Cryptocurrency exchange

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Crypto Exchange

What is cryptocurrency exchange? Cryptocurrency exchange involves the usage coins (different types) to get cash or funds. In other view. It is sometimes the trading process or website where an individual can buy, sell or exchange different cryptocurrency for other digital currency or traditional currency like the US dollar or Europe. For professional traders that wish to have access to fancy trading tools, it is significant to use an exchange medium which definitely require opening an account and identity verification.

There are two types of crypto exchanges that offer various ways of asset exchanges;

  • Through a Decentralized Crypto Exchange (Pre-Programmed Software)

Digital currency exchanges are similar to traditional exchanges such as the Nasdaq in which you have buyers and sellers except there’s no brokerage intermediary and it’s completely decentralized. Decentralized exchanges allow buyers and sellers to directly trade cryptocurrencies with one another without any third party intermediaries to ensure all trades are processed correctly. Predominantly, these exchanges would operate solely with the exchange of just cryptocurrency.

  • Through an Intermediary (Cryptocurrency Company) – Fiat Exchange

However, there are some cryptocurrency exchanges that act as an intermediary between buyer and seller and collect fees in order to profit from these exchanges. These types of exchanges would operate as a fiat exchange. In which physical currency can be traded for the cryptocurrency. Both exchanges have their advantages and disadvantages which we will highlight later in this article

Different types of exchange exist and exchange process exist in different forms which are:

  1. Traditional” Cryptocurrency Exchange: These are the exchanges that are like the traditional stock exchanges where buyers and sellers trade based on the current market price of cryptocurrencies (with the exchange playing the middle-man). These type of trading platforms generally charge a fee for each transaction. Some of these types of exchanges deal only in cryptocurrency, others allow users to trade fiat currencies like the U.S. dollar for cryptocurrencies like Bitcoin. Coinbase’s GDAX (AKA Coinbase Pro) is an example of this type of exchange, as is Kraken. Of exchanges, there are those run by third parties (they have a middle man who can do support and correct some problems) and Decentralized Exchanges or DEXs that mimic traditional exchanges like IDEX (trading is based on smart contracts and not facilitated via a centralized third party’s software for the most part). In general centralized exchanges will require a lot of info, but often allow fiat trading, and DEX exchanges won’t allow fiat trading, but require less information.ading process
  2. Cryptocurrency Brokers: These are website-based exchanges that are like the currency exchange at an airport. They allow customers to buy and sell cryptocurrencies at a price set by the broker (generally at the market price plus a small premium). Here the exchange is between the buyer or seller and the broker, not between a buyer and seller. Coinbase is an example of this type of exchange. Shapeshift provides a similar service as well (it lets you swap on type of token for another). This is the simplest solution for new users. You’ll generally pay slightly higher prices than you do on the exchanges due to the ease of use and the work the broker puts in.

Types of exchanges

  1. Trading platforms – they are websites that connects buyers and sellers and take a charge from each transaction.

2.Direct trading – these platform allowed direct person to person trading where individuals from different countries can exchange currency. Direct trading exchanges don’t have a fixed market price, but each seller have their own exchange rate.

4.Brokers – they are websites that anyone can visit to buy crypto currencies at a price given by the brokers. Crypto currency brokers are in line to foreign exchange dealers.

What to look out for before joining an exchange.        

It is essential to do a LITTLE homework before you start trading. Here are some things you should check before making your first trade:

  • Reputations: the better way to find out about an exchange is to search through reviews from individual users and well known industry websites. One can ask any question you may have on forum like bitcoin talk or reddit.
  • Fees: most exchanges must have few related information on their website before joining, make sure you understand deposit, transaction, and withdrawal fees. Fees differs substantially depending on the exchange used.
  • Payment methods-different payment methods exists on cryptocurrency exchange  such as credit and debit cards,wire transfer,paypal.if exchanges has limited payment option,then it would not be easy to use.remeber purchase of cryptocurrency with a credit card will need identity verification and also with a premium price because there will be higher risk of fraud and higher transaction and processing fees
  • How to Buy and Sell on a Crypto Exchange

As we mentioned earlier, all of the transactions occur over a software designed to handle digital currency trading.

The way a crypto currency exchange work, for individuals looking to sell crypto coins, is that they design an order. These orders specify the quantity and price at which the buyer would like to sell the coin at. All of these orders are then placed in a large ledger called an “order book”. On the other hand, you have the buyer. When this individual seeks to purchase crypto coin they will search through the order book for a price and quantity satisfactory to them. If they cannot find one then they create there own order. When they’ve submitted there terms then the exchange tries to match their order conditions with the order conditions of the buyer and then the exchange is made.

  • The problem most exchanges face is the time lag needed to complete the exchange. Sometimes it varies from a couple of minutes to several days to complete. There are two ways of speeding up this process. Using an intermediary or getting the software to match the buyer and seller physically as opposed to by there terms. It’s always preferred to use an intermediary in the case of disputes breaking out. At least the third party can act as an arbitrator.
  • Advantages and Disadvantages to Using Crypto currency Exchange

ADVANTAGES of Crypto currency Exchange

  • No concentration of power. They are completely run by people.
  • Low or no fees
  • No central point of authority with decentralized exchanges means no government interference
  • Decentralized exchanges have more privacy

DISADVANTAGES of Cryptocurrency Exchange

  • Longer trade times
  • Lower liquidity (depending on the exchange)
  • What a Cryptocurrency Exchange is and How Does it Work
  • There are two types of crypto exchanges that offer various ways of asset exchanges;

Through a Decentralized Crypto Exchange (Pre-Programmed Software)

Digital currency exchanges are similar to traditional exchanges such as the Nasdaq in which you have buyers and sellers except there’s no brokerage intermediary and it’s completely decentralized. Decentralised exchanges allow buyers and sellers to directly trade cryptocurrencies with one another without any third party intermediaries to ensure all trades are processed correctly. Predominantly, these exchanges would operate solely with the exchange of just cryptocurrency.

  • Through an Intermediary (Cryptocurrency Company) – Fiat Exchange
  • However, there are some cryptocurrency exchanges that act as an intermediary between buyer and seller and collect fees in order to profit from these exchanges. These types of exchanges would operate as a fiat exchange. In which physical currency can be traded for the cryptocurrency. Both exchanges have their advantages and disadvantages which we will highlight later in this article.

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