How To Pick the Best Bitcoin Exchange
Compare each bitcoin exchange below. If you have trouble deciding which you like best, see this guide on how to find the best bitcoin exchange for you.
Exchanges List (17)
- Bitfinex – World’s largest and most advanced bitcoin trading platform. (Trading Platform)
- Bitmex – The next generation of bitcoin derivatives and most advanced bitcoin exchange. (Trading Platform)
- Bitquick – The premier service to get your coins in just 3 hours. (P2P)
- BuySomeBitcoins – Buy instantly with your credit/debit card. (P2P)
- CEX.IO – This is the top place online for the best price. (Broker)
- Changelly – Visa and MasterCard accepted here. (Broker)
- Coinbase – The most used online wallet and great place to buy with credit card or bank wire. (Broker)
- GDAX / Coinbase – The most trusted digital asset exchange. (Broker)
- Coinmama – Use the easy widget to purchase bitcoins by the dozens. (Broker)
- Kraken – Exchange bitcoin for US Dollar into your bank account. For $10,000+ use Kraken. (Trading Platform)
- Local Bitcoins – Buy and sell with paypal, credit cards, whatever you want. (P2P)
- OneXBTC – Buy with Paypal, no ID. (Broker)
- Paxful – Another peer-to-peer site website. (P2P)
- Poloniex – This bitcoin exchange has the largest selection of alt-coins and cryptocurrency. (Trading Platform)
- Spectrocoin – Instant exchange allows you to buy and sell btc within a second. (Broker)
- Whale Club – Where to exchange bitcoin for other cryptos, forex, metals, stocks and bonds. (Trading Platform)
- Xcoins – The quickest way to get bitcoin online. (P2P)
How To Find The Best Bitcoin Exchange For You
Do You Want To Buy, Sell, and/or Trade Bitcoin?
Trading bitcoin can seem like a scary and confusing process. Depending on where you look and who you talk to, you might hear stories about scammers and crooked sites. The exchange rates, fees and limits may seem bewildering, and you might feel nervous trusting your personal information to sites you’re unfamiliar with.
The reality, though, is that the bitcoin and cryptocurrency world has evolved quite a bit from the early days, and there are a variety of legitimate and established bitcoin exchanges, many specializing in serving the differing needs and desires of people looking to buy and sell bitcoin.
This guide will go through some of the things to look for and be aware of when buying, selling or trading bitcoin, and how to find the best bitcoin exchange for you.
The first thing to know is that there are two basic types of bitcoin exchanges: Broker exchanges and Peer to Peer (P2P) exchanges. In the end, both facilitate you paying fiat currency (USD, EUR, etc) for bitcoin or vice versa, but they differ fundamentally on who you’re making the exchange with.
How Broker Exchanges Work
If an exchange is a Broker exchange, the exchange itself sells bitcoins to the user for money at a rate set by the broker, and the exchange itself buys bitcoin from the user for money. In other words, the company or interest running the exchange is the only person the user ever transacts with directly.
The nice thing about Broker exchange is that if you trust the company running the exchange, you can feel completely safe in terms of your exposure to risk or to getting scammed.
How P2P Exchanges Work
A P2P exchange, on the other hand, is an exchange that connects users with other users, and the transaction is between those two independent parties. With P2P exchanges, the exchange usually operates as an escrow service, holding payment from one or both parties for a period of time to ensure that the transaction proceeds honestly and without problems.
The nice thing about a P2P exchange is that very often this is the best way to buy bitcoin if you want to maintain partial or close to total anonymity. If you buy or sell bitcoin on most Broker exchanges, chances are you’ll be required to provide your verified identity, usually involving the presentation of government issued photo ID.
The rules on many P2P exchanges are a little bit laxer, although in certain circumstances a P2P exchange may still wish to perform an identity verification.
Key Features Explained:
So now that you’ve got the basic concept down, how do you choose the best exchange for you? One thing to be aware of right from the beginning is that there’s no such thing as the perfect exchange. At best, there might be an exchange that’s perfect for you, depending on what exactly you’re looking to do and what your priorities are. However, there’s a decent chance that you’re going to end up having to weigh the pros and cons of some exchanges and pick the best fit.
