What is a cryptocurrency exchange?
Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. For those that want to trade professionally and have access to fancy trading tools, you will likely need to use an exchange that requires you to verify your ID and open an account. If you just want to make the occasional, straightforward trade, there are also platforms that you can use that do not require an account.
Types of exchanges
- Trading Platforms – These are websites that connect buyers and sellers and take a fee from each transaction.
- Direct Trading – These platforms offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate.
- Brokers – These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.
What to look out for before joining an exchange
It’s important to do a little homework before you start trading. Here are a few things you should check before making your first trade.
- Reputation – The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. You can ask any questions you might have on forums like BitcoinTalk or Reddit.
- Fees – Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees. Fees can differ substantially depending on the exchange you use.
- Payment Methods – What payment methods are available on the exchange? Credit & debit card? wire transfer? PayPal? If an exchange has limited payment options then it may not be convenient for you to use it. Remember that purchasing cryptocurrencies with a credit card will always require identity verification and come with a premium price as there is a higher risk of fraud and higher transaction and processing fees. Purchasing cryptocurrency via wire transfer will take significantly longer as it takes time for banks to process.
- Verification Requirements – The vast majority of the Bitcoin trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals. Some exchanges will allow you to remain anonymous. Although verification, which can take up to a few days, might seem like a pain, it protects the exchange against all kinds of scams and money laundering.
- Geographical Restrictions – Some specific user functions offered by exchanges are only accessible from certain countries. Make sure the exchange you want to join allows full access to all platform tools and functions in the country you currently live in.
- Exchange Rate – Different exchanges have different rates. You will be surprised how much you can save if you shop around. It’s not uncommon for rates to fluctuate up to 10% and even higher in some instances.
Additional Things To Consider Before Investing Any Considerable Amount In One Exchange:
- How safe is the website and server? Secure exchanges are better.
- High liquidity.
- Transaction fee structure of the exchange like fixed fees, percentagefees and spread.
- Whether exchange provides transparent data of coins transactions, prices,and volumes?
- How many and which currency pairs are available to trade Bitcoin, forexample USD, Euros, and other fiat /government issued currencies, orAltcoins?
- Multiple options to buy Bitcoin like PayPal, credit card, etc.
- Are customers happy?
- Good user ratings. (Check Reddit for Customer Experiences)
Shut Up Already, I Came Here For The Top Exchanges..
The Best Cryptocurrency Exchanges
Today there are a host of platforms to choose from, but not all exchanges are created equal. This list is based on user reviews as well as a host of other criteria such as user-friendliness, accessibility, fees, and security. Here are ten of the best crypto exchanges in no specific order.
Backed by trusted investors and used by millions of customers globally, Coinbase is one of the most popular and well-known brokers and trading platforms in the world. The Coinbase platform makes it easy to securely buy, use, store and trade digital currency. Users can purchase bitcoins, Ether and now Litecoin from Coinbase through a digital wallet (Download the Coinbase App) Available on Android & iPhone or through trading with other users on the company’s Global Digital Asset Exchange (GDAX) subsidiary.
- Pros: Good reputation, security, reasonable fees, beginner friendly, stored currency is covered by Coinbase insurance.
- Cons: Customer support, limited payment methods, limited countries supported, non-uniform rollout of services worldwide, GDAX suitable for technical traders only. Very Basic Options (Bitcoin, Ethereum, Litecoin), Lack of Anonymity.
Coinbase has stated that they will be adding several new currencies in 2018.
This is the best option for beginners, it’s simple and you can buy from your phone. However, for experienced traders or those who would like to own/trade more cryptocurrencies than the basic 3.. Coinbase is limited. Anonymity is also a concern after Coinbase was mandated to hand over all account owner information to the IRS after only a few people reported capital gains taxes last year.
Binance is both a cryptocurrency and an exchange (which concluded its ICO in July 2017). Binance means “Binary Finance”, for anyone who gives a shit and as an exchange, it aims to power the future of crypto finance.
It is a centralized exchange like Bittrex and Poloniex, and they’re based out of China. It claims to be a better alternative to many other centralized exchanges because they have identified the most major pain points of centralized exchanges and are working rapidly to provide solutions.
