First of, I’d like to wish Happy Chinese New Year to all my friends, colleagues and blog readers. Thank you for your support folks and keep those emails pouring in.
From the many emails I received, there were 2- common questions asked. So, I thought why not do a blog post around this topic.
1) Which is the best Bitcoin exchange?
2) What are the pointers to look out for when choosing a Bitcoin exchange?
Before I go ahead and answer, let’s look at what are the 4-important factors I always look into before deciding on the best Bitcoin exchange to signup with.
DISCLAIMER: I’m not in any way suggesting you should take my advice in here and join any of the exchanges listed. Please do your own research before joining. If you do decide to join, I just want you to know that I may get a small fee from the exchange you joined.
4-Important Factors: Choosing a Bitcoin Exchange
Bitcoin exchanges all share certain core functionality, but their effectiveness as trading networks can vary greatly as a result of minor design and functionality infusion as well as the different regions or countries they operate in.
Every bitcoin exchange has a slightly different fee structure, designed to suit various usage patterns and cater to distinct audiences. Almost every exchange uses a volume-based fee schedule, where those offering to buy and sell large chunks of bitcoin pay lower fees. Fees express a percentage of the transaction amount and generally cap at around 0.30 percent.
Some exchanges use a maker-taker fee model, where those who place buy and sell orders designed to move the price up or down (makers) pay no fees, while those who accept whatever offers are currently available (takers) pay a fee for the convenience. This ensures that traders are always acting to stabilize the price, keeping it as close to the market average as possible.
When trusting a bitcoin exchange with your money, you want to ensure that the security measures are top of the line. Almost every bitcoin exchange uses two-factor authentication at the least to protect your account from hijacking, but some exchanges go above and beyond to ensure client privacy and security. Everything from advanced encryption methods to offline, unhackable ledgers, to strict hiring procedures can help make a bitcoin exchange more secure.
Trading & Currencies
The trading volume of a bitcoin exchange can tell you a number of things about the exchange. It lets you know that many people trust the network with their money, which speaks well of business practices. A larger client base and higher trade volume ensure more equitable trades for all involved because everyone has more potential trade partners. As a rule, bitcoin exchanges with higher trading volume tend to stick closer to the average market value of bitcoin, while smaller networks tend to skew higher. Which currencies a network accepts can also affect its trade volume, as well as its usefulness.
Almost every bitcoin exchange offers an API, or application program interface, to allow custom software to interface with the system. This allows you to develop advanced tools for managing money automatically without having to do everything by hand. Where bitcoin exchanges vary is in the specific functionality their APIs provide. For example, some APIs have built-in functionality for trading on margin, making them ideal for day traders and other currency speculators.
There are bitcoin exchanges available that trade in different flat currencies and other types of cryptocurrency. Some use enhanced and multiple levels of security, and the trading volume for various exchanges differs, which can affect your ability to buy and sell bitcoins.
Which Is The Best Bitcoin Exchange?
This is a very subjective question as what is best for me may not be best for you. However, I believe in seeing what the majority if the Bitcoin community has chosen. If you’d like to learn more about their terms and joining policy, simply click on the link/logo.
Bitstamp is a European bitcoin exchange that has been running continuously since 2011. Its reputation has also made it one of the most common places to buy bitcoins on the internet. They accept U.S. Dollars and European Euros, as well as British Pounds and Swiss Francs.
Bitstamp’s fee schedule is not very complicated. Bitstamp collects a small fee on every transaction based on the exchange volume, calculated in U.S. dollars. For transactions under $20,000, the fee is 0.25 percent. At $100,000, the fee drops to 0.24 percent and then continues to drop roughly every time the transaction amount doubles until it bottoms out at 0.10 percent at the $20 million mark.
Not only is this system simple to understand, it incentivizes bulk purchases, which makes it simpler for large financial institutions to move in and out of the currency. Bitstamp also recently lowered its wire transfer fees, which is a nice bonus.
The company makes every effort to provide consistent, timely service and support through a well-designed and solidly integrated platform. Coinbase is customer centric, and eliminating complexity from the platform is important. In order to do this, engineers and financiers improve multiple aspects of customer interaction as they buy and sell bitcoins and automate them.
Coinbase has recently been a target of the US government especially the IRS. In its recent sting operation, IRS has requested the company to hand over and reveal all of it’s customers data. You can read and follow with the latest on this exchange from here.
BTC-e is one of the largest exchanges to buy and sell bitcoins and even offers a chatroom. Based in Bulgaria, it lets you trade not only in bitcoins, but also Namecoins and Litecoins for other currencies. This digital currency exchange has been in business since 2011. The exchange handles a high percentage of the total volume of bitcoin transactions.
A nice feature about this exchange is that you can withdraw to a debit card, and you can use a major credit card to buy and sell bitcoins. This exchange offers support if you have problems and it has one of the lower usage fees among bitcoin exchanges. New clients cannot make withdrawals for the first three days from the time of opening an account. This time is to verify your identity.
Kraken is based in San Francisco and founded in 2011. They let you exchange multiple currencies and buy bitcoins on its platform. Integration with Bloomberg terminals in 2014 provided greater visual access for this company. The company uses innovation and good security to structure a safe and viable trading platform.
Currencies traded include bitcoin, Ripple, Dogecoin, Litecoin, Ven, U.S. dollars, the euro, and the Korean won. Using the International Standards Commission’s abbreviation for bitcoin, Kraken uses XBT rather than BTC. The X designates a decentralized currency. This San Francisco Company offers a quick platform for customer exchanges, the website itself is well planned, and the designers incorporated a light-hearted look to the website itself.
Remitano is a product of Babylon Solutions Limited – incorporated in Seychelles. It provides escrowed P2P Bitcoin marketplace where people buy and sell Bitcoin easily and safely. They currently operate in many countries including the United States, Australia, United Kingdom, Malaysia, Nigeria, Vietnam, Cambodia, China, India, Tanzania and Ghana. According to traffic metrics, it is the largest Bitcoin exchange in Vietnam.
However, Remitano is distinct from all other Bitcoin exchanges in that it operates without the need of a banking partner.
Let me explain further…
Remitano is a P2P bitcoin exchange (just like Localbitcoins) but with one distinct difference. It DOES NOT deal with banks, hence completely shielding itself from the whims and fancies of weird and often not so ‘Bitcoin friendly’ banking rules. Most bitcoin exchanges are centralized platforms which are heavily dependent on banks to receive deposits and facilitate withdrawals for customers but not Remitano.
Banks have a history of harassing centralized exchange platforms. A recent example is of a well-known Malaysian centralized exchange BitX, who had to face a sudden overnight closure of its banking account that caused great trouble for it’s Malaysian customers who weren’t able to cash out or make deposits. They have since made ammends with withdrawals part but not the deposits.
That’s how more and more people got to know about P2P exchange platforms. They now know that they can nullify the ability of banks to interfere, shut down or dictate terms to them or cryptocurrency exchanges.
So that’s my list of the 5-best bitcoin exchanges I’d recommend to anyone.
Are you using a different exchange from the above? Tell me which one and how’s your experience been so far.