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Nowadays we’re seeing a massive growth on cryptocurrency exchanges offering unique services. Exchanges that are not affected by issues and problems like malware and hacking are quite limited. Poloniex so far has evaded these problems successfully. The company is deemed to be a premier digital currency exchange for traders. But how safe is Poloniex exchange? Is everything as good as it seems? Are the owners even active in the cryptocurrency community? Is Poloniex a scam?
What is Poloniex?
There are numerous controversies surrounding Poloniex’s ownership, as they are yet to reveal who the real owner of the platform is. In addition, they don’t have any physical office in existence. So it’s no surprise why a lot of people do not trust the company.
Poloniex is an international crypto to crypto exchange headquartered in the United States. Though it has been operating since 2014, it was only officially registered with FinCEN or Financial Crimes Enforcement Network as an MBS or money service business in 2016. Its business address was listed in Delaware, but according to research, that address belongs to one of its agents. The company’s website offers very little information about its owner as well. Nonetheless, their LinkedIn profile identifies Tristan D’Agosta as Poloniex’s CEO and founder.
- I think the reason why they are not disclosing this Important information is to avoid tax implications and regulations. So keep in mind to be always vigilant and don’t store all your assets in one basket. It’s possible for this exchange to go default without warning.
- Aside from being an exchange service, the platform also offers margin lending and trading markets wherein you can spread out your crypto and make more profit in the process. I find lending quite interesting as many exchanges like Coinbase don’t offer this kind of service where you provide cryptocurrency to other users and they will pay you with a daily interest rate.
Moreover, Poloniex exchange is likewise one of the leading sources of Ethereum coin in the market today, where 4,000 ETH is traded every day. Thus, it’s labeled itself as an Ethereum mecca. Users can buy and sell, trade ETH and other digital currencies as well.
- Just about anyone can deposit and trade their coins in Poloniex.
- Their service is available worldwide and not limited to any country except for those where cryptocurrencies are banned.
- Poloniex’s website provides an extensive FAQ section just like with any crypto exchanges.
- You can post any problems or issues encountered in the ticket section of the website.
Buying and Selling on Poloniex
As I mentioned at the start of this article, Poloniex’s specialization is crypto to crypto trade. So if you’re used to e-payment systems, bank transfers or credit cards, this may not be the suitable platform for you. Digital currencies are the only existing currencies in the platform and do not accept FIAT withdrawals or deposits like other exchanges. Poloniex has around 50 coins available for transactions. But the downside of it is, a lot of these coins are new and can at any time get delisted if there is not enough trade volumes.
The exchange offers you two products when trading your crypto:
- You can swap your coins around based on the market’s current exchange rate.
- The available trade function is stop-limit so you can specify either high or low limitation on what price you want to get.
- You’ll have a basic order book showing transactions history of its users.
- Basic buy and sell trades.
- It has the biggest amount of trading pairs consisting of BTC, XMR, USDT, and ETH as the main coins.
- Designed for newbies and traders looking for immediate transactions in order to make the most of market trends.
- Uses the buy and sell functions combined with the stop-loss feature and leveraging as an extra tool.
- If you want to borrow crypto coins from other users, you are allowed to set a loan rate which will depend on the market situation of lending.
- This is more for traders with a lot of market experience, although we think that they will find some of the functions to lack scope.
- It slightly differs from the standard exchange of Poloniex in terms of leveraging and loans.
- Available margin trading tools are limited compared to Bitfinex and BitMex.
Poloniex offers a narrow exchange rate since it’s determined by the coin evaluation of the platform and the type of order you will make. The difference between the buy and sell trades is less than 1% which we think is just fair. Depending on the volume traded and the market trends, the taker and make changes daily.
- Taker fees: 0.05% – 0.25%
- Maker fees: 0% – 0.15%
- Lending: 15% of the interest rate
These fees do not differ that much from other exchanges. Coinbase, Bitfinex, CEX.io, Kraken, and Bitstamp have a maker/taker fee of up to 0.35%. On the other hand, the withdrawal fees don’t rely on the volume. These costs are continuous and the value is fixed since you will pay for the value of the digital currency you hope to withdraw.
The account verification in Poloniex comes in three levels:
You can get verified by providing personal details on the registration page such as your name, email address and country of residence. This level of verification lets you have a minimum daily deposit and withdrawal limit of $2,000 worth of cryptocurrency. Exchanging, trading and lending has no limit.
Apply for this level if you want to increase your day-to-day limits. To be verified, you have to provide a phone number, postal address, physical address, date of birth as well as a passport ID. You will also be required to upload a passport photo along with an ID photo. Once approved, you will have a deposit and withdrawal limit of $25,000 worth of cryptocurrency.
- Level 3
For a limit exceeding $25,000 crypto, you can apply for the third level by contacting their support team. The maximum limit for deposits and withdrawals they offer is quite high compared to Coinbase and other exchanges.
Is Poloniex Safe?
Poloniex controls all private keys to all the wallets that contain your coins. While the exchange promises that they store your deposits in a cold storage, it did, however, suffer a security breach in 2014. This minor incident caused around 12% of BTC user deposits to be stolen. After the incident, Poloniex assured users that they would be reimbursed all the funds they’d lost. After a few months, Poloniex did carry out on that promise.
