What is a Bitcoin Stock Exchange?
To understand how a Bitcoin stock exchange works it is essential first to understand what it is and what it entails. A Bitcoin Stock Exchange is a website where people can freely buy, sell or exchange Bitcoins with other virtual currencies or traditional fiat currencies such as the US dollar, Euro or the British Pound. On a Bitcoin stock exchange, one can access real-time prices and trade against thousands of other cryptoassets and commodities.
For those willing to trade professionally, and have full access to various trading tools, you are likely to use an exchange that necessitates users to verify their identity and open an account. However, for other trading platforms, an account isn’t required especially for those who trade Bitcoins occasionally. Cryptoassets have an inherent advantage in their liquidity and trading volume profile because they are natively digital.
Types of Bitcoin Exchange Platforms
There are three types of exchange platforms, namely:
- Trading Platforms – These exchange platforms provide a link that connects sellers and buyers, enabling them to transact while charging a small fee for every transaction made.
- Direct Trading – This trading platform offers a direct person to person exchange platform, traders from different nationalities worldwide can trade Bitcoins with each other. Direct trading platforms lack a fixed market price; instead, the seller sets this/her own exchange rate.
- Brokers – This is a Bitcoin exchange platform where a broker sets the exchange price. Bitcoin exchange platforms operated by brokers are similar to foreign exchange platforms run by dealers
Factors to look Out for Before Joining a Bitcoin Exchange Platform
Just like choosing online Bitcoin betting sites, before commencing bitcoin trading, it is imperative to undertake a background check first of potential trading platforms you wish to start trading in. Below we have prepared a list of essential factors worth checking out before making your first trade.
The Platform’s Reputation – This is one of the surest ways of determining whether an exchange is reliable. You can get tonnes of reviews from different individuals or communities on various websites. You can also get answers by posting questions about an exchange platform on different forums such as Reddit or Bitcoin Talk.
- Charges incurred on the Platform– Majority of exchange platforms indicate their fees and other payment-related information on their website. Before joining, it is vital to countercheck the various fees the exchange charges for deposits, transactions and withdrawals to avoid any hidden costs. These fees vary depending on the exchange platform you choose.
- Available Payment Options– Every exchange platform provides customers with various payment options. Whether you prefer transacting via PayPal, wire transfer or debit/credit card, you should choose an exchange that has the payment option that comfortably suits your needs.
- Verification Requirements – Majority of trading platforms require a user to provide some ID verification to make deposits or withdrawals. This verification may take a couple of days to process; however, it is essential for protecting users from scams or any form of money laundering
- Geographic Location – Some exchanges require users to transact from a specific country to access their functions fully. Before trading verify if the exchange platform you want to join allows you to access all its features from the country you currently live in.
- The Platform’s Exchange Rate – The exchange rate varies depending on various exchange platforms. This exchange rate fluctuates and can vary by up to 10%; therefore, it is wise to shop around and seek the best market rates available.
The Best Bitcoin Exchange Platforms
There are various Bitcoin exchange platforms to choose from; however, it is important to note that not all exchanges are equal and each has their advantages and limitations,
We have prepared a nonconclusive list of suitable and reputable Bitcoin stock exchange platforms you can trust.
Kraken was founded in 2011 and is the largest Bitcoin exchange regarding total volume and liquidity; it is also an associate of the first ever cryptocurrency bank. With Kraken, it is possible to buy and sell Bitcoins and trade them with fiat currencies such as US Dollars, British Pounds, Canadian Dollars and the Japanese Yen.
You can also trade your Bitcoins with other virtual currencies such as Ethereum, ICONOMI, Litecoin, Monero, Ethereusm Classic, Zcash, Ripple, and Stellar Lumens. Kraken is also the best choice for professionals since it offers margin trading and other pro trading options.
Advantages: Respectable reputation, supported globally, has a myriad of useful features, reliable customer support, best exchange rates, and affordable transaction fees.
Limitations: Few payment methods, sophisticated UI, and complicated to use especially for beginners.
Bitstamp is a Bitcoin marketplace based in the European Union and has been around since 2011. Bitstamp is one of the pioneers of Bitcoin exchanges and comprises a vast loyal customer following. Bitstamp is the most trusted and popular Bitcoin exchange platform mostly due to its reliability and safety. It guarantees its customer’s maximum security by using a two-step authentication system and other features such as multi-signature technology for customers wallet and also an insured cold storage.
Bitstamp also offers clients 24/7 support and a multilanguage interface that can be used by everyone around the world. Setting up an account is relatively easy and free, and after making your first deposit, you can start trading immediately.
Advantages: Respectable reputation, supported globally, reliable customer support, high-level security, and affordable transaction fees.
Limitations: Few payment methods, and high deposit fees.
Bitsquare is a peer to peer exchange that allows users to buy and sell Bitcoins and exchange them for other altcoins and fiat currencies. Bitsquare is a decentralized exchange platform that can be accessed instantly and does not require any registration.
Bitsquare also doesn’t hold either customer’s funds or trader’s personal information. This exchange platform is highly secure and has an arbitrator system in case of trade disputes. If you value your security as a trader, then Bitsquare is the perfect Bitcoin trading platform especially if love remaining anonymous.
Advantages: Respectable reputation, supported globally, reliable customer support, high level of security, no registration required, and perfect for advanced traders.
Limitations: Few payment methods, unsatisfactory customer support, and not suitable for beginners.
LocalBitcoins is a point to point exchange platform that links traders in cities all across the globe. With LocalBitcoins you can link up with other traders in your local area and trade your Bitcoins with each other. LocalBitcoins allows transactions via PayPal, Dwolla, Skrill and even supports wire transfer. LocalBitcoins takes 1% of each sale from sellers who set their exchange rate.
To ensure the security of its traders, LocalBitcoins has an escrow service, and Bitcoins cannot be released until the seller confirms the trade is both paid for and completes. LocalBitcoins also has a support team that resolves conflicts in case a deal goes wrong between traders. Traders also have a reputation rank that publicly displays a trader’s past activities, and this rank increases with every successful trade. For an in-depth analysis, including payments options and countries supported, check out our full review of LocalBitcoins.
Advantages: Respectable reputation, supported globally, friendly for beginners, high-level security, instant transfers, multiple payment options, and affordable transaction fees.
Limitations: Not preferable for large Bitcoin transactions, and high exchange rates
For traders who specifically want to conduct crypto-to-crypto trading, the best available choice is Binance. The platform is extremely popular mainly due to its low trading fees. Although it is relatively new, it is growing rapidly and has a wide selection of altcoins.
Advantages: Relatively cheap to transact, supported globally.
Limitations: No trading with fiat currencies, and few payment options.
The above list is non-conclusive, and there are other trading platforms available that have been reviewed in depth by other sites such as HitBTC and CampBx. With up to more than 60 trading platforms, there is a vast selection to choose from, however, a wise trader should do his/her homework before commencing a trade and weigh various features such as fees, trading features, liquidity, etc, to enjoy the full perks of trading Bitcoins.
P.S. If you want to sit back, relax and learn more about Bitcoin and other cryptocurrencies then you can view our full bitcoin documentary guide here.