What is a Cryptocurrency Exchange?
Cryptocurrency exchange is a spot allows you to trade Cryptocurrencies to other Cryptocurrencies or other fiat currencies(USD, EURO)
Types of Cryptocurrency Exchanges
Centralized exchanges have a central authority which includes a commitment in every transaction and vaults and even every other thing on the exchange. If you trade on a centralized exchange, they take responsibility for what you trade. You take the risk about what you trade on.
Let’s figure this out with an example,
Let’s say you have 0.1Bitcoin(0.1BTC) in your account which created on a centralized exchange. You’re going to buy Siacoin(SC) with the rest BTC you have. When you placed the order in the market, They fund you with Siacoins. The exchange, I meant by “They”
Siacoin(SC) current price in BTC – 0.00000025 BTC
BTC you have – 0.10000000 BTC
– 0.10000000 BTC / 0.00000025 BTC
You approximately get 400,000 Siacoins. That is the basis of centralized exchanges.
Unlike centralized exchanges, Decentralized exchanges have no central authority. In simple if you sell or buy currencies on a Decentralized exchange, you directly deal with the buyer or seller. You need to be very careful while working on a Decentralized exchange.
Unlike centralized exchanges, If you mistakenly placed a lower price than the current price when you sell Cryptocurrency, It will immediately be sold.
Facts that you have to consider when using Exchanges
Verification requirements – Most exchanges asking you to verify your identity to make withdrawals and deposits or expand withdrawal limitations. These verification processes may need these kinds of documents. This process is called “KYC“
- National Identity Card/Driving License/Passport
- A bill that registered to your address that you registered on the exchange
Fees – You need to be notified with transaction, deposit and withdrawal fees. Related information can be found on exchange websites.
Cryptocurrency exchange rates – Cryptocurrencies are decentralized so different exchanges have different rates. You need to pay attention to this point.
Payment methods – Few exchanges have payment options like credit/debit cards, bank wire, etc. Only these exchanges allow you to buy Cryptocurrencies directly with USD. Take a look around.
Best Cryptocurrency Exchanges
I’m going to list down the latest centralized cryptocurrency exchanges and their good and bads. This is not a professional exchange review. Only I’m focusing on the main facts that you need to know as a beginner.
These are my personal preference so some exchanges may not exist on this list.
This platform lets users to trade fiat money with cryptocurrency. And convert cryptocurrencies to fiat money. The interface of cex.io is super user-friendly so if you’re a beginner, this platform is one of the best for you. There are a lot of countries including cex.io supported countries where you can find details on the cex.io website.
PROS – User-friendly, Reputation, Supports credit/debit cards
CONS – Fees can be variable with the payment method you use, cex.io verification rules, Cryptocurrency exchange rates, Limited cryptocurrencies available for trading
Another biggest exchange you can find. Poloniex exchange is a pretty decent website with a high amount of cryptocurrencies available for trading. Was founded in 2014. Poloniex is popular around the web with the highest trading volumes.
PROS – Easy to use platform, Better candlestick pattern details, Low transaction fees, High-level security, High volume trading
CONS – No fiat currency support
Bittrex is opened to customers worldwide except for North Korea, Iran, the Crimean region, Syria, and Cuba. Has grown in popularity in the past few years. It’s also a high volume exchange
PROS – High volume for trading, Lot of cryptocurrencies, Easy sign-up process, High-level security
CONS – Low customer support
Used by millions of customers worldwide. This is one of the most popular trading platforms. Coinbase also has a digital wallet that can keep coins securely. Coinbase offers its own Android/iOS application, especially for coin base wallet.
PROS – High-level security, Coinbase insurance, Reputation
CONS – Limited payment functions, Limited countries supported.
Launched in July 2017. Binance is popular among the other because of they have their own cryptocurrency called “BNB” This exchange had a 24-hour trading volume of USD 1.1 billion (2nd highest in the world) and a 30-day trading volume of USD 28.6 billion (highest in the world). It also has an attractive user interface. But I would say it’s not beginner-friendly.
PROS – Credit card support, High trading volume, Reputation, Low trading fees
CONS – Slow customer support
I can review these exchanges one by one if you wanted to.
What is the best exchange? What do you think? Comment your opinion below.