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Thank you for everyone’s positive sentiment and comments via email about our articles, its great to hear everyone is really enjoying the publication. Today we see total cryptomarket cap lost $14.2 billion. With all the talk of institutional onramps, ETF’s, Bitcoin Options, New surging altcoins todays article is on great platforms to use in the space.
What is a cryptocurrency?
Cryptocurrency, a digital asset, works as a medium of exchange that uses robust cryptography techniques and encrypted algorithms to secure financial transactions, control the creation of additional units, and verify the transfer of asset. Cryptocurrencies are decentralized, meaning they have no central control, unlike the financial institutions which regulate the conventional fiat currency. It is instead governed through blockchain technology, where each user is ultimately responsible for their blockchain-based assets unless they pass through a decentralized system such as an exchange.
Cryptocurrency holders require a wallet that acts the same as a bank account, but instead, it holds crypto coins. Since the successful launching bitcoin, the popularity of cryptocurrencies and imminent bull run has attracted quite some investors ready to trade in digital currency. This has given rise to many exchange platforms that work to facilitate transfers of digital coins such as Bitcoin.
What is a cryptocurrency exchange?
In simple terms, the cryptocurrency exchange is an online marketplace that enables traders to buy, sell, or trade cryptocurrencies for other assets such as fiat currencies (like the dollar) or altcoins. Cryptocurrency exchange’s main aim is to connect buyers and sellers of cryptocurrencies who buy or sell bitcoin by choosing a market order or a limit order (similar to forex). These exchanges impose transaction fees that are applied to each transaction made.
There are different types of online exchanges. The traditional exchange, one of the many exchanges, is much like a conventional stock exchange. The platform operates as a middleman whose objective is to facilitate trades based on the concurrent price in the market. A percentage cut of each transaction finances this service.
Direct trading exchanges, or peer-to-peer networks, allow for direct transfers between buyers and sellers. In these networks, individuals agree on their prices independent of the current market value. In a peer-to-peer model, a single user has some clue with whom he/she is trading with. The data might include a wallet address, public ID, and their username. This peer to peer trade feature is quick, cost affordable, but also less anonymous.
Unlike a direct exchange, users enrolled in standard exchange have no clue of the trading partner. The exchange acts as intermediaries who connect the two traders hence making the exchange anonymous.
Exchanges accept credit card payments, wire transfers, or other forms of payment in exchange for digital currencies or cryptocurrencies.
UK crypto exchange
Several cryptocurrency exchanges operating in the European Union obtain their licenses under the EU Payment Services Directive and the EU Electronic Money Directive. The adequacy of these licenses of operations still contradicts the administrative services; hence, most exchanges prefer to operate outside the western countries to avoid regulation and prosecution.
Famous for its stock markets like trading platform, Coinbase tops in the list of cryptocurrency exchanges in the United Kingdom, and the United States. Coinbase integrates a simple to set and use user-friendly interface; therefore, any newcomers into the crypto market should be able to use and navigate the platform with ease. The platform has, however, received critics due to invasion of privacy of its users, something that many crypto enthusiasts are unpleased with. Coinbase tracks the coins it produces and sometimes shuts down accounts involved in illegal transactions.
Coinbase is currently offering $10 to new users to try out their exchange.
Biggest cryptocurrency exchanges
Coinbase and Binance lead in the cryptomarket as they offer a wide range of services and cryptocurrencies.
Services cryptocurrencies exchanges offer
Crypto exchanges have undoubtedly changed the future of finance by facilitating the trading of bitcoin and other coins. These platforms provide a wide range of services such as
- Decentralization- cryptocurrency transactions are very different from the traditional financial institutions due to the decentralized nature of these exchanges. These transactions are, therefore, more resistant to hacking or manipulation and are more convenient since no intermediaries are involved. Exchanges will help build a robust platform with the above benefits and many more.
- Anonymity – for a user to hold or trade-in cryptocurrency, he/she will need a wallet. The exchanges will provide new users with an online wallet address and will not require any verification documents. This ensures anonymity unless the user decides to disclose his/her private identity.
