Recently, there have been a number of trade mining models that have cropped up, and not everyone agrees as to whether or not they are a good idea. There are those who worry that there might be some type of scam being perpetrated with some of the options, while others believe that they are a legitimate option in a field that has become extremely competitive. For those who are considering trading on one of the exchanges, such as with CET on CoinEX, there are some things you need to understand and be aware of first.
Understanding Trade Driven Mining
The goal of CoinEx is to convert the transaction fees that they charge into their own tokens, which are called CETs. It is important to realize that these tokens are not the same as coins. The exchange will then distribute 80% of those fees to the users of the exchange each day. The amount that a user receives will depend on the trades that they made during the day.
Those who are currently using ASIC Bitcoin miners, or who are thinking about using them for mining, might be wondering just what any of that has to do with mining. Truth be told, it does not actually have anything to do with mining other than the fact that it is using the word mining as more of a marketing tool than anything else. Rather than using coins, as other mining exchanges use, they are using tokens. CET is the CoinEx Token, and it is based upon the ERC20-Standard, which means that it has been pre-mined. When you are a part of the CoinEx exchange, there is no actual mining that you are going to be doing.
It is also important to realize that the CET will not have any value outside of the exchange. The only time that you are going to be using those tokens is when you are trading on the exchange.
Is This a Good Alternative to Mining?
While there are some out there who are looking to this as a different way of getting into cryptocurrency, most will agree that there are too many things wrong with the system of trade driven mining. While there is the promise that CoinEx and similar types of exchanges that are using tokens can help to grow your wealth, they tend to be a bad option for most. They take the money or the cryptocurrency that you have put into them and then turn it into these tokens that are only usable on the exchange currently.
Some might profit from this system, but most will not. Those that do will generally be the early adopters. Those who want to get into cryptocurrency will more than likely want to start looking at the options available through actual mining exchanges with options that are more tried and true, such as Bitcoin and Litecoin. It tends to be a safer option.