Cryptocurrency Exchange

Deciphering Cryptocurrency Exchanges


The volatile world of Cryptocurrency has seen its highest highs of $20,000 in December 2017 and lowest low of $3,684.98 on Nov 27, 2018. But what has stayed a constant in this roller coaster ride of this digital currency is the attraction it has maintained on the new investors, the crypto world giants, experts and speculators alike.

The new cryptocurrency investment trend offers a promise for the future despite its fluctuating trajectory. And the same novelty puts the users into choosing a suitable cryptocurrency exchange based on aspects such as return value, security, and risk involved, and versatility of the cryptocurrency exchange. But for those new to the crypto world, the terms, and the digital currency’s exchange dynamics can be mind-boggling.

So, what is Cryptocurrency exchange after all?
Cryptocurrency exchange is ‘selling’ or ‘buying’ or ‘trading’ of cryptocurrencies (such as Bitcoin, Ripple, Ethereum, Litecoin etc) that are often purchased with authorized currencies. These currencies can be the legal currency/ legal tenders of the country you belong such as Dollar, Euro, Pounds and so on.

Due to the digital algorithm ledger-based nature of the Cryptocurrency, difficulty to draw any parallel analogy for the digital currency and understanding the exact nature of the cryptocurrency becomes a slippery road. Cryptocurrency is not a real currency like the legal government tenders. They are in an in-between state of currency and stock. The cryptocurrency exchanges offer the same services as what one gets on a stock or a bond market. Cryptocurrency exchange enables its investors to buy, or sell, or trade cryptocurrencies.

Cryptocurrency exchanges allow an investor to trade a variety of crypto coins like Zcash, Ethereum, Bitcoin, Ripple and so on. In this variety too, there are coins that can be purchased directly with currency such as U.S. dollars, while some can be traded in exchange for other coins. Such as one can get Bitcoin by exchanging Litecoin and likewise. The cryptocurrency exchange rates often inform the investors of the current value of the coin in U.S. Dollars and the exchange rate between the various crypto coins.

Investing in cryptocurrency:
On the face value of the surprising dip in the value of cryptocurrency in 2018 since its gigantic start in 2017, one may steer clear of investing in this digital currency. But just a little in-depth understanding of the cryptocurrency can hold you due to its massive potential. Many experts are expecting a turn- around in the value of the cryptocurrency in 2019.

In the interview according to Financial Times (FT), Mike Novogratz is expecting a transition in the investment trends towards the cryptocurrency funds. He predicts a shift from “investing in cryptocurrency funds to investing in cryptocurrencies proper in the first quarter of next year. It’s easy to get skeptical but there’s something happening” after having pointed out cryptocurrency developments led by major figures in traditional finance.”

Mike Novogratz also expects a ‘flip in the cryptocurrencies by the next year.’ According to him ‘that is when the prices will start to move again.’

Ways of investing in cryptocurrency:
Cryptocurrency, like many other investment routes, allow its investors to invest in the short term, medium term and long-term investment schemes. Like any other investment plans, the investments in cryptocurrency exchanges are also subjected to market fluctuations.

To gain the maximum benefits out of a cryptocurrency exchange there are a few points that are good to look into before making up your mind. Things like the cryptocurrency exchange must suit the investors budget, risk capacity, the versatility of the platform where the exchange is performed, any additional security offered by the platform and, whether one can buy the coins in exchange of fiat currency or in exchange of other coins and so on.

Here are a few promising cryptocurrency exchanges that are versatile enough to suit the needs of many:

1. Coinbase:
Registered as Money Service Business with FinCEN along with holding a license to operate in most of U.S., Coinbase was founded in 2012 and currently has $1 Billion valuations. It offers exchange, wallet and other tools for investors and merchants. It trades in four types of cryptocurrencies. It allows its investors to use fiat currencies for the exchanges and the wallet at the fee of 1.49% to 3.99% on every purchase. For instance, for $1,000 of Bitcoin, the price would be around $14.90. The only nagging point is that the investor can’t short sell on Coinbase platform.

Coinbase is regarded as ‘most beginner friendly exchange’ due to its user-friendly functions. The investor can easily buy coins of your choice using wallet. In case one needs to trade the coins, Coinbase’s sister company GDAX offers a platform for traders to trade their coins amongst each other at a competitive low fee. Just to add another feather to the user-friendly approach of Coinbase- it offers its wallet services on iPhone and Android interfaces.

Coinbase has also partnered with companies that accept Bitcoin like Expedia (EXPE) Overstock (OSTK) and Dish (DISH) -As per Forbes report.

The FDIC assures a maximum of $250,000 for the U.S. coin holdings. This is a great advantage for investors based in the U.S.

2. Binance:
Binance is considered the world’s largest cryptocurrency exchange. In one of the interviews on Nov 13, 2018, with The Street, the CEO of Binance- Changpeng Chao discussed Binance’s rapid growth and the company’s future plans.