Here’s an overview of some of the factors that you’ll want to consider when choosing an exchange:
One of the most crucial factors when it comes to bitcoin transactions is security. How do you know your bitcoin is safe, or that your fiat currency transactions are protected?
Reputable bitcoin exchanges have a variety of methods they use to make sure your transactions are secure, and that your bitcoin is safe when you’re storing it in one of their wallets.
One security feature almost all bitcoin exchanges will use to some extent is encryption. On a basic level, bitcoin is already protected by encryption by its very nature. When we think of a bitcoin wallet, it’s natural to want to extend the metaphor and think of a wallet as ‘holding’ the bitcoin. But what a bitcoin wallet actual is is a location that stores the digital credentials of your bitcoin holdings. Bitcoin uses public key cryptography, meaning there are two keys, one public and one private. A bitcoin wallet holds a collection of those keys.
Many bitcoin exchanges engage in further cryptographic protection to prevent malicious hackers from hacking their servers and accessing data that would allow them to plunder the bitcoin stored by the exchange. There have historically been instances of exchanges being hacked, but it’s exceedingly rare with the larger and more reputable exchanges.
Another security feature many bitcoin exchanges employ is 2FA, or 2 factor authentication. The concept of 2FA is fairly basic: In order to access an account or other valuable entity, it’s necessary to make two security checks rather than one. A popular form of 2FA uses a password entry as one factor, and then the user’s phone as the second factor. It’s possible to even use multiple factor authentication, but 2FA seems to be the standard in the bitcoin exchanges.
Another security technique many bitcoin exchanges use is the concept of cold storage. Cold storage is the practice of keeping a bitcoin wallet offline. A bitcoin wallet kept online is known as a hot wallet. Cold storage is generally preferred because storing your bitcoin constantly online means increasing your vulnerability to a variety of attacks. Most of the larger exchanges are storing bitcoin in cold storage.
To sum it up, bitcoin security is a major concern, and the best exchanges do everything in their power to keep their integrity.
Privacy is another significant factor when considering what bitcoin exchange is right for you. If anonymity is your number one concern, a P2P exchange may be your best option. Many P2P exchanges put you in touch with a buyer or seller, and then allow the two of you to come to terms on the exchange. Some P2P exchanges specifically pair users based on geography, so that users can meet up and trade bitcoin for cash.
On the other end of the spectrum, Broker exchanges are far more likely to require that you validate your identity to buy or sell bitcoin with them. This will generally involve you sending them a photograph of a piece of government issued ID like a passport, driver’s license or similar level of ID. Sometimes you’ll also have photograph yourself holding said ID.
The reputation of your bitcoin exchange matters, as there have been instances of bitcoin exchanges going under, getting hacked, or defrauding their clients. Spend some time doing a little bit of research on how long a bitcoin exchange has been operating and what reputable sources are saying about it.
And it’s important to stress ‘reputable’. You can find user forums online where individual people are complaining about an exchange, but that doesn’t mean it’s a scam. Pay attention to what reputable writers and sites in the cryptocurrency world are saying, and do research with multiple sources.
Many exchanges with excellent reputations exist out there.
Ease of Use
Some exchanges are easier to use than others, but most Broker exchanges tend to keep things pretty streamlined. The general process is that you’ll have to create an account, go through whatever verification steps the site requires, and then you can buy or sell bitcoin through fairly user-friendly interfaces.
The P2P sites can be slightly more complicated, but overall most reputable exchanges work hard to make the process as easy for the user as possible.
Price (Exchange Rate)
Bitcoin’s exchange rate with regard to USD or other fiat currency fluctuates according to a variety of factors. A bitcoin might be going for $4,500 one day, and $4,750 the next day, or vice versa.
But even beyond the fact that bitcoin’s price fluctuates over time, different exchanges have different rates at which they’re offering to sell bitcoin. Sometimes, the best bitcoin exchange rate can be had on P2P sites, where you take on more risk in dealing with unknown parties, but the flip side is that you’re able to get better prices.