- All-time operational – Cryptocurrencies do not have a fixed time of the trade. The exchanges work 24/7, allowing users to exchange instantly at all times.
As the market for crypto assets increases, the demand for new financial services increases too. These services may include exchanges, crypto-based lending, and payment systems. The integration of payment systems and exchanges is evolving, and so are the lending services which allow holders of crypto assets to generate interest income. Lending services in cryptocurrency occur in several ways
- Margin lending – this unique service will enable users to fund traders in many currencies, depending on the trade volume and price on a given period. The user (lender) earns via a passive income. The user funding traders decide the interest rate and the duration of payment. This type of lending occasionally happens in centralized platforms, making it difficult for the borrowed fund to leave the platform. Bitfinex and Nuo firms offer Margin Lending.
- Crypto-to-crypto Lending- by agreeing to smart contracts, traders, or businesses with spare cryptos earn interest rates for a given period by lending Bitcoin or altcoins. This type of lending enables users or businesses to raise extra coins.
- Nuo and Lending Block are few companies that engage in crypto to crypto lending.
- Crypto to fiat lending – business or users who are in dire need of cash can lend their digital coins and in turn, receive some money in hand. The cash amount is usually accredited to the borrower’s bank account, and he/she can only receive the coins back once the full amount is paid. Cryptocurrencies and cash work as collaterals in this type of lending.
That offer this type of lending model includes SALT Lending and Unchained Capital.
Staking refers to holding funds in a cryptocurrency wallet to support the operations of a blockchain network. This process is closely related to the proof of stake mechanism, which is widely used by the blockchain technology. PoS chains produce and validate new blocks through staking. This enables the production of new blocks without the need to rely on mining hardware. So PoS validators are selected based on the number of coins they are committing to stake.
Production of blocks through staking enables a higher degree of scalability; that’s why the Ethereum network will eventually migrate to PoS, in the Ethereum Casper upgrade. Most crypto holders will merge their resources to increase their chances of validating blocks and receiving rewards in a staking pool. These pools are most effective in networks where the barrier to entry, whether technical or financial, is relatively high. Additionally, pools provide flexibility in times of withdrawal and minimum balances on the network; thus, beginners are encouraged to participate, leading to greater network decentralization.
Cold staking refers to the process of taking on a hardware wallet. Cold staking networks ensure security to the user’s wallet. However, a stakeholder will stop receiving rewards if he/he decides to move the coins from the storage. Cold staking is a handful in allowing significant stakeholders in the network to ensure maximum protection of their funds while still supporting the system.
Binance supports staking for several PoS coins.
Initial Exchange Offering (IEO)
IEO works differently than an ICO. Whereas ICO involves handing money to the project team in exchange for a certain amount of crypto on a given blockchain, IEO has crypto exchanges, acting as intermediaries, who take the money instead of developers in order to receive tokens.
Advantages of IEO
Crypto exchanges site remain strict by before accepting projects into IEO offerings hence ensures security. This includes validating the project’s whitepaper, its stakeholders, and making sure the objectives can be easily accomplished.
In the case of shady dealings, crypto exchanges can back out of an IEO before they happen.IEO reduces investor’s risks such as scams, which are most common in ICOs.
With IEO, trading will start instant. Exchange registered in the IEO facilitates quick buy and sell/trade your crypto.
Top 5 crypto exchanges
It is a Chinese company based in Tokyo, Japan. Due to regulatory problems, Binance shifted its operations from China to its neighboring capital, Tokyo. Binance is so far the leading virtual currency exchange globally by adjusted volume, and it also supports multiple altcoins than most exchanges do. This has therefore attracted most crypto investors trading in Bitcoin, Bitcoin Cash, and litecoin to explore the altcoins ecosystem.
Due to its popularity and good reputation, more coins aim to be listed or just to be announced on the Binance platform so as to expand their markets and be known to more people.
