Exchanges are composed of makers and takers where each party can either be a buyer or a seller. Maker orders are created when an order doesn’t trade immediately, thus adding their decision to buy/sell to the order book. Essentially, the maker provides liquidity to the order book and “makes” the market. For example, person A places an order to buy 4 BTC at $40,000. This order sits in the exchange’s order book until Bitcoin reaches said price or another trader decides to sell BTC at that price. When you look at the order book or a market depth tool, you will see only pending orders placed by makers. Maker fees are generally lower than taker fees to encourage frequent maker orders and boost liquidity.

While makers provide liquidity to the order book, taker orders, on the other hand, remove (or take) part of the total liquidity from exchanges immediately once their order is placed. The taker is placing a buy/sell order that matches an existing order already on the order book. To illustrate, if person B creates a market order to sell 3 BTC at its current market price, the trade executes immediately. Taker orders are never displayed on an order book or market depth tools.