Owning Bitcoins for the first time is exciting. It can be confusing and a little bit challenging, but the process introduces you to a new world. Learning about Bitcoin wallets for the first time, discovering you can make profits by just holding them or buying something with Bitcoins make owning the cryptocurrency a whole lot better. The following guide reviews one aspect of trading that can be hectic: choosing the right crypto exchange.
Types of Exchanges
There are 2 main types of exchanges in the crypto space today.
- Fiat exchange-on this exchange, you buy a cryptocurrency like Bitcoin with a fiat currency like the US dollar.
- Cryptocurrency to Cryptocurrency Exchange- on this exchange, you use a highly popular cryptocurrency like Bitcoin to buy other cryptocurrencies like Monero.
The two types of exchanges can further be divided based on how they operate:
A regular exchange is like an office where you buy cryptocurrencies for real cash. The popular exchange, coinbase.com, is an example of a regular exchange. Coinbase has centralized management that makes all the rules of who trades, what cryptocurrencies can be bought and based on what terms.
Peer to Peer Exchange
In the spirit of a decentralized platform, some exchanges choose to allow cryptocurrency buyers to deal directly with sellers. A P2P exchange usually asks for few registration details and only gets involved in transactions to solve disagreements. LocalBitcoins.com is a popular peer to peer exchange.
A broker exchange works like a stock brokerage firm. The company’s representatives buy cryptocurrencies and sell them at a profit. If you need to sell, the representatives look for buyers and deduct a commission for their work.
Of late, new types of exchanges have also been launched. An exchange like Changelly lets you trade one cryptocurrency for another without sending coins out of your wallet. Changelly works as an API installed in your cryptocurrency wallet.
Currently, the second biggest exchange based on daily trading volumes, Binance is one of the most popular cryptocurrency exchanges in the world. Surprisingly, Binance is less than one year old. It was launched in July 2017 and had risen to the top 10 most popular exchanges by December 2017.
Binance is a cryptocurrency to cryptocurrency exchange. It lets you deposit Bitcoins and ethereum from your wallet and use them to buy altcoins like DOGE and Litecoin. In fact, Binance lists more than 100 cryptocurrencies. It is easy to create an account on the exchange; their security is top notch and only charges 0.1% in trading fees.
Bitfinex is currently the fifth largest exchange based on 24-hour trading volumes. Based in Hong Kong, the exchange allows members to buy up to 8 cryptocurrencies using US dollars. They also list a ton of other cryptocurrencies that are paired with the USD, Bitcoin or ethereum.
The exchange claims to be extremely paranoid about security. They store 99.5% of all their cryptocurrencies offline. They back up their databases on a daily basis and encrypt them accordingly. Bitfinex also supports Bitcoin to euro trading.
When it comes to buying Bitcoins, Ethereum and Litecoin using US dollars, there is no exchange more popular than Coinbase. Based in the US, Coinbase is one of the pioneer exchanges in the cryptocurrency industry. Launched in 2012, Coinbase has consistently remained a top 4 exchange. Their affiliate, GDAX, is the eight most popular exchanges based on 24-hour trading volumes. Coinbase enforces strict anti-money laundering laws and only accept members from 32 countries.
Based in Beijing China, Huobi is the second largest exchange based on 24-hour trading volumes. Huobi was launched in 2013 as a cryptocurrency to cryptocurrency exchange, but they later began accepting Fiat currency in 2014. The exchange initially targeted Chinese customers but has of late begun marketing itself outside of the country following China’s directive to stamp out exchanges in the country.
Huobi lists more than 100 cryptocurrencies on their platform. They have extremely low fees at just 0.2% and allow members to trade using Bitcoins, ethereum, and other altcoins.
Based in Las Vegas, Bittrex is the tenth largest exchanges based on daily trading volumes. Bittrex was founded in 2014 by ex-Microsoft security experts. Like most exchanges, Bittrex pairs minor cryptocurrencies with Bitcoins, ethereum and fiat currencies.
Bittrex has a rather strict registration process. If you want to join the exchange, you must provide crucial personal details like your name, date of birth and addresses. For users who want the flexibility to deposit more than $10,000, you have to provide additional details. Fees on Bittrex are extremely friendly. You only pay 0.25% transaction fees, and there are no withdrawal fees.
Exchanges with Lowest Trading Fees
One of the trends happening in the crypto exchange space is the emergence of new exchanges with zero trading fees. How do they make money? Some exchanges charge high deposit fees while others charge high withdrawal fees but no trading fees.
Exchanges with zero trading fees are yet to take shape mainly due to bad reviews. However, there are extremely popular exchanges that charge very little in trading fees.
CEX.io– Based in the UK, Cex.io charges a standard 0.25% per trade. Combined with a friendly platform and solid customer support; this is one of the best exchanges out there. Read a complete review of the platform on https://www.abitgreedy.com/cex-io/
Poloniex– currently ranked at the 15th position based on daily trading volumes. The company charges a 0.15% maker fee and a 0.25% taker fee.
Kraken– Based in the US, Kraken is the 7th most popular exchange based on daily trading volumes. Kraken charges a 0.16% maker fee and 0.26% taker fee.
GDAX– although GDAX only focuses on major cryptocurrencies like Bitcoin, ethereum, and litecoin, it’s one of the most popular exchanges. GDAX charges a 0% maker fee and 0.25% taker fee.
Binance– apart from being the most popular exchange based on daily trading volumes, they have standard fees of just 0.1%. If you trade using their in-house BNB coin, you are only charged 0.05% per trade.
The most popular exchanges earned their positions by building a user-friendly platform, good customer support, and reasonable fees. Each of the top 10 exchanges in the world has a solid security system. Still, most of them have been compromised in the past. Research in depth about any cryptocurrency exchange before you buy or sell cryptocurrencies on their platform.