The OTC market stands for “over the counter market”, also known as the decentralized market, which is organized not based on a fixed trading ground such as the exchange market (centralized market), but on a system operating under a competitive bid mechanism and negotiates with the advance of media.
The key to distinguish OTC from stock exchanges is the asset price mechanism. On the OTC exchange, the asset price is agreed upon by the two parties, while on the centralized exchange focuses, the price of an asset will be fixed at a specified time.
Initially, the OTC market acted as a thriving market, however, it has now grown into a premium market, operating on OTC exchanges or coordinated by OTC brokers.
The advantage of the OTC market is the flexibility in asset pricing mechanisms and minimizing transaction costs. In addition to being able to buy a potential stock at a low price, both the buyer and the seller can save a lot of fees (e.g. management fees, transaction fees).
Merits of the OTC Market
Safety and security: Choosing a reputable OTC Market will be more secure when trading, avoiding scams such as black market transactions. It is difficult to be attacked because there is no centralized platform so it cannot be hacked.
Liquidity Volume: If you intend to buy and sell large quantities of your coin, OTC exchanges such will be very suitable.
Quick transaction: The process of making OTC transactions is quite quick because it doesn’t need to go through the exchange, just the confirmation of the traders.