For those not living under a rock for the past couple of years, Bitcoin is no latest news. It began way back in 2009, and although it did die down a little in the intervening years, it did manage to rise up stronger than ever in 2016-2017. At the time, people had almost given up on the cryptocurrency, and the select few who still had money invested in it, waited with baited breath for the prices to rise up just a little so that they could, to some extent minimize their losses. Shockingly, what happened next simply turned the game around on its head. The Bitcoin rose in value, and tremendously at that.
What started out as a mere experiment initially, was now dominating financial markets all over the world. All those people who were earlier yearning for some form of compensation from their losses now felt no less than the poor who had suddenly struck gold. Such was the sheer reach of the Bitcoin that not just the United States or other western nations, but the entire world seemed to be reaching out with both hands to invest their money.
Additionally, the success of Bitcoins further gave rise to an altogether new and previously ignored niche of cryptocurrencies. Now that the world had been witness to the super smashing success of Bitcoins, they were ready to believe that altcoins could bring about similar returns. In fact, the cryptocurrencies in themselves turned out to be goldmines capable enough to spew out industries like cryptocurrency mining and more.
One industry is the one of buying cryptocurrency. As the interest in bitcoin rose so did the number of exchanges. While most of them were (and still is) well-meaning and simply just want to help people get access to cryptocurrencies, there still are some scamming exchanges around.
To save yourself from such pitfalls and common mistakes, we bring you a comprehensive review of one of the finest Bitcoin exchanges in the market right now, Bitfinex. We went ahead and gathered all the information we could whilst also noting down the pros and cons of the service as a whole. Before you begin looking for a cryptocurrency exchange platform for your cryptocurrency business, we suggest you read through this Bitfinex review in order to make a much more informed decision.
Bitfinex is based out of Hong Kong. It is touted as one of the fastest and safest Bitcoin exchange services around and is favored by millions around the world for its simple interface and great customer service. It specializes in trading and is pretty great in the sense that it encourages the US Dollar based trading for Bitcoins. Additionally, it also deals with a variety of other cryptocurrencies, including Ethereum and Monero. Such diversity in terms of the cryptocurrencies involved in seldom found in exchange platforms, and is one of the reasons why Bitfinex is so great. As far as US Dollars denominated Bitcoin trading is concerned, you can’t possibly get better service than what you get with Bitfinex.
When it comes trading volume, Bitfinex totally dominates all of its nearest competitors. Trade volume actually refers to the amount of security that was supposedly traded during a set period of time in a capital market. In other words, it is simply the shares traded per unit of time, where a unit of time is typically one trading day. Now the one great fact about Bitfinex is that it currently has the greatest volume out of all the Bitcoin exchange services in existence. That in itself is no small feat to master but BItfinex has managed to do that pretty easily. In fact, this has been the case since a change was made by the Chinese Bank (People’s Bank of China) as per which all Bitcoin or cryptocurrency exchange services were compelled to start charging trading fees from their customers. This particular ruling in turn completely eliminated the discouraged practice of wash trading, which involved the reporting of artificially expanded or inflated trading volumes and was done by almost all major Chinese exchange services. Now since the collected data only involves genuine information that can’t possibly be faked, Bitfinex tops the charts pretty easily.
As far as market share is concerned, Bitfinex’s closest rival happens to be Bitflyer, which is based out of Japan. However, a fact worth mentioning here is that Bitflyer charges zero trading fees from their customers. What this means is that the trading volume or market share reported by the company could, in fact, be a misnomer and the actual market share of the company could be significantly lower than what is actually being reported. If such a thing is true, then Bitfinex’s market share is most likely even higher than what is anticipated currently.
The Bitfinex Hack
Unfortunately, in August of 2016, the company received a major blow. About 120,000 Bitcoins, which amounted to roughly 72 million USD at the time, were stolen away from the exchange service by hackers. This particular event proved to be fatal not just for the company but for the entire Bitcoin market in general since the Bitcoin price almost as much as 25% after the news was reported. However, due to the amazing management and level-headed approach of the Bitfinex bosses, the company was saved from going bankrupt or shutting down altogether.
They started socializing their losses. The total loss was spread evenly across user accounts, and no particular user accounts were affected more than the other. While this did raise concerns among a lot of users, the company went on record saying that each and every user affected will be compensated in full by the company in due time. In order to further quell any disappointments or disagreements among users, BFX tokens, roughly equal to the value of losses faced by each user, were issued to all the users.
