Cryptocurrency Exchanges Overview

The Introduction 

Buying and holding bitcoin is one thing, but there’s hundreds of other cryptocurrencies (altcoins) out there and no shortage of cryptocurrency  exchanges on which to buy and trade them. In this guide we’ll introduce a few of the most popular exchanges, and discuss a few things you should know before jumping in.

Exchanges allow users to buy and sell cryptocurrencies on live markets, trading them against each other and against fiat currency (government-issued currency like Dollars or Euros). Be sure to also read our overview of wallet types to learn how to store your coins.

Registration

Most exchanges require different levels of verification. Verification can range from confirming your email address and phone number, to providing proof of address and scans of government ID accompanied by a selfie to prove that you are who you say you are.

Higher levels of registration are essential if you wish to deposit fiat currency on these exchanges, or move higher amounts of cryptocurrency daily. Extra verification measures are also necessary to ensure that the exchange complies with anti-money laundering (AML), know your customer (KYC), and counter-terrorism financing (CTF) laws and regulations.

Security

The first and most important rule of using exchanges is: NEVER leave money on an exchange. Once you’ve added funds to your exchange wallet and made whatever trades you want to, the next priority is moving your cryptocurrency into either a more secure online wallet, or better yet, an offline or paper wallet. This advice goes double if you’re moving large amounts of currency.

Although unlikely, exchanges can be hacked, and you might not always get refunded if this happens.

Securing your account with a strong password and two-factor authentication (2FA) is also recommended. With 2FA enabled, nobody can access your account without actually having your phone in their hand.

Lastly, be sure to always visit the correct site. Beware of emails claiming to be from your exchange that direct you to fake sites. Phishing sites like this are used by hackers to steal your login details and clear out your funds. Make sure your connection is secure, bookmark the correct site, and if in doubt consult your exchange’s FAQ.

Get trading

Once your account is verified and secure, take a look around the cryptocurrency exchange site. While broadly similar in function, exchanges all have different interfaces, and it’s worth taking some time to get comfortable with the layout before making your first trades. If in doubt, don’t be afraid to read through the FAQ or contact customer support.

Most people trade by transferring bitcoin to an exchange, before swapping it for other cryptocurrencies. To do this, log into the exchange and find your wallet. Then copy the receive address and send funds from your regular wallet to this address.

Trading volatile cryptocurrencies is a skill that can’t be taught overnight, and even the best and most well-informed traders make losses. Keep this in mind, and start trading small amounts until you get the hang of things.

Buys and Sells

There are several kinds of buy and sell orders you can execute on exchange sites. If you’re unfamiliar with the lingo, here’s a rundown of a few of the most common orders:

Limit Order: A limit order allows the trader to specify an amount they would like to buy or sell, and at what price they would like to do it. For instance, if the market price of a currency is $50 and the trader places a buy order at $49, the trade will be executed when the market reaches $49 and the seller’s ask matches the trader’s bid in the order book.

Market Order: A market order is an order that executes immediately for the current best price available. This kind of order is used when speed and ease are prioritized.

Stop Order: A stop order triggers a buy or a sell when the market reaches a price set by the trader. For example, if the market is currently at $50 and a trader is concerned that this might nosedive drastically overnight, they might set up a stop sell order at $48 to minimize their losses. Like

Stop Limit: A stop limit order works like a limit order within a specific price range. The trader sets a price at which the order is triggered, and a price at which the order can be filled. For example, a trader might want to buy when the market hits $100, but not pay more than $105. After the market reaches $100 the order will match available asks, but if the market rises above $105 it may go partially unfilled.

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Bittrex

Bittrex is a US based and regulated exchange that lets users trade over 190 new and established cryptocurrencies. Founded by a team who worked in security at Microsoft, Amazon, and Blackberry, Bittrex has picked up a reputation for reliability. As well as this reputation, Bittrex is also known for its fast transactions and dependable customer support.

Currencies: 190+

Fees: 0.25% trading fee

Accepts deposits in: Cryptocurrency only

Serves American customers: Yes

Poloniex

Hugely popular and offering a massive selection of currencies, US-based Poloniex is another of the most well-known exchanges. While Poloniex’s security is up to scratch, its customer service leaves a lot to be desired. Verification can be a hassle, and reports of ignored support tickets and emails abound.

Despite these drawbacks, Poloniex is clean and intuitive, and is a popular choice for regular altcoin traders due to its excellent charts and analysis tools.

Currencies: 75+

Fees: Staggered trading fees, up to 0.25%

Accepts deposits in: Cryptocurrency only

Accepts American customers: Yes

Kraken

Consistently rated among the best and most secure cryptocurrency exchanges, and the first exchange to pass an independent audit, Kraken built its reputation on steadfast reliability. In fact, the Bloomberg Terminal uses Kraken’s information to display bitcoin prices.

Users won’t find the bewildering selection of altcoins offered by Bittrex or Poloniex however. Instead they’ll find a slickly designed site that makes trading as simple or as complex as you want. 24/7 customer support and rock-solid security round out the package.

Currencies: 17

Fees: 0.19% USD bank wire fee, staggered trading fees up to 0.26%

Accepts deposits in: USD, EUR, GBP, CAD, JPY, Cryptocurrency

Accepts American customers: Yes

Bitfinex

Launched in Hong-Kong in 2014, Bitfinex quickly grew to become one of the world’s largest bitcoin exchanges, until hackers breached the exchange in 2016 and stole $72 million worth of bitcoin, a breach second in magnitude only to the infamous Mt. Gox hack of 2014.

Since then, the Bitfinex team have repaid their users and rebuilt their reputation. Bitfinex offers traders in-depth charts as well as coins that are unavailable on other exchanges, like IOTA. A word of warning however: Bitfinex announced last month that it is pulling out of the US market and discontinuing services for US customers before the end of the year, citing difficulty dealing with US regulations.

Currencies: 16

Fees: Staggered trading fees up to 0.2%

Accepts deposits in: Cryptocurrency only

Accepts American customers: Variable

GDAX

GDAX is an American-based trading platform operated by Coinbase – a company noted for security and reliability. GDAX (see more in our guide) is regulated and FIDC insured, and is backed by some of the biggest investors in the industry.

GDAX’s association with Coinbase means that transfers of funds between your Coinbase wallet and your GDAX account are instant and free. Its interface is also clean, intuitive, and fast.

Currencies: 3

Fees: Staggered trading fees, up to 0.25%

Accepts deposits in: USD, EUR, GBP, Cryptocurrency

Accepts American customers: Yes

Summary

So far we’ve covered registration, security, a few basic buys and sells, and introduced several of the most popular exchanges. Trading can be as simple as buying and holding onto a few cryptocurrencies you believe in, or as complicated as getting stuck into day-trading and margin trading obscure altcoins.

Do your research, make security a priority, and have fun out there.

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