Bitcoin Exchange; Buying and Selling Bitcoins
You must have heard of the currency exchange, a market where currencies buyers connect with currencies sellers. The various currencies exchange platforms don’t own any currencies, they just act as platforms that facilitate transactions between currencies buyers and sellers.
A Bitcoin Exchange is a digital marketplace where traders can buy and sell Bitcoins using fiat currencies or altcoins. Bitcoin is a cryptocurrency that was created in 2009 by an anonymous person also known as Satoshi Nakamoto. It is the very first peer-to-peer form of currency, which eliminates the need for third parties to be involved in any given transaction.
Fiat currencies are those that different governments have declared as their legal tenders. Altcoins, on the other hand, are alternative cryptocurrencies launched after the success of Bitcoins, for example, Ethereum and Monero.
What entails Bitcoin Exchange?
- A Bitcoin Exchange platform brings together Bitcoin Buyers and Sellers. Just like the currency, the various exchange platforms tend to be based on peer-to-peer transactions, whereby transactions are exclusively operated and maintained by software.
- Bitcoin exchange platforms such as Mt. Gox, allows different traders (Buyers and Sellers) to convert Bitcoins to national currencies (fiat currencies) such as dollars, or altcoins such as Ethereum or Monero, and vice versa.
For example, if you have Bitcoins and I have US Dollars, you can transfer your Bitcoins to me, at the expense of my dollars in return. At the end of the transactions, you will be having US Dollars while I will be having Bitcoins.
- In a traditional market exchange such as the New York Stock Exchange, where buying and selling of shares are conducted, traders exchange different shares for different currencies by inputting a market order or a limit order. This very same concept is applied when exchanging Bitcoins for other currencies.
A market order is the default option suggested by a given Bitcoin exchange platform such as Bitpanda. It gives the current best prices at which Bitcoins can be traded for other currencies and vice versa, on the online marketplace. For example, a given exchange platform can set the current market order at USD 3576.67 per Bitcoin.
On a different note, a limit order gives traders the liberty of setting the rates at which they would want to exchange their Bitcoins for other currencies and vice versa. For example, despite the market order being set at USD 3576.67 per Bitcoin, I can choose to set my limit order at USD 3580.76/BTC or USD 3570.88/BTC.
- Bitcoin exchange marketplaces usually designate the trade participants as either makers or takers. A maker is an entity that has the power to influence the price it charges whereas a taker is an entity that has accepts the set prices.
In a stock exchange, the makers are the shareholders whereas the takers are the share buyers. In our Bitcoin exchange case, the makers are the Bitcoin owners or buyers using limited orders whereas the takers are Bitcoin buyers or sellers using market orders.
- When a Bitcoin Buyer or Seller places a limited order; his or her order is added to the order book. The limited order, registered in the order book, will then have its price matched by another trader on the opposite end of the transaction. Buyers and sellers participating in this kind of transaction are referred to as makers.
On a different note, market orders get immediately filled and do not have to be matched with the opposite end of the transaction. Traders participating in this kind of transaction are referred to as takers.
- For you to transact on a Bitcoin exchange platform, you have to first get registered by the platform and go through a series of verifications authenticating your identity. After the verifications are over, an account will be set up for you where you can transfer funds to either buy or sell Bitcoins.
The funds’ transfer can be done through bank wires, debit cards or credit cards, direct bank transfers, among other acceptable means. The very same means can be utilized for withdrawing funds from the exchange platform.
- Making deposits and withdrawals form Bitcoin exchange platforms have transaction fees applied to every completed order. The fees charged are mostly dependent on the on the volume of transactions carried out.
What are the most popular Bitcoin Exchanges platforms?
- This is a platform where everyone can exchange Bitcoins for different currencies such as US Dollars and Euros. There are however various countries and US States where CEX.IO is restricted.
- The exchange supports deposit of funds from Visa or Mastercards or bank transfers, as well as altcoins.
