There has been a lot of buzz about cryptocurrencies and cryptocurrency exchanges since the beginning of 2018. If you are reading this, you still may not totally understand what a cryptocurrency exchange is exactly. That's what this article is for. Let us explain.
A cryptocurrency exchange is a business that facilitates the trading and/or exchanging of cryptocurrencies and fiat currencies. It's basically a forex market for cryptocurrencies where there can be trading pairs between cryptocurrencies and/or crypto and fiat currencies. Exchanges also keep track of the current exchange rates for the various currencies.
Exchanges can be online and either be decentralized, peer-to-peer, or centralized. Their trading fees can vary but usually, an exchange will either charge a flat fee, or a percentage of the traded value of the currency. A customer can transfer funds from their exchange account to their cryptocurrency wallet or to a bank or debit/credit card tied to the exchange account.
We have created an easy-to-read table to help users assess the top 10 cryptocurrency exchanges. The criteria we factored in include withdrawal limits, reputation, fees, payment methods, verification process, country restrictions, customer support.
A peer-to-peer Bitcoin exchange is a networked cryptocurrency exchange environment with no centralized server. There is no middle party involved in the transaction. Users connect and trade directly with other users. The exchange basically acts as a matchmaking service connecting buyers and sellers. Sellers will be allowed to set the prices they are willing to sell at and the payment types they are willing to accept for the sale. Several peer-to-peer exchanges offer as many as 60 payment types. During a transaction, the currency being traded will oftentimes be placed in an escrow account until the buyer pays the agreed upon price for the currency. Once the buyer and seller complete the transaction the funds go to each respective party’s digital wallet.
As a response to the two main hurdles in the growing cryptocurrency industry, security issues, and government regulation, the industry is starting to see the introduction of exchanges with a centralized server but where the funds are kept and stored by the users. Often times the exchange will assign users a proxy token representing the currency they are trading. The currency is not exchanged until the final transaction.
There are very few decentralized exchanges that trade in fiat currencies (other than Bisq) unless they incorporate out-of-band payment options in the sales transactions. The added security also brings added complexity to using a decentralized exchange. Unlike with peer-to-peer exchanges, users considering using a decentralized exchange must download and install the exchange's software, and create and back up a digital wallet to store their funds.
Here is a list of decentralized exchanges:
A centralized exchange not only tracks the cryptocurrency markets and facilitates transactions but also acts as a middleman, holding and transferring money between the buyer and seller. Centralized exchanges store users’ blockchain on their servers. This allows for more ease of use but as seen in recent exchange hacks, it also increases the security risk. Also, depending on how one looks at it, centralized exchanges are more able to comply with government regulations making it easier for users to be lawful and at the same time create more privacy issues. Centralized exchanges require much more stringent approval process since they are fully regulated. This means requirements for ID, the source of funds, amongst other potential verifications.
Most exchanges have daily or even yearly withdrawal limits on the amount of money a user can take out of their account. These limits may vary greatly depending on the country the exchange is located in and the type of exchange (centralized, peer-to-peer, or decentralized). The more verification one provides, the higher the withdrawal limits are.
Since many exchanges are online businesses, new users will intuitively want to check out cryptocurrency exchange reviews, read online cryptocurrency investment forums, read our site, and ask friends about their experience using different exchanges. Users want to know if the exchange is trustworthy and if they are focused on keeping transactions safe and secure. Not to mention, they will want to learn more about an exchange’s customer service practices, what hoops, if any, a customer has to go through to get a refund, and get insight into how an exchange handles user complaints.
Exchanges will usually charge either a flat fee, or percentage of the value of a trade, or both when customers use an exchange’s trading services. However, exchanges may also charge for other account activity like transfers, purchases tied to a credit/debit card, ATM usage fees, wire transfers, and currency conversations. Cryptocurrency investors and users will want to weigh the services being offered by the exchange versus how much the exchange charges its customers.
There are several exchanges that offer more than 60 different payment methods. There are a couple of issues to consider. If using Bitcoin, there is more risk in doing transactions with reversible payment methods such as PayPal since Bitcoin transactions are non-reversible. Some payment services can increase the risk of doing transactions by making it easier for someone to take Bitcoin without fulfilling their part of the trade.
This added risk can increase transactions fees, especially in peer-to-peer exchanges where sellers set the transaction fees and the exchange may not offer any type of insurance, transaction safe guards, or required ID verification for buyers and sellers. ID verification leads into another factor to consider when considering payment methods.
If privacy is important to a user, then any payment method that involves a bank, government entity, or credit card will probably require some sort of ID verification. The issue of ID verification may be the very reason why the largest number of cryptocurrency exchanges are in Asia, since there are several countries in that part of the world with less restricted banking regulations than in the West.
Verification policies vary greatly among cryptocurrency exchanges depending on the type of currencies traded (crypto or fiat), transaction types, the type of exchange (peer-to-peer, decentralized, or centralized), and the country the exchange is registered in (Ex. Singapore versus the U.S.). A cryptocurrency exchange’s policies can end up affecting almost all the other items in this list of considerations because it’s one of the few actions an exchange can take that determines the level of risk, trust, anonymity, and regulatory adherence an exchange will take on.
Some cryptocurrency exchanges require as little information as a digital currency wallet address or an email, while others may require all of a user’s personal information, a selfie, a picture of a credit/debit or bank account information, and a government issued ID. As mentioned above, users will want to consider their tolerance for giving up their privacy.
When considering an exchange’s verification policies, the issue cuts both ways. Not only might it be risky to provide your information to a third party increasing the risk of your financial and identity information being stolen, but an exchange that does not require some sort of verification may attract people with less than good intentions. Finally, depending on your circumstances, a user will want to consider the time it takes to get verified. Exchanges with more extensive verification policies can take several days, or even a week or more to verify a user before they can place their first trade.
How a cryptocurrency exchange’s country restriction policy impacts its users will depend on where the exchange’s legal residence is and the location of the user. Countries across the world have a broad spectrum of regulatory policies toward the use of cryptocurrencies. Countries like the US and the UK have pro-cryptocurrency regulations where in contrast countries like Bolivia, and most recently, South Korea are not. Additionally, for some users located in certain countries that do not subscribe to international banking regulations, or have international sanctions levied against them, they may be banned from trading on exchanges altogether. Several countries also limit cryptocurrency trading to their country, restricting their citizens from participating in the international trading of cryptocurrency. So, depending on where the user is and which exchange they want to use will have a big impact on if they can trade. Users will want to check not only their country’s tax and commerce authority’s regulations on trading in cryptocurrency but also how it defines cryptocurrency as well as their country’s banking and legal status internationally.
Reviewing customer support times for cryptocurrency exchanges will help potential new users to see the ability for the exchange to service customers, see how the exchange treats its customers, and ascertain the amount of risk involved with participating in transactions on the exchange.
