The cryptocurrencies stock exchange is one of the integral parts of the entire cryptocurrency ecosystem. What are they and how do they differ from other platforms of this type, where different assets can be traded? And above all – how to use them safely?
What is the cryptocurrencies exchange?
Cryptocurrencies are – depending on their definition and actual use – an asset or currencies, i.e. means of payment. The cryptocurrencies market is naturally needed for trading and exchanging both tokens and cryptocurrencies. In the world of brokers and traditional investments you can naturally buy shares on the stock exchanges. In exchange offices you can, in turn, buy currencies (usually fiduciary). On the market of digital currencies, by far the biggest turnover and volume of exchange takes place on the crypto exchanges. It is on these Internet platforms that you can exchange your “paper” currencies (Polish zlotys, dollars, euro, etc.) for crypto currencies such as Bitcoin, Ethereum or e.g. Litecoin. The crypto exchange also enables you to trade in crypto, e.g. BTC on LTC, ETH on BTC, etc., depending on the number of pairs offered by a given exchange. Therefore, cryptocurrencies exchanges serve as a kind of “third party”, which enables easy and convenient exchange in the blockchain technology space. What is obvious for an older participant of this market, they have only a digital dimension. Today, they do not exist in physical form. If someone would like to buy cryptocurrencies in such a way, he or she has to use the offer of stationary exchange offices or bitomats. Another alternative to cryptocurrencies exchanges is also the online bitcoin cantor.
What is the role of crypto exchange in the market?
The stock exchanges are extremely important for every investor of digital currencies. Their basic role is to enable all market participants to buy and sell cryptocurrencies. A characteristic feature at this level is the fact that they allow you to view both buy and sell offers. Thus, both the buyer and the seller can observe how many offers there are before their order. If the investor is interested in time, he can easily overbid other offers, of course paying a higher price than the competition, or they sell cheaper than other traders offer.
Bringing the role of the stock exchange crypts only to the position of an intermediary in trading would be a shallowing of the subject and their importance for the market as a whole. Today, thanks to the mutual competition between entities, such platforms offer a wider and wider range of trading services, but also access to new tokens / crypts, as well as the recently popular IEO – a collection very similar to the standard ICO, which takes place on the exchange platform. Some of the exchanges even decide to use educational platforms through which they train their users. Thanks to such solutions, stock exchanges are convenient not only for advanced investors, but also help to enter the blockchain world for people who have only recently become interested in the subject.
The number of platforms that emit their own stablecoins is also growing – cryptocurrencies with a fixed exchange rate related to, for example, the value of the US dollar. Some of the exchanges also release their own tokens, which allow traders to reduce buy/sell commissions on the exchange.
Centralised or decentralised?
In the above description, the concept of a so-called third party emerged. Although in most cases blockchain projects are based on the idea of decentralisation, cryptourrencies exchanges are still largely centralised today. Although this, too, is slowly changing and with the development of the market, more and more decentralised exchanges are being established. Some centralised exchanges are also deciding to create their decentralised counterparts, the so-called DEX’s (decentralised exchange). Today, decentralised exchanges are only a form of experiment, not a standard.
The main distinguishing feature between decentralised and centralised exchanges is that the aforementioned ‘third party’ does not in theory exist. Why only in theory? Well, transactions take place thanks to the pairing of relevant orders directly on blockchain. This means that the funds are permanently stored on our wallet, to which we have a private key, which significantly increases security. In practice, we still have to pay a commission on purchase/sale to the stock exchange operator. Decentralised exchanges are still a new and newly developed concept and their operation is not always easy. Therefore, it is recommended to use them by users more familiar with the cryptocurrency market.
It is worth mentioning that the crypto exchange (regardless of whether it is decentralized or centralized) remains one of the most secure forms of cryptocurrency acquisition to this day. However, one should remember….
That the stock market is not a wallet!
The crowning principle of using the stock exchanges is to keep funds on them (especially in larger quantities), only for as long as necessary. Keep this in mind and store our digital assets on your own wallets, preferably those to which your private key is solely in your possession. Unfortunately, many new investors on the market still forget about it and choose convenience instead of greater security of their funds.
Cryptocurrency exchange – which platform to choose?
You should always carefully check the costs of using a given platform (commission amount), the volume of transactions it registers (the higher it is, the easier it will be for us to trade on it) and, above all, security issues. In the latter, we mean any elements that may help us to protect our funds. It is worth checking if, for example, the stock exchange offers, for example, multi-level authentication (2FA). An important issue for traders will also be the offers of the stock exchange in terms of the number of cryptocurrencies pairs.
Hacking still happens on the stock exchange market. Therefore, it is also worth checking which entity is behind a given platform and what is its type (whether it is a company, if so, where it is registered). In addition, it is worthwhile to find out whether the people managing the stock exchange are open and searchable on social media, such as LinkedIn.
For beginner traders, we can recommend two crypto exchanges, which are easy to use and safe at the same time. These exchanges are BitBay and CoinDeal.
Other interesting cryptocurrencies exchanges
Another alternative to the above mentioned exchanges is Binance, which provides many exchange pairs. There is a very good chance that you will find tokens or crypto that are not yet available on BitBay or CoinDeal on Binance. You can read more about the platform here, and the instruction on how to register on the Binance exchange step by step, here.
Advanced traders who want to trade with leverage may be interested in the BitMEX cryptocurrency exchange. This platform allows us to leverage our trades up to 100:1. Due to the high investment risk, we recommend this platform only to experienced traders.
The crypto exchange – let’s summarize:
As you can see, cryptocurrencies stock exchanges play a much more important role today than we might think. Their importance will probably grow with the growing popularity of Bitcoin and similar assets and digital currencies. There is a growing interest in this market among brokers and institutional clients. Some entities even supplement their offer with Contracts for Difference (CFDs) based on virtual coins, which gives participants from outside the crypto market the opportunity to speculate on such pairs as BTC/LTC, BTC/USD and many others.
However, the key is to choose a cryptocurrency exchange that meets our expectations and guarantees maximum security. It is worth remembering the second one in particular. Nobody is able to take care of your digital currencies as well as you!