If you are ready and willing to buy some bitcoin you should familiarize yourself with bitcoin exchanges. In the recent past, a lot of Bitcoin exchanges have popped up and as such, you need to tread carefully.
In this section, we assume that you understand the basics of cryptocurrencies and have concluded it is a worthy investment venture for you. If you still are fuzzy with regards to Bitcoins, you should follow the blog links below to individual articles that will shed some more light on your interested area. For now, here are the basics.
What is a Bitcoin exchange?
A Bitcoin exchange is basically a digital marketplace where persons interested in trading in Bitcoins can buy and sell this cryptocurrency using altcoins or fiat currencies (USD, EUR, etc.). A bitcoin exchange acts as an intermediary between the sellers and buyers of Bitcoins.
The Bitcoin exchange platforms will generally match Bitcoin buyers with sellers. And just like in trading stocks, traders in the Bitcoin exchange business can decide to sell or buy bitcoins by inputting a limit order or a market order. The two are different – here is how they differ. With a market order, a trader is giving the exchange the authority to trade his/her Bitcoins at the best price market on other online platforms. On the other hand, with a limit order, the trader is telling the exchange company to trade his/her Bitcoins for a price that is either lower than the prevailing ask, or that is above the prevailing bid. Of course, this depends on whether one is selling or buying.
Types of Bitcoin Exchanges
Some of the Bitcoin exchange types include:
These are the websites that are designed to connect sellers and buyers for the Bitcoin transaction. For every transaction, a standing fee is charged.
These are platforms that provide traders with direct peer to peer trading. With this Bitcoin exchange type, all traders from all parts of the world can exchange their Bitcoins and currencies. In direct trading, there is no set market price. Every seller sets his/her own market price.
These are websites that have been created to allow anyone to buy Bitcoins at a predetermined price. Brokers set the price. You can think of these cryptocurrency brokers as foreign exchange dealers.
What You Should Consider Before Joining Any Bitcoin Exchange
Before you commit to any exchange and trade your Bitcoins, it is important that you do your homework. Below are some factors you should consider before jumping right into an exchange.
The easiest and best way of finding out more about an exchange is searching for its reviews online written by top review websites in the industry and by individuals. You also can ask for guidance on various Bitcoin Forums. Below you will find our reviews of each platform so that you can make an educated choice, without doing too much research yourself.
All exchanges have fee-related information plastered on their websites. Before you join any of them, ensure you understand the process of depositing, transacting and the withdrawal fees. Yes, the fees differ greatly from one exchange to another.
What are some of the payment methods that are available on the Bitcoin exchange platform? Does the exchange have debit or credit card? PayPal? Wire transfer? A Bitcoin exchange with limited payment methods might be an inconvenience to use. You should bear in mind that using a credit card to purchase Bitcoins will require you to provide verification and will attract a higher premium fee and price as the risk of fraud is higher. With wire transfers, the process will take longer as the transaction has to be verified by the banks.
There are specific functions offered by certain exchanges that are only accessible from predetermined countries. Before joining, always ensure that the platform has all functions and tools accessible to your country, or the countries you frequent for holidays.
Like mining, Bitcoin exchanges are an integral part of the new cryptocurrency world and its entire ecosystem. Before you step you dive into the waters, understand the trade, have someone guide you through it if need be, but whatever you do, do not get into it blind.
Below you will find all our reviews and buying guides of exchanges so that you easily can get started.