Exchanges with long customer support response times can increase the amount of theft and fraud risk users can be exposed to during transactions. If something gets botched with a transaction, a trader doesn’t want to be left waiting and left to their own devices to figure out what went wrong on their own. When looking at customer support times, users may want to dig a little deeper and do their own due diligence, and see how many customers use the site, how many employees the exchange employees, what kind of customer service support resources the exchange utilizes, and even check employee reviews who work there to see how the company treats its employees. Employees generally treat customers how they get treated by their employers.
Also, would you rather have an exchange with one or two employees manning a phone or chat application, or would you rather do business with a cryptocurrency exchange that incorporates a fully integrated customer service call center with 24/7 availability. And, if so, are you willing to pay for it? There will most likely be a direct correlation to the speed of an exchange’s customer service response times and the cost to do business with that exchange. For more experienced and savvy cryptocurrency investors, faster response times may not add value to their experience, or be worth paying for.
The best practice is when reviewing an exchange’s customer support response times, compare it to the fees the exchange charges.
Coinbase started in June 2012. Located in San Francisco, California the exchange has over 10 million users and has done over $50 billion in transactions.
Coinbase has raised over $217 million of capital as a new cryptocurrency exchange from some of the world’s investment and venture capital funds. Coinbase’s financial backers include: NYSE, BBVA, USAA, Sozo Ventures, Bank of Tokyo Mitsubishi UFJ and IDG Ventures to just name a few.
548 Market St #23008, San Francisco, CA 94104
Phone Number: (888) 908-7930
Hours: Open 24 hours day, 7 days a week
Coinbase supports the cryptocurrency trading in 32 countries. These are the countries that allow buying and selling of cryptocurrencies using Deposits, Credit/Debit Cards, Bank Accounts:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, Greece, Hungary, Ireland, Italy, Jersey, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom
Australia and Canada allow for the purchase of but the sale of cryptocurrency using only Debit/Credit Cards.
Coinbase restricts its service to the US state of Hawaii because of new regulatory policies enacted by the Hawaii Department of Financial Institutions making Coinbase required to keep an equal amount of fiat currency reserve on hand for all digital currency balances in their custodial accounts.
Also, since Coinbase complies with US banking laws, the exchange will not let any user log on to the exchange from any country in the world under US Government sanctions. If this is a concern, refer to the U.S. Treasury and the Office of Foreign Asset Control.
Coinbase provides an easily accessible web page for users to check their account limits. Most new users in the US will start with an instant buy limit of $100 weekly on their digital wallet. Coinbase provides new users opportunities to increase their account limit by providing varying levels of ID verification. New users can increase their account limit by providing the following:
Coinbase also assesses limits based off of the age of the transactions completed on an account and the type of accounts tied to a Coinbase account. So, newer accounts with only recent transactions will have lower account limits than older accounts with older transactions. A tied credit card to a Coinbase account will have different weekly limits than a tied bank account.
The best way to ascertain Coinbase’s reputation is to check sites like:
However, Coinbase is one of the largest and most successful exchanges in the world.
That reputation has come fraught with the exchange receiving its share of criticism. Just go to any Bitcoin user forum and you will find plenty of people complaining about the exchange. Coinbase is not for the traditional “Bitcoiner” who is using cryptocurrency to side-step and subvert a global banking and finance system that they feel is corrupt.
The reason being, Coinbase has tried to become a bridge between the worlds of traditional fiat and cryptocurrency worlds by working to make cryptocurrency more like a traditional currency. The exchange has received 3 rounds of funding from some of the world’s largest financial institutions, and in doing so have imposed some strict, and oftentimes, draconian requirements on its customers.
Here are some things to keep in mind when using Coinbase:
Coinbase has 3 main types of charges:
Coinbase calculates conversion fees in two different ways, and charges the amount based off the greater of the two calculations:
Minimum Fee — A flat fee will be charged on conversions of amounts under $200
Percentage Fee — a percentage is calculated based off of the geographical location, account activity, and payment method. Usually the fee will between 1.49% — 3.99%. Wire transfers are usually $10 — $25
Coinbase may charge a variable percentage fee of 1 % with a minimum amount of $1 up to a maximum amount of $50, and/or a fixed percentage of 2.49 % may be charged as well. Coinbase calculates this fee based off the user’s geographical location, product type, and payment method.
Coinbase makes payment methods available based off a customer’s location and banking regulations for the user’s jurisdiction. Customers can use the following payment methods:
Use Coinbase’s Support page to search for the payment methods offered in your area.
Coinbase may request or collect the following information on its customers in order to verify their identity and to comply with U.S. KYC and AML laws:
If a customer requests to have their buy and/or sell limits increased Coinbase may request and/or collect the following types of identifying information as well from its customers:
Readers may be asking how Coinbase uses this information. Coinbase states that their primary intention in collecting your information is to guard against fraud. Of course, the next question might be, “Whose fraud?” Our potential for committing fraud, or theirs? Some more notable entities they share it with are law enforcement, the customer’s bank, and anyone they deem their “partner” or third-party. As mentioned before, this may cut both ways and may make a potential customer feeling either at ease or very suspicious.
According to Coinbase’s company blog, the customer experience and customer wait times has been a growing issue, along with the company’s continued growth. The cryptocurrency exchange grew its platform capabilities by over 7000% and its customer service infrastructure by almost 900% to meet growing demand and the estimated peak usage for 2017. Unfortunately, their efforts did not keep up with their current growth, and the CEO and Co-founder Brian Armstrong has promised to double the company’s customer service infrastructure over the next 3 months. Coinbase also recently hired a new Vice President of Operations, Tina Bhatnagar, former VP of Operations from Twitter, to oversee the expansion of their customer service operations. There are posts on Reddit’s /r/coinbase forum of customers waiting over 70 days for a response to their support tickets. It looks like Coinbase is responded to the issue, and we will have to see what unfolds over the next several months during Q2 2018.
Binance, started by CEO Changpeng Zhao, has recently been lauded as the fastest profitable company to reach over a $1 billion, (it’s closer to $2 bn) in market cap (aka a unicorn). And, the cryptocurrency exchange achieved this noteworthy distinction in less than 6 months. It’s also considered (at the time of the writing of this article) the largest cryptocurrency exchange in the world by trading volume. One of the things that sets Binance apart from several of its rivals in the cryptocurrency exchange diaspora is that it has stated it is working to transform from a company into a community by creating its own ecosystem. Binance is following through with its goals by backing several initiatives, including the release and use of its own blockchain, the creation and trading of its own cryptocurrency currency, the Binance Coin (BNB), and the financing and backing of a cryptocurrency incubator to help spawn the development of new cryptocurrencies and blockchain technology. Recently, there was an attempted to hack of the Binance’s exchange prompted via an API leak. This has led to the Binance team to begin development of a decentralized exchange and their own blockchain. Binance is a company positioning itself to dominate the cryptocurrency space for the foreseeable future with low fees, a desire to create a safe and secure platform, one of the largest baskets of currencies to trade on its exchange, and a business plan that integrates its future with the development of cryptocurrency technology and markets.
