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The Best Cryptocurrency Exchanges: [Most Comprehensive Guide List]
So you want to start trading cryptocurrencies? Check out this guide to the best cryptocurrency exchanges. Can’t get enough of cryptocurrencies? Take our beginner course on cryptoeconomics.
What is a cryptocurrency exchange?
Cryptocurrency exchanges are websites where you can buy, sell or exchange cryptocurrencies for other digital currency or traditional currency like US dollars or Euro. For those that want to trade professionally and have access to fancy trading tools, you will likely need to use an exchange that requires you to verify your ID and open an account. If you just want to make the occasional, straightforward trade, there are also platforms that you can use that do not require an account.
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Types of exchanges
- Trading Platforms – These are websites that connect buyers and sellers and take a fee from each transaction.
- Direct Trading – These platforms offer direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, instead, each seller sets their own exchange rate.
- Brokers – These are websites that anyone can visit to buy cryptocurrencies at a price set by the broker. Cryptocurrency brokers are similar to foreign exchange dealers.
What to look out for before joining an exchange
It’s important to do a little homework before you start trading. Here are a few things you should check before making your first trade.
- Reputation – The best way to find out about an exchange is to search through reviews from individual users and well-known industry websites. You can ask any questions you might have on forums like BitcoinTalk or Reddit.
- Fees – Most exchanges should have fee-related information on their websites. Before joining, make sure you understand deposit, transaction and withdrawal fees. Fees can differ substantially depending on the exchange you use.
- Payment Methods – What payment methods are available on the exchange? Credit & debit card? wire transfer? PayPal? If an exchange has limited payment options then it may not be convenient for you to use it. Remember that purchasing cryptocurrencies with a credit card will always require identity verification and come with a premium price as there is a higher risk of fraud and higher transaction and processing fees. Purchasing cryptocurrency via wire transfer will take significantly longer as it takes time for banks to process.
- Verification Requirements – The vast majority of the Bitcoin trading platforms both in the US and the UK require some sort of ID verification in order to make deposits & withdrawals. Some exchanges will allow you to remain anonymous. Although verification, which can take up to a few days, might seem like a pain, it protects the exchange against all kinds of scams and money laundering.
- Geographical Restrictions – Some specific user functions offered by exchanges are only accessible from certain countries. Make sure the exchange you want to join allows full access to all platform tools and functions in the country you currently live in.
- Exchange Rate – Different exchanges have different rates. You will be surprised how much you can save if you shop around. It’s not uncommon for rates to fluctuate up to 10% and even higher in some instances.
The Best Cryptocurrency Exchanges
Today there are a host of platforms to choose from, but not all exchanges are created equal. This list is based on user reviews as well as a host of other criteria such as user-friendliness, accessibility, fees, and security. H ere are ten of the best crypto exchanges in no specific order.
Bitbuy.ca is a Canadian owned and operated digital currency platform. Originally founded as InstaBT in 2020, the company’s mission is to provide convenient, dependable and secure access to Bitcoin and other digital currencies. Customer service, ease of use, and quick turnaround times for deposits and withdrawals are pillars of this platform. They cater to beginners as well as experienced traders, and are one of Canada’s quickest growing buy/sell platforms. A great choice for users looking to buy and hold crypto, or users looking for a reliable on-ramp to turn their fiat into crypto quickly and easily.
- Great customer service
- Fast registration and verification
- Quick processing of CAD deposits and withdrawals
- Low fees
- Only offers BTC, ETH, LTC, BCH
- Only available to Canadians
ChangeNOW is a registration-free instant cryptocurrency exchange platform for limitless crypto conversions. ChangeNOW has been on the market for more than a year now and has earned a reputation for reliable service with great rates. The exchange platform does not require account creation, processing fast transactions for more than 170 cryptos, as well as fiat-to-crypto purchases. ChangeNOW stays honest with its customers and collects no hidden or inflated fees. The timing of the transaction remains rather short. Depending on the transaction volume, the processing speed can take as little as 2 minutes.
- Registration-free – no account needed
- More than 170 cryptocurrency coins and tokens listed – more than 36000 trading pairs
- No limits – no maximum exchange amount
- 2 cryptocurrency exchange flows: standard and fixed-rate
- Convenient purchase with credit cards
- 24/7 support
- Mobile application
- No leverage.ChangeNOW does not offer leveraged trading on cryptocurrencies
Backed by trusted investors and used by millions of customers globally, Coinbase is one of the most popular and well-known brokers and trading platforms in the world. The Coinbase platform makes it easy to securely buy, use, store and trade digital currency. Users can purchase bitcoins, Ether and now Litecoin from Coinbase through a digital wallet available on Android & iPhone or through trading with other users on the company’s Global Digital Asset Exchange (GDAX) subsidiary. GDAX currently operates in the US, Europe, UK, Canada, Australia, and Singapore. GDAX does not currently charge any transfer fees for moving funds between your Coinbase account and GDAX account. For now, the selection of tradable currencies will, however, depend on the country you live in. Check out the Coinbase FAQ and GDAX FAQ
- Pros: Good reputation, security, reasonable fees, beginner-friendly, stored currency is covered by Coinbase insurance.
- Cons: Customer support, limited payment methods, limited countries supported, non-uniform rollout of services worldwide, GDAX suitable for technical traders only.
Founded in 2020, Kraken is the largest Bitcoin exchange in euro volume and liquidity and is a partner in the first cryptocurrency bank. Kraken lets you buy and sell bitcoins and trade between bitcoins and euros, US Dollars, Canadian Dollars, British Pounds and Japanese Yen. It’s also possible to trade digital currencies other than Bitcoin like Ethereum, Monero, Ethereum Classic, Augur REP tokens, ICONOMI, Zcash, Litecoin, Dogecoin, Ripple and Stellar/Lumens. For more experienced users, Kraken offers margin trading and a host of other trading features. Kraken is a great choice for more experienced traders. Check out the Kraken FAQ
- Pros: Good reputation, decent exchange rates, low transaction fees, minimal deposit fees, feature rich, great user support, secure, supported worldwide.
- Cons: Limited payment methods, not suitable for beginners, unintuitive user interface.