It is the largest operational cryptocurrency exchange in the United Kingdom and the United States. This massive cryptocurrency exchange has established licenses and bank accounts to operate in both states. Coinbase success comes from its reliable customer support, zero hack incidences, and also the ability to deposit and withdraw in traditional currencies/fiat currencies such as USD, EUR.
The exchange offers limited cryptocurrencies to trade, depending on the user’s location. Users based in the United States enjoy zero restrictions when transacting on the following cryptocurrencies: Bitcoin, Ethereum, Ripple, Litecoin, Ethereum Classic, Bitcoin Cash
Coinbase platform accepts debit and credit cards as forms of payments. The Coinbase Card, a visa- based Debit card used to make purchases, is only available in the UK, but it is yet to be introduced in the US as per the announcement released by Coinbase’s CEO, Brian Armstrong.
It is one of the earliest cryptocurrency exchanges having been launched in 2011. It is the largest bitcoin exchange in euro volume and liquidity. The platform supports buying, selling, and trading of multiple coins such as Bitcoin, litecoin, Dogecoin, Ripple, Stellar, Monero as well as Ethereum. Unlike Coinbase, Kraken’s platform supports more fiat currencies, has a large area base, and it offers a number of trading feature like margin trading. It accepts credit card and bank transfers of fiat currency. Kraken users enjoy significantly lower transactions and deposit fees with a maker and taker fee of 0% to 0.26%.
Kraken has one major drawback. Its user interface is confusing, counterintuitive, and its website can be slow to process trades. The platform offers no mobile support, and it is thus recommended to traders with much experience in the crypto world.
It is a crypto-only platform that offers reliable and reputable services. It has a long list of coins (over 190) to trade but is far less on coin selection as compared to Binance. Bittrex supports large trade, but this comes with a slightly higher fee than Kraken. Its main success is the excellent customer service that has gained a good reputation over time.
Bittrex was an active target site for phishes and scams, but the company took a strict motive by investing heavily in security measures. It holds a majority of its funds offline, thus increase its security. There is no mobile app for Bittrex. Its user interface is less beginner-friendly but a lot smoother.
It entails an extensive list of tradable coins and unique assets. Initially, traders could deposit and withdraw large amounts of bitcoin without revealing personal details, but this has been drastically reduced to a mere two bitcoin a day.
Arbitrage can be defined as trading the same asset with different prices on different markets. This means we could buy an asset on one market and sell it with a price different on another, making a profit in the process. As such, the price difference allows some people to take advantage of this opportunity and make a profit.
Arbitrage has been in the existence for a long time, as goods or currencies were exchanged and the economic laws of laws of supply and demand have generated price corrections throughout history. This model is applied daily in the stock and forex market but it is not easily accessible to retail traders, as one often need to go through brokers and have large funds available in order to participate.
Cryptocurrency exchanges facilitate arbitrage trading by setting cryptocurrency prices. As with other assets, the driving factor of a cryptocurrency’s price is supply and demand. The determining factor is always the last trade done on that exchange.
Advantages of cryptocurrency arbitrage trading
The following are benefits of arbitrage trading in crypto
- It is a fast way to turn a profit while trading since it takes as little time to completing the trades involved in the process, prior to traditional approaches.
- Traders require Minimum knowledge about a cryptocurrency to make a successful trade. When trading, you only need to rely on good technical analysis and news about a particular currency.
- Since cryptocurrencies are volatile, there is always potential for the price difference. The information transfer between exchanges is slow and disjointed, which as a result creates arbitrage opportunities.
- There are more than 150 exchanges globally hence generate a lot of opportunities for arbitrage trading
Best cryptocurrency exchange for arbitrage trading
Smart trade coin is a user friendly next generation cryptocurrency trading platform for both experienced and inexperienced users. This platform provides a powerful information tool that enables traders to trade several orders of magnitude more efficiently. Smart trade coin is the professional way to trade cryptocurrency since it requires minimum investment, is easier to use (having no special knowledge) required and you can enjoy automatic earning 24/7.
Hopefully, you have enjoyed today’s article. Thanks for reading!
Have a fantastic day!
Live from the Platinum Crypto Trading Floor.
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