With Binance’s recent ICO of its own coin (BNB) and upward price movement, the company’s net worth reached a speculated $2 Billion. And, that’s not just the meteoric rise of a flash-in-the-pan unicorn start-up. Binance is profitable and standing on its own two feet. Add to that during the company’s initial fundraising efforts last year in July 2017 the exchange was able secure financial backing from major financial venture capital and financial services companies, such as: Morgan Stanley, Nomura, SBI Group, Accenture, Sequoia Capital, and Chinese VC firms Blackhole Capital and Funcity Capital. Binance’s ICO was also backed by such investors as Roger Ver and Matt Roszak. Binance seems to be not only making a profit but turning out to be great investment and market leader for its backers.
Binance has offices in multiple locations throughout the world. According to the r/Binance Reddit forum, due to security issues, and the possible recent crackdown by the Chinese Government on cryptocurrency exchanges, the company does not seem to share the addresses of its offices. Also, to comply with the ban on cryptocurrency exchanges, Binance has moved its servers and IPs from Hong Kong to other locations. (like, Korea and the British Virgin Islands).
If the Chinese Government has their way (and the Chinese Government usually does) then all foreign countries will be unable to trade on Binance. However, it seems the company’s president, Changpeng Zhao, has taken steps to get around the issue by moving the company’s servers and IPs outside of the country. So currently, Binance does not seem to have any country restrictions, at least none listed on its website.
There are 3 levels of withdraw limits that correlate to the amount of ID verification a customer provides to Binance. The standard daily withdrawal limits for Binance are 2 BTC per day (around $20,000 +/- a couple thousand) However, if a customer provides the required ID verification (Ex. A picture of a photo ID or a government-issued ID), then they may be able to get their withdrawal limit extended up to 100 BTC (around a $1 million USD).
According to the cryptocurrency exchange website, Cryptocompare.com, Binance has a rating of 3.6 out of a 4 star rating based off of customer 254 reviews. Probably the biggest hurdle the company faces is that it’s an exchange with no central location, and no live support. All support requests at the current time are handled through their Submit Request page, which for some people might cause some anxiety. There is the potential that if something goes wrong, not only is there no physical place to go to retrieve information (or, possibly a way for customers to withdraw their money), but there also isn’t a live person to talk to in real time to help customers if the shit hits the fan.
The best way to ascertain Binance’s reputation is to check sites like:
Binance has some of the lowest fees in the industry. They charge a trading fee of .1% on every trade. However, if customers pay their trading fees in Binance Coin (BNB), they receive a discount. Binance also charges a withdrawal fee that is calculated based on the currency being withdrawn by the customer.
Binance is a total cryptocurrency exchange, meaning they do not do any transactions in fiat currencies, nor do they accept any payments or transfers directly from a bank account. They only way to fund or make payments toward your Binance account is either by funding your account through a digital wallet or another cryptocurrency exchange custodial account using a cryptocurrency. With the introduction of a decentralized exchange architecture, Binance can potentially be a very secure and anonymous exchange with low fees. Some potential downsides of Binance being discounted from the world of fiat currency can be the extra steps involved with getting cryptocurrency exchanged for fiat currency.
As mentioned earlier, withdrawal limits are directly correlated to the level of verification customers provide to Binance. For basic first level account withdrawal limits of 2 BTC a day, users just have to sign up for an account. However, in order to be able to gain level 2 account withdrawal limits (100 BTC daily withdrawal), customers must provide more detailed personal identity information, a photo ID, and a selfie. For level 3 account withdrawal limits (greater than 100 BTC daily withdrawal), users must provide more detailed financial and identity information.
There is no official response times kept about Binance, and the exchange has a reputation (just search on the Reddit r/BinanceExchange forums) for having shoddy customer service since all of their customer services are handled through email. If you use Binance expect to possibly wait hours, or even days if an issue comes up. Your best bet is to make sure to transfer and store all your funds in a cold wallet and to take good screenshots of any issues that may arise in order to send them to their customer support team.
Changelly is a cryptocurrency exchange service. The service uses a virtual robot to connect to several cryptocurrency exchanges and aggregates exchange rates from multiple cryptocurrency information sources to provide an average suggested exchange price. The first version of Changelly came into fruition in 2013 with the creation of a prototype by the mining pool Minersgate, while the second version was released in 2015 with subsequent updates.
Changelly has partnered with several crypto wallet services including Jaxx and also gone in on a joint venture with Chronobank, to provide the Changelly service in the company’s cryptowallet.
Changelly is located somewhere in the Czech Republic.
Since the exchange service is run from a website, there are no country restrictions.
Even though Changelly has no exchange limits, they do have some terms for a new customer’s first several transactions using a bank card. For the USA, Canadian, and Australian Customers:
New customers are not allowed to make more than 3 transactions within the first week of opening their account. After the first month, there are no limits on the account.
For the CIS region (Russia/Ukraine/Belarus/Kazakhstan/Armenia/Georgia):
New CIS regions users can make payments up to $2000 in the first week of having their new account and make $10000 worth of transaction within the first month.
For new users in the EU and other countries:
New users in the EU and other countries can not make more than 6 payments within the first week when they open a new account. There are no limits on debit/credit card transaction after the first month.
According to Trustpilot.com, Changelly has a 3 out of 5 stars, based off of 566 reviews at the time of this writing. Other than some typical snafus users experience with cryptocurrency exchanges, like missing funds or frozen transactions, Changelly’s .5% flat trading fee seems to only apply to its new fiat currency support in theory. The company uses various third-party payment services and reminds its customers that it can not guarantee .5% flat fee for transactions since Changelly does not have control over what their third-party payment services charge. There have been some cases where users have received nothing, or a sizable amount of their transaction amount has been taken because the network fee, Changelly’s commission, and the exchange rate fee combined ended up being more than the amount being exchanged by the user.
If considering using Changelly, the best way to ascertain the exchange’s reputation is to check sites like:
As mentioned above, Changelly charges a .5% fee for all transactions. The exchange has adopted this fee structure because they state that if they used a fixed rate fee structure they would have to charge higher fees in order to cover market risk and volatility.
Also, Changelly includes a Network fee in each cryptocurrency transaction. This fee is calculated based on the currency you are trading. Every time you add a currency to a blockchain, a fee is assessed. Each currency has its own network fee it charges with adding currency to its blockchain. So, when a user sends a currency to Changelly’s digital wallet, a Network fee is assessed based on which currency is being sent.
A user must also keep in mind that exchange rates can fluctuate dramatically on cryptocurrency exchanges. So, the rate a user is quoted may change as their transaction is going through Changelly’s network.