KuCoin is a newer cryptocurrency exchange based in Hong Kong. It operates on a crypto-to-crypto basis, so no fiat currencies are supported. Nonetheless, its digital assets portfolio is pretty extensive and KuCoin offers its own token KCS (KuCoin Shares) and uses it in a similar way to Binance.
Fess of KuCoin are really competitive. It charges a flat fee of 0.1% per trade, while the average in the secctor is around 0.20% – 0.25%. Besides, for those who hold KuCoin Shares, there are attractive discounts.
Promotions are Awesome!
KuCoin offers a bunch of promotions: a referral program, top traders bonus promotion, and discount options for those holding its KCS token.
Kukon offers by far the most attractive referral program for those of you looking to earn passive income.
As a new exchange there is not a ton of info on the company/comapny owners. Until I am able to see about the company owning the site and the brand I will use Kukoin for trading but not keep large sums of money on the exchange.
Founded in 2011, Kraken is the largest Bitcoin exchange in euro volume and liquidity and is a partner in the first cryptocurrency bank. Kraken lets you buy and sell bitcoins and trade between bitcoins and euros, US Dollars, Canadian Dollars, British Pounds and Japanese Yen. It’s also possible to trade digital currencies other than Bitcoin like Ethereum, Monero, Ethereum Classic, Augur REP tokens, ICONOMI, Zcash, Litecoin, Dogecoin, Ripple and Stellar/Lumens. For more experienced users, Kraken offers margin trading and a host of other trading features. Kraken is a great choice for more experienced traders. Check out the Kraken FAQ
- Pros: Good reputation, decent exchange rates, low transaction fees, minimal deposit fees, feature rich, great user support, secure, supported worldwide.
- Cons: Limited payment methods, not suitable for beginners, unintuitive user interface.
I have been with Kraken for some time. I agree they have some nice features (AFAIK, I don’t know other exchanges) and they take security seriously. However, their customer service and wire transfer (USD and GBP) is highly variable. I have never had a good experience getting money onto the exchange – all three attempts have been unpleasant, one failed entirely. And right now, they are having a customer service melt down. My current ticket not touched for over a month, and they are telling people to post their ticket numbers on their facebook page to get attention (yes seriously).
Co-founded by Tyler and Cameron Winklevoss, (remember Social Network the “Facebook movie” yea the Rugby bros- they have been on the forefront of the digital currency movement, and although they weren’t portrayed in the best light in the movie- they have a keen sense of business and some big backers behind them. Gemini is a fully regulated licensed US Bitcoin and Ether exchange. That means Gemini’s capital requirements and regulatory standards are similar to a bank.
Also, all US dollar deposits are held at a FDIC-insured bank and the majority of digital currency is held in cold storage. Gemini trades in three currencies, US dollars, bitcoin, and ether, so the platform does not serve traders of the plethora of other cryptocurrencies. The exchange operates via a maker-taker fee schedule with discounts available for high volume traders. All deposits and withdrawals are free of charge. The platform is only fully available to customers in 42 US states, Canada, Hong Kong, Japan, Singapore, South Korea and the UK.
Check out Gemini’s FAQ
- Pros: Security & Compliance, slick/minimalistic and user-friendly design, great analytics, high liquidity.
- Cons: Limited currencies, (Only Bitcoin Ethereum) small community, average customer support, limited worldwide availability, no margin trading (or that could be a positive for many of us!)
Cex.io provides a wide range of services for using bitcoin and other cryptocurrencies. The platform lets users easily trade fiat money with cryptocurrencies and conversely cryptocurrencies for fiat money.
For those looking to trade bitcoins professionally, the platform offers personalized and user-friendly trading dashboards and margin trading. Alternatively, CEX also offers a brokerage service which provides novice traders an extremely simple way to buy bitcoin at prices that are more or less in line with the market rate. The Cex.io website is secure and intuitive and cryptocurrencies can be stored in safe cold storage. Check out the Cex.io FAQ
- Pros: Good reputation, good mobile product, supports credit cards, beginner friendly, decent exchange rate, supported worldwide.
