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Cryptocurrency trading pairs for example ltc/btc, doge/btc should be paired using some criteria. I'd like to comprehend on what basis they are paired.

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Exchanges generally choose a few base currencies and build trading pairs on top of them. It has multiple reasons:

  • The exchange needs to find a base currency where people can understand the value of X from X/base. BTC/USD is $1350 that gives you a clear idea of how much BTC is worth in USD. That is different from LTC/DRK = 0.98. What did that tell you? Not much. You are in need of a base currency you are familiar with. Most people have a good feeling for the value of USD. Therefore, it is a good denominator.
  • The exchange needs to find a base currency which people are most likely to deposit/withdraw for trading. After you are done with trading numerous altcoins with each other, you want to exit the trading platform in a currency that has a meaning to you. To make that easy, base pairs are usually BTC.
  • This is probably the most important, if an exchange has BTC LTC USD, they will most likely not create BTC/LTC pair because that will decrease the liquidity of LTC/USD pair. They will most likely only offer BTC/USD and LTC/USD. On top of that, the extra pair will have maintenance cost to the exchange.
  • I disagree on your last point. Why is the most important? And I trade on Kraken and btc-e, which both have BTC/LTC/USD (and EUR) and BOTH have all the market pairs with those currencies. I really like those to have all the options, and I will stop trading on an exchange without one of them. I think the other two options are far more important for the exchange to decide which pairs they offer. But I am not an exchange developer or something :) – Mathias711 Jun 3 '14 at 11:16
  • BTC/LTC/USD is not a good example. But it's understandable. They are liquid pairs. Imagine less liquid pairs. PPC/NXT/DOGE then you understand what I'm saying. – Emre Kenci Jun 3 '14 at 12:04
  • Ahh, yes. Then BTC/LTC was the worst example you could choose. But I understand your point – Mathias711 Jun 3 '14 at 12:05
  • The decision to open BTC/LTC would depend on the liquidity of the exchange. IF you don't have much, then you wouldn't open BTC/LTC. Imagine being a small exchange. – Emre Kenci Jun 3 '14 at 12:09

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