Changelly will accept payments in most cryptocurrencies. The exchange also recently started accepting payments using credit/debit cards in January 2018. Users can also use debit/credit cards to buy or sell cryptocurrencies using any other exchangeable fiat currency and a debit/credit card. However, they will be converted to either USD or EUR for the transaction.
In order to set up a Changelly account, new users must provide an email address. To be able to log into your Changelly account, users must be able to perform two-factor authentication. (2FA) This involves having a second device (i.e., a cell phone) with Google authentication that allows a user to receive a text message or email with a link for them to log in from that device to confirm they are who they say they are. However, users can turn off 2FA at any time.
For bank card transactions, users will either have to use a card that allows for 3-D secure verification (i.e., real-time verification through your phone using a password or SMS). If for some reason, the 3-D verification does not work, users may also be able to call a phone number to verify a transaction using voice recognition, and by taking a picture of a photo ID and/or a selfie.
Since Changelly is an online currency exchange service and not a currency exchange, the service can be used worldwide wherever a user can access it from the internet or mobile phone network.
Coinmama launched in 2013. The cryptocurrency exchange service has over 200,000 satisfied customers. It is one of the oldest online cryptocurrency exchange services and is known for being one of the most convenient ways to buy cryptocurrency using a credit/debit card. Currently, Coinmama only supports buy orders of Bitcoin and Ethereum. Users can buy Bitcoin and Ethereum directly from Coinmama.
Since Coinmama started, it has changed over from accepting cash payments through Western Union to debit/credit cards by partnering with the international payment service, Simplex.
There is little information about which companies have provided financial backing in the past for Coinbase. However, Coinbase is listed as owned by NBV International s.r.o., a subsidiary of New Bit Ventures Ltd.
The company is based in Bratislava, Slovakia. Its address is:
Boženy Němcovej 8
Bratislava 811 04, Slovakia
The address of NBV International s.r.o is:
Rehov Paamei Aviv 28
4390500 Givat Hen, Israel
Coinmama can currently be used in 226 countries, except for countries under international sanctions. The service is also available in following U.S. states:
Coinmama has a daily and monthly spending limit:
Daily limit: 5,000 USD/EUR
Monthly limit: 20,000 USD/EUR
The calculation of a user’s daily limit begins at the end of their first trade per every 24 hours. A user’s monthly limit is calculated every 30 days. There is also a minimum purchase amount of $60 USD (or its equivalent in EUR)
Coinmama is known for its convenient service of providing cryptocurrency purchase services using credit/debit cards. The exchange allows users to purchase up to $150 worth of cryptocurrency using a credit card without having to do an ID validation. The business review website Trustpilot.com gives Coinmama 4 out of 5 stars with 17 reviews while reddit.com r/coinmama forum does not seem to have anything too major on it.
If considering using Coinmama, the best practice is to check Coinmama’s reputation on sites like:
Coinmama is known for being one of the most convenient ways to buy cryptocurrency using a debit/credit card. However, at least with Coinmama, that convenience comes with a cost. Coinmama has some of the highest transaction fees in the industry for buying cryptocurrency. Coinmama charges a 5.5% flat fee for every transaction. If a user decides they want to buy a cryptocurrency using a debit or credit card, Coinmama charges another 5% per transaction.
On top of the charges Coinmama charges, the user’s bank may also add on a cash advance fee if it considers a user’s purchase of a cryptocurrency a cash transaction. Currency exchange fees may also apply to any users who purchase Bitcoin or Ethereum with a currency that must be changed into USD or EUR.
Coinmama accepts Visa, MasterCard, and cash payments through Western Union using USD or EUR, or any currency that can be converted into USD or EUR.
One of the things that has put Coinmama on the map is it allowing users to purchase up to $150 of cryptocurrency using a credit/debit card without any ID verification. This allows people who want to make small purchases of Bitcoin or Ethereum easy and convenient. That being said, as stated on Coinmama’s website, “The more documentation you provide, the more currency you can buy.” Coinmama has three levels of verification. Each additional level of verification allows for a user to buy a higher amount of currency.
Users must submit a valid government issued ID, a selfie of themselves holding the ID, and a note with “Coinmama” and the day’s date written on it. Users can provide the following types of ID for Level 1 verification:
For level 2 validation, the user must submit:
Utility bills Coinmama accepts for validation include electric, cable, gas, water bill, property tax, bank statements. And credit card statements. Paper bills and internet bills are not accepted.
To pass Coinmama’s third level of verification, users must contact Coinmama’s support team to fill out an online form.
Coinmama operations in 217 countries and about half the US states. If a user does not see their country listed, in Coinmama’s list of places they operate, they can contact support to send a notification of when they do.
Coinmama does not publish their response times. However, based off of a bitcointalk forum post from Coinmama’s head of customer service, they try to respond to all customer support requests within 24 hours of receiving them.
Bittrex began operations in 2014. The exchange was founded and is led by Bill Shihara, and the Bittrex management team, Richie Lei, Rami Kawach, and Ryan Hentz. All of whom were security and operations engineers for the likes of Amazon, Blackberry, Microsoft, and Mercury Payment Systems.
Bittrex was started with security and reliability in mind. The platform leverages an elastic multi-stage wallet strategy to make sure that 80-90% of funds are offline and safe. Bittrex also uses two-factor authentication for all withdrawals and API usage. The Bittrex trading platform was designed with high frequency and volume trading in mind with fast transaction times. The exchange also offers a fairly large basket of 190 altcoin pairs with BTC, ETH, and USDT to invest in.
Bittrex CEO, Bill Shihara, recently announced the coming addition of USD to the exchange’s reserve currency choices which may be a foreshadowing to the delisting of USDT as a reserve currency for the exchange since the U.S. Commodity Futures Trading Commissions issued a subpoena to Bitfinex and Tether. He also announced an upcoming partnership with Upbit, a South Korean cryptocurrency exchange operated by South Korean wireless company Kakao Talk.
Bittrex is a real American success story. The company was built from scratch by 3 security and software engineers who decided to work full-time jobs while working part-time in the evening on Bittrex. They all finally were able to quit their jobs by 2017 to work on Bittrex full time. They Bittrex founders did not use any VC investment money to start their business or get it going.
In February 2018, Bittrex updated its Terms of Service to clarify its Locations Restrictions policy. Since the exchange is working to stay on the good side of US banking and financial regulators, they are making an effort to avoid doing business with any country or individual with US sanctions levied against them. Currently, the countries that Bittrex will restrict their services in are: North Korea, Syria, the Crimea region, Iran, and Cuba.