Cex.io provides a wide range of services for using bitcoin and other cryptocurrencies. The platform lets users easily trade fiat money with cryptocurrencies and conversely cryptocurrencies for fiat money. For those looking to trade bitcoins professionally, the platform offers personalized and user-friendly trading dashboards and margin trading. Alternatively, CEX also offers a brokerage service which provides novice traders an extremely simple way to buy bitcoin at prices that are more or less in line with the market rate. The Cex.io website is secure and intuitive and cryptocurrencies can be stored in safe cold storage. Check out the Cex.io FAQ
- Pros: Good reputation, good mobile product, supports credit cards, beginner friendly, decent exchange rate, supported worldwide, API solutions for automated trading
- Cons: Strict verification rules, fees vary with the payment method
ShapeShift is the leading exchange that supports a variety of cryptocurrencies including Bitcoin, Ethereum, Monero, Zcash, Dash, Dogecoin and many others. Shapeshift is great for those who want to make instant straightforward trades without signing up to an account or relying on a platform to hold their funds. ShapeShift does not allow users to purchase crypto’s with debit cards, credit cards or any other payment system. The platform has a no fiat policy and only allows for the exchange between bitcoin and the other supported cryptocurrencies. Visit the Shapeshift FAQ
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- Pros: Good reputation, beginner friendly, Dozens of Crypto’s available for exchange, fast, reasonable prices.
- Cons: Average mobile app, no fiat currencies, limited payment options and tools.
Founded in 2020, Poloniex is one of the world’s leading cryptocurrency exchanges. The exchange offers a secure trading environment with more than 100 different Bitcoin cryptocurrency pairings and advanced tools and data analysis for advanced traders. As one of the most popular trading platforms with the highest trading volumes, users will always be able to close a trade position. Poloniex employs a volume-tiered, maker-taker fee schedule for all trades so fees are different depending on if you are the maker or the taker. For makers, fees range from 0 to 0.15%, depending on the amount traded.
For takers, fees range from 0.10 to 0.25%. There are no fees for withdrawals beyond the transaction fee required by the network. One of the unique tools on the Poloniex platform is the chat box which is constantly filled with user help and just about everything. Any user can write almost anything but inappropriate comments are eventually deleted by moderators. It can sometimes be hard to distinguish the good advice from the bad, but the Chatbox is a great tool that will keep you engaged.
- Pros: fast account creation, feature rich, BTC lending, high-volume trading, user-friendly, low trading fees, open API.
- Cons: Slow customer service, no fiat support.
Bitstamp is a European Union based bitcoin marketplace founded in 2020. The platform is one of the first generation bitcoin exchanges that has built up a loyal customer base. Bitstamp is well known and trusted throughout the bitcoin community as a safe platform. It offers advanced security features such as two-step authentication, multisig technology for its wallet and fully insured cold storage. Bitstamp has 24/7 support and a multilingual user interface and getting started is relatively easy. After opening a free account and making a deposit, users can start trading immediately. Check out the Bitstamp FAQ and the Fee Schedule
- Pros: Good reputation, high-level security, worldwide availability, low transaction fees, good for large transactions.
- Cons: Not beginner friendly, limited payment methods, high deposit fees, user interface.
CoinMama is a veteran broker platform that anyone can visit to buy bitcoin or Ether using your credit card or cash via MoneyGram. CoinMama is great for those who want to make instant straightforward purchases of digital currency using their local currency. Although the CoinMama service is available worldwide, users should be aware that some countries may not be able to use all the functions of the site. CoinMama is available in English, German, French, Italian and Russian. Check out the CoinMama FAQ
- Pros: Good reputation, beginner friendly, great user interface, good range of payment options, available worldwide, fast transaction time.
- Cons: High exchange rates, a premium fee for credit card, no bitcoin sell function, average user support.
Bitsquare is a user-friendly peer to peer exchange that allows you to buy and sell bitcoins in exchange for fiat currencies or cryptocurrencies. Bitsquare markets itself as a truly decentralized and peer to peer exchange that is instantly accessible and requires no need for registration or reliance on a central authority. Bitsquare never holds user funds and no one except trading partners exchange personal data. The platform offers great security with multisig addresses, security deposits and purpose-built arbitrator system in case of trade disputes. If you want to remain anonymous and don’t trust anyone, Bitsquare is the perfect platform for you. Check out the Bitsquare FAQ
- Pros: Good reputation, secure & private, a vast amount of cryptocurrencies available, no sign-up, decent fees, open source, available worldwide, good for advanced traders.
- Cons: Limited payment options, average customer support, not beginner friendly.
LocalBitcoin is a P2P Bitcoin exchange with buyers and sellers in thousands of cities around the world. With LocalBitcoins, you can meet up with people in your local area and buy or sell bitcoins in cash, send money through PayPal, Skrill or Dwolla or arrange to deposit cash at a bank branch. LocalBitcoins only take a commission of 1% from the sellers who set their own exchange rates. To ensure trading is secure, LocalBitcoins takes a number of precautions. To start, the platform rates each trader with a reputation rank and publicly displays past activities. Also, once a trade is requested, the money is held on LocalBitcoins’ escrow service. After the seller confirms the trade is completed the funds are released. If something does happen to go wrong, LocalBitcoins has a support and conflict resolution team to resolve conflicts between buyers and sellers. Check out LocalBitcoins FAQ
- Pros: No ID required, beginner friendly, usually free, instant transfers, available worldwide.
- Cons: Hard to buy large amounts of bitcoin, high exchanges rates.
LinkCoin is an Over-The-Counter (OTC) cryptocurrency exchange that was developed by Yesbit Ltd in collaboration with Bibox. Based in Toronto Canada, the exchange processes transactions autonomously via smart contracts. Plus, with a fully functional website, and Android + iOs apps, the platform has the necessary technological infrastructure to provide users with a service that meets all of their investment needs. Linkcoin has 7 cryptocurrencies available for purchase (BTC, ETH, BCH, ETC, LTC, LKN, BIX) plus, with some of the indsutrie’s lowest transaction fees (zero buyer fees + 0.6% seller fees), they make buying and selling cryptocurrencies as affordable as possible. Accessibility is something Linkcoin also values. Which is why they accept interac e-Transfer, Bank Wire, AliPay and WeChat Pay. Users can also pay in either CAD, USD, CNY, JPY, or HKD.