- Cons: Average customer support, drawn out verification process, depositing is expensive
- Heads Up: CEX is only allowed to operate in 44 states with Georgia is one of the 6 that have not opened up to CEX yet.
Founded in 2014, Poloniex is one of the world’s leading cryptocurrency exchanges. The exchange offers a secure trading environment with more than 100 different Bitcoin cryptocurrency pairings and advanced tools and data analysis for advanced traders. As one of the most popular trading platforms with the highest trading volumes, users will always be able to close a trade position. Poloniex employs a volume-tiered, maker-taker fee schedule for all trades so fees are different depending on if you are the maker or the taker. For makers, fees range from 0 to 0.15%, depending on the amount traded.
For takers, fees range from 0.10 to 0.25%. There are no fees for withdrawals beyond the transaction fee required by the network. One of the unique tools on the Poloniex platform is the chat box which is constantly filled with user help and just about everything. Any user can write almost anything but inappropriate comments are eventually deleted by moderators. It can sometimes be hard to distinguish the good advice from the bad, but the Chatbox is a great tool that will keep you engaged.
- Pros: fast account creation, feature rich, BTC lending, high-volume trading, user-friendly, low trading fees, open API.
- Cons: Slow customer service, no fiat support, higher volumes causing lagging, seem to have trouble with the additional volume and new customers
New accounts are having problems getting higher level verification and payments are being lost or limited. you welcome to search on reddit and see the amount of issues. support is horrible and trollbox is filled with people asking for help or verification , lost transaction, stoppped transactions etc
theres a sub reddit actually seup for it as well /r/PoloniexForum/
Bitstamp is a European Union based bitcoin marketplace founded in 2011. The platform is one of the first generation bitcoin exchanges that has built up a loyal customer base. Bitstamp is well known and trusted throughout the bitcoin community as a safe platform.
It offers advanced security features such as two-step authentication, multisig technology for its wallet and fully insured cold storage. Bitstamp has 24/7 support and a multilingual user interface and getting started is relatively easy. After opening a free account and making a deposit, users can start trading immediately. Check out the Bitstamp FAQ and the Fee Schedule
- Pros: Good reputation, high-level security, worldwide availability, low transaction fees, good for large transactions.
- Cons: Not beginner friendly, limited payment methods, high deposit fees, user interface.
Bittrex is a US-based cryptocurrency exchange that provides you the option to trade more than 190 cryptocurrencies at a time. They are well-regulated and compliant with all of the current US rules, so crypto users need not worry about the safety of their funds.
Bittrex handles one of the largest BTC trading volumes out of all the exchanges in the world. Here, the users (buyers/sellers) decide the rates in which they want to trade, and Bittrex charges them a small service fee for providing this platform (0.25%).
To get started with Bittrex, you need to register and log in through your email ID, but to withdraw funds, you need to do a KYC by submitting your ID documents and phone number, as well as enabling two-factor authentication for higher limits.
But one good thing about Bittrex is the account verification happens quite fast.
Bittrex supports two types of accounts:
- Basic Account – withdrawal funds worth up to 3 BTC/day.
- Advanced Account – withdrawal funds worth up to 100 BTC/day.
Bittrex is a “crypto-only” exchange, meaning it doesn’t allow you to deposit fiat currencies such as USD, EUR, GBP, etc.
Availability of many coins (E.g. NEO, OMG, XMR and list goes on)
- Multi coin support (BTC, ETH, USDT)
- Clean user interface
- High performance
- Reliable server uptime: There hasn’t been any time when the server was shut down or wasn’t working suddenly
- USA Based
- High security
“Bittrex constantly upgrades and tests to make sure they are doing great job. They allow you to use two-factor authentication for all withdrawals and API usage and I highly recommend you to set up the two-factor authentication. Also, Bittrex.com is protected by SSL, which strengthens the security level.” However there has been a lot of recent posts from customers using the exchange recently that haven’t been too pleased.
What Some Customers Have Been Saying Recently:
Bittrex does not respond to help requests. I deposited funds into my account before verification cleared. Verification never cleared. It’s been over two and a half weeks and all I get is automated replies from their system. I am fairly certain I will never see my money again.