Due to their decentralized nature and limited regulations, OTC markets might come across as uncertain and unpredictable, especially when starting your journey in the world of investments. Undoubtedly, OTC desks shoulder tremendous responsibility in terms of safety and security of transactions due to their working concept. To answer the question “are OTC markets safe?”, one needs to delve deeper into analyzing the various aspects of OTC trading first.
OTC Markets Explained
You must be familiar with the working of cryptocurrency exchanges. If not, suffice it to say that exchanges are businesses or platforms that serve as marketplaces for traders to buy and sell cryptocurrencies. Therefore, the exchange acts as an intermediary between the buyer and seller of cryptocurrencies, facilitating the trade whenever there is an overlap between the requested and bidding prices on the two sides.
Over-the-counter, or OTC companies do just the opposite. These businesses and platforms enable direct trading between the two parties, without any involvement of intermediaries. One of the biggest highlights of OTC markets, however, has to be the high trade values they deal in, compared to digital exchanges that have a smaller cap.
Therefore, it is easy to surmise that the answer to what type of trading is most profitable has to be an OTC desk crypto offering. OTC markets usually begin from a value of around $25,000, which is a plus for sophisticated investors, institutional investors and market ‘whales’.
The Safety of OTC Markets: An Impressive Framework
The increasing numbers of traders and investors exploring and reaping several benefits from OTC markets speak highly of its safety already. No wonder, currencies like BTC and BCN crypto are already finding high trade volumes on over-the-counter desks.
This assured safety of OTC markets rests on its underlying framework of privacy. Unlike exchange trades, where personal information of traders may be masked but financial information is still accessible and subject to theft or manipulation, OTC trades bring the benefit of complete opacity to any kind of sensitive data, personal or transactional. From transaction details to trader documentation and identity, all such sensitive information remains masked in OTC trading.
At the same time, the two trading parties on both ends are directly involved with each other. The exchange of assets takes place without the involvement of any intermediary, thus there are fewer risks involved. It is true that such direct trader-to-trader transaction leads to higher transaction fees being charged, but the unparalleled safety and privacy you earn from OTC trades is worth this investment from your side.
The Added Benefit of Superior Control
Compared to digital crypto exchanges, where you lose custody over your cryptos immediately after putting them on the exchange, trading using an OTC desk ensures that you can retain your crypto assets all the way through. No wonder, crypto exchanges suffer from cyber attacks and infiltrations more often, because the authority and control over digital assets lies with the exchange and can be easily affected.
The retention of custodianship of crypto assets by traders themselves, thanks to the absence of intermediaries, is the highlight of OTC trading, and ensures its safety. Investors alone are responsible for their trades, and if there is no discrepancy in the intention of the individuals or businesses participating in the trade, there is nothing to worry about.
Interestingly, traders also have control over price fluctuations, which is a major concern on digital crypto exchanges. Understand this – as trades are anonymous and opaque, the platform or anyone involved with it is unaware of actual trade volumes. Therefore, the transactions have no impact on the crypto assets market overall, meaning there will be no price fluctuations due to the highs and lows of trade sizes and volumes. Apart from privacy, you get the added benefit of greater profitability through large trade quantities, without suffering from steep price fluctuations. Sounds amazing, right?
Final Thoughts on OTC Markets
Truly speaking, no investment is completely devoid of risks. However, with OTC markets offering a guaranteed level of privacy to your sensitive information, no involvement of intermediaries and thus less chances of theft or cyberattacks, greater control to traders in terms of crypto assets, transactions as well as market prices, and ability to garner huge profits without having to worry about information theft, OTC markets paint a bright picture for investors.
All you need is a smart and strategic trading plan and well-designed risk management. That, and a reliable OTC desk to handle your hefty transaction volumes with safety, speed and accuracy. OTC desks such as Secure Digital Markets are doing exactly this for investors globally, through their straightforward and user-friendly trading process. Proudly settling transactions on a daily basis, Secure Digital Markets accepts trades that are $25,000 or larger, though you can get in touch with us if you want to accommodate a smaller transaction.