- Different fees are applied to different amounts of transactions and currencies (approximately 3.9% of every transaction). However, bank transfers are not charged fees on the platform.
- The platform offers different levels of accounts including Basic, Verified, and Business Accounts.
- This Bitcoin exchange platform is based in Israel and has its services opened to anyone in the world.
- The exchange accepts Visa Cards, Mastercards, and cash payments. Additionally, it supports funds transfer via the Western Credit card is the most popular method on this Coinmama.
- Coinmama charges a fee of approximately 6% on any given transactions. Apparently, the platform supports a wide range of countries, with a few exceptions.
- Any amount over $150 transacted via Coinmama requires full verification of a trader.
- LocalBitcoins is a peer-to-peer exchange platform, whereby buyers and sellers agree on terms of trade. This makes it one of the most private ways to purchase Bitcoins.
- It grants users lots of trade options and supports nearly every country in the world.
- Its greatest advantage is that it doesn’t have any buying or selling limits imposed on traders. However, since it’s a peer-to-peer network, quite a number of users have witnessed lots of scams.
- The platform supports any funds transfer method, with cash deposit being the most popular. Every transaction is charged a 1% fees.
- This exchange platform is based in Austria and offers a wide range of payment options (SOFORT Transfer, Visa or Master Cards, Neteller, Skrill, OBT) as well as good exchange rates.
- It is the best Bitcoin exchange platform via credit/debit cards in Europe.
- Its key disadvantage is that transactional fees are not displayed but included in a transaction.
- BitPanda supports most European countries but not used in the US.
- Coinbase is the top Bitcoin exchange platform in terms of the capacity of users and transactions it supports.
- It offers a variety of payment options including bank transfers, SEPA transfers, Interac Online, among several others.
- It is the easiest way for new users to trade Bitcoins.
- However, it has limited payment methods compared to other platforms and may track how its users spend Bitcoins.
- Coinbase poses an approximately 5% fees on any given transaction carried out.
- 247exchange is supported in more than 110 countries worldwide.
- It accepts a variety of payment methods including Credit or Debit cards, Instant money transfers, SEPA transfers (Single Euro Payment Area), Prepaid vouchers, and cash deposits.
- The exchange provider generally charges a 1% fee on transactions carried out, but this may vary based on other factors.
- The most trusted clients on 247exchange are the ones who enjoy the highest transactional limits.
- Bitcoin.de is based in German.
- The system matches Bitcoin buyers with corresponding sellers.
- After a successful match, the buyer is required to send the seller money directly to him or her via Bank transfer. Once the seller approves reception of the money, he or she transfers Bitcoins to the buyer’s
- For every successfully completed transaction, Bitcoin.de charges a 1% fee, which is split between the buyer and seller.
- This exchange platform offers great transparency for users. Nevertheless, it supports exchange to and from Euros only.
- Coinhouse.io is based in Paris and lets users in France trade Bitcoins.
- The platform accepts 3D secure credit or debit cards, as well as Neosurf prepaid cards as means of funds transfer.
- It requires full identification of users including selfies and can allow users to trade up to 2000 Euros worth of Bitcoins per day.
- Its main disadvantage is that it charges relatively high fees on different transactions, compared to other platforms. Between 6% to 10%.
- LakeBTC accepts traders from all over the world and supports over 160 countries.
- Based in Shangai, China, the platform supports a wide range of currencies including USD, EUR, SEK, XOF, JPY, among several others.
- The platform targets high volume traders and imposes robust verification steps.
- The fees charges per transaction are varying in nature depending on the volume of transactions and ranges between 0.3% to 0.1%.
- Exmo was launched in 2014 and is controlled by Exmo Finance LLP.
- It supports tons of payment methods as well as huge trading limits.
- Exmo exchange platform offers 24/7 support services in different languages.
- However, it charges relatively high transaction fees and has no privacy as a result of its solid verification requirements.
- Paxful was founded in 2015 and is based in Wilmington.
