What Is Huobi?
Huobi is a Singapore-based cryptocurrency exchange created in 2013 by former Oracle engineer Leon Li. Originally based in China, the Huobi Foundation expanded to Singapore, South Korea, and Japan following China’s 2017 Bitcoin trade ban. Huobi currently supports over 280 cryptocurrency markets, with over $350 billion worth of crypto tokens traded daily, making it the third-largest cryptocurrency exchange in the world.
In June 2018, Huobi Group announced Huobi Chain, which will distribute its exchange ledger.
The Huobi Token, its proprietary cryptocurrency, was created in January 2018 to reward Huobi exchange users with lowered fees for using HT. The token was distributed to paid Huobi VIP members in response to China’s crypto ban and decreased trading activity. It is an exchange coin like Binance’s BNB coin, so it’s tradeable with any cryptocurrency on the Huobi exchange and comes with voting rights.
With hackers and governments around the globe targeting cryptocurrency exchanges, what are the risks and rewards for keeping your coins in Huobi’s exchange wallet and holding HT?
Before explaining that, let’s take a look at the performance of HT, Huobi’s proprietary coin, on the cryptocurrency market.
Huobi Token Cryptocurrency Market Performance
The peak price of HT so far was $5.97 on June 5, 2018, and the circulating supply is 500,000,000 HT.
The initial HT distribution (which the team insists is “not an ICO”) took place from January to February 2018. At this time, 300,000,000 of the total HT supply was distributed on a first come, first serve basis to Huobi VIP subscribers.
There are five levels of Huobi VIP, with the bottom tier paying 120 HT per month for a 10-percent trading discount and the top tier paying 12,000 HT monthly for a 50-percent trading discount. Unlike Binance’s discount, Huobi’s is perpetual, although you must pay monthly for the benefit while BNB is free.
In fact, because Binance created BNB first, Huobi modeled much of HT’s features and benefits after BNB. Aside from the Huobi trading discount for paying in HT, it plans to buyback HT like Binance does BNB. It’s used as a wrapped placeholder for cryptocurrencies placed in the exchange wallet.
Holding HT is also the only way to vote on which assets to list on Huobi, so new projects would need to spend a lot to hold enough HT to get themselves listed. However, it is still possible, especially for well-funded blockchain projects.
Of the total HT supply, 200,000,000 (40 percent of the total supply) was withheld by the Huobi team. Half of this (20 percent) cache is withheld for user rewards and platform maintenance. The remaining 100,000,000 HT is distributed to the Huobi team when its vested in four years.
Obviously Huobi is the best place to buy and sell HT, but it’s also tradeable on LBank, Bibox, Gate.io, and DDEX.
The top coins traded on Huobi (wrapped HT trading pairs) are BTC, BCH, EOS, XRP, and ETH.
HT is an ERC-20 token on the Ethereum blockchain, so it can be stored in any wallet that supports ERC-20 tokens, including the Ledger Nano S and MyEtherWallet.
Storing and Exchanging Cryptocurrencies
The irony of HT is when you store it in a third-party wallet, you don’t receive the benefits. Meanwhile, Proof-of-Stake cryptocurrencies and airdropped tokens aren’t always supported by cryptocurrency exchanges like Huobi. For example, Binance and Huobi distribute GAS dividends to its customers but Reddit users report Bittrex does not.
This is the war in cryptocurrency over where you store your digital assets and exchanges like Binance and Huobi both want them. But they’re fighting an uphill battle.
Cryptocurrency wallets have a bad reputation, and most experts recommend you don’t store your coin and token balances in an exchange, aside from the bare minimum necessary. Aside from the problems described above, exchanges are big targets for hackers.
The stigma of cryptocurrency exchanges was created when Mt. Gox was hacked in 2011 and closed its doors in 2014. Approximately 850,000 bitcoins were stolen and many people are still left empty handed to this day.
In fact, cryptocurrency exchanges are responsible for the biggest cryptocurrency thefts of all time, including Mt. Gox, a 2016 Bitfinex hack of 120,000 BTC, and the king of losses – Coincheck’s 523 million XEM hack, worth around $534 million.
And let’s not forget how Bitfinex seems forever tethered to allegations of crypto market price manipulation.
Many of these hacks, like Coincheck leaving its XEM storage connected to the Internet, happened because of rookie mistakes that shouldn’t be made by the people holding your money. But of course no system is ever secure, and even Wall Street and SEC, the U.S. government’s watchdog, have been hacked.
And let’s not forget that Huobi itself had to pick up and move to Singapore after homeland China banned cryptocurrency exchanges, essentially making it illegal for any of its citizens to withdraw their balances from the exchange. At any given moment, any government regulator can shutter an exchange and freeze all its accounts.
These are just a few of the many, many reasons security experts recommend you store your cryptocurrency balance on hardware wallets disconnected from the internet. It’s also why many analysts forecast the move to decentralized and OTC exchanges.
Creating a Global Huobi Footprint
Huobi’s survival playbook appears to be following in the footsteps of digital piracy, moving from centralized servers, a la Napster, to decentralization, a la Gnutella. This is why Huobi aggressively expanded into other Southeast Asian markets. It also recently opened an office in Russia.
Huobi Group is also eyeing expansion into the Middle East, along with Brazil, Vietnam, and the UK and European markets.
Its plans to secure these expansion projections is to forge local partnerships. It has a great track record with investment firms, securing angel and VC capital investments from Dai Zhikang, Zhen Fund, and Sequoia Capital prior to acquiring Quick Wallet in 2014.
It partnered with SBI Group for its Japanese expansion and San Francisco-based trading platform HBUS for its U.S. expansion. It’s also part of several Chinese fintech groups working to implement blockchain and cryptocurrency solutions on the mainland.
In August 2018, Huobi acquired blockchain-based electronics manufacturer Pantronics Holding in a reverse takeover to get listed on the Hong Kong Stock Exchange.
Huobi is a cryptocurrency exchange making moves that mimic (and often precede) Binance as it aims to become the top cryptocurrency exchange. This includes issuing the HT cryptocurrency, decentralizing its exchange ledger, and expanding to new global markets. Its success hinges on several key ingredients.
- Although created in China, Huobi moved its headquarters to Singapore after China banned ICOs and crypto exchanges. It continues working with the Chinese government to advocate for blockchain and cryptocurrency.
- Huobi forges strategic partnerships in each country it expands into and is currently moving into Japan, South Korea, Europe, Russia, and the Americas.
- Huobi Token provides discounts of up to 50 percent on transaction fees in exchange for a membership fee. HT will periodically be bought back by Huobi and burned.
With these pieces in place, Huobi continues its success as one of the top cryptocurrency exchanges by trading volume. It’s prepared for anything hackers or the government can throw at it, and over one million users can’t all be wrong.
Huobi is a great place to exchange crypto, but as with all hot wallets and exchanges, store your assets at your own risk.
The author is not currently invested in any crypto token, coin, or asset mentioned in this article.