While it is impossible to gauge perfectly the level of security measures employed by an exchange service, since most of their protocols are kept secret in order to protect their data from hackers, it sure can be estimated roughly. Since Bitfinex has been witness to an almost cataclysmic event when it comes to exchanging security in the past, it can only be hoped that this time they have learned their lesson and severely beefed up their security protocols and firewalls.
However, the security of your Bitcoins is as much of an exchange issue as it is yours. You can’t simply leave it all up to the exchange and rest peacefully, for you must also take some drastic measures in order to maintain the security and integrity of your coins.
Before you sign up for an exchange service, always look to their insurance, audits and security practices and make your own informed decision on whether the exchange would be suitable for you, and whether their security practices are entirely up to the mark.
If possible, there is also the provision actually dividing your assets in equal volumes and investing them in different exchange services so as to minimize your own losses in case some kind of a mishap takes place.
Bitfinex is in the practice of lending cryptocurrencies or US dollars to traders employing leverage. The reason why this works so great is that it enables users to earn interest on any funds left over on the platform.
Apart from the regular exchange services that the platform deals in, there are also large but private trades arranged by the service as a part of their OTC, or over the counter service. This is particularly beneficial if you need to transfer a large number of coins under the watchful eyes of other cryptocurrency traders.
In addition to their website, Bitfinex also endorses and owns a mobile application, which in fact is a great platform for those traders who are constantly on the move and must make trading decisions on the go. Not a lot of other services boast of this feature. This mobile app is perfect and works well for trading or even receiving important updates for your account. However, caution must be exercised and due to the potentially vulnerable nature of mobile platforms, we recommend not using it to carry out trades of large volumes.
Bitfinex boasts of a pretty impressive trading interface, something which seasoned traders have come to appreciate. They actually have charts neatly displayed on the screen which accurately entail a bird’s eye view on trading trends and is based on the famous Trading View charting website. The interface is also largely responsive and detailed and can be customized as per the customer’s own needs and conveniences.
BItfinex actually charges a pretty nominal fee, especially when you compare it to some of the other trading platforms out there. The fee charged by them is completely in line with and agrees to the standards set for large but trade focused exchanges. At low volume exchanges, the fee charged for traders who are actually accepting the offer from some other trader, or takers as they are called, is merely 0.2%, while the fee charged for those who place trades in the order book or are extending the offer themselves, is merely 0.1%.
The fee for makers has even been waived completely for those users whose account statistics show a total trade volume of more than $7.5 million. That in itself is a pretty great scheme for large and frequent traders.
The Need for Exchange Platforms
All of this led to the creation of a great many services and exchanges catering exclusively to cryptocurrencies. With the rise in the number of users opting for these new-age currencies, a similar thrust was felt in the need for efficient and well-performing platforms which could help the average user harness the power that rests in them. The Bitcoin is the most popular received the most attention, and before we knew it, there were already a great many numbers of Bitcoin exchange services functioning online and otherwise. Other cryptocurrencies followed suit almost immediately. Currently, we have at least a dozen well-meaning and quality exchange services for almost every other widely used cryptocurrency out there.
Exchange Platforms: The way they work
These exchange platforms work in a pretty straightforward manner. They simply allow the user to either trade in the cryptocurrencies they own, or to buy or sell them in exchange for cash. In case you’re interested in trading your Bitcoins for Litecoins for example, then the very first thing you need to do is look for a platform which deals in both of these types of cryptocurrencies. Once you’ve found one, you need to log on to their website, look for a potential buyer or seller, and trade in the cryptocurrency you own for one that you actually want. Similarly, in case you’re interested in selling your Bitcoins, you need to go the website and look for potential buyers who will then in turn contact you in case they’re interested in your offer. After a few communication exchanges between you and the buyer, and with the agreement of both the parties, the exchange finally takes place.
The entire process is highly smooth and completely transparent. What is great is that you don’t even have to wait for long for the transaction to fall through, for most of the times it all happens instantly without any waiting periods.
Exchange Platforms: Choose Wisely
However, wherever there is good, there is a smidge of the bad too. Now while all of this seems very promising and great for the average cryptocurrency buyer, there is, however, one hidden disadvantage. Currently, there are so many great exchange platforms available on the web that a first time user is bound to get confused and fail to take the right decision. Choosing a cryptocurrency exchange service isn’t just about opting for the best as per market standards. Rather, it is about opting for the best as per your own needs. A user may tend to delve towards the wrong decision simply because they were not informed enough, and found themselves lost in the sea of options available to them. What if the exchange you opt for doesn’t cater to the type of cryptocurrency you’re interested in? What if the exchange you opt for charges a transaction fee that doesn’t exactly fall within your set budget?