It can be tough trying to figure out where to get your hands on some valuable cryptocurrencies like Bitcoin and Ethereum. With all of the options out there (some being scams or otherwise dangerous), it’s important to do your research when picking a suitable cryptocurrency exchange for buying and selling cryptocurrency.
One of the most popular cryptocurrency exchanges out there is Coinbase, which combined with sister exchange GDAX (aimed more at power users like experienced traders), is the 7th largest cryptocurrency exchange by 24-hour trading volume (as of March 19, 2018).
Coinbase is known for its ease of use, with users able to buy Bitcoin, Ethereum, Litecoin, and Bitcoin Cash (the cryptocurrencies that Coinbase currently offers) instantly with their credit cards. Combined with the fact that Coinbase has tons of trading activity (and subsequently high liquidity), Coinbase is one of the easiest and quickest places to buy and sell popular cryptocurrencies.
However, nothing is without its flaws. Coinbase has some issues such as only offering support for only 32 countries (as of March 19, 2018), higher fees, user activity monitoring, account freezes and closures and poor customer service. This has led to more and more people looking for alternative places to buy, sell and store cryptocurrencies.
GDAX is not necessarily an “alternative” to Coinbase in the sense that Coinbase owns GDAX. However, users that find Coinbase’s fees to be high can use GDAX instead, as traders on GDAX at most pay a trading fee of 0.25%.
The lower fees on GDAX are likely due to the fact that the platform is aimed towards traders with a bit of experience, whereas Coinbase makes it very easy to buy and sell cryptocurrency with its newbie-friendly interface.
Like Coinbase, Gemini is another United States-based exchange. While Coinbase is based out of San Francisco, Gemini is based out of New York. Founded in 2015, Gemini is run by the Winklevoss twins (of Facebook fame) and also has operations in Canada, the United Kingdom, Puerto Rico, Singapore, Hong Kong and South Korea.
Given the twins’ background, Gemini is a very professionally run operation and has ties to the traditional financial world, with the Chicago Board Options Exchange (CBOE) partnering with Gemini for its Bitcoin futures financial products, as the futures are based on Gemini’s Bitcoin auction price.
On Gemini, users can buy and sell Bitcoin and Ethereum with and for United States Dollars (USD).
While Coinbase charges for wire transfers (a fast way to fund your account on most cryptocurrency exchanges), Gemini does not.
Institutional accounts are also available for organizations that want to trade large amounts of crypto.
Kraken is another San Francisco-based cryptocurrency exchange. It has been around since 2011, making it slightly older than Coinbase (operational since 2012). It would probably surprise most to learn that Kraken is based out of the United States since it is very popular in Europe.
Kraken is notable for its large selection of cryptocurrencies, which isn’t limited to just heavy hitters like Bitcoin, Ethereum and Litecoin (Coinbase offers the three cryptocurrencies just mentioned as well as Bitcoin Cash, or BCH).
In addition to Bitcoin, Ethereum, and Litecoin, Kraken offers trading pairs for cryptocurrencies like Monero (