- Pros: No ID required, very cheap to sell, platform token, free to buy, high privacy and security, lots of payment options.
- Cons: Lack of altcoins, limited volume, not beginner friendly.
If your focus is to conduct crypto-to-crypto trading, Binance is one of the best options. Ranked as one of the most popular cryptocurrency exchanges worldwide, they provide you with impressive offerings along with an extremely low trading fee. Although the Binance platform is a young entrant into the market, it is rapidly growing, and holds a huge selection of altcoins with Bitcoin, Ethereum, and Tether pairings.
The exchange offers its own coin termed as BNB (Binance coin). Being a centralized exchange, you can get decent discounts while conducting trade with their token. Binance offers a standard trading fee of only 0.1% which can even be reduced further if the payment is made with in BNB.
- Pros: Ubiquitous platform, platform token, very cheap to transact, available worldwide.
- Cons: No fiat trading, limited payment options.
Co-founded by Tyler and Cameron Winklevoss, Gemini is a fully regulated licensed US Bitcoin and Ether exchange. That means Gemini’s capital requirements and regulatory standards are similar to a bank. Also, all US dollar deposits are held at a FDIC-insured bank and the majority of digital currency is held in cold storage. Gemini trades in three currencies, US dollars, bitcoin, and ether, so the platform does not serve traders of the plethora of other cryptocurrencies. The exchange operates via a maker-taker fee schedule with discounts available for high volume traders. All deposits and withdrawals are free of charge. The platform is only fully available to customers in 42 US states, Canada, Hong Kong, Japan, Singapore, South Korea and the UK.
Check out Gemini’s FAQ
- Pros: Security & Compliance, slick/minimalistic and user-friendly design, great analytics, high liquidity.
- Cons: Limited currencies, small community, average customer support, limited worldwide availability, no margin trading.
Located in San Francisco, Huobi is operated by HBUS Holdco, Inc. (“HBUS”), a U.S. company and strategic partner of Huobi Global, one of the world’s largest digital asset trading and management service providers. At the time of writing, Huobi is only available to Chinese and US residents excluding those residing in Alabama, Arizona, Connecticut, Georgia, Louisiana, New York, North Carolina, Hawaii, Vermont, Washington , and all U.S. Territories. Huobi offers a plethora of token trading options (Over 50 pairings). As we all know, crypto doesn’t sleep and neither does Huobi as they offer their customers 24/7 free customer support. Fees for USD trades are .1% regardless of being maker or taker, all crypto to crypto trades are .05%.
Pros: 24/7 Free Customer Support, High-Quality Analytics, High Liquidity, Good reputation
Cons: Only Available to Chinese and Some US Residents, USD is the only Fiat Supported
Cryptocurrency Exchanges: Conclusion
Picking the ideal cryptocurrency exchange platform for your specific needs may be a difficult and time-consuming process. Remember to pay attention to the fees, reputation, security, verification processes, and geographical services an exchange platform has to offer. Remember that you are not limited to using only one cryptocurrency exchange. Hopefully, the information provided will assist you in deciding which exchange platform to use.
What is a CryptoCurrency?
How do CryptoAssets and Virtual Currencies Work? [2020 Overview]
The idea of cryptocurrencies has been around for a long time. Developers and coders have been seeking the perfect way to implement cryptography into a digital asset since the birth of the internet. The idea is to use cryptography to secure all transactions of the specific digital asset, as well as control the creation of that same asset through the same means.
First descriptions of a functional Cryptocurrency appeared around 1998, and were written by a person named Wei Dai. They described an anonymous digital currency titled “b-money.” Not long after, another developer by the name of Nick Szabo created what they call “Bit Gold,” the first cryptocurrency that used a proof of work function to validate and authenticate each transaction. All following currencies would use this proof of work concept in their code.
It wasn’t until 2009 that the first, decentralized cryptocurrency was launched and developed by none other than the famously reclusive Satoshi Nakamoto. Simply put, his digital form of currency was a work of art. It used cryptography and proof of work functions just as described by Nick Szabo. The whole code was released as open source for anyone to see and work on in 2009.
Bitcoin was the first currency of its kind. Each transaction between Bitcoin users was designed in a peer-to-peer method, meaning that all transactions were direct and without an intermediary. Each transaction is then authenticated and verified multiple times by other computers on the network. The more time passes since the occurrence of the transaction, the more validated it becomes. It is estimated that once a transaction has been verified 6 times, its validity is equivalent to a 6 month old credit card transaction.
Because Bitcoin has no repository or single administrator, and since all of the code used for its own functionally is open source, it is considered to be a truly decentralized system. The Bitcoin community itself makes decisions on what needs to be implemented in the code and what needs to be rectified. In order for Bitcoin to work correctly, each version of the Bitcoin Core software has to be compatible with each other, so everyone has to make the decision regarding all updates to the software, otherwise those who do not agree with the update will not be able to be a part of the Bitcoin network. Since the computing power of the users on the network is needed to keep Bitcoin alive, it is in the developers’ interest to keep everyone happy with the decision that they make. Furthermore, since all of the code is open source, it is practically impossible to shift any power over Bitcoin to a single user or a group of users because this part of the code would be identified quickly and brought to light, making most of the users very unhappy with an attempt to centralize the currency.
Satoshi Nakamoto has claimed to be a man living in Japan who was born on the 5th April, 1975. However, Nakamoto has always been somewhat secretive about his identity. In fact, it is unclear to this day whether they are a real person or a pseudonym. Many people speculate that Nakamoto is actually a group of developers who worked together to jump start the Bitcoin project and then disbanded when it took off. Nakamoto worked on the Bitcoin system up until December of 2020, at which point he handed over the network alert key and the source code repository to Gavin Andresen while distributing some of the key domains linked to Bitcoin amongst notable members of the Bitcoin community. Afterwards, his involvement with the project ceased.