Just as a general rule, you’re going to pay a premium for the safety and stability that some of the more established exchanges provide. In effect, you’re paying for the peace of mind in knowing your bitcoin transactions are safe.
Deposits (Payment Methods)
Depending on what method you’d like to use to buy bitcoin, there probably are a few exchanges that are better or worse for you. Some exchanges are restrictive, only accepting deposits by bank transfer, or verified debit/credit cards. Others are far more permissive, and will allow money transferred through online payment services such as Paypal.
It’s important to shop around and see which exchanges line up with your preferred methods of payment.
The same concept applies to withdrawals as did with Deposits. Different exchanges offer different withdrawal options, so picking the right exchange for you is important.
Nearly every exchange will charge some kind of fee for bitcoin transactions, usually taken as a percentage of the transaction. One exchange might charge you a 5% fee on the total of your transaction, while another might only charge 2%. Not only are fees variable between exchanges, but they also often times depend on what source you’re using for deposits or withdrawals.
A rule of thumb, similar to the one regarding price, is that fees will be higher on sites where you as the buyer/seller are assuming less risk. Riskier sites often offer tantalizingly low fees, so this is a risk/reward evaluation you’ll have to make for yourself.
Again, it’s critical to research different exchanges with the knowledge of how you plan to deposit or withdraw and find a site with acceptable fee structure.
Many exchanges place limits on how much bitcoin you can buy or sell in different time intervals. Often times, it will take the form of $100 of bitcoin per day, $1,000 per week, $10,000 per month (though those are made-up numbers and the true values vary greatly by site).
Sometimes, exchanges will have tiers of limits, where users can gain greater limits by providing more identity verifications.
Especially if you’re planning on making large transactions, be sure to choose an exchange whose limits won’t be a problem for you.
There’s a good deal of variance in terms of how quickly you’ll get your bitcoin after making payment from exchange to exchange. Some exchanges promise instantaneous transactions, while others can make you wait a week or more. If speed of transactions is important to you, look for exchanges who make a point of advertising instant transactions.
The two most common methods of customer service on exchanges are live chat with customer service reps or email based help desk style support. Customer service is a field in which there are wildly differing levels of responsiveness and user friendliness.
A number of exchanges have vibrant user communities, which can be excellent resources for new bitcoin traders. Generally congregating in forums either associated with the exchange itself of general bitcoin/cryptocurrency forums, these communities can give valuable advice on how to master the ins and outs of a particular exchange.
Many exchanges offer a bitcoin wallet, and you can store and even spend the bitcoin you buy. Other exchanges decline to offer that service, meaning that users will need to provide the address of their own wallet to use that exchange.
Many third-party bitcoin wallets unassociated with any exchange exist, so if you decide to use an exchange not providing a wallet, you’ll have to use one of them.
When looking for a wallet, whether it be one associated with an exchange or a third party, security is a big priority. Wallets offering cold storage are less vulnerable to attack, and are the risk-adverse choice.
The simplest form of bitcoin trading is exchanges of fiat currency for bitcoin or vice versa. But that’s only scratching the surface of the world of bitcoin trading.
For one thing, there’s a robust trading market centering on cryptocurrency to cryptocurrency trading. Then there are more complicated trading options, like margin trading, and even more complicated options.
Some exchanges are very much focused on the more complex forms of bitcoin trading, and offer sophisticated interfaces and APIs allowing for automation options, while other exchanges are focused on the simplest of bitcoin purchases and sales.
If you’re looking to immerse yourself in the world of bitcoin trading, the more robust trading exchanges are probably what you’re looking for. But if you’re looking to buy or sell bitcoin in exchange for fiat currency, chances are you’re better looking for a site without the advanced trading bells and whistles.
Bitcoin Exchange Reviews
The bitcoin exchange reviews you see on this site reflect my opinion of each exchange.
Bitcoin exchanges of all shapes and size exist out there, many of them extremely reputable and safe. Depending on how you wish to trade bitcoin, any of them might be a good or a poor fit. Using the principles outlined here, you should be equipped to do the research to find the best bitcoin exchange for you.