odds or just not bother making our £5k bet. The very thin order book on Betfair for this market has therefore made it exceptionally illiquid.
A similar thing happens in cryptocurrencies. For you to be quoted a price for a crypto, there is an order book behind that.
How Has 0X Coin Been Able To Reduce On-Chain Transactions?
You should now understand why if a market on a cryptocurrency exchange is illiquid, then there isn’t going to be much trading activity at all. The liquidity issue is actually a major problem for decentralized exchanges.
0x coin has solved this problem by allowing anyone to maintain a public or private order book and charge a fee for the liquidity. The companies or individuals that own these order books are known as relayers. These relayers add liquidity to the 0x platform and facilitate trades between makers and takers. An example of a maker is a person who has 10,000 0x coins and is willing to sell at $1.10. A taker would be a person that wants to spend $11,000 on 0x coins and is happy with taking a price of $1.10. The relayer can be seen as generating value and earning a fee for making this trade possible and earns ZRX coins for facilitating it.
The important thing to get is that the relayers do not actually process the transaction. Instead, it’s all done through smart contract and the relayer does not take possession of any funds whatsoever. This means that the transaction can be done in a trustless way, with no third party.
In terms of reducing smart contract fees, everything except for the final trade between the taker and maker is done off-chain and does not use a smart contract. This means that fees are only payable for the actual transaction and not for setting up orders or anything like this.
Point-to-point orders are essentially peer-to-peer transactions. This is when a maker wants to swap with a specific taker. Basically, the maker can send an order relay in point-to-point mode and only the designated taker can make the swap go through. Why is this feature important?
Well, large digital asset swaps do not usually take place on either centralized or decentralized exchanges. Instead, they occur in over-the-counter markets. Companies running an over-the-counter trading service are the places that whales go to trade cryptocurrency. Essentially, the over-the-counter operator might have orders for $100 million to buy ZRX coin and people with $100 million worth of ZRX coin to sell. The over-the-counter company would fulfill this order off-exchange to ensure the price of the asset doesn’t move.
Put it this way, if a $100 million order for any cryptocurrency was placed any one person at any exchange, it’s going to move the price of the asset. Crypto is still a relatively small market and is not liquid enough for such large orders. By using an over-the-counter solution, massive buyers and seller of cryptocurrency avoid these problems. That’s where 0x point-to-point orders become exceptionally useful.
How Is The ZRX Coin Used?
Basically, if anyone swaps cryptocurrency using the 0x protocol then all fees will be paid in ZRX coin. Relayers are also paid in ZRX coins for the liquidity they provide to the platform. In short, if there is any fee associated with the use of 0x, then it will be denominated in ZRX coins. The coin also plays a role in governance and voting for future protocol changes.
The long and short of it is that if 0x is widely used then the value of the 0x coin should rise.
The 0x Team
The 0x project has the potential to usher in the next step of cryptocurrency exchange evolution. However, every great project needs a team capable of taking it to the next level. With 0x, the team is 18 people strong. TotalCrypto are impressed with the blend of skill sets that the team has to offer and the levels of experience. Indeed there is a significant number of ex-Apple, Facebook and Google employees working on the project. Due to space limitations, we sadly cannot go into depth on every team member. However, we will give you an overview of the 0x founders.
Co-Founder & CEO – Will Warren: Unlike most successful tech company founders, Will actually completed his first degree in Mechanical Engineering at the University of California San Diego. He then went on to do a Structural Engineering PhD at the same university and made the standard tech founder move of dropping out.
Will went on to become a technical advisor for Basic Attention Token and then co-founded the 0x project.
Co-Founder & CTO – Amir Bandeali: Amir started off his professional career at the University of Illinois and completed his BSc in finance. Amir followed up his interest in financial markets by taking three trading jobs at Chopper Trading and DRW. Evidently, Amir thought that his knowledge of financial markets trading could be put to better use and decided to co-found 0x.
