The rise of the cryptocurrencies has created the demand for a place where people can trade them. Just like stocks and fiat money have exchanges. In that manner, the cryptocurrency exchanges came to be. They are the place where you should go if you want to buy, sell or exchange Bitcoin and Altcoins against fiat money or other cryptocurrencies.
An exchange is an organized market where tradable assets can be bought and sold. Modern-day exchanges are typically digital acquiring the name trading venue. There is no actual physical place for you to visit and trade on.
To participate in cryptocurrency trading and if you want to buy an asset from the list of cryptocurrencies by market cap, you need to have an account on an exchange and a wallet. The wallet is the place where your newly acquired assets will be stored. There are two types of wallets:
- ✓ Hot Wallet – this is a virtual address on which your assets are stored. It is free to open a hot wallet and it is connected to the Internet. This allows for swift access and quick operations with your cryptocurrencies.
- ✓ Cold Storage – the cold wallet is an offline device that can be disconnected from the web. It is like a bank vault where you can store more of your cryptocurrency capital to make sure it cannot be stolen.
When you go on a cryptocurrency exchange, you will have to open an account through which the assets can be sent to your hot wallet via a public key. From the same wallet, you will be able to sell your assets using your private key.
Never share your private key with anyone and always back it up! If someone discovers it, they will be able to steal your assets and if you don’t back it up and lose it, you won’t be able to access your wallet ever again. When joining a cryptocurrency exchange, many people that have been active participants so far open new hot wallets so that they do not put a predominant part of their assets at unnecessary risk.
If you think you know which is the best cryptocurrency to invest in 2018, then there shouldn’t be anything standing in your way to trade it. Most cryptocurrency exchanges are very user-friendly and they can welcome even people with limited previous experience.
Relying on the Cryptocurrency Exchange Rates
Exchange rates indicate the value of a certain asset in terms of another. As it was already mentioned, when trading on a cryptocurrency exchange, you can trade Bitcoin and Altcoins against cryptocurrencies or fiat money. Each exchange will make the effort to give you the most recent and authentic quotes so that you can trade with the most accuracy.
Of course, as with all other exchanges, there might be slight differences in the exchange rates between the different exchanges. This has given people the ability to participate in a type of day-trading known as Arbitrage. Of course, these differences are as slight as possible but people still consider them a valid way to profit.
What Has Allowed for Arbitrage?
Inefficiency is what has allowed for Arbitrage trading to be possible. Put in simple terms, for a market to be inefficient means that the tradable assets’ prices do not reflect fully or accurately the true value of the asset.
It is quite simple to understand the principle of Arbitrage trading. In doing it, people buy a given asset on one cryptocurrency exchange and immediately sell it for profit on another, if they have spotted a slight difference in exchange rates. All you need are the right wallets and authentication, and to act fast.
Modern technology has evolved so much, that today there are investment solutions that monitor those things and act accordingly. All thanks to sophisticated algorithms and innovative build.
Discover the Top Bitcoin Exchanges by Volume
People with the ambition to participate in Bitcoin exchange against USD, Euro or Altcoins, as well as other cryptocurrencies like Ethereum and Litecoin, need to open a trading account on one of the cryptocurrency exchanges. You might be presented with the opportunity of using your exchange account as a wallet as well, without having to open one specifically. Of course, it is still advisable to have a cold storage to be able to keep your assets offline.
There are some crucial characteristics you must look for when choosing your cryptocurrency exchange. Given the high demand for a place to trade crypto assets, some not so reliable exchanges have been established. Be very careful in your choice so that you do not regret your decision later on. Here are some guidelines what to demand of your exchange:
- 1. Secure & Encrypted Environment
- 2. Clear & Transparent Terms & Conditions for Participation
- 3. Liquidity & Variety of Cryptocurrencies Up for Trading
- 4. Detailed & Accurate Asset Information, Including Charts & Historical Data
- 5. Does It Allow You to Trade Against Fiat Money
- 6. Reliability & Variety of Transaction Methods
- 7. Does It Provide ‘Wallet’ Services or You Need to Open One
- 8. Does It Provide a User-Friendly Experience
- 9. What Current or Past Clients Have to Share About It, Satisfaction Level.
A clear sign that a given cryptocurrency exchange is preferred and liked by its users is the volume traded over it in different time spans. Here are the three biggest cryptocurrency exchanges by volume in the past 24 hours, at the time this article was written, in terms of all crypto assets, not just the Bitcoin:
- ✓ Binance – this is an international multilingual exchange that has quickly grown to the biggest one. In the past 24 hours, the full trading volume is more than $1,3 billion. They have done an ICO of their own coin – BNB token, giving users that trade with it and pay with it a 50% discount. It owns a little over 30% of the market.
- ✓Bitfinex – the immediate competitor of Binance, the trade volume for the past 24 hours on this exchange has been a little over $1,2 billion. They possess 30% market share. Despite some controversies and hacking incidents from the past, this is still one of the most preferred cryptocurrency exchanges operational.
- ✓ HitBTC – in the past 24-hour period it has a trading volume of nearly $290 million and it possesses 6% market share. It launched in 2014 and it is deservedly among the top exchange, being in itself a multi-currency exchange platform.
- ✓ Coinbase GDAX – it has the fourth largest trading volume in the past 24 hours with a market of 6% for the nearly $245 million volume. It is both a place where you can buy assets and a digital exchange for professionals. It has a great reputation in the industry and is one of the best-known names.
Is It Worth To Trade Crypto Wealth on Exchanges?
Exchanges are the place where wealth is multiplied. The processes of buying and selling cryptocurrencies have greatly influenced their value. The market makers and those who influence the values of crypto assets are the ones actively participating in online trading on cryptocurrency exchanges. They are places open to anyone. If you can calculate the risks of such an endeavor and you are sure you can handle all the psychological requirements to trade with a cool mind, there is nothing standing between you and the crypto world.
Hello, I am Collin Tyusm. I am a Forex blogger. I have created my blog, because I want to help people learn more about Forex & CFD Trading Software and Bots.