Market makers and market takers

Markets are made up of makers and takers. Market makers create pending buy and sell orders (for example, to sell BTC when the price reaches $15,000). This creates liquidity, meaning it is easier for other market participants to buy or sell BTC instantly when conditions are met. Market takers are those who instantly buy/sell digital assets. In other words, makers create orders and takers execute them.

Each and every market participant belongs to one of these groups at least. Indeed, being a trader, you will act as a maker or taker at one point. Both makers and takers provide trading platforms with liquidity and depth. Their presence, or absence, determines strong platforms from weak ones.

Makers

Exchanges often calculate the market value of an asset by means of a table of limit orders, or an order book. This is where all buy and sell offers of market participants are collected. For example, you can create an order to buy 8 BTC for $100,000. Your order is then added to the order book. It will be executed when the price of 1 BTC reaches $12,500, i.e. the order book will be full.

Thus, you create an order as a maker by adding it to the order book in advance. In this case, you act as a maker because, in a sense, you cause an increase in supply or demand for an asset.

Takers

On the other hand, takers execute makers’ orders by creating a market order to buy or sell an asset at the current price. When they do so, orders in the order book are executed immediately and liquidity is reduced.

If you have ever placed a market order, you have acted as a taker. Notably, a taker can also use limit orders. Put simply, you become a taker every time you execute someone else's order.