While other exchanges offer password manager, email encryption and API message tools, Poloniex who has ignored these only offers 2FA or two-factor authentication.
Not knowing who the real founder is may not always be a bad thing, but it’s always advisable to always be careful and only keep as much value as you may require to trade, lend or exchange. Keep in mind that the platform is centralized with a great custodial risk. In addition, always send funds you don’t need right away on the exchange to a wallet that you have more control over.
Issues regarding withdrawal
There were users who reported to have encountered problems when withdrawing their funds from Poloniex. Some have experienced a prolonged awaiting approval time, even though their accounts are in good standing. Your new account may be able to withdraw funds, but increasing your limits to more than $2,000 daily can be difficult.
A lot of accounts have been frozen as well and users have not been able to withdraw their funds from their Poloniex wallet. This prompt some people to post a warning regarding Poloniex being a Ponzi scheme.
Poor customer support
Personally, an exchange with a poor customer support is reason enough to stop using its services. In the world of digital currency, this is a major issue. However, the problem with the customer support of Poloniex is far worse than of most exchanges. Many users have complained on forums like Reddit that the exchange’s support team takes relatively long to respond to users.
For a company that holds millions, if not billions of USD worth of people’s crypto, they really need to improve their customer support.
User reviews and complaints
Google Poloniex and you will see hundreds of reviews about it. Though it’s normal for crypto exchanges (even reputable ones) to have bad reviews, they also have good reviews. It up to you to do your due diligence before joining an exchange.
How to use Poloniex?
When buying digital currencies at Poloniex, traditional payments, such as credit card, debit card, Paytm, IMPS, and NEFT are not accepted. You can only use crypto to make payments.
Here is a step by step guide on how to buy, sell and trade on Poloniex.
- Click Balances tab and then click on, Deposits & Withdrawals.
- Search for the coin you want to deposit and click Deposit.
- Copy and paste the address of the cryptocurrency and send the amount you wish to trade.
- Track all of your transactions on the same page.
- Click the exchange tab located at the top of the page.
- You will see a chart of select crypto. All the coins available are displayed in the right section of the page.
- Choose your preferred cryptocurrency. A graph will load where you can see the Buy and Sell Cryptocurrencies option upon scrolling down.
- Enter the amount of coins you want to buy. Fees will be charged accordingly.
- Click Buy Button and complete the buying process.
- Click on the exchange tab found at the top part of the platform.
- Select your preferred coin. Just like with buying a graph will load and you need to scroll down to see the option Buy and Sell Cryptocurrency.
- Enter the amount of coins you want to sell. The total amount of crypto will be automatically displayed.
- Click Sell Button and complete the selling process.
Poloniex uses the system of Taker/Maker wherein the seller is the maker and the buyer is the taker. To encourage market liquidity, the makers are charged less and are rewarded of that liquidity with a discounted fee, while the takers are the ones who take the order of the makers.
If you want to use the stop-limit feature of Poloniex to buy coins, you have to set the highest and lowest price for that particular coin. So if the value of that coin drops in the range of highest to lowest, it will be purchased automatically. The same rule applies when selling your coins, when the value of the coin drops in the range of highest to lowest, it will be sold automatically. If you’re just beginning to trade cryptocurrencies, I’d recommend not to use this feature until you grasp the stop-limit concept.
Poloniex Review Summary
Poloniex exchange has some good and decent features. It has a huge market for Bitcoin and Ethereum, plus you will be able to find the latest cryptocurrencies on the exchange. But with the lack of FIAT currencies combined with a lack of security, withdrawal and customer support issues, these are things you need to consider before joining the exchange.
Pros of using Poloniex
- It is considered today as the world’s biggest Ethereum exchange by trade volume.
- It is open-source.
- Offers detailed charts and tools for data analysis.
- Fees for crypto deposits and withdrawals are comparatively low.
- Provides high volume margin trading.
- Offers a lending service from major digital assets.
- Supports more than 50 cryptocurrencies.
Cons of using Poloniex
- There have been reports since early last year that users cannot withdraw their funds.
- You can’t use FIAT currencies.
- Centralized private key management which exposes your funds to custodial risk.
- They don’t have a physical office which leads to distrust from potential users.
- Unknown identities of owners, managers as well as investors.
- Poor customer support.
- No mobile app is available.
- Margin trading functions not available.
- Inadequate API tools and other security functions even after the 2014 hacking incident.
- Questionable liquidity for a lot of cryptocurrencies as every day they get delisted.
- Users experienced slowness and downtimes all throughout the boom of crypto in 2017.
Some factors you have to consider before using or trading at Poloniex are liquidity, unknown users, and hackers. It is highly recommended not to invest massive volumes of coins. But, if you’re interested in using the exchange platform for trading do some good research first.
If you want to learn and understand the ins and outs of the cryptocurrency industry, make sure to check out our other content. We have everything you need to know about them, from guides on how to buy and sell a wide range of coins to tips and reviews.