Also, the exchange may limit or outright ban use of its services in the following US states: Alaska, Arkansas, California, Connecticut, Florida, Hawaii, Idaho, Iowa, Kansas, Louisiana, Maryland, Michigan, Mississippi, North Carolina, North Dakota, Nebraska, New Hampshire, Nevada, Ohio, Oklahoma, Pennsylvania, South Dakota, Texas, Vermont, Virginia, Washington, Wyoming, and Puerto Rico.
As with other exchanges, there is a direct correlation between the amount of identity information a user provides and the withdrawal limits Bittrex provides for an account. Bittrex generally provides three different levels of verification.
Account limit: 0 BTC
Account limit: .4 BTC per day (or equivalent). This amount is calculated to be around $3000 USD per day and may fluctuate to match this amount.
Account limit — 100 BTC per day (or equivalent) when a user enables 2-factor verification on their account.
As a security precaution, Bittrex will not allow any withdrawals from an account for 24 hours if the account’s password has been changed. Also, the maximum amount that can be withdrawn from a Bittrex account without 2FA enabled on the account is 1 BTC per day.
Bittrex is known for offering a secure exchange platform that has scaled well with the company’s increased growth even though the exchange’s fees are a little high compared to their competition. However, the company, like many cryptocurrency exchanges, has neglected customer service. The company is known for suspending or closing accounts without much response to customer inquiries. These actions have been met with much ire from the cryptocurrency community, with a plethora of threads in some user forums about the problem.
Bittrex charges a .25% flat fee on profits of all trades. This is calculated by amount * purchase * .25. Any amount of a transaction that does not execute will not be charged.
Also, expect to be charged a currency transfer fee levied by the currency blockchain when doing any sort of transfer which Bittrex will pass onto the user. However, Bittrex does not itself charge any fee for deposits or withdrawals.
Currently, Bittrex is a cryptocurrency exchange only. Users can only deposit and withdrawal funds using their digital wallet or another cryptocurrency custodial account. One caveat to this is that users who have an enhanced account can make deposits of $100,000 USDT (Tether) using a wire transfer. The exchange does not accept the buying and selling of cryptocurrency using a credit/debit cards.
Bittrex uses financial services Identity verification service, Jumio. Depending on where a user is located determines the type of authentication required. The biggest issue with ID verification Bittrex has with users is when a user submits the same picture for their selfie that was used on their ID. This will cause a user’s verification to be denied.
The Bittrex support team states that they will respond to all support inquiries within 24 hours. However, the company has a reputation in the forumsphere for not responding to support inquiries in an urgent manner, especially when suspending or deactivating an account. One of the better ways to contact their support team and keep abreast of what the company is doing seems to be through the Bittrex Exchange Twitter feed. The best thing to do is to make sure to keep all the credentials used to set up your Bittrex account handy just in case they ask for them. Also, don’t trade or keep any more currency than you are willing to lose on the Bittrex exchange. Finally, store your currency in a cold wallet once finished executing your trades. Never store your currency with your exchange, if you don’t have to.
The Gemini Cryptocurrency exchange was started by the Winklevoss twins, Cameron and Tyler. Gemini is a licensed digital asset exchange and custodian. They provide exchange service company s to both individuals and institutions. The Gemini exchange is a New York trust regulated by the New York State Department of Financial Services (NYSDFS). Gemini adheres to US banking and financial regulations. The financial services company is registered as a fiduciary and subject to the capital reserve requirements, cybersecurity requirements, and banking compliance standards set forth by the NYSDFS and New York Banking Law.
Gemini prides itself as being a “bridge” between the old world of money and the new world of digital currency. The exchange trades in only 3 currency pairs: BTC/ETH, BTC/USD, and ETH/ETH.
The company was funded by part of the money the Winklevoss twins invested in Bitcoin after winning a lawsuit against Facebook CEO Mark Zuckerberg for allegedly stealing the twins' idea of starting the social media platform, Facebook.
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Gemini is available for use in 46 of the 48 US states (at this time Hawaii and Arizona are excluded). Also, Gemini is available in the following countries:
Users can trade in other fiat currencies other than the US dollar as long as it can be exchanged for US dollars. Also, when traveling abroad, users must download and install Authy for 2FA security procedures.
Also, since Gemini is regulated by the New York State Department of Financial Services (NYSDFS), the Winklevoss twins are trying to keep the investment of their nest egg secure. That means Gemini is working to stay on the good side of US banking and financial regulators, they are making an effort to avoid doing business with any country or individual with US sanctions levied against them. Check with the U.S. Treasury to make sure your location does not restrict your ability to trade on the Gemini Exchange.
Gemini has the following limits on ACH transactions:
For institutional investors, Gemini’s limits are as follows:
There are no withdraw or deposit limits on the following transactions for either individuals or institutions:
Cameron Winklevoss has stated, “ Our philosophy is to ask for permission, not forgiveness.” This philosophy has helped them create a very trustworthy exchange with the backing of the regulatory community. All USD funds are FDIC insured. It was also one of the first US exchanges to be authorized to trade both BTC and ETH. Even though Gemini does not have the best ratings on review sites like Coincompare.com, the exchange’s reddit forum doesn’t seem to have a lot of the typical complaints that their competitors inspire in their own disgruntled users.
Gemini uses a “dynamic a maker-taker fee schedule” to calculate user trading fees. In order to understand how this works, let’s discuss the definition of a maker and taker.
Makers are users you post a trade to a currency’s ledger that creates liquidity in the currency. This means the order is posted to the ledger and the trader must wait for another trade to be created in order for their trade order can be filled. Takers, on the other hand, are users you post orders to a currency’s ledger that take liquidity away from the currency. This means the order is posted to the currency’s ledger and is immediately filled. Liquidity-making orders bear more risk because the user must wait for the order to be filled. This is the reason liquidity making orders are generally cheaper in order to provide more incentive.
The next factor Gemini uses in determining fees is that trading volume a user has created in the past 30 days. The more volume a trader has created, the more discounted their fees become. Gemini’s fees start out at .25% for all continuous and auction trades:
A table provided by the Gemini Exchange Fee Trading Schedule
25 bps (0.25%)
25 bps (0.25%)
25 bps (0.25%)
23 bps (0.23%)
20 bps (0.20%)
20 bps (0.20%)
20 bps (0.20%)
15 bps (0.15%)
15 bps (0.15%)
15 bps (0.15%)
10 bps (0.10%)
10 bps (0.10%)
10 bps (0.10%)
0 bps (0.0%)
0 bps (0.0%)
Fee denominations are in USD for all USD trading pairs and in BTC for all BTC pairs. Also, Gemini does not round fees and account balances, even though they may be stated as rounded up or down as such.
Currently, users cannot fund their account through credit, debit, cash, or check. The only methods for funding or making payments through Gemini for trading are through bank wire or ACH transfer using USD, or through a digital wallet or custodial account with either Bitcoin or Ethereum.
Bank wire transfers made before 3 pm EST will clear and be available same day. ACH bank transfers take between 3 and 5 business days but may take longer depending on your bank and if there is a US bank holiday.
