Steemit Crypto Academy Contest / S1W3 – Blockchain through the concepts by @cinnymartins

Hello guys welcome to my blog once again. The steemit Crypto Academy has come up with another interesting task which I'll be most glad to join in. In line with the theme of the week, I'll be talking about the terms 'Market maker and Taker'. This is one concept I've come to find interesting in the past few week especially after getting better in trading with the help of our amiable professors.

I'll like to tell you guys about the whole market taker and maker stuff, who they are and why they exists.

Let me go simple here and tell you that a market taker is simply one that takes liquidity out of the market while a maker is one that provides liquidity to the market. Some may even choose to be more simplistic in their definition and say that makers are those who place limit orders while takers place market orders, although this is true, thats is not always the case, especially while using the binance trading platform.

Now we talked of liquidity earlier right, let me quickly explain that to you. When we talk of liquidity, in the crypto world or any where else, this simply refers to how quickly an asset can be sold fot cash. When you can easily sell an item, its said to be liquid( eg Gold) on the other hand if it proves difficult to sell, its said to be illiquid.

Speaking of existence of these terms, well they exist simply because of what they do to the term 'liquidity'. While one provides liquidity, maker, the other takes liquidity off the market, taker.

So we have established that makers provides liquidity and takers takes liquidity. Let me give a little analogy to explain how they do just that.

Think of takers as you and I who just loves to go to the market to get stuffs from the best available store offering us the best service as well. All we have to do is to go there, take what we need and come back without much hassle.

On the other hand, think of makers as the shop owners. They have made efforts to provide those goods needed and make them easily available with the benefit of saving you time and some other benefits.

You get the analogy? Now back to the big grammar stuff, makers are those that place limit orders in the market and fill out the order book there by providing liquidity, while takers place market orders and therefore take away liquidity from the market.

In a more general term, the whole idea of makers and takers is to provide or take liquidity from the market.

Well there certainly is. For the takers, they get to have their wish filled out almost immediately meaning that thus saves them time. The down side to this is that you get to pay some more fees to fill out your order quickly.

As for the makers, well they get compensation from the trading platform for their efforts to provide liquidity to the market. This compensation usually comes from the takers fees in which they get a percentage of the paid fees. The downside to this is the time, your order will not be filled immediately and stands the chance of the order never getting filled.

Well we now know the concept of market making and taking, would you look at that! I don't think the crypto world would be the same without these guys, they consist basically of everyone in the market right now.

The only way I see this improving in the future is by thr inclusion of regulatory bodies into the mix. This way, makers would better price their assets and make more readily and easily accessible to the takers. More incentives would go a long way to encourage the makers too.

At some point in my trading experience I've been a taker and a maker and I'm sure you've been in similar positions too in the past.

Thanks for stopping by, that'll be all for now.