Anyone wishing to enter into the cryptocurrency market requires the services of a cryptocurrency exchange. After obtaining a wallet, it is often the next item on the agenda. Cryptocurrencies have experienced a massive spike in popularity around the world in 2017. As a result, a lot more people are actively beginning to invest in the market. This has made the role of crypto exchanges to become even more important in the world of cryptocurrencies. Before delving into the top 5 fiat-to-crypto exchanges, it is important to know what a crypto exchange is.
A crypto exchange is an online website that provides a platform for the buying, selling, or exchange of cryptocurrencies like bitcoin, ether, and litecoin for fiat money like USD, EUR, and GBP.
There are basically three different types of cryptocurrency exchange platforms. The difference is due to what determines the price of the cryptocoin coin on the exchange platform.
These websites are marketplace where potential buyers and sellers of cryptocurrency can place “buy” or “sell” orders. The buyers and sellers do not interact with each other. Each person only interacts with the platform. The service charges fees upon the conclusion of every transaction.
Instead of interacting solely with the platform, these services connect buyers and sellers directly. There are no fixed market prices as everything depends on the two parties coming to an agreement. The role of the cryptocurrency exchange is to provide escrow and transaction mediation services.
These function like forex broker services. Potential buyers can visit these platforms and purchase cryptocurrencies. Broker sets the price of the cryptocoins.
There are a great number of crypto exchange services on the internet. The focus of this article is to present the top 5 online crypto exchange services where people can exchange their fiat currency for cryptocoins.
Coinbase is a popular cryptocurrency exchange and wallet service provider. They have millions of customers from all over the world. The service was launched in 2012 and they currently have more than 10 million customers with over $50 Billion in trades since inception.
Coinbase is known for its ease of use as well as its availability in many different countries. Another popular feature on the Coinbase exchange service is the GDAX platform. GDAX stands for Global Digital Asset Exchange and it functions as a trading platform for cryptocurrencies.
Credit/debit cards, as well as bank transfers, are the two most popular payment means on the platform. Transactions via credit/debit card are a lot faster than bank transfers. The former takes a few minutes while the latter can take between 3 to 5 days. The fees for card transactions can go as high as 5 percent.
The cryptocurrencies that can be bought with fiat money on Coinbase are Bitcoin (BTC), Ether (ETH), and Litecoin (LTC). Account verification is required to buy cryptocurrencies on the platform. This verification requires a photo ID, bank details, and phone number.
Gemini leads the way in being the foremost US regulated cryptocurrency exchange service. Based out of New York, they operate fully licensed and registered to provide BTC and ETH exchange services. The platform was founded by Cameron and Tyler Winklevoss, the famous Winklevoss twins.
Gemini’s biggest selling point is the assurance and security it provides its customers. All fiat deposits in US Dollar are kept at banks that are FDIC-insured. It also makes sure to store the bulk of their ETH and BTC in cold storage.
Gemini accepts both bank transfers as well as credit/debit card payments. They also provide reasonable discounts for people who place high-value orders. Gemini is available in 42 states in the US as well as a few other countries such as Japan, Canada, and Singapore. Read the guide to trading on Gemini.
Many crypto exchange services try to offer something a little different in order to give themselves an edge in the market. In the case of Kraken, its key value proposition is hinged around offering margin trading. This makes it a great choice for cryptocurrency traders.
Kraken was established in the year 2011 and has gone on to become the largest Bitcoin exchange service platform in terms of both liquidity and euro value. Kraken is also a partner in Fidor Bank AG; the first cryptocurrency bank. Kraken doesn’t only deal in Bitcoin exchange services. It offers exchange services for other cryptocoins like ETH, XMR (Monero), ETC (Ethereum Classic), LTC, and XRP (Ripple).
Kraken accepts payments via wire transfers in currencies like USD, JPY, CAD, and GBP. They are quite big on providing robust security features. Their account security framework includes 2-factor authentication protocols as well as PGP email encryption. Identity verification is required upon opening an account.
Coinmama is arguably the favorite of people who do not like the hassle of account verification. You can purchase BTC from the Coinmama service without having to upload identifying documents and photo ID.
Payments can be made using credit cards or cash. Cash transactions can be processed by either using Western Union or MoneyGram. This means that buyers can obtain BTC through cash payments using their countries fiat currency.
Coinmama only deals in both BTC and ETH and their services are available virtually worldwide with multilanguage support. The service is known for having a user-friendly website that is not difficult to navigate. This makes it a good choice for first time BTC buyers.
Bitstamp is a popular crypto exchange service in Europe. This is due to the fact that deposits made via SEPA are 100 percent without charge. Established in 2011, it is one of the oldest and most trusted cryptocurrency exchange platforms on the market.
In terms of security features, Bitstamp has quite a good setup. Their services come with multi-signature (multisig) technology, and 2-factor authentication protocols. The bulk of their crypto holdings are also kept offline away from online hackers.
Bitstamp offers some of the lowest fees on the market. Cryptocurrency purchases below $500 in value are charged a fee of 0.5 percent. Purchases above $150,000 are charged fees of only 0.2 percent.
The Bitstamp website offers multiple language support and they accept a host of currencies such as Swiss francs, Euro, and GBP.
Like any other investment class, cryptocurrencies involve a fair bit of risk. Before choosing a crypto exchange platform, it is important to carry out a proper due dilligence. A lot of research has to be done before one can comfortably settle for an exchange service. Parameters such as fees, payment methods, and account security features are just some of the key indicators of a reputable cryptocurrency exchange. With proper research and due diligence, the risk of falling victim of exchange fraud is materially diminished.