Gemini, the Bitcoin and Ethereum exchange run by the Winklevoss twins, has announced that it will allow block trading to take place on the platform. As explained in a press release posted by Cameron Winklevoss, ‘Block Trading enables our customers to buy and sell large quantities of digital assets outside of Gemini’s continuous order books, creating an additional mechanism to source liquidity when trading in greater size.’
Allowing block trades on Gemini makes the exchange more desirable for day-traders and brokers who handle large amounts of cash. The post by Mr. Winklevoss outlines the important details of how block trading works on their platform. Any customer can make block trades, but market makers only find out information regarding quantity and collar price. This ensures that individuals who move huge amounts of cryptocurrency around (often referred to as ‘Whales’) do not create too much of an adverse reaction on the market— either by accident or as a deliberate and coordinated attempt at manipulation.
One of the defining principals of this system is that of its ‘Indication of Interest’ (IOI), which is a means of having the exchange determine how much interest will be generated by an order. For this to be determined, users must specify whether they want to buy or sell, the quantity they want to handle, the minimum quantity required to be filled, and a price limit. To create a level playing field among traders, all of this information is handed to all market makers simultaneously.
In the press release, Cameron Winklevoss expressed the company’s desire and commitment to be a ‘transparent and rules-based marketplace,’ meaning that their decisions regarding the way block trades work are designed to create fairness among traders. Mr. Winklevoss also clarified that the upcoming block trading capabilities would not interfere with their more traditional auction order books.
The features go live on April 12, 2018, at 9:30 am Eastern Time. The minimum quantities for a block trade are 10 BTC or 100 ETH, but this will likely be updated should there be any drastic changes to the price of Bitcoin or Ethereum.
Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.