Last updated on November 11th, 2017 at 11:53 am
After deciding to acquire Bitcoin and getting a secure Bitcoin wallet, the next step is to choose a suitable Bitcoin exchange. A Bitcoin exchange is an online trading platform, which brings together, those who want to buy or sell Bitcoins. The buyers are matched to sellers of the digital currency, although some very large exchanges have reserves in order not to delay Bitcoin buyers.
There are different Bitcoin exchanges, each with its own rates, requirements for registration, working hours and security. Nonetheless, because many exchanges are prone to cyber theft, the security of the Bitcoin exchange is what Bitcoin buyers or sellers should look out for the most. Usually, Bitcoin exchanges use a particular or a set of particular Bitcoin wallets, from which buyers get their Bitcoins and to which sellers send their Bitcoins. The addresses of these wallets are displayed on the exchange, and all transactions carried out with Bitcoins have a transaction hash code, which is publicly displayed on the Blockchain. Since transactions can be traced and the addresses involved in the transaction obtained, Bitcoin transactions are not anonymous, and for this reason, exchanges require a lot of personal information from anyone who wishes to register. Also, there are some fraudulent exchanges out there, so beware!
Bitstamp, for instance, requires the full name, date of birth, country of residence, phone number and address upon registration. Some Bitcoin exchanges also give a time limit to pay and charge fees, while others make a profit from altering their rates. Not all exchange use the same rate. Therefore the buyers or sellers of Bitcoin should compare rates, as rates could vary by up to or over $20. About 80-90% of all Bitcoin trading today, is carried out in China; therefore, the rates used there should be a standard for other Bitcoin exchanges.
Bitstamp, a Bitcoin exchange developed by the two youngsters, Nejc Kodriĉ and Damian Merlak, is very efficient and admirable, because of the manner of their management over the exchange. It even does an exchange in other currencies except for Dollars. In 2014, exchange giants MT.Gox, in Tokyo, Japan, lost a total of $350 million in Bitcoin, owing to cyber theft and the exchange collapsed. The aftermath of this tragedy was the depreciation of the value of the digital currency, and afterward, exchanges learned from the errors of MT.Gox, developing more secure and safe mechanisms for Bitcoin trading.
Exchange giants, Coinbase, is said to be the foremost Bitcoin exchange currently. It can be used for spending, accepting and even storing of Bitcoins. It was previously restricted to the United States alone but now provides an exchange to around 18 countries including the United Kingdom, Canada, Singapore and most of Europe. Generally speaking, it is the largest Bitcoin broker available. Other well-known exchanges include Bitfinex, AvaTrade, and Kraken. Some transactions are completed in exchanges within seconds, while others may take days, because due to security concerns. In fact, some exchanges stop operations for a while, at times even days, when paranoid about security.
Generally, just like bitcoin wallets, Bitcoin exchanges are improving. Take heed, although some exchanges are insured and if they are hacked, regain their money, many others are not, and the possibility of losing all your Bitcoins is very real. So next time you want to exchange money for Bitcoins, be sure to use a good exchange.