Crypto Market Makers vs. Takers

There are many things the majority of people are yet to fully understand about cryptocurrency, as, even though cryptocurrencies have been with us for over a decade now, many are still unaware of all the possibilities and benefits, not to mention some specifics and how it all actually works. The whole crypto market is designed in a unique way, and traders can actively participate 24/7. That is an extremely significant fact as many are hesitant to dip their toe into the crypto trading world because of the high volatility. Exchange platforms play a key role in crypto trading, and those who want to trade need to pay a fee for trading on that exchange. Now, every exchange platform has different fees, so before making any decision, do your homework.

What also might confuse you is the terminology used in the crypto trading world. Not only that certain words are completely new, but some words and phrases also have entirely different meanings. All of this can be a lot to take in for a newbie, which only leads you to have even more questions like, “What are market makers and market takers, and what’s the difference?”

Now, this is a pretty common question that almost all newbies in the cryptocurrency market ask me. I understand how they feel. A while ago, I was also confused about this until someone helped me understand the difference between these two aspects of crypto exchange platforms. So let us get started.

First of all, what are Market Makers?


Market makers are part of a crypto exchange platform that provides prices for a particular trade and we will try to explain it better. For example, let us say you want to sell 100 tokens at a price of 0.001 BTC each to me.

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So what does it mean? It means that you have quoted a sell order with your desired amount and token price as mentioned above. In this case, you are a Market Maker because you are making the price.

If I accept your order, then you have to fulfill the order by sending me 100 tokens at 0.001 BTC each when I send you the corresponding amount in Bitcoins. On the question of when does an order get executed? Most of us know that when we place buy/sell orders on any exchange platform, we get filled when the price reaches our desired level, or to put it simply, we place our orders, and when they are met, we get billed. But what is the process behind it and how to understand it?

So, the question is did I buy these tokens from you by paying 0.001 BTC for each token or not? No! It means that you have placed a market order with your desired token amount and price and waited for someone to take it. And now, if I paid 0.001 BTC for each token, it means that I have bought your market order. So in this way, you are the Market Maker, and I am the Taker.

Market Makers are helpful in providing liquidity to the exchange platform like BitcoinEvolution at current rates while taking an extra charge for this service. Liquidity refers to the ability of a stock or commodity to be quickly bought or sold without affecting the general stability of its price. It is a pretty important part of this market and helps it be like it is for a while. Market takers are traders who have taken liquidity from the market maker by filling their orders at current rates, and both are crucial elements because if it weren’t for them, this whole concept would not be possible. And without this concept, it is a big question what would happen to the whole crypto market.

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Who is a Market Taker?


As mentioned above, I am a taker because I filled your market order with my own buy order, but I needed to follow your offer and file it with a certain amount. The one you have placed earlier to sell 100 tokens at 0.001 BTC each., and if I want to buy them, I need to offer that amount of money for each of them. That is the main and the most important difference between a Maker and a Taker of an exchange platform, and we hope that we described it so everybody can understand.

Another important question is on what basis are these orders filled? Let us take another example to understand how it works since everything is much easier with examples. This time I am quoting myself as a maker of the order with a desired token amount, price, and type (market buy order).

So, in this case, I have quoted a market buy order which means that whoever accepts my quote by filling it with their own sell order will be considered as a Market Taker and not me. Please keep in mind that both types of orders result in the same thing- a trade or a transaction between two users on an exchange platform but the principle is slightly different.

The main purpose of a market maker is to add liquidity and depth to the order book of an exchange platform by quoting buy/sell orders. But market takers are users who take liquidity from the order book of an exchange platform by placing their own buy or sell orders. Both of them are important to the market, and it is impossible to have liquidity without one of them because if there are no takers, makers do not have sense.


Final Thoughts

Now when we understand the difference between Market Maker and Taker on crypto exchanges, we should be able to trade with confidence by using this knowledge. It is crucial to know enough about the important terms and understand various things in the crypto world because without elementary knowledge we cannot expect to gain any profit.

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We described the main difference between Market Makers and Takers on an exchange platform in this article, but there are some things to be careful about. For example, it is crucial to be careful and don’t get it wrong that Market Makers are always profitable for you because if there are no takers of your order, then you will end up getting nothing in return. We all want to make some profit out of cryptocurrencies, and because of that, we need to learn all the time and understand what we can expect and when we can expect it. It is true that this market is unpredictable, which makes things much harder for us, but we need to be prepared the best as possible because it is the only way to gain some profit and end up with more money.