BTC payments will usually clear within 30 minutes (3 Bitcoin network checks). Ethereum payments usually clear within 3 minutes (12 Ethereum network checks).
For the initial sign up, new users will have to provide their full name, a valid email, and create a password. All new account holders are required to provide a driver’s license or passport. User not in the U.S. must also provide a proof of address like a utility bill (gas, electric, or water).
If interested in accessing your Gemini account while traveling outside the U.S., Gemini requires users to download and install the 2FA browser application, Authy. Verifications are only the tip of the iceberg as far as security measures that Gemini takes in order to provide safe and secure financial transactions it seems. They provide a rundown of their security procedures on their website.
Customer support is handled through the company website’s FAQ page and through email. Gemini’s customer service is known for having a better response time than what’s typical of the industry, 2 – 3 days on average, which may not be saying much.
Localbitcoins is a what is called an over-the-counter (OTC), a peer-to-peer trading platform that started in Finland in 2012 by Jeremias Kangas. Trades are done between individuals. Buyers and sellers determine the trading parameters (the currency pair, payment method, etc.). Because the trading platform is peer-to-peer, there are no centralized servers. Each member of the network is an individual node.
Localbitcoins mission is, “Connecting everybody to Internet economy.” Buyers and traders post advertisements of what they want to trade and people respond. Transactions are completed either in person or through banking transactions. Localbitcoins states that it tries to support any type of payment method its users want to incorporate into their transactions.
The exchange has had issues with being prosecuted or banned in different countries (like Germany, Belgium, Russia, and several US states) because it works to protect users’ privacy. However, the company says it is used in over 249 countries.
Localbitcoins Has no venture capitalist backing. The company was started by Jeremias Kangas and has also started other bitcoin ventures such as Easy Wallet.
VAT id: FI25251957
The company has been banned in certain countries but the Localbitcoins has provided instructions to how to get around technical hurdles put up by different governments by using VPNs and Tor. Despite bans and prosecutions for money laundering in countries like Russia, China, Belgium, and some US states, the peer-to-peer exchange seems to get plenty of business from those countries and from everywhere else around the world.
Localbitcoins lets sellers set the limits for all transactions. The exchange rates payment services that sellers can use in their transactions. Localbitcoins recommends that sellers set lower withdrawal limits on payment services Localbitcoins rates as being high risk. The exchange also encourages its sellers to impose first-time buyer limits to reduce the risk of being scammed. The reason being is that fraud scams mostly occur from new accounts on the exchange. Setting first-time buyer limits keep buyers with no transaction history or reputation from requesting high-volume trades, and from attracting fraudulent buyers in contacting sellers.
Also, Localbitcoins uses an escrow system to protect its users. If by chance a user takes off with funds before a transaction is complete, Localbitcoins can release the funds in escrow to the scammed party.
It seems in spite of the various scams that seem to have taken place on the exchange, the exchange makes a concerted effort to provide a secure and safe environment for individual traders to have a positive experience by offering the following:
The site also incorporates a number of features designed to help secure trading:
The impression Localbitcoins leaves is that they have done their due diligence to provide a legitimate, low cost, peer-to-peer trading platform for users all over the world, yet like many of the other exchanges in the space still suffer from being able to keep up with the increased demand from the recent spike in interest in cryptocurrencies and do not have the infrastructure in place to provide the support required to meet all their users needs.
Localbitcoins does not charge users for registering, buying, or selling Bitcoin. The way the exchange makes the majority of its money is through a 1% advertising fee it charges users when they create an ad on the exchange and complete a transaction with another user.
Localbitcoins also does not charge users for transferring funds to and from their wallets. However, users are automatically charged a Bitcoin Network Fee by the blockchain when a user sends or receives funds from another wallet. The fee is set by the blockchain and the amount of the charge is dependent on the amount of network usage at the time of the transaction. Localbitcoins will cancel a transaction if the transaction fees are greater than the amount being sent by the user.
If using Localbitcoins merchant invoice service, users will be charged .5% fee for every transaction which Localbitcoins deducts from each invoice amount. When paying the invoice with an external payment source, then a Bitcoin network deposit fee will also be deducted from the invoice amount.
Localbitcoins also charges a 200 EUR per hour consulting fee for researching and resolving any external issues with their service if a user requests it.
Localbitcoins will support any payment method that user's agreed upon in a transaction.
Users, and more specifically sellers, set the verification requirements for transactions on Localbitcoins. Some users may choose to comply with financial ID verification regulations for their locale’s jurisdiction, like for instance, AML and KYC laws in the United States in order to avoid any possible legal issues.
Localbitcoin, however, also provides mobile and paper-based 2FA verification for users and Login Guard to protect users from logins from unauthorized web browsers.
As of this writing, Localbitcoins states on their support page, that the current response times for their support team is 4 days. However, in the past year the Localbitcoins support team has posted the support times they try to adhere to on their general user forum. The support team tries to make a first contact within 30 – 40 minutes of the initial support ticket submission. However, depending on the time of day and the amount of tickets the team is working on, it can take up to 12 hours.
Coinsquare proudly states that it is a Canadian cryptocurrency and online forex exchange. The company is located in Toronto, Canada. The exchange highlights Canada’s political stability and light regulation environment. Coinsquare was started by Virgile Rostand and Cole Diamond in 2014 and is the second largest exchange in Canada with an annual trading volume of $5 billion (USD). Its one of only a few exchanges worldwide that uses the Canadian dollar as a fiat currency. Coinbase’s trading proprietary trading platform technology is the same that New York Stock Exchange uses, and has been stress tested for hacking and DDoS tested. Coinbase also puts 98% of all currency they keep on hand into cold storage to reduce the risk of theft.
Recently, Coinsquare adopted using credit/debit cards to their payment method options through a partnership with online payment processing company, Processing.com. They are also in the process of adding the cryptocurrency Ripple to their basket of currencies.
In September 2017, blockchain investment company Riot Blockchain invested a 10.5 million CAD back in December 2017 with a series A round of venture investors. In February 2018, Coinsquare’s CEO Cole Diamond stated that the company had raised a total of $47 million, an increase of the company’s original statement of $30 million through commitments from Canaccord and Cormark Securities. Also, Coinsquare is working to raise $120 million USD in an IPO. All the recent fundraising activity is part of the exchange’s plan to expand globally.
The Coinspace website states that their address is actually for their P.O. Box and that their company offices are nearby.
Coinsquare is only able to verify the accounts of Canadian citizens who are the age of majority in their resident province. The age of majority is 18 in the following Canadian provinces:
Alberta, Manitoba, Ontario, Prince Edward Island, Quebec, and Saskatchewan.
The age of majority is 19 in the following Canadian provinces:
British Columbia, New Brunswick, Newfoundland, Northwest Territories, Nova Scotia, Nunavut, Yukon
If you aren’t Canadian, you’re out of luck, eh.
