Crypto Exchanges – A Brief Overview For A Smart Investor
It’s time to buy some coins and make real money, eh?
It means you’ll need to go to a crypto exchange.
Not all exchanges are equal though. Some are easy to use while other can be a real hassle to deal with.
There are more known and trusted exchanges and some that you probably have never heard of.
Popular Trading Platforms
I’ve had a pleasent experiences with BitTrex thus far. It’s relatively easy to use and their support has been fantastic.. especially compared to Coinbase. Coinbase just doesn’t answer to anything usually. Here’s a hilarious picture from reddit to describe Coinbase Support.
For me, BitTrex support has been fine, but I’ve read that some users have had worse experiences with the support. BitTrex is one of the biggest exchanges and you can get 100+ midsize cryptocurrencies from there (for example Verge, Pivx, Antshares, Myriad, Ubiq etc). They claim their trading fee to be 0.25% on every trade, but not all users agree to this.
Personally, I like Kraken. It has been a great experience with a good customer service. They did have some issues when I made an account, but they fixed the bug and everything went fine. For European, it’s important to know that Kraken has a bank account in Germany, so SEPA payment will be with them within one working day and they actually register it quickly. Though Coinbase also has an account in EU, it took far longer to see my funds on my Coinbase account. Kraken has about dozen cryptos – Bitcoin, Litecoin, Etherum, Monero, Dash, Ripple, Zcash etc. Kraken trading fees are tier based – bigger the transaction, lower the %. Here’s an example for XBT/USD trading fees.
I think the Poloniex ease of use is top level. It didn’t take any time to figure out how the exchange works. Poloniex has 30+ cryptos available. Most of the available cryptocurrencies are already fairly well known, such as Factom, NextCoins, Siacoin, Viacoin, Radium, OMNI, Digybyte etc. Poloniex also gives you an opportunity to lend out coins to make some profit with less risks. This option is not available for all cryptos, though, and 15% fee applies to earned interest.
Their fee system is bit more complicated. I will copy here their explanation:
Every 24 hours, we will calculate the last 30 days of trading volume on your account (spot and margin combine) and dynamically adjust your fees according to the following schedule:
|Maker||Taker||Trade Volume (trailing 30 day avg)|
|0.15%||0.25%||< 600 BTC|
|0.14%||0.24%||≥ 600 BTC|
|0.12%||0.22%||≥ 1,200 BTC|
|0.10%||0.20%||≥ 2,400 BTC|
|0.08%||0.16%||≥ 6,000 BTC|
|0.05%||0.14%||≥ 12,000 BTC|
|0.02%||0.12%||≥ 18,000 BTC|
|0.00%||0.10%||≥ 24,000 BTC|
|0.00%||0.08%||≥ 60,000 BTC|
|0.00%||0.05%||≥ 120,000 BTC|
Every trade occurs between two parties: the maker, whose order exists on the order book prior to the trade, and the taker, who places the order that matches (or “takes”) the maker’s order. Makers are so named because their orders make the liquidity in a market. Takers are the ones who remove this liquidity by matching makers’ orders with their own.
The maker-taker model encourages market liquidity by rewarding the makers of that liquidity with a fee discount. It also results in a tighter market spread due to the increased incentive for makers to outbid each other. The higher fee that the taker pays is usually offset by the better prices this tighter spread provides.
I’ve never traded on GDAX myself, so I will have to rely on information that I gathered from different users online.
GDAX is a platform mainly for institutional and professional investors. It’s US-based and a regulated exchange. Today, it’s operated by Coinbase. What’s different with GDAX is that it’s insured and backed by big investors like NY Stock Exchange, Andreessen Horowitz etc. Funds are FDIC insured, which means every investor is entitled to up tp $250k in remuneration in the event of a loss.
Fees are low:
Maker Fee: 0% (all volumes)
Taker Fee: 0.25% (volume-based discounts can drop this fee to as little as 0.1% for traders who trade more than 113,432 BTC in a 30 day period)
Though it most definately is a secure and good platform, I am personally still bit cautious with everything related to Coinbase.
Niche platforms and smaller caps
Cryptopia is an exchange located in New Zealand. There are 800+ cryptos listed, most of them small or very small. Only 10 of the listed cryptocurrencies are above $1b valuation. Even investors that have been around for some time haven’t heard many of them, for example Ecobit, ChainCoin, Insane, SakuraCoin etc. Cryptopia asks 0,2% for crypto to crypto trades. To get on that exchange, you would need to change your fiat elsewhere and transfer your crypto to your Cryptopia account. Lots of volatilty.
Bitfinex is a Hong Kong based exchange and also one of the major exchanges by trading volume. There are some big winners on Bitfinex, namely IOTA and OmiseGo, two coins that many traders have invested in. In 2016 August, Bitfinex was hacked and 120 000 Bitcoins were stolen. That was $72m in value. Bitfinex managed to stay in business, but of course, their credibility was hurt badly.
Bitfinex also has maker/taker fee system.
|Executed in the last 30 days (USD Equivalent)||Maker fees||Taker fees|
|$0.00 or more traded||0.100%||0.200%|
|$500,000.00 or more traded||0.080%||0.200%|
|$1,000,000.00 or more traded||0.060%||0.200%|
|$2,500,000.00 or more traded||0.040%||0.200%|
|$5,000,000.00 or more traded||0.020%||0.200%|
|$7,500,000.00 or more traded||0.000%||0.200%|
|$10,000,000.00 or more traded||0.000%||0.180%|
|$15,000,000.00 or more traded||0.000%||0.160%|
|$20,000,000.00 or more traded||0.000%||0.140%|
|$25,000,000.00 or more traded||0.000%||0.120%|
|$30,000,000.00 or more traded||0.000%||0.100%|
Maker fees are paid when you add liquidity to our order book by placing a limit order under the ticker price for buy and above the ticker price for sell.
Taker fees are paid when you remove liquidity from our order book by placing any order that is executed against an order of the order book.
Based in Shanghai, Binance has been one of the fastest growing exchanges in 2017 (they also started in 2017). One of the reasons behind the growth is the trust in their team, which has many experienced and capable people involved. The team is led by crypto expert Zhao Changpeng.
What’s interesting about Binance is that they have a strong policy to support only those cryptos with high credibility, user base and liquidity. They also ask the crypto community to suggest coins they want to see listed on Binance. This sits well with the one of the main pros of cryptocurrencies (power back to people).
Binance also has it’s own coin (BNB), which makes the trading cheaper.
Binance fees are very transparent:
Fee for deposit: Free
Fee for trading: 0.1% trading fee
If you have BNB (Binance own coin), you can choose BNB to deduct 50% trading fee (temporary).
Fee for withdrawal:
|2||Bitcoin||BTC||0.0005||BTC||July 20th, 2017 updated|
|5||Neo||NEO||Free||NEO||June 28th, 2017 updated|
|9||Bitcoin Cash||BCC||to be confirmed||BCC|
There are many more exchanges to choose from, but as you’re just starting out, we recommend to pick one of the exchanges we listed here first. These are the most reliable and know exchanges. The industry is still at it’s infacy though, which means it’s very likely there will be a lot better platforms in the future.
We’ll keep you posted.