“Right now, Binance is still a major cryptocurrency exchange and many people view us like that, but we are building the ecosystem. We want to be the infrastructure services provider for the Blockchain space, so we have a number of different initiatives. Right now, our ecosystem is made up of the Exchange, a wallet, Labs, Charity, Info, Academy, and more. We Hope some of them will become the infrastructure of the industry.”
Binance offers a very low transaction fee of 0.1% which obviously is one of the major reasons behind the $500 Million volume of trade on per day basis. Not only this, the company offers an array of 130 tradable currencies

Binance understands the investor’s mind and therefore it offers different trading modes based on the experience level of its investor such as beginner or advanced levels.

Just to notch up the attraction for investing in Binance, the company offers its own coin called Binancecoin or BNB. The investor can avail it at a discount on the fees while trading cryptocurrency with another cryptocurrency. The token holds a market cap of $1.7 Trillion, as per CoinMarketCap.
With all these pluses, there are three negative points that can hold the investor back. The first one is that Binance is not using fiat currently. Secondly, the margin trade of the crypto coins is not permissible at this platform. And lastly, the exchange offers minimal regulation.

3. BitMex
BitMex- Bitcoin Mercantile Exchange, a Hong Kong based platform, is an exchange catered for the more experienced crypto traders. It only offers a trade of Bitcoin cryptocurrency. Yet the focused approach of this exchange has earned it $2 Billion trade per day basis.

BitMex offers unique leveraged contracts. Instead of owning the Bitcoins, the investor can buy these contracts such as futures contracts and perpetual contracts that constitute Bitcoins. Any upwards or downwards movement in the crypto market results in Bitcoin and not in cash. BitMex has a fee of 0.05% to 0.25%. It does not accept fiat. And unlike other exchange platforms, it does offer short selling and the margin trade, which simply adds more feature to this unique exchange platform.

The only limiting side of this exchange is that it is not available for U.S. market currently.

4. OKEx
OKEx, a Hong Kong based exchange company offers 145 tradable coins for trading. It also offers its own coin called OKB. Starting with the pluses, OKEx tokens offer traders discount, allows voting within the company and allows margin trading and short selling of its coin or tokens. Extending the plus points, with OKEx exchange platform the investor can buy the coins with fiat.

It charges 0.02% to 0.2% fee. The company boasts $1.5 Million in Bitcoin Futures every 24 hours.

Due to regulation issues, OKEx is also not available in the U.S.

5. Kraken
Kraken has earned a name of being the largest Bitcoin exchanges in Euro and liquidity. This company started in 2011 and gained fame with its acceptance of various tradable fiats such as USD, Euro, Pound, Yen, and the Canadian Dollar. Kraken is the first exchange platform to partner with the first-ever cryptocurrency bank.

An investor can take benefit of margin trading option, short selling, and the low fees of 0% to 0.26%. The company also offers 17 tradable coins to the investor to choose from.

Kraken had to face a difficult patch of time when the company’s CEO Jesse Powell did not adhere to the New York Attorney General’s inquiry into their regulations while maintaining that the company is working on the required regulations.

6. Huobi
Huboi is a Chinese exchange platform that offers an impressive range of 248 tradable coins. The attractive fees of 0% to 0.2%, Huobi is becoming widely popular among investors.

The company takes care of both the first-time investors and the experienced ones. For the newbies, it has the traditional Huboi OTC that comes with zero fee trading of cryptocurrency with fiat currency. And for the experienced traders, the company offers Huobi Pro, which caters more advanced features backed up with a 24/7 customer service.

‘Huobi is going to offer a cryptocurrency exchange traded fund (ETF) to be named GB10. The ETF will allow users to be exposed to a variety of assets at the same time.’- According to Coindesk.

With all these attractive benefits, the company is yet to find its way to the U.S. markets.

7. Gemini
Gemini, a New York based exchange, is the brainchild of Facebook creators- Cameron and Tyler Winklevoss. The company caters to individual traders and to the institutional investors. It accepts fiat currency.

The company charges a fee of 0% to 1%, offering three types of tradable coins. The company is making name for complying with regulators. It provides FDIC insurance for cash. After converting the cash into cryptocurrency, the freedom lies in the hands of the investor, which is an attractive feature for many investors.

Gemini does not allow margin trading or short selling. It is regulated by the New York Trust company, which is eventually regulated by the New York State Department of Financial Services. Gemini, therefore, promises a legitimate crypto investment for the investors.

Investing in the cryptocurrency entails decisions made based on location, and the unique investor’s targets and capacity. Also, the investment is shaped based on experience one has, the fiat purchasing decision of the coins or the margin selling/ short selling of the currency. Although the investment in the cryptocurrency involves risk; but with an informed decision, one can make safe and regulation compiling investments.

Leave a Comment

Your email address will not be published.

You may also like