Coinsquare requires a minimum initial deposit of $100 CAD to verify a new users bank account. Also, Coinspace enforces a minimum and maximum deposit and withdrawal limits depending on the payment method. They are as follows:
A recent post by Cole Diamond CEO of Coinsquare discussed the credibility problem that the cryptocurrency industry faces at this time. However, searching on coinspace’s reddit page may indicate how Cole’s concerns seem to shape how the company handles their customer support issues. Coinsquare’s customer support responded to the poster. Also, when looking through Coinsquare’s Twitter feed, notice their users don’t seem to leave a lot of negative comments on Coinsquare’s tweets. This is generally a sign that they are making efforts to take care of their customers.
Coinsquare has one of the largest exchanges in Canada and one of the better run exchanges in the industry. This type of quality comes with a robust fee structure and Coinsquare seems to charge its users for just about everything.
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Also, Coinsquare charges users for withdrawals of Canadian dollars:
Coinsquare also charges maker and taker fees for traders using their more advanced currency trading platform:
Makers are traders that add liquidity to the market with through transactions and takers are traders that remove liquidity from the market through a trade.
If using the traditional exchange platform for currency trading does not suit your fancy, Coinsquare provides a quick trade service as well for trading between cryptocurrencies and fiat currencies easily. Quick trade fees are simple and straightforward:
Digital currency transfers are also assessed a transaction fee on digital currency withdrawals similar to their fiat currency cousins. The fee will depend on the digital currency, and the volume of activity on the blockchain:
Coinsquare lists the following fiat currencies:
And, the following digital currencies:
Coinsquare accounts can be funded through the following means:
Coinsquare works to comply with AML and KYC laws. Coinsquare will first try to instantly verify new users through information they provide when filling out the online form for a new account. If Coinsquare’s third-party verifying service is unable to identify the new user, then they will request the following information through the exchange’s online document center.
Coinsquare does not publish its customer support response times. However, like many of the other exchanges in the cryptocurrency space, they seem to be having growing pains and difficulty providing timely and effective customer service.
Coinsquare provides support through their company’s knowledge base and users can send a support request if they are logged into their account. Company also has customer support through email: email@example.com. However, the website states that account specific inquiries should be sent through their support request page and not through email. Some users seem to have luck posting support requests on Coinspace’s Facebook page, and seem to get a more timely response.
Below are some common answers to some common questions about cryptocurrency exchanges and exchanging cryptocurrencies.
A Canadian exchange ought to:
Now there are some exchanges that will allow Canadian users to buy cryptocurrency with a credit card, like Coinbase and Coinmama with some relatively high exchange rates. That might work in a pinch, if a user is traveling or has to liquidate some coin in an emergency, but we’re assuming if someone is reading this, they want to have an exchange with access to full trading capabilities, a good variety of cryptocurrencies to trade in, and several options for funding their account. Also, there is something to be said for the exchange being located in your home country, especially of Canada. The country’s banking system is very stable and well regulated as compared to the U.S. It’s also nice to know if something happens to a user’s account, the user has the option to go to the exchange’s office. Not to mention, the company will be subject to Canada’s banking regulations.
There are four main cryptocurrency exchanges/brokerages doing business in Canada:
All four exchanges offer the Canadian dollar as a fiat currency, are subject to Canadian banking laws, have their offices in Canada, and offer a similar basket of cryptocurrencies, such as:
Coinsquare seems to offer the largest basket of fiat currencies though:
Canadian Bitcoins is strictly a broker though. They also do not offer exchange services, but they have live phone support with a real Canadian. CoinSquare and Qudriga CX are geared more toward investors who want to trade currencies. Though, Coinsquare seems to be the only one of the two that also offers brokerage, and over-the-counter trading services, and a French-language website. Qudriga CX recently had issues with being able to accept transactions from users using credit/debit cards because of the daily transaction limits banks were putting on cryptocurrency transactions, but they seem to not be the only Canadian crypto exchange having this issue.
Here is a list of honorable mentions. These are exchanges and brokerages that operate globally:
Let’s discuss our criteria that we are using to discern the answer what is the “best”. First here at tokenspace.com we believe in the inherent wisdom of the markets. So, finding a home-grown UK exchange with volume is important. This means the exchange is liquid, and it’s service are subject to the demands of the market. A UK exchange ought to:
There are several exchanges and brokerages that do business with UK customers. Exchanges such as GDAX and Coinsbank come to mine. Coinsbank, according to coinmarketcap.com, has the highest daily trading volume of BTC/GBP in the world as of this writing. GDAX has the second highest daily trading volume globally in BTC/GBP but also has higher trading volume overall compared to Coinsbank. Trading volume is an important consideration when thinking about an exchange because this impacts the risk involved with makers’ trades and the liquidity of the market. For our criteria, these two exchanges would probably be nice honorable mentions along with brokers like Coinmama and Coinbase, but we still want to know which native UK exchanges are best for UK cryptocurrency investors and users.
These are the following cryptocurrency exchanges and brokerages operated out of the UK:
All of these cryptocurrency exchanges and brokerages operate out of the UK and offer the British Pound as a fiat currency. Coinsfloor does not have the daily GBP volume that GDX or Coinsbank but offers the BTC/GBP and BCH/GBP trading pairs and is one of the largest cryptocurrency exchanges that uses the GBP as a fiat currency located in the UK.
Bittyliscious is a much smaller Uk-based exchange than Coinfloor but also offers the most trading pairs for GBP and cryptocurrencies, including: ETH/GBP, LTC/GBP, DGB/GBP, BCH/GBP, VTC/GBP, STRAT/GBP, BTC/EUR, SYS/GBP, and BLK/GBP. It offers its services to British, Belgian, Dutch, EU, and Australian users, and an option for transactions with global users. The exchange allows users to buy and sell BTC using EUR, AUD, GBP, and BTC as fiat currencies. It also provides a basket of 15 cryptocurrencies as well for users to buy and sell Bitcoin with.
BitBargain describes itself as a bitcoin market, and a solution to the issues that arise from OTC trading. They act as an escrow service between buyers and sellers. They alert users when there is an offer for a currency they want to buy and sell. BitBargain prides itself on having fast transactions and Bitbargain users can buy and sell BTC, LTE, BCH, and NMC. Bitbargain lists USD and GBP as their fiat currencies.
DSX has the largest of the UK-based exchanges by volume, and offers at the time of this writing offers the following GBP trading pairs: BTC/GBP. BTG/GBP, ETH/GBP, GBP/USD, LTC/GBP, and BCH/GBP. Another notable feature of DSX is their regulation and certification by the UK government’s Financial Conduct Authority (the UK government’s financial regulatory agency) and their partnership with the FCA-certified electronic payment system, ePayments.
