Within the options available to us to operate cryptocurrency, in addition to the CFD platforms, we have different types of exchange and even exclusive trading platforms for tokens.
What is an exchange?
Fundamentally an exchange is an online platform that allows the exchange of fiat money (fiduciary, explained below) by cryptocurrency. Since the first block of Bitcoin was mined almost 10 years ago, the exchange of this has been perfected, the first exchange between bitcoin and fiat data of 2009 and was made through PayPal on the New Liberty Standard platform, which calculated the prices based on the cost of mining, at this time the value of 1 BTC did not amount to more than $ 1. At the moment the complexity is much greater, for that reason also it is possible to be under this name the platforms of exclusive exchange between “cryptos”.
Currently we have a huge amount of exchanges of all kinds and operate in different countries, below there is a comparison chart where you can compare the characteristics of the main platforms of today, however, only appears a certain type of exchanges.
What types of cryptocurrency exchange exist?
There are centralized and decentralized exchanges, the control of funds is the characteristic that differentiates said exchanges. A centralized exchange is one in which an intermediary is required to carry out the transaction, you stop controlling your funds directly. On the contrary, a decentralized one is one that allows P2P exchange, an example is the “brokers” that buy and sell cryptocurrency with a differential in the purchase-sale price. To operate with decentralized exchanges we must have our own portfolio of tokens.
The main exchanges are currently centralized, although some more than others. For example Bitcoin.de does not store fiat on its platform, only the tokens, the fiat money is exchanged P2P. In this platform money transfers are made between individuals through SEPA or similar and the exchange of cryptocurrencies is carried out on the platform so that, in principle, there are no problems.
In essence, there are two types of centralized exchanges, those that support fiat and those that do not.
What is fiat money?
It is fiduciary money, its value is not circumscribed to any physical asset, such as gold (gold standard). It is based on trust and is backed by the state. The issuance of this type of money is monopolized by the central banks of each country (ECB in euro), so their value can increase or decrease depending on these organisms (among other things) generating a general increase in prices, inflation, or its decline, deflation.
However, if we do not have cryptocurrencies or tokens to operate, we need to go through a platform that allows exchange with fiat money or get them validating transactions (mining) which is not easy at present.
How does an exchange work?
A centralized “crypto exchange” works, basically, in the same way as the classic asset exchange platforms, the difference is what is negotiated, in this case, pairs of “cryptos” (LTC / BTC) or “crypto” pairs/fiat (BTC / USD) the high volatility of these pairs is what usually attracts users of trading platforms.
These platforms generate income in various ways, although the most important are commissions to the volume of operations (usually calculated at 30 days), they also earn income in the following ways:
Fiat or crypto deposit and withdrawal fees, although less important and less common of fiat or crypto, although they have less importance and are less common Offer of services of “margin lending” and leverage, that charge you an interest rate and / or a percentage of the profits.
A curious example is RobinHood, which does not charge any commission and generates income from the offer of leverage, the subscriptions “prime” and the ICO service.
There are two types of basic operations, limited orders and orders to the market. In trading platforms for cryptocurrency this is quite relevant because depending on the type of operation you perform, in most platforms, you will apply a commission or another, even to the negative commissions, the “rebate”. The limited orders are those that give liquidity to the market, for that reason it is called operation “maker”, on the contrary, the market orders withdraw liquidity, hence “taker”. For example, putting your “cryptos” for sale at a certain price is a “maker” operation, selling them at the market price is a “taker” operation. Generally, “maker” commissions are lower, it is a way of encouraging the provision of liquidity for the market.
Best exchanges to buy and sell cryptocurrencies
| Exchange | Volume 30 days* | Taker | Maker | Fiat |
|
Binance
|
<100 BTC | 0,10% | 0,10% |
–
|
| >100 BTC | 0,10% | 0,09% | ||
| >500 BTC | 0,10% | 0,08% | ||
|
OKEx
|
<100 BTC | 0,15% | 0,10% |
USD, CNY
|
| >100 BTC | 0,14% | 0,09% | ||
| >500 BTC | 0,13% | 0,08% | ||
| Huobi | – | 0,20% | 0,20% | 15 |
| Bitfinex | <500.000 $ | 0,20% | 0,10% | USD,EUR,GBP,JPY |
| Bittrex | – | 0,25% | 0,25% | USD |
| Poloniex | <500.000 $ | 0,20% | 0,10% | – |
|
Kraken
|
<50.000 $ | 0,26% | 0,16% |
USD, EUR
|
| <100.000 $ | 0.24% | 0,14% | ||
| <250.000 $ | 0,22% | 0,12% | ||
| <500.000 $ | 0,20% | 0,10% | ||
|
Bitstamp
|
<20.000 $ | 0,25% | 0,25% |
USD, EUR
|
| <100.000 $ | 0,24% | 0,24% | ||
| <200.000 $ | 0,22% | 0,22% | ||
| <400.000 $ | 0,20% | 0,20% | ||
| <600.000 $ | 0,15% | 0,15% | ||
|
Coinbase (pro)
|
<10.000 $ | 0,30% | 0% |
EUR, USD, GBP
|
| <100.000 $ | 0,20% | 0% | ||
| >100.000 $ | 0,10% | 0% | ||
| Robinhood | – | 0% | 0% | USD |
| Hit BTC | – | 0,10% | -0,01% (Rebate) | – |
| Bitcoin.de | – | 0,50% | 0,50% | EUR, USD |
** Free from 1000 USD
Considerations on the table:
- Most platforms have “Volume for 30 days” sections higher than those mentioned in the previous table, so the discount continues to increase in those sections.
- Regarding the retirement commissions of cryptos, it is necessary to bear in mind that the majority (some do, but it is not clear if it is a withdrawal commission or that of the miners, in the case of Bitfinex it seems that it does charge a withdrawal fee) of the platforms say do not charge withdrawal fee. What you necessarily have to pay are the “fees” for the use of the network (for the miners, who, for the most part, prioritize the validation of transactions with higher commissions), these depend fundamentally on the saturation of the network and the Expected speed of validation, that’s why the “commission” they have is dynamic. Therefore, to relativize the price of the “withdrawal commission” we must observe the state of the network and the optimal commission. For example, Robinhood that does not benefit from the withdrawal transactions today is “charging” 0.001 BTC for the withdrawal of BTC, the most efficient commission today is 0.0000315 BTC, this higher price in the commission would ensure a confirmation speed faster.
- We must take into account that the majority (some do, but it is not clear if it is the withdrawal committee itself or that of the miners, in the case of Bitfinex it seems that it charges withdrawal fees) of the platforms they say. What you necessarily have to pay are the “fees” for the use of the network (for the miners, who, for the most part, prioritize the validation of transactions with higher commissions), these depend fundamentally on the saturation of the network and the expected speed of validation, that’s why.
- All exchanges in the table are centralized.
Also published on Medium.