The father of Bitcoin was able to not only code an exceptionally well built system, but also found clever ways to ensure his work was validated and not misunderstood for some sort of a scheme by others. For example, Nakamoto left a message inside this first manually altered code. When the first block of Bitcoin was mined, it read ‘The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.’ This quote is the headline for The Times newspaper which was published on January 3rd, 2009. The clever use of this simple message is overlooked by many, and it dictates that the first block was mined no earlier than January 3rd, 2009. This is extremely important because the whole Bitcoin system is designed to run and validate itself from the previously mined blocks, so giving a valid timestamp which can be authenticated by a simple headline title to the first block was genius. Afterwards, all blocks used the previous block for reference.
It should also be noted that the timestamps on the subsequent blocks indicate that Nakamoto did not mine the first blocks in an attempt to keep them for himself and make profit this way. Yes, Nakamoto was awarded Bitcoins as he was the first and a sole miner for some time, but this continued only for about 10 days after the launch of the Bitcoin network. The only thing that Nakamoto used his Bitcoins for was a few test transactions. Starting from around mid-January of 2009, those Bitcoins were left unspent. Anyone can check the public log of Nakamoto’s Bitcoin address, which shows roughly 1 million Bitcoins. This amount of Bitcoins is roughly equal to about $2.8 billion USD. Needless to say, Nakamoto’s invention was a success.
This is all fun and peachy, but how exactly are all the transactions made by Bitcoin users kept in check? Well, luckily Satoshi Nakamoto thought of a rather ingenious way to handle transactions and making them all transparent at the same time.
Simply put, whenever a user sends a certain amount of Bitcoins to another user, a third user verifies this transaction and publicly notates it in a ledger which is accessible by anyone. This ledger is called the “blockchain.” As time goes on, more and more users see the transaction in the blockchain and are able to verify it again. The more times each transaction is verified, the more secured it becomes.
The idea behind the blockchain comes with two main principals. The first is easy to understand, make all the transactions public thus allowing complete transparency over all transactions and the ability to cross reference or double check each transaction if necessary. The second principal is somewhat more unique and isn’t realized by others. Recording each transaction in a public ledger also prevents this information from being duplicated. This way every transaction is unique in its own way, which successfully eliminates transaction fraud and other financial crimes. Oh, did we mention that verification of each transaction are done by other users on the Bitcoin network, and this can’t be compromised or corrupted by anything or anyone? Yep, it truly is that secure.
The beautiful part of a blockchain is that you aren’t limited to just using it with Bitcoin. In fact, many other online currencies and representations of digital value have started using blockchain as a method to prevent unfair transactions. The best part is that you don’t need to know anything about the way it works, simply plug it in and watch it do its magic. However, having a general understanding of the blockchain gives you the ability to fully comprehend the security and stability that blockchains bring to the table.
So how exactly does the blockchain function? It’s actually a lot simpler than you think. Whenever a transaction is authorized and added to the ledger, it is replicated amongst all the nodes on the network. This means that every computer that is connected to a network which is using a blockchain has a copy of this ledger stored on their machine. Every time another transaction occurs, it is updated. Because these ledgers are simultaneously being kept on multiple machines, messing with or editing them is pretty much impossible. Furthermore, because it is being replicated and updated on all machines, there is no single point of failure, meaning if something happens to one ledger, there are thousands of others that can verify the data and omit the faulty one.
This idea of all nodes controlling the blockchain is why it is truly decentralized. Effectively, every user connected to the network who is acting as a node through the software is an administrator of the blockchain. What does this mean in plain English? There is no single entity or group that controls the blockchain, and everyone is an equal admin of the public ledger.
Why is using blockchain and decentralizing a currency so important to its success? The answer to this question boils down to the ability to cut out the proverbial middle man responsible for verifying all transaction who in the real world charge the users for this action. What does this mean for the user? The transaction fees are set by the users. In theory, there doesn’t have to be a transaction fee at all to complete each transaction, but there is the matter of speed and how quickly you want your transaction to be added to the blockchain. If you need everything done now and want your transaction to be accelerated to the top of the list, then expect to pay a small amount for your transaction. The thing is, it doesn’t matter how much money you are sending in your transaction, low or high it is all equal to the roughly the same amount of data. Because of this, the fee will entirely be reflected only by how fast you want the transaction to be complete.
Each blockchain transaction can be coded with more conditions and information put into the transaction. Essentially, this gives the users an opportunity to generate what many call a Smart Contract. For example, let’s say you are starting a new business and are looking for a certain amount of investors with a promise of making money back within a period of time. With the help of a Smart Contract, you can code these conditions into the transaction and ensure that it will only proceed if you have enough investors. The beautiful part about these Smart Contracts is that they are transparent on the blockchain, meaning you can’t simply modify the transaction once the investors have paid their share and end up scheming them over. Once the transaction has been made, all of its conditions are set in stone.
Another thing that the blockchain can be used for is truly decentralized market systems which can use peer-to-peer payments without a middleman. One of the early examples of such a market is OpenBazaar. It is a completely free marketplace where you can Buy or Sell items without any fees or restrictions. The payment system is peer-to-peer and a blockchain is in use to verify all transactions. Simply download the software and look for items you wish to buy or post items you wish to sell; the rest is history as they say.
There is truly no limit to the blockchain. For instance, imagine using the blockchain to host every website on the internet. Instead of connecting to one specific host which has all the files stored on their computer, the blockchain can have the website stored on all computers at the same time. Doing this would greatly increase the speed of accessing the information or files stored on such a decentralized website. Imagine streaming videos or music through such a network. It could truly be an amazing sight.
While Bitcoin was one of the first currencies to hit the global network, it certainly isn’t the only one. Most of the digital currencies out there use some of the code found in Bitcoin, and nearly all of them use the blockchain. It’s simply too good of an invention not to take advantage of. But each currency has something unique to offer to its users. Some try to focus on even greater security, while others prioritize transfer speeds. No matter what your priorities are, we are certain there is a cryptocurrency out there for you. Let’s take a look at some of the major cryptocurrencies out there and see what they have to offer.
This cryptocurrency is one of the first ones to hit the market after the launch of Bitcoin. Technically, it is nearly identical to Bitcoin, but with one major difference. Instead of using SHA-256d as its hash algorithm, Litecoin uses Scrypt, created by Colin Percival and designed to make it extremely expensive to initiate large scale hardware attacks because of the amount of memory that is needed to decrypt a single key. Litecoin was released in 2020 and was founded by Charles Lee.
