Bitcoin Exchange Kraken Creates “Dark Pool” For Anonymous Trading

Most people are drawn to bitcoin on the promise of being anonymous when using this disruptive digital currency. However, nothing could be further from the truth.  Bitcoin is not anonymous in any way, or not in the traditional meaning of the word, anyway.  But Bitcoin exchange Kraken is looking to up the ante, as they guarantee anonymous trading for large Bitcoin buyers.

Dark Pool – The New Way To Buy Bitcoin in Large QuantitiesKraken Small

With a name such as “Dark Pool”, Kraken is putting themselves in a bit of an awkward position. Bitcoin and digital currency have been associated with shady transactions and the Deep Web from day one, and creating a new service with the term “Dark” in it will not do it any favors.  Especially when linking the term “Dark Pool” to a way of buying Bitcoin anonymously.

That being said, the term “Dark Pool” refers to the fact that you can, in fact, remain anonymous while buying large volumes of Bitcoin from Kraken. Oddly enough, there is no information regarding Dark Pool on the Kraken website – at the time of publication – yet several customers have received this information as part of their Kraken newsletter.

What makes Kraken’s “Dark Pool” so interesting is that this is a separate Bitcoin order book, which remains invisible from the regular exchange’s order book. On top of that, every trader using Dark Pool can only see his or her own trades, and nothing more. In a way, a sense of anonymity is being created by the popular Bitcoin exchange.

Another interesting aspect of Dark Pool is that traders can anonymously set large buy or sell orders, without expressing their interest in the Bitcoin market to anyone else. In a traditional setting, huge buy and sell orders hitting the order book can cause a frenzy across the exchange, leading to an unfavorable price shift in pricing.

Qualifying For the “Dark Pool” Program

As you would come to expect from such a new initiative, the Dark Pool program by Kraken is only aimed at high-volume Bitcoin traders. That also means that, in order to be eligible for this new initiative, you must own a Tier 2 buyer account on the exchange. On top of that, there will be an additional 0.1% fee for all of your executed trades.

But that is not all, as each Dark Pool order has to be for a minimum of 50 BTC, which is quite steep. In exchange, all Dark Pool users will be able to trade against all major fiat currencies, such as USD, CNY , GBP and EUR. Last but not least, these trades will be denoted by a “.d” on the transaction, indicating this trade took place through Dark Pool.

Whether or not this move by Kraken will have a positive or negative outcome in Bitcoin trading remains to be seen. Granted, there are quite a lot of high-volume BTC traders who wouldn’t mind an additional layer of anonymity. But the question becomes whether this service will be more popular for buyers or for sellers.

Source: Reddit

Images courtesy of Kraken and Shutterstock