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20 April 2018
In order to start trading cryptocurrencies users need to find a proper platform, where such transactions are processed. Digital assets like Bitcoin and Ethereum are usually traded on dedicated cryptocurrency exchanges, which charge fees for their intermediary services apart from the fees charged by the miners approving transactions in their respective blockchains. Here are some quick facts and samples of digital asset exchanges for a beginner review.
DCE: general idea
Digital cryptocurrency exchanges differ by business structure and organization: some platforms trading fiat and cryptocurrencies have physical offices, others are based exceptionally online. Besides, some DCEs may be aligned with Digital currency providers, or issuers of their own cryptocurrency, working as a subsidiary, while others operate as a standalone business with little to no relation to the DCPs.
Major part of the cryptocurrency exchanges are based outside the United States and Europe as their offshore location allows them to avoid regulatory scrutiny and problematic proceedings launched by law-enforcement authorities, internal revenue agencies and other governmental bodies. Meantime, digital asset exchanges are working primarily with the key fiat currencies like US dollar, Euro, pounds and yuan. Participants of these platforms may exchange their fiat currency for some crypto coins through money transfer, credit card transactions and many other payment options. A number of cryptocurrency exchanges enable users to take money from their digital currency accounts to special anonymous prepaid cards, which can be used at ATMs.
Founded and initially established in China, Binance is now a multinational cryptocurrency exchange based in Japan with the offices in Taiwan. Last July the exchange successfully raised 15 million dollars during the Initial Coin Offering for the crowdsale of its BNB tokens based on ERC20 protocol.
Binance provides an attractive scheme for its participants to have them use its own tokens for mutual settlements and transactions. Thus, the first year of the participation in the discount program brings a 50% rebate, followed by 25% in the second year, 12.5% in the third year and 6.25% in the fourth year. Following its example, other exchanges also started actively arranging ICOs to sell their tokens for simplifying the process of trading on their platforms.
San Francisco-based, Coinbase is one of the largest US cryptocurrency exchanges and last year, according to the reports by CNBC, Coinbase overpassed Charles Schwab, a bank and brokerage firm, by the number of accounts recorded both in October and November. Experts expect the number of active accounts at Coinbase will beat that of Fidelity, the first largest broker in the U.S.
Users accept Coinbase as one of the most convenient brokerages for starting traders. Coinbase currently allows traders to exchange Bitcoin, Bitcoin Cash, Ethereum and Litecoin with fiat currencies, and, besides, processes Bitcoin transactions and enables Bitcoin storage for users in 190 countries across the globe. Coinbase accepts bank wires and debit cards for buying cryptocurrencies. This February the exchange discontinued accepting new credit cards as a method to pay for cryptocurrencies on its platform, saying it cannot ensure successful transaction completion with credit cards in view of the progressive trend among financial institutions to impose restrictions or explicitly ban the use of credit cards for buying cryptocurrencies.
Coinmama, being a venture of NBV International, has its registration in Slovakia, but key operations of the startup are performed from Israel. This exchange is a centralized service alleging it has an extensive user base exceeding 1 million. Coinmama supports a great number of countries, where its services can be accessed: they count up to 200 states worldwide.
Coinmama mainly accepts credit cards for trading cryptocurrencies, but there are other options available too. Traders may deposit their accounts using either Mastercard or Visa credit or debit cards and also cash, if they send it by Western Union. The exchange is currently working with Bitcoin and Ethereum and charges a relatively high fee for the transaction (5.5%).
Coinmama allows users to purchase Bitcoin for an amount up to $150 without the need to upload the photo of their ID document. Amounts exceeding that threshold require verification of every user. Meantime, Coinmama is considered one of the most convenient exchanges in terms of the upper limits for purchases of the cryptocurrency that could be made using a credit card. Participants may purchase up to $5,000 worth of BTC a day and up to $20,000 worth of BTC per month.
Kraken, a San Francisco-based cryptocurrency exchange, is believed to be the world’s largest Bitcoin exchange in terms of euro volume and liquidity. The exchange is currently operating in Canada, European Union countries, Japan and the United States. At the moment users may trade Bitcoin, access the dark pool trading for Ethereum, launched in June 2016, and VEN, the most stable cryptocurrency in the market.
Kraken is working with Bloomberg, providing Bitcoin pricing data to its Bloomberg Terminal. Last April, the exchange started accepting money transfers in US dollars and government-issued currencies as fiat funding option.
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