Also released in 2020 and very similar to Bitcoin, this cryptocurrency uses SHA-256d for its hash algorithm. The main difference between Bitcoin and Namecoin is the ability to store date within its own blockchain transaction database. This does propose a challenge when all the transactions are scaled; to solve this issue Namecoin uses a shared proof-of-work system. Namecoin can also act as a decentralized DNS. It was created by Vincent Durham.
Peercoin is another cryptocurrency which uses SHA-256d as its hash algorithm. Created around 2020, this cryptocurrency is one of the first to use both proof-of-work and proof-of-stake systems. The inventor of Peercoin, known as Sunny King, saw a flaw in the proof-of-work system because the rewards for mining are designed to decline over time. This reduction in rewards increases the risk of creating a monopoly when fewer miners are incentivized to continue mining or start mining, thus making the network vulnerable to a 51% share attack. The proof-of-stake system generates new coin depending on the existing wealth of each user, so if you control 1% of the Peercoin currency, each proof-of-stake block will generate an additional 1% of all proof-of-stake blocks. Incorporating a POS system makes it significantly more expensive to try and attain a monopoly over the currency.
This cryptocurrency was initially created as a joke on December 8 th , 2020. However, the meme based currency quickly generated a community and reached a value of $60 million USD by January 2020. Today, this currency is worth nearly $440 million USD. Although there aren’t many mainstream applications designed to use Dogecoin as a method of payment, many online users have been using this form of digital currency as a way to tip others for their creative content or services. Dogecoin is very popular amongst the social media networks. With the help of crowdfunding, the community managed to schedule a delivery of a gold coin which represents the official currency to reach the Moon’s surface by 2020. Created by Jackson Palmer and Billy Markus, Dogecoin uses Scrypt as a hash algorithm alongside a POW system to solidify all transactions.
This form was an attempt at creating a decentralized digital currency system to replace the heavily restricted Icelandic currency known as krona. The use of Bitcoin in Iceland is also very restricted. This is part of the reason why Baldur Odinsson, a pseudonym of an unknown entity, created Auroracoin. This coin was launched in 2020 and uses Scrypt as a hash algorithm and POW for transaction authentication. The creator of Auroracoin attempted to boost the knowledge of Auroracoin amongst the general public and increase its network effect by distributing 50% of all generated Auroracoins to the population of Iceland. This action was dubbed the “airdrop.” The airdrop was delivered in three phases, after each phase the value of Auroracoin was drastically decreased and after the final stage all remaining Aurora coins were burned by sending them to a non-existing address labeled “AURburnAURburnAURburnAURburn7eS4Rf.” Since April of 2020 and the previous destruction of pre-mined Auroracoin, the value of each coin has stabilized and has been on the rise.
This is another open source cryptocurrency which introduces something new into the crypto world: instant transactions. Originally introduced to the cryptocurrency market as Darkcoin, this currency was renamed Dash on March 25 th , 2020. Unlike other currencies, Dash uses X11 as a chain hashing algorithm for its proof-of-work system. It was one of the currencies which started with a set of pre-mined coins, estimated to be about 1.9 million coins which are equal to about a quarter of the current Dash coin supply. The developer of Dash faced his fair share of issues when working with Dash, one of which was known as an “instamine” error. After resolving the problem, the developer suggested a re-launch of the cryptocurrency but the community strongly insisted on leaving everything as it is and progressing with the development of the currency. At one point, Evan Duffield, the lead developer and creator of Dash, suggested that an airdrop of Dash was needed to broaden the initial distribution of the coin. This was also overwhelmingly rejected by the community. The Dash community is one of the most active around the cryptocurrency side of the internet, and the current capitalization of Dash is over $500 million USD.
As you can see, there are many different cryptocurrencies out there and each one of them offers something different. They were all created with certain criteria or functionality in mind, and many more developers continue generating new and improved functions amongst the existing cryptocurrencies, as well as generating new ones to satisfying the ever demanding users.
ICOs, Investments, and Profits
Before we can start talking about investing into cryptocurrencies and possibly making some profit along the way, we need to discus ICOs, not to be confused with IPOs.
Let’s get to the point, what in the world is an ICO? An Initial Coin Offering is a transaction type designed to help spur up and launch new cryptocurrencies and give them some traction. Essentially, it is a fundraising tool designed to boost the newly born currency into the online world. The idea is that you invest currently launched cryptocurrencies into the new currency you are favoring in an exchange for future cryptocoins of the freshly launched or to be launched currency. It’s somewhat simple: you give the launchers some Bitcoin or Ethereum and you get some of their future Unicorncoin, assuming those don’t exist yet.
In the fiat currency world, most financial institutions see these ICO transactions as “unregulated” investments of cryptocurrencies where users can make Bitcoin or other digital currencies. The key word here is unregulated. Unlike share or traditional IPOs, ICO coins, the representation of your investment into a certain digital currency startup, aren’t linked to any ownership rights and thus can be trade or exchanged at will. In the fiat world, this is a huge no-no.
So, let’s put everything on the table. ICOs are essentially coins which you get by supplying someone with currently successful crypto coins so that they have a chance to make new future proof and even more successful coins. It seems silly, but somehow these ICO transactions are actually making a huge buzz in the cryptocurrency world. It is estimated that nearly $240 million has already been invested into such ICOs, of which about $110 million was invested this year. Surely there is a reason for such a huge movement of money? We think that people are constantly searching for that new and shiny cryptocurrency that will inevitably become the world currency system, and perhaps this is the reason why investments into this research are so high. Some of you might say that the potential is already there via Bitcoin or some other already released currency, but the reality is that not everyone is on the same page. Those of us who are so called non-conformists might be looking for something special in other places.
Here is the problem with ICOs
As long as you paint a pretty picture and throw in enough cryptocurrency jargon at an unsuspecting investor, you are able to get away with keeping all the investments which were given to you to start the somewhat fictional currency and never be heard from again. Since anonymity is relatively easy to attain online and that’s exactly what most cryptocurrencies are about, accepting that 1 BTC payment request and never hearing from your so called “genius” developer is a very sound and scary possibility. Our suggestion is to be diligent and careful with your ventures. Double check everything, including dates, claims, and domain registration dates. If something seems odd or misaligned, run like you have never run before. With all this in mind, don’t assume all of these potential goldmines are deadly web traps. Many of these developers are actually looking for legitimate funding and they are in fact trying to make the new invention a success. Who knows, maybe you will find the diamond in the rough.