There are several other cryptocurrency exchanges that British residences can use in the UK but are not based there, may not use GBP as a fiat currency, and may not be regulated by the UK government’s banking or financial regulations. Here is a list of honorable mentions:
The US dollar is still considered by many a global reserve currency and was the first fiat currency used to trade Bitcoin. Because of this fact, USD is listed as a fiat currency on most exchanges that list traditional fiat currencies. The negotiation on the price for Bitcoin was started on May 17, 2010, in the Bitcoin forum Bitcointalk.org, by a user named Laszlo Hanyecz, over the price of 2 pizzas after the first Bitcoins were mined. Laszlo exchanged 10,000 BTC for 2 pizzas, and it was calculated that the exchange was valued at $41, or $.0042 per BTC at the time. The price has gone up a little since then and there is a Bitcoin Pizza Index that now keeps track of the value of 10,000 BTC, the amount Laszlo paid for those pizzas. There are fortunately exchanges that will offer Bitcoin traders a better exchange rate than what Laszlo was able to negotiate at the time.
These exchanges are who we believe to be the best for buying Bitcoins with US dollars (USD):
These are not in any particular order. We suggest you check them out further to find the one that best suits your needs. Here are the reasons we believe these are the best exchanges for buying Bitcoin with USD.
Liquidity is one of the most important factors when considering any exchange. These 4 exchanges have been consistently ranking in the top 25 exchanges for 24-hour volume on CoinMarketCap.com. However, only two of them are ranking in the top 10, GDAX and Kraken, at the time of this writing. An exchange’s volume usually represents its liquidity but there is also the issue of what is really USD liquidity. As pointed out by blogger Bitfinex’ed, that exchange- volume tracking sites like CoinMarketCap.com do not accurately measure volume because many of the cryptocurrency exchanges that do not have USD listed, or frankly any traditional fiat currency listed, have no USD volume. Their volume is $0. The only cryptocurrency sites that can claim any USD volume are ones that have USD listed as a fiat currency and uses USD in a trading pair with a cryptocurrency.
There is also the issue of exchanges that have been recently suspected of inflating their trading volumes. Through the statistical analysis and research done recently by Sylvain Ribes, who recently found an inordinate amount of slippage in the price when selling $50K of cryptocurrency on several different exchanges. This led to the realization that there are several high-ranking exchanges on CoinMarketCap.com, that may not be accurately representing their true volume.
Well, why does that matter? The larger the volume of an exchange, the more liquid an exchange is, and generally speaking, the lower the fees will be because of the economy of scale. Also, it’s easier to get in and out of a position because there are more buyers and sellers to match orders as well as closer spreads between the currency pairs. This can reduce risk, and also create more price stability.
However, reduced price spreads can also cut both ways. If a trader is looking for and can pull it off, then a smaller price spread might reduce arbitrage opportunities. More risk equals more reward, but also more opportunities to lose the shirt off your back.
Working with exchanges that are regulated is good. That means sticking with doing business with exchanges that are located usually in countries with a healthy regulatory environment. Most of those countries are in Europe and North America. All the exchanges on our list are located in the US and Europe. That fact allows the exchanges on our list to avoid the pitfalls of traders working with exchanges that inflate their volume, do not use proper accounting practices, are not insured, do not take adequate or effective security measures, or enforce AML and KYC protections for their users.
As Cole Diamond, CEO of Coinsquare, pointed out recently, the cryptocurrency space has got a reputation problem. A lot of people think they are shady, and in a lot of cases, they are correct. At this point, probably the best way to ascertain an exchange's reputation is to follow them on Twitter and Reddit. See what people are saying about them. Most people will be able to find horror stories about customer service, long wait times, and accounts being shut down. But, it’s also important to see how the companies respond to these issues. The companies on our list generally are trying to serve their customers. Exchanges that take USD deposits are going to be the most reputable since they need to adhere to all the regulations of taking deposits. Additionally, the majority of the exchanges are FDIC insured on fiat balances. It’s important to note that they do not ensure any cryptocurrency that you have in your account.
When looking for an exchange that is trading USD/BTC, make sure they make it easy for their users to move their money in and out of the exchange. If trading using USD, that means using an exchange that lets their users transferring their funds to and from their bank accounts and cryptocurrency wallets. The reason for wanting to be able to move your money is simple. Exchanges at this point in time should never be considered secure, and once users are done with their trades, they should move their money out of the exchange immediately either to a bank account or to cold storage. It’s best to look for exchanges that have mobile apps for their customers, so they can track prices, move funds, and place trades on the go to increase the ability to check on their accounts and make moving funds more convenient. The fewer barriers between you and your money the more secure it will be.
The easiest way to buy bitcoin with US dollars is to use a Bitcoin broker like Coinmama or Coinbase. These brokers specialize in letting customers buy Bitcoins using credit or debit cards making the transactions fast and easy. Also, Coinmama has the highest buy limit for unverified users in the industry, $150. However, the convenience comes with a price, high transaction fees. Services like this usually charge between 5.5% to 6.5% per transaction or more.
Another way to buy Bitcoins quickly is to go to a brick and mortar broker or exchange and buy Bitcoins with US dollars. Paying with cash, credit/debit cards, or money order may all be options. However, some brick and mortar Bitcoin brokerages and exchanges can charge high fees.
Next, users can set up a trading account with a Bitcoin exchange, tie their bank account to the exchange, and fund the account with USD. If a user is in the US, or in a country that uses USD as a currency, then this can be a very affordable and fast way to buy bitcoin with USD. Also, users can buy Bitcoin on an exchange for usually a better price than what they can get through a broker if they shop around. Usually, ID verification requirements will be more stringent when trading on an exchange, especially when trading with fiat currencies like the U.S. dollar, and completing transactions using a bank account.
Finally, there are peer-to-peer exchanges like Localbitcoins.com where local buyers and sellers can trade USD for BTC directly with one another. The sellers set the terms of the sales, including such things as, the price, ID verification requirements, buy limits, and accepted payment methods. Traders can execute the trade through the trading platform or meet face-to-face to finalize the deal.
The most convenient way to buy BTC using a debit/credit card is through an online brokerage, like:
There are some things to keep in mind when buying BTC with a debit/credit card. First, if the user’s bank account is based in a currency that is not being used as a fiat currency by the brokerage or exchange where the user is completing the transaction, then the user will be charged a fee to exchange the brokerage’s fiat currency into their local currency.
Also, when using a debit/credit card, banks will often time charge a cash advance fee if they deem a trader’s transaction a cash-advance transaction. Not to mention, many brokerages and exchanges charge a high fee for the user’s who purchase BTC with debit/credit card, or for funding an account with debit/credit card. Part of the reason for this may be the convenience that comes with being able to do this, but most exchanges, and brokerages also must take several precautionary measures to protect against fraud and chargebacks by using third-party payment services.