[w4llstr33t]

I don't know that much about this, so you could chalk it up to "great ignorance", I suppose.

I'm a software engineer, interested in crypto, and not that involved in traditional markets (except for holding an S&P 500 index fund).

I do think the exchanges in traditional finance shouldn't have required HFTs in the first place (i.e. it's an antiquated technology). I also think hedge funds and the ultra rich have privileged info, that retail investors don't have.

Anyway, I appreciate the clarification. I like learning about all this.

[pgwhalen]

> I'm a software engineer, interested in crypto, and not that involved in traditional markets

As you learn more about crypto and traditional finance, it'll be fun to compare the two. Your confusion about the role of an exchange in traditional finance might be because you see the crypto world, where a single entity often performs the roles that many entities perform in traditional finance (exchange, clearing firm, broker, etc.).

> I do think the exchanges in traditional finance shouldn't have required HFTs in the first place (i.e. it's an antiquated technology)

I'm not quite sure what this means, but it's important to understand that HFTs exist in the crypto space as well. Capital markets don't function particularly well without marker makers, and absent some rule explicitly preventing high speed trading, marker makers will tend towards being the fastest traders in any market.

[w4llstr33t]

> As you learn more about crypto and traditional finance, it'll be fun to compare the two. Your confusion about the role of an exchange in traditional finance might be because you see the crypto world, where a single entity often performs the roles that many entities perform in traditional finance (exchange, clearing firm, broker, etc.).

Yes, I agree!

In terms of what I called antiquated technology, I think there are a lot of layers on traditional finance, and a lot has changed since its beginnings. I think crypto will go through a similar evolution, in terms of tech, regulation, etc. I think we're in the very early stages for crypto and it has a chance to be an even better system.

I do know that HFTs exist in crypto, and it still is the wild west in some ways, but in the end I like that innovation is happening and that there are alternatives to existing systems.

That said, I appreciate all the responses and I'll take some time to learn more about traditional markets.

[IncRnd]

Today's crypto has the same issues: the fastest decision-making computer with the shortest time to the network makes the block.

Just like cutting inches off mainframe cables, manufacturers of ASICs purpose-build computer chips for crypto. GPU operators tune their cards and even download new code to get every last bit of processing capability from their devices. Crypto in these ways is just like HFT.

[Dylan16807]

Isn't that the opposite of how it works?

Transferring data and calculating the core of a new block takes a fraction of a second, and then it takes an average of several minutes to find the right random numbers to finish the block.

A latency advantage in HFT lets you take most of the profits. A latency advantage in cryptocurrency mining gives you a fraction of a percent better profits.

A calculations-per-second advantage helps in mining, but it's strictly proportional.

[w4llstr33t]

I still like the distribution of power to those who wouldn't have had a chance otherwise.