What about regulations and laws?
Isn’t there something out there in place to protect my potentially fake investment? Truth be told, you are sort of out of luck. You see, most of these ICO coin tokens are designed in a way that marks them as ‘software presale tokens.’ So essentially, your ICO coins are no different than a video game token that you bought before it launched. The main reason many developers choose to address their new currency in such a way is to avoid paying all the expenses that come alongside legal sales. In a similar matter, a developer of a newfound cryptocurrency might choose to say that his or her investors are ‘donating’ coins to their cause and what not. So while this is completely acceptable and falls under the same reasoning for why Bitcoin was invented in the first place, to decentralize and stop all the crazy fees that go into making these investments happen, it’s still relatively questionable.
If it is so risky to invest through the use of ICOs, then why is on the rise and why are so many people trying to make a profit this way? Many predict that the boom in ICO sales is primarily due to the huge amount of return that was made by the early Ethereum adopters, making ICOs seem pretty desirable.
So is everyone chasing a golden egg laying goose and getting scammed along the way? Not really. There is great potential for making some serious profit when investing with ICOs, but the lack of regulation and security is what we are worried about. Just because the system works doesn’t mean it is working the right way. Yes, in a certain alternative way ICOs are exactly what the whole cryptocurrency world is all about, but security is something that all cryptocurrencies focus on as well. We don’t see this same concept being implemented with ICOs.
The question remains, should you buy ICOs in an attempt to make profit? If you have an insane appetite for risk and aren’t afraid to lose any of your investing capital, then go ahead, you might come out on top. But when you take all the factors into account and think about the security aspect, or the lack thereof, then maybe you should put your money into someone else’s pocket for the time being, while ICO security is improved.
Selling, Buying, and Trading
First things first, buying and selling Bitcoin isn’t even remotely close to being the same as using the stock exchange to purchase or sell stocks. On the same note, it isn’t anything like FOREX and should never be considered the same thing.
Secondly, the factors involved with trading Bitcoin are completely different than those on a traditional exchange network. Fees, regulations, limitations…every single one of these points are completely different from using any other fiat currency or stock exchange system. Furthermore, all of these points have to be taken into account when deciding how much to buy or sell or when to buy or sell. Then there are the different ways you can purchase Bitcoin or other cryptocurrencies, and the multiple different ways you can sell that same currency. The only resemblance between fait currency exchange and cryptocurrency exchange is that just like choosing which software to use for trading stocks and fiat currencies, you will have to choose a cryptocurrency exchange platform.
If there isn’t a centralized exchange system or limitations and regulations fluctuate from one platform to another, then why would you choose to trade cryptocurrencies? One of the key reasons why people choose to trade Bitcoin over other currencies is due to its availability on the global scale. There is no timeframe during which Bitcoin can be traded, the market never closes and is always open to trading. Weekends don’t exist for Bitcoin, so you can trade any time of the day, during any day. Whatever is most convenient for you, wherever is most convenient for you, Bitcoin will be there for you to trade.
Another reason many choose Bitcoin over traditional stocks and fiat currencies is because of its fantastic volatility. To a long term investor, volatility might be a bad idea and promotes instability. However, day to day traders can benefit enormously with the amount of volatility which is seen in Bitcoin every day. We are all aware of the reason for this volatility as well, as all new currencies experience it. This is especially true when knowledge of the currency is low alongside the relatively low network effect. But this doesn’t mean the currency is bound to fail, and all it means is that Bitcoin needs more time to mature. For a day to day trader, those are golden words.
Something else that many have turned to Bitcoin because of is the ability to trade it with leverage. Certain platforms will give you leverage over your initial desired trading amount. For example, BitMEX offers up to 100x leverage for your trades. This means your investment of $20 can be leveraged as high as $2000. Keeping in mind that most of these platforms will have regulations and rules in place to protect their investment; it is still a somewhat heavenly environment for a trader when combining these leverages with the high volatility that Bitcoin goes through each day.
One of the most sought after reasons why so many traders are turning to Bitcoin is the fact that it’s a completely new median and is in most cases independent of the FOREX and other exchange systems. Furthermore, this currency also moves on a global scale, so it is somewhat isolated from localized risk. Events that impact the fluctuation of Bitcoin prices are usually easily traced and often predictable as long as common sense and some knowledge of economics are used. Those of who are first starting to trade Bitcoin won’t have to sift through enormous amounts of data to carefully analyze price movements of Bitcoin, in most cases you can see clear relationship between events related to Bitcoin and its value.
So what is the best way to trade Bitcoin?
Luckily, we have this wonderful and somewhat magical concept known as Contracts For Differences. All CFDs represent a contract between the trader and the exchange that is accepting or proposing the contract. It dictates that the difference between entry price and the exit price of each trade is in turn equal to the profit that the trader will make. Essentially, it’s both parties agreeing to simulate the use of actual assets. This allows the trader to use an exchange of choice for Bitcoin trading without actually owning any Bitcoin. CFDs offer flexibility, no matter if you are interested in going long or short term. The best part is that they can be entered into the exchange at any time on any day and be closed whenever you wish.
Generally, the fees related with trading through CFDs are usually very low when compared to other market trading methods. However, they are higher than if you were to trade direct Bitcoin instead of CFDs. Additionally, it is vital to understand that CFDs are perfectly suitable for a short term trader but are not a good choice for those seeking to make long term investments, because of the daily premium of 0.1% that most charge for using CFDs. Then there is the all-time hated “margin call.” This is a system put in place to prevent the client balances from going deep into negatives. Since Bitcoin offers high volatility and most exchanges give you high leverage, the possibility of negative balances is a real risk and a threat to the exchange. Lastly, CFDs require regulations and regulations come with fees. This is exactly why many Bitcoin exchanges choose to operate outside of the US, where these fees are astronomical.
