You’ve decided to give it a go, you want to start trading Bitcoin or Altcoins. The only problem: how are you going to find the best cryptocurrency exchange out there? I’ve gone through this process and spent countless hours researching the topic. So let me share my findings with you and give you my recommendations on the top cryptocurrency exchanges you should consider.
First, how do platforms rank in terms of importance?
Before we go through the main characteristics of Bitcoin platforms, it is important to see how they compare in terms of traded volumes. That gives us an idea oh how significant they are on the global market. To do that, go to data.bitcoinity.org to get excellent statistics on the relative weight of trading platforms. If you want to use it as an arbitrage platform for Bitcoin, you can do that as well.
So now let’s look at the big names, the ones that come out on top of every benchmark, rating, ranking, comparative out there.
Coinbase is one of the largest and best known brokers around. It is one of the most popular and very easy to use. It is available to users in 32 countries. Check wether your country is in this list:
Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Cyprus, Czech Rep., Denmark, Finland, Greece, Holland, Hungary, Ireland, Italy, Jersey, Latvia, Lichtenstein, Malta, Monaco, Norway, Poland, Portugal, San Marin, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK, US
It was founded in 2012 and is based in San Francisco, California. Coinbase has been funded by some of the most prestigious names in the VC and investing world, including Andreessen Horowitz, BBVA, IDG Ventures, Y Combinator, Adam Draper.
The company is fully compliant with Government regulations and runs two operations: 1. coinbase.com, a retail operation that maintains wallets for customers in 32 countries; 2. GDAX ( Global Digital Exchange), a professional trading platform.
Coinbase has over 10.5 million users with 35 million wallets, they’re partnered with 46k merchants worldwide.
You can charge your account via bank transfer (incl SEPA) or credit / debit card, but Coinbase does not accept Paypal at this stage. Coinbase will charge you fees between 1.5% and 4% on your transactions.
Customers can only buy three cryptocurrencies on Coinbase: Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC).
The site is essentially a wallet but also proposes a system called The Coinbase Vault as a mode of storage with enhanced security features.
You can get 10$ or 10€ worth of free Bitcoin if you make a purchase exceeding 100$ or 100€, using this special link.
Pros: good reputation, serious backers, millions of users, ease of use, payment by credit card, accepts EUR and USD
Cons: limited payment methods, only three cryptos available, customer support
CEX.IO has over 1.3 million active subscribers and is another leading Bitcoin Exchange. It operates in 99% countries including 24 US states.
The exchange was created in 2013 as the first cloud mining provider. It allows for trading across multiple platforms (website, mobile app, web socket) and has good security features such as two-factor authentification and cold storage for crypto currency funds.
The company is based in London. It is registered as a Money Services Business within FinCEN in the US and has a good reputation. It follows strict anti money laundering practices as well as KYC (Know Your Customer), you’ll have to disclose your identity to be able to start trading.
Customers can recharge their accounts using credit card (in USD, EUR or RUB) or bank transfer (including European SEPA), no PayPal at this point. Crypto capital transfer is of course also possible. The availability of these methods will depend on where you are situated.
CEX.IO allows margin trading at 1:2 and 1:3, however you have to be attentive to the fees structure as there are many different cases, and sometimes fees will be included in exchange rates. Click here if you want a good view of the account opportunities.
There are four levels of accounts at CEX.IO: Basic, Verified, Verified Plus and Corporate.
Pros: good reputation, operates worldwide, solid security features, supports credit cards, good for beginners
Cons: some complaints about hidden fees (ex. in the exchange rate), customer support not always on par
Poloniex is a US based exchange platform based in San Francisco that was founded by Tristan d’Agosta in January 2014.
It is another favorite (the best?) among crypto trading enthusiasts, having some of the highest trading volumes. Poloniex supports over 100 Bitcoin cross currency pairs. The site has roughly 14 million visitors per month.
It boasts good security features such as cold storage for most customer deposits. However, Poloniex does not support fiat currencies (eur, usd,…) so accounts can only be credited with other cryptocurrencies.
Fee structure adopts a maker-taker principle, and will be variable depending which side of the transaction you are on and what volume you are trading, usually from 0.10% to 0.25%. for takers and 0 to 0.15% for makers.
Their trading interface is quite user-friendly, offers a lot of features, and margin trading is supported with leverage up to 2.5x on some pairs.
Pros: many pairs traded, good interface, cold storage, account creation is easy, lot of features on the platform, high volumes
Cons: still a recent platform, customer service, no support for fiat currencies
Bitfinex is the world’s largest bitcoin trading platform. It is owned by iFinex Inc and operates out of Hong Kong.
It supports the major cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Bcash, OmiseGO, Iota, Dash, Ethereum Classic, Zcash, Monero, EOS, NEO, Ripple, ETP, and Santiment.
The platform offers leveraged margin trading through a peer-to-peer funding market.