The Future Of 0x
The 0x project has already achieved a lot in its short lifespan. Indeed, in mid-2018 Coinbase acquired the Paradex exchange for an undisclosed fee. Paradex uses the 0x protocol and with this recent acquisition, it would be surprising if Coinbase integrated 0x technology into their entire platform in the future.
0x has the potential to be the next step in the evolution of cryptocurrency exchanges. Indeed their value proposition has resulted in the protocol already being quite well adopted in cryptocurrency. With cryptocurrency exchanges like Binance boasting of profits higher than Deutsche Bank in 2018, it is not surprising that running a crypto exchange is highly lucrative. However, cryptocurrency exchange hacks are an issue in the market. 0x provides a way for exchanges to provide better security for their customers, whilst also reducing decentralized exchange fees.
We have little doubt that if cryptocurrency markets grow, 0x will directly benefit from this increased adoption. Indeed it could potentially become the blueprint on which every crypto exchange is built on.
The 0x ICO
The 0x ICO took place on in August 2017 and raised $24 million. Early backers of the project were able to get exposure to the project at just $0.048 per ZRX coin. In other words, ICO investors are already sitting on a 23.64x return.
Since their ICO 0x coin has gone on to become a top 25 cryptocurrency. This just goes to show that a cryptocurrency project doesn’t need to raise $40 million like some other crypto projects have. Even though 0x raised less money in its ICO than other projects in late 2017 and early 2018, it still remains one of the best-funded cryptocurrencies out there and we are confident it will continue to see growth in 2018 and beyond.
Should I Invest In ZRX Coin?
- A significant number of decentralized exchanges have realized the value the 0x protocol offers and have integrated the technology.
- Decentralized exchanges are widely viewed as the future of crypto exchanges. 0x solves the major shortcomings these exchanges have. This should make them more competitive with their centralized counterparts in the future.
- The need for the 0x protocol should increase as cryptocurrency prices rise. Quite simply, as crypto prices go up centralized exchanges become ever bigger targets for hackers.
- The ZRX coin has a real use case that makes sense.
- The protocol currently only supports Ethereum based assets.
- It still remains to be seen if exchanges like Binance will use the 0x solution or create their own.
How Can I Buy 0x Coin?
Coinbase has recently announced that it may be listing ZRX coin in the near future. If this comes to pass, the easiest way to buy 0x will be directly through Coinbase. However, right now our top way of buying 0x coin is by using a combination of Coinbase and Binance. Our easy how to buy walkthrough will show you everything you need to know to buy this crypto.
There is no doubt that cryptocurrency exchanges are big business. Indeed, they are one of the few businesses in the space that actually generate cash flows right now. The problem with cryptocurrency exchanges is that the majority of trading volume happens on centralized exchanges. This creates an environment where crypto investors using exchanges are at risk of being hacked.
0x is creating a cryptocurrency ecosystem where investors don’t have to run the risk of using centralized exchanges. Instead, they can enjoy both the benefits of a centralized and do this with the security that decentralized exchanges offer. 0x also reduces the costs for using these more secure exchanges, therefore making them more viable to use.
ZRX coin has certainly positioned itself to play a key role in the crypto exchange industry. The TotalCrypto team would love to see support for other non-Ethereum based assets such as NEO. However, we are confident that the 0x team will implement this support in the future.
Overall, we love 0x as an infrastructure play, particularly because it’s so well positioned in the most lucrative area of the crypto economy.
Below we’ve listed some key resources relevant to ZRX coin.
? Safest ZRX Wallets
Hardware wallets are the safest crypto storage solutions available. These wallets store your private keys and do not expose them to the outside world, making your crypto as safe as possible. Maybe you should treat your crypto like the million dollars it could well be worth one day?
Can’t decide if Trezor or Ledger is best for you? Just check out our Ledger Vs Trezor comparison guide.
? Best Free Wallets
As 0x coin is a ERC-20 token, you can use any wallet that is compatible with Ethereum.
? Best Crypto Tracking App For ZRX Coin
Want to dive in deep into 0x? Just read their white paper.