- The platform boasts a wide variety of payment options and is easy to join and get started with trading.
- Its greatest setback is the mixed reviews it has received from various customers, with some of them reporting cases of fraud.
- Additionally, sellers have been reported imposing high commissions, on buyers using uncommon methods or non-mainstream currencies.
- CoinCorner was launched in 2014 and is found in the UK-Douglas.
- The platform supports merchants and personal exchange accounts.
- For every given transaction, CoinCorner charges a 5% fee, which varies depending on other transactional factors.
- Coincorner has received a mixed review from different users, with some complaining of extremely expensive transactional fees.
- Bitlio avails its exchange services to over 40 countries in the world.
- The platform imposes a fee of 1% of every successful transaction and requires a government ID for any user to complete verification.
- It accepts payments in a number of fiat currencies.
- However, it is an unregulated exchange platform, and a direct successor of a scam company, which derails its reputation.
- BitQuick is an exchange platform that allows users to only make cash deposits as a means of payment. The means of exchange is supported in over 49 states.
- It charges a 2% fee for every given successful transaction.
- The platform is not as private as other platforms as it requires a government ID for verification.
- Its main disadvantage is that markup on Bitcoin prices can be relatively high sometimes.
What is the best Bitcoin exchange site?
Different Bitcoin exchange platforms have their advantages and disadvantages. Nevertheless, a few factors, which can point you to the best exchange sites include:
- Customer reviews: Checking the different Bitcoin forums for different customer experiences can really reveal the quality of services offered by various exchange platforms. Be worried about traders registering complains of high cases of scams on a given platform.
- The exchange rates and fees: Bitcoin exchange rates and fees really matter. The best Bitcoin exchange platforms offer good exchange rates to their customers as well as charge fair fees on successfully completed transactions.
- The number of payment methods supported: A flexibility in payment methods via fiat currencies and altcoins are a means of building a good Bitcoin exchange rate history for any given exchange platform.
- The number of currencies supported: Many sites support Bitcoin exchange for USD. Nevertheless, a good site will support other fiat currencies as well as altcoins thereby offering buyers flexible payment options.
- The volume of transactions: Generally, sites such as Coinbase will always top the Bitcoin exchange list because of the large volumes of transactions they manage on a daily basis. It’s a sign of customer trust. A Bitcoin exchange chart is the greatest hint to the volume of transactions it processes over time.
- Security: Bitcoin exchange best serves the traders if it assures them of the security of their accounts from external interference, especially theft and hacking.
- Privacy: Different bitcoin exchange sites offer different privacy policies. Depending on your preferences, you can always check on the ones that favor you the most.
Payment methods in Bitcoin exchanges
The various payment methods in Bitcoin exchanges include a cash payment, Debit or Credit Cards, altcoins, online payment platforms such as Skrill, Western Union, Neteller, among others.
Most top Bitcoin exchange platforms offer more than one payment option. Out of the numerous payment methods, it is always advisable to opt for the safest and most secured ones such as bank transfers.
Additionally, also embrace those platforms that promote easy payment methods such as Bitcoin exchange for USD.
Exchange Bitcoins for USD
Most traders prefer Bitcoin to dollar exchange because it is the most flexible method supported by most exchange platforms. Additionally, the dollar is a competitive currency, which is widely recognized thereby making the Bitcoin exchange rate for USD one of the most profitable deals.
To frequently observe how the Bitcoin rates against the dollar, you can compare the Bitcoin exchange rate charts on various exchange platforms. For beginners, Bitcoin to dollar exchange is the most convenient as a result of the simplicity involved in the exchange process.
To sum it up
Bitcoin exchange is a really volatile subject and requires some level of experiences with the Bitcoin market for one to make profitable transactions from his or her engagements. Other contributing factors to successful Bitcoin exchange engagements are the safety of transactions and amount of fees imposed on every transaction. Check out more of our posts to learn more about what Bitcoins entail.