Exciting articles several times a month
10 May 2017
Cryptocurrency exchanges are popular marketplaces for trading digital currencies or exchanging them for fiat currencies for multiple purposes and reasons. Some exchanges offer best rates, other provide greater variety of currency pairs and options, so in order to make the right choice of exchange, users need to determine their priorities first.
Quest for a cryptocurrency exchange is a matter of aspects that a user is focused on, and as such is based on what is really conductive or crucial for a given task. In most cases, such aspects include traded currency pairs, fees and security.
There is a great number of exchanges that trade bitcoin only, which means that buyers may only purchase bitcoin for the specified fiat currencies or a currency, which are generally US dollar or Euro, while other major exchanges offer more extensive list of cryptocurrencies which may be both interconvertible or purchased for some acceptable legal tender.
Fee structures may vary as well being based either on the volume of transaction or maker-taker model. In the first scheme participants purchasing large amounts of currencies pay lower fees, while in the second structure, makers place their order for buying or selling bitcoin or any other cryptocurrency specifying the rate and expect for the moment when someone comes to fit their order, and in some cases they do not pay any fee, while takers immediately accept the offers currently available at the marketplace if they match their orders and pay the fee for removing the market liquidity.
Security measures practiced by exchanges also differ. Most exchanges offer two-step verification and encryption of personal data, and particular exchanges in a move to keep their brand standing out on the common background go far beyond those measures providing offline storage of all funds and maintaining dedicated servers for sensitive information, cut off from the shared global network.
It is the world’s largest bitcoin exchange in terms of euro volume and liquidity according to bitcoincharts.com, offering remarkable diversity of cryptocurrencies including BTC, ETH, ETC, LTC, DOGE, NMC and others and fiat currencies including Euro, US dollar, pound and yen. Kraken operates in Canada, Europe, Japan and the United States, claiming to be ‘the best bitcoin exchange’. Daily bitcoin volume of Kraken is $39,000,000.
Kraken is among those exchanges supporting maker-taker pricing system with the fees calculated as the ‘percentage of the trade’s quote currency volume (by default)’ while in some cases ‘certain pairs allow the fee to be calculated based on the trade’s base currency’. Still, Kraken combines it with the volume-based fee structure, thus, the more you trade, the lower is the fee charged for the subsequent trades reaching as low as 0% (for makers). For most currency pairs the highest fee for makers is 0.10% and for takers is 0.26% for the lowest volume of 50,000, while the lowest is 0.00% for makers and 0.10% for takers charged for the volume reaching over 10,000,000.
Kraken provides two-step verification for login and funding the account and advanced two-step verification for trading with PGP/GPG signing and encryption to receive encrypted emails from the exchange. Besides, users may lock their account settings and establish a master key for account recovery.
On the side of its own security measures taken for the whole process, Kraken uses cold wallets for storing most part of the coins and all deposits, which are isolated from online systems, with all wallets being encrypted. Hot wallets, are obviously used for storing those coins in operation.
San-Francisco based Coinbase is a digital asset exchange with extensive coverage providing exchange of bitcoin, ethereum and litcoin for fiat currencies in 32 countries and transactions with bitcoin as well as bitcoin storage in 190 countries across the globe. The company is a truly prominent cryptocurrency exchange provider backed by high-end investors including Andreessen Horrowitz, NYSE, BBVA, USAA and others. Daily bitcoin exchange volume of Coinbase is $40,000,000.
Coinbase also is using maker-taker model with the fee paid by the maker accounting for 0% and fee paid by the taker being between 0.10% and 0.25% for BTC books and 0.10% and 0.30% for ETH books. Coinbase also charges a taker fee for partial matching: if the order is partially matched then the fee is applied to that portion, while the rest of the order will be charged no fee. Such foreign exchange like trading mainly happens on its Global Digital Asset Exchange (GDAX) on the dedicated website, while other users wishing just to buy or sell some cryptocurrency go to coinbase.com.
Coinbase boasts high security standards, stating that 98% of customer funds are stored offline as it believes that such kind of storage ensures better safety against loss or theft and, thus, distribute bitcoin in special secure deposit boxes and vaults worldwide.
Besides, personal information is kept on the company servers not connected to the internet with the data further split with redundancy and encrypted to AES-256 standard, copied to ‘FIPS-140 USB drives and paper backups’. These are also distributed like bitcoin in special safe deposit boxes and vaults across the globe.
Similar to other exchanges Coinbase offers two-step verification process for account holders and people working in the company to access devices and services internally. In addition, Coinbase has strict requirements to employment, checking criminal background of any potential applicant or candidate. To crown it all employees at Coinbase follow the procedure of encrypting hard drives, using strong passwords and screen locking when working at their places.
It is an exchange based in Luxembourg with offices in the UK and the US. Bitstamt is the world’s second largest bitcoin exchange in terms of volume claiming to be the first fully licensed exchange platform, as it was granted a license by Luxembourg’s Ministry of Finance. Users are allowed to trade between bitcoin and two fiat currencies (US dollar and Euro) and between Ripple and bitcoin. Its daily bitcoin volume is $30,000,000.
Fee structure of Bitstamp is based on the volumes traded over 30 days. Thus, the highest fee paid in the bitcoin-Euro pair is 0.25% for the volume less than €18,000, and the lowest is 0.10% for the volume over €18,000,000.
Most security features don’t make Bitstamp stand out much from the crowd, as two-factor authentication and storing 98% of user bitcoins in the safe vaults totally disconnected from the global web network sounds as nothing new. In addition to these commonly used methods of ensuring safety for its customers, Bitstamp also applies MultiSig technology for the hot-wallets on the exchange that requires signature from a user or users who broadcast their transaction onto the blockchain.
We certainly should mention such exchange giant as Bitfinex, once considered the world’s largest bitcoin exchange service in the world by volume ($45,000,000 daily), but it looks like the service may lose its positions to other exchanges due to a series of unfortunate events happened to it. Last year the exchange was involved in the major hacking attack today known as Bitfinex hack with 120,000 units of bitcoin worth about $72 million at that moment stolen from accounts. In addition, this April the exchange reported that it no longer has an opportunity to allow account holders to withdraw their money in US dollar as it faced limitations imposed by Wells Fargo on its wire transfers. While Bitfinex made a pathetic attempt to sue the banking holding it later decided to revoke its filing and lifted the price of Bitcoin by about $100 as compared to other exchange platforms as customers started increasingly buying bitcoins for further moving them to other exchanges.
Exciting articles several times a month