Bitfinex allows margin trading with up to 3.3x.
The platform was hacked in 2016 but all $72m stolen from its customers was said to have been returned in April 2017. That event sent Bitcoin prices diving -20%.
Pros: world’s largest Bitcoin platform, supports lots of cryptocurrencies, leveraged trading is possible
Cons: security breach in 2016
Founded in 2011, Kraken is a global exchange open to customers in Europe, the US, Canada and Japan. It ranks consistently among the best and most secure platforms. Its prices were the first to be made available on Bloomberg Terminal.
Based in San Francisco, it is the largest Bitcoin exchange in euros, but also accepts deposits (via bank wire or SEPA) in CAD, USD, GBP and JPY.
Kraken investors include Blockchain Capital, Digital Currency Group, Hummingbird Ventures, Money Partners Group and SBI Investors.
Kraken has strict validation procedures and several Tier levels depending on your volume of identification provided.
The interface is not very easy to use, but quite powerful and very rich in functionalities. Kraken also offers a wide range of variety of assets traded, around 17 as of Sept 2017.
Fees are quite low, at 0.16% to 0.26% if you’re buying less than $50,000 per month. Kraken also allows margin trading up to 5x and shorting is permitted. Charging your account can only be done by bank transfer, as the platform does not allow credit cards or Paypal.
Pros: very good reputation, wide range of cryptos traded, leverage, low fees, worldwide coverage
Cons: quite complex interface, no deposits in credit cards or Paypal
Trading Bitcoin OTC (Over The Counter) means buying or selling in off-exchange transactions. Simply put, you establish transactions at negotiated prices, which is useful if you want to buy a large quantity of Bitcoins for example. Normal brokers would usually take a lot of time to fill such orders.
One of the main OTC players is localbitcoins.com.
Localbitcoins is a peer to peer exchange platform where you will be dealing directly with other parties to trade Bitcoins.
The company is based in Helsinki Finland, and it can connect you to users all over the world. The idea is that you can buy or sell Bitcoins in your local currency, by simply publishing the quantity and price that you are bidding or asking for. Once the transaction is concluded, your coins will be available in an online wallet stored at localbitcoins.com. From this wallet, you will be able to buy online or transfer Bitcoins to a personal wallet.
Localbitcoins offers all payment methods, left for users to decide.
Pros: good for beginners, all currencies and payment methods supported, social aspect (you get to meet people)
Cons: you need a counterpart to make a transaction (could take longer), risks of scams linked to anonymity
As you might have noticed, I have excluded the platforms that are predominantly tackling the asian market: BTCtrade (China), Bithumb (Korea), BTC38 (China), Coinone (Korea).
You could also consider other cryptocurrency exchanges, there are hundreds out there.
If you decide to choose another cryptocurrency exchange, here are the criteria you need to consider
1. Check that the exchange is available where you live
Exchanges are not all open to traders all over the world, so that might be the first thing to consider. You have to check that you are able to register on any of these platforms.
2. Consider the nature or type of the platform
There are several types of cryptocurrency exchanges:
- Trading platforms: they connect buyers and sellers and collect a fee from the transactions that are made;
- Direct person to person trading platforms: they make it possible for people from different countries to exchange currencie
3. What currency does the cryptocurrency exchange accept?
In order to buy the Bitcoins or Altcoins that you desire, you will need to charge your account with some currency. Is it euros, usd, or other cryptocurrencies ? Exchanges do not all accept what we call fiat currencies (eur, usd), some only accept other cryptos (bitcoin, ethereum,..).
4. What mode of payments does the cryptocurrency exchange accept ?
There are a variety of ways you will want to charge your account. Paypal and credit card are usually popular and in high demand. Bank transfers are another common method.
5. How reputable is the exchange you are considering?
Reputation is key. The world of cryptocurrency exchanges is sadly full of scammers or unreputable platforms. Choosing a cryptocurrency exchange that has a good reputation is essential. That reputation will be a combination of different things:
- how long has the exchange been existing for?
- who is it backed by, who are its shareholders or promoters?
- where is it established?
6. The issue of security.
The Bitcoin protocol has never been hacked, but there have been many cases of hacked exchange platforms: MtGox, Bitfinex, … So you need to be aware that 100% security doesn’t exist, that most of the large exchanges are working hard on security, and that what you really need to do is avoid the rather shady scammy platforms. My recommendation: stick to the big names.
7. What kind of storage does the exchange offer?
Once your cryptocurrencies will be on your account, there are different ways they can be stored by the exchange. It is something important to consider because some exchanges offer interesting security features.
Once you have considered all this, you can decide to go through this list of exchanges by coinmarketcap.com, it will give you the highest trading volumes by exchange in the last 24 hours, so depending on the currency you want to trade you can see which exchanges provide the best liquidity.
Have a safe crypto trading !