If CFDs aren’t what you are looking for and you are more interested in a long term investment, then buying and holding onto your Bitcoin is probably a better choice for you. There are plenty of platforms which offer free wallets to hold your Bitcoin once a purchase is made. Generally, most platforms will let you use your Debit Card, Credit Card, Bank Account (this often takes a few days per transaction), and even PayPal. You will need to register on the platform of your choice, open and account, and fund it with one of the above options. From that point on you can make a purchase for the desired amount of BTC you wish as long as your account balance permits it.
Most of these platforms will also allow you to sell BTC back to customers who are looking to buy them. The concept is the same: find a buyer, sell your BTC, and withdraw your profits.
The beautiful part about trading Bitcoin is that there are limited rules and regulations set regarding cryptocurrencies around the world. This means that you aren’t limited by your government with your transactions. However, some countries have very strict rules when it comes to trading cryptocurrencies, such as Russia. If you reside in one of these countries make sure that you are operating within you legal parameters.
Final Words On CryptoCurrency
Bitcoin and many other cryptocurrencies are opening the doors to a new type of digital money, which we think has the potential to someday become a leading currency of the world. At the moment, even the oldest of cryptocurrencies are still maturing and only time will tell where this genius invention is heading. From what we can tell, there is plenty room for advancement. At the same time, Bitcoin has already revolutionized the digital world.
Cryptocurrency Exchange Reviews
Your first step into the cryptocurrency world will most likely occur through an exchange or brokerage. There are two main types of exchanges that we will discuss in this guide.
The first type of exchange are called fiat exchanges.
These exchanges allow the direct conversion of US Dollars, Euros, and most government-backed currencies into cryptocurrency.
The second type of exchange are called cryptocurrency to cryptocurrency exchanges.
These allow cryptocurrencies to be traded with each other. Crypto to crypto exchanges will be covered more in-depth on the second half of this page.
Depending on what cryptocurrency you are trying to obtain, you’ll need to use certain exchanges.
Based out of San Francisco, California, Coinbase is considered by many to be the most beginner-friendly exchange. It accomplishes this through its beautiful yet simple user interface.
Coinbase is a brokerage, meaning that instead of buying Bitcoin and other cryptocurrencies from other users, you are buying directly from Coinbase.
As far as fees go, Coinbase charges 1.49% on bank purchases and 3.99% on credit and debit purchases.
Due to the lower fees involved, it’s recommended to use your bank account when making large purchases.
Coinbase’s fees are on the lower end compared to other brokerages mentioned later in this guide.
Why use Coinbase?
You should use Coinbase if:
- You are a beginner to cryptocurrency
- You like low fees
- You plan on paying via credit card, debit card, bank transfer, or bank wire.
- Your country is supported by Coinbase (United States, Europe, Singapore, Australia, etc.)
Coinmama is another beginner-friendly cryptocurrency brokerage that focuses on credit and debit card purchases.
They offer instant delivery and sell Bitcoin, Ethereum, Ripple, Litecoin, and more to 40 US States, and most countries.
Coinmama doesn’t provide its users with a wallet on the exchange. Instead, users are asked to provide a wallet address to send the purchased cryptocurrency to.
As long as you have your own wallet, this shouldn’t be an issue!
Coinmama’s fees are slightly higher than Coinbase at 5% when a credit or debit card is used.
Recently, Coinmama has made it possible to sell Bitcoin back to your bank account. This feature is only available in European countries, but it’s likely it will be available to more as time goes on.
Why Use Coinmama?
You should use Coinmama if:
- You plan to purchase cryptocurrency with a credit or debit card
- Your country is not supported by Coinbase
- You have a cryptocurrency deposit address for Coinmama to send purchased crypto to
Bitpanda, called by some the Coinbase of Europe, is a popular brokerage that sells Bitcoin, Ethereum, Ripple, and more for US Dollars, Euros, British Pounds, and Swiss Francs.
Just like Coinbase, Bitpanda has a very simple user interface, making it easy for beginners to successfully purchase in cryptocurrency.
The exchange has several payment methods such as bank transfers, credit cards, debit cards, Skrill, Neteller and more. Depending on which method is used, there may be differing deposit fees.
When it comes time to transact on the exchange, Bitpanda charges 1.49% for buys, and 1.29% on sells making them an extremely competitive option.
Why Use Bitpanda?
You should use Bitpanda if:
- Your payment method is supported (card, bank, Skrill, Neteller, etc)
- You want to purchase a wide variety of altcoins
- Your country is not supported by Coinbase
Headquartered in London, UK, CEX.io offers security, high liquidity, and cross-platform trading. It has somewhat high fees, margin trading, almost 100% uptime, and more.
The exchange was affected by a small hack long back but has had no issues for a while. It has over 2.8 million accounts and a wide variety of cryptocurrencies for sale.
CEX.io appears to have little no fees at first glance. They are able to do this by charging a premium on the Bitcoin price.
When a user buys cryptocurrency on their exchange, they are paying more for the actual currency compared to the other exchanges prices. This doesn’t matter too much as it is basically the same thing as a service fee.
Why use Cex.io?
- Your payment method is supported
- You want to purchase a wide variety of altcoins
Kraken is another popular exchange based in the United States that’s been around since 2020.
In terms of trading fees, Kraken’s are very fair and scale based on your 30-day trading volume. If you’re a maker, they range from .16% all the way to 0%. Taker fees on Kraken range from .26%-.1%.
For funding options, Kraken offers deposits in USD (FedWire), EUR (SEPA), and CAD(Wire & EFT). Like most other options, if you own cryptocurrency already, they allow for several cryptocurrency assets to be deposited on the exchange.
A unique feature of Kraken is that it allows for margin trading with up to 5x leverage. When margin trading on Kraken, eligible accounts can borrow up to $500,000 to go long or short on a cryptocurrency.
Last but certainly not least, the exchange features a powerful and intuitive API for those wanting to take their investing to the next level.
Why use Kraken?
- You want to margin trade (up to 5x)
- You want to trade cryptocurrency on fiat and crypto pairs
- You enjoy low fees
- You want to purchase a wide variety of cryptocurrencies
- Your country is supported
LocalBitcoins offers a highly trustworthy escrow service and peer-to-peer (P2P) exchange.
