Trading bitcoins is a profitable and advantageous process, even if it involves some rules. In order to be profitable, it is important to know how to store assets and trade them with others. For this reason, anyone who is not afraid to invest and wants to increase earnings through technology needs to know well what cryptocurrency exchanges really are.
Interested? Then follow all the following topics and learn relevant information on this type of platform. In this article, we will discuss:
- What is a cryptocurrency exchange?
- How to trade in an exchange?
- What are the main differences between cryptocurrency exchanges?
- What are the main exchanges?
- How to choose an exchange?
In February 2010, a user named “dwdollar” created a portal called Bitcoin Market. Where it would be possible to buy and sell digital currencies through peer-to-peer negotiation. As a method of payment, even PayPal, one of the most famous transaction brokers, was included. The rise of Bitcoin Market marked the beginning of an era.
The idea of a cryptocurrency exchange (or brokerage) started emerging. The goal was to maximize Bitcoin’s innovative aspect and allow its users freedom during their financial operations. Thus, a cryptocurrency broker or exchange is a platform on which registered users trade with each other with bitcoins and other digital currencies. Through these trades, it is possible to obtain more bitcoins or other financial assets, such as reais or dollars.
These environments may be physical or online, but most users prefer to access them via the internet. Because of technology, connectivity and the end of geographical and temporal barriers, traders are able to trade from anywhere they want and when they want.
The exchanges act as a kind of free market for cryptocurrencies, where people interact with each other and trade their assets. A feature of this type of platform is the incidence of fees and costs on financial operations. These monetary charges are the way brokers support themselves financially. In Brazil, although the number of users and exchanges is growing, there is still no clear oversight on such platforms.
Exchanges are not the proper place to store coins, usually bitcoin wallets are the right tool to do so. These wallets come in many shapes and sizes, from the safest to the riskiest. However, as movements occur within this type of platform, it is important that there is reliability and protection. In the last topic of this article, we’ll walk you through what to evaluate before choosing an ideal broker. This will allow you to consider the most relevant aspects.
How to trade in an exchange?
To start with a brokerage firm, a user must register and go through a verification process in order to authenticate their identity and data. Once the documents have been validated, they will be able to transfer money and try to profit from trading opportunities.
The agreements between the parties may be direct or anonymous. In the case of a direct approach, users interact directly with each other and get the values right. When the option is anonymous, cryptocurrency exchange intermediates the operation and does not expose personal information. Either way, it can be done from anywhere in the world at any time of the day.
Arbitrage consists of buying the cryptocurrency from a lower priced exchange and selling it on another platform where its value is higher, thus allowing the seller to profit. This operation can occur between brokerages or even the brokerage itself, as it can be performed almost instantaneously or over a longer period of time.
What are the main differences between cryptocurrency exchanges?
The world’s leading Bitcoin exchanges differ in several factors. One aspect is with regards to commissions and fees. These values vary and change depending on where people sell and buy their bitcoins. It is essential to pay attention to them before each process.
In the same way, identification methods change a lot depending on the option. Some sites use encryption, while others do not.
There are also differences regarding the variety of currencies to trade – and this directly affects the trader. If in exchange X, there are more options in exchange Y, X may represent a higher profit in less time for the user. Associated with this is the liquidity factor, which depends on the number of traders on each platform. The higher the number, the higher the liquidity.
What are the main exchanges?
Coinbase is a well-known platform which earns several million dollars. Etoro is another globally known company that operates in over 170 countries and is available for Android and iOS. CoinMama is an exchange famous for allowing credit card, debit and bank transfer.
Still at the global level, Bitfinex is the largest of its kind by volume. Brittex is based in the United States and has withdrawal, trading and deposit limits. This feature aims to democratize opportunities and strengthen security in the internal environment, facilitating the work of users.
To increase these limits, the seller or buyer must present documents such as passports, CNH, and other confidential data.
In Brazil, Bleutrade, founded in 2014, is a reference in the cryptocurrency business and has one of the best rates in the national market. There is also the São Paulo-based Mercado Bitcoin, which was the first exchange in Latin America to broker purchases and sales of cryptocurrencies. In addition, we have Foxbit, based in Sao Paulo, which has developed good security solutions to optimize the lives of users.
How to choose an exchange?
The support is very important as it is what will help people if they have questions about using the site. A good service is always focused on users and helping them get the most out of the platform by mitigating difficulties.
It is important that this service is attentive, helpful, humanized, efficient and always available. That way you can trust and rest without fear of losing your assets.
Ease of use
If a cryptocurrency exchange is too complex to use, it discourages people and presents difficulties to use. That way traders will have trouble understanding the data on their dashboard and taking important actions. Therefore, it is important that everything must be practical and easy to use, in a way that streamlines the process and does not delay operations.
It is also important to evaluate what additional features each site offers. After all, these factors denote or care for the creators and how important they consider the experience of each negotiator. In addition, these features help in everyday life, generating optimized use that generates more profits and less risk for each user.
As the options are many in the market, it is essential to focus on fulfilling the traditional regulations and comply with the laws. This ensures that you will trust your assets to a truly secure and reliable platform.
Compliance of an exchange says a lot about the experience that users have with her. To avoid problems and inconvenience related to the operations and values you have, consider this as a priority.
Another factor is the safety. Buyers and sellers should look at the robustness of each option and how platforms deal with cyber attacks and crime possibilities. It is always ideal to choose systems that offer real solutions in this regard, with powerful tools and ideal protection policies.
Investigate the reputation and history of each alternative regarding the server failures, deposits or errors that compromise personal information. Try to understand the data that they make available to check for reliability in this regard.
Operations must be transparent together with the actions of the provider company. Everything must be clear to the user in order to enable secure processes and transactions.
As we mentioned before, the platform and exchange market is not yet overseen as it should in some places. Therefore, to protect yourself, it is important to research the credibility of each alternative in order to separate the true from the false ones. In addition to evaluating security procedures, it is interesting to see if the broker has market authority and a good reputation.
We have to emphasize the efficiency in the processes. A good brokerage firm should be secure, as we have already discussed, but it must also be speedy and agile in trading, avoiding bureaucracies that become bottlenecks and impediments. In this sense, it is worth evaluating the practicality of use, the features and how it all generates speed for users.
Since each company has its own values, fees and commissions, it is essential to analyze this as well. In this regard, the user needs to compare in order to choose the option that is most viable and least expensive. In addition, it is interesting to evaluate the variety of currencies and the number of people involved to achieve liquidity. All of these issues impact profitability.
Virtual currency exchanges are very important platforms for traders as they focus on buying and selling, as well as allowing contact. With its features and functions, it is possible to optimize earnings and ensure a good return from existing opportunities. A good site also provides the security required for operations.