On the exchange, users to trade among themselves. Due to the nature of the transactions on the exchange, there is a resolution and feedback system.
It also allows users to post a quick buy or quick sell ad on the exchange platform. It is one of the best cryptocurrency exchanges for peer to peer trading.
LocalBitcoins is one of the better exchanges for users concerned with their privacy. Bitcoin can be purchased in person without linking an identity to an exchange.
Why use LocalBitcoins?
- You plan to use cash to buy cryptocurrency
- You want to use an escrow service
- You want a more private way of purchasing cryptocurrency
Bitstamp is one of the oldest Bitcoin and cryptocurrency exchanges being founded in 2020. They have a wide variety of fiat vs crypto trading pairs.
As one of the oldest cryptocurrency exchanges out there, Bitstamp has proven to be one of the most reliable exchanges out there. They offer top of the line security, with highly encrypted personal information, and over 98% of assets locked in cold storage.
Although it’s based in Europe, Bitstamp users from the United States and other countries can send international transfers for a very low fee.
Want to trade on the go? Bitstamp also offers free mobile apps on Google Play and the App Store.
Why use Bitstamp?
- You want high liquidity
- You enjoy low fees
- You want to purchase a variety of cryptocurrencies
Gemini is an exchange based in New York, US that allows for the trading of USD against Bitcoin, Ethereum, Litecoin, Zcash, and more.
The exchange also offers high security and compliance, top of the line cold storage system that stores information offline, access controls, and multi-factor authentication.
For fees on Gemini’s brokerage service, expect 1.49% fees on buys and sells for orders over $200. Gemini’s brokerage service is an intuitive way for beginners to purchase cryptocurrency.
If you feel comfortable using their exchange feature, have your account switched to ActiveTrader mode. On this mode, fees scale base off your trading volume and are between .35% and 0% depending on if you are a maker or taker.
Why use Gemini?
- You want a secure exchange
- You enjoy low fees
Crypto to Crypto Exchanges
Here’s some information on some of the most popular crypto to crypto exchanges.
Binance is one of the newer exchanges but has impressed its customers on several occasions. They have some of the highest trading volumes on several of their trading pairs, and an enormous amount of coins available for purchase.
It is based in Hong Kong, with offices located in several other countries such as Japan and China. It is available to all countries and US states.
Binance introduced SAFU (Secure Asset Fund for Users), which takes 10% of all trading fees the exchanges earns, to give back to the users in the event of a hack. The exchange did have a hack in May 2020 but covered all user funds using the SAFU fund.
The Binance exchange features their own coin, Binance Coin, that allows users to save big on trading fees.
In June of 2020, the exchange announced that there would be a new exchange for US users to trade on that is separate from the Binance DEX. This is likely due to the regulatory status of cryptocurrency in the United States.
Changelly takes a different approach to the exchanging process. Instead of letting users store their cryptocurrency on their exchange, they set up conversion transactions. Users select an input and output currency and an amount.
In the above example, I selected .1 BTC and an opposing amount of ETH is automatically determined at the going rate. Then, Changelly provides an address to send the Bitcoin to and asks for an address to send their Ethereum to.
This effectively cuts out one step and swaps currencies in real-time. In exchange for their services, Changelly charges .5% on transactions. Fiat currencies such as the US Dollar and Euro can be used, but have slightly higher fees. Pretty cool!
Bitfinex is one of the larger cryptocurrency in terms of volume and users. It is based in Hong Kong and has trading fees of .1% for makers, and .2% for takers. It is important to note that BitFinex does not allow US users to sign up for their exchange.
Please note that Bitfinex is limited in the countries they serve and do not accept US signups.
So to sum it all up… each exchange has different pros and cons, so the best exchange for one person, might not be the best for another.
You should consider a number of things when determining the
best Bitcoin/cryptocurrency exchange for you:
- How safe is the website and server? Secure exchanges are better.
- How is the liquidity? The higher the exchange’s volume, the better.
- What are the exchanges fees? The lower the better.
- How is the exchanges customer support?
- What trading pairs are available?
- How many different payment options does it have?
- Is the exchange beginner friendly?
Most cryptocurrency exchanges will serve their intended purpose in letting users buy cryptocurrency listed on the exchange.
The main differences are the exchanges fees, customer support, the number of supported coins, and supported countries. To ensure you have access to as many cryptocurrencies as possible, it may be wise to sign up for each exchange.
The important things to take away from this page is the difference between the two main types of exchanges.
The first set is commonly referred to as fiat exchanges, and allow users to use credit cards, debit cards, and bank transfers to purchase cryptocurrency. The most popular fiat exchange is Coinbase.
The other type of exchange is known as a crypto to crypto exchange and only allows cryptocurrencies to be exchanged with each other. No fiat currencies or debit/credit or bank transfers are used on these exchanges.
Frequently Asked Questions
How Do I Deposit Into an Exchange?
Depending on what type of exchange you are trying to deposit into, this will differ. If the exchange is a fiat exchange, you must link a payment method such as a bank account, credit card, or debit card.
If it’s a crypto to crypto exchange, you will find a tab or page on the exchange titled wallets, deposits or something of the sort. Click that, and from there you will see a deposit address for every cryptocurrency available on the exchange.
How Do I Withdrawl from an Exchange?
Similarly to deposits, this will vary depending on the type of exchange. Most fiat exchanges allow users to withdraw sold cryptocurrency back into their bank accounts. It is somewhat rare to find an exchange that allows withdrawals to a credit or debit card.
For crypto to crypto exchanges, you can most likely withdrawal from the wallet tab mentioned earlier. You will need to provide another wallets deposit address in order to send the transaction.
Lastly, some exchanges will have limits on withdrawals, that can be improved by verifying your identity.
Can I Buy Facebook Coin on An Exchange?
As of right now, it’s unsure just what will happen with Facebook Coin. We know it will be a stablecoin used to send payments on the social network.
Its regulatory status in the United States is still very unclear, but as time goes on we will know more.
Do I Have to Pay Tax on Cryptocurrency?
Absolutely! While the IRS hasn’t been very clear on their guidelines for cryptocurrency tax law, they are treating them like normal cryptocurrency at the moment.
Here’s an informative slideshow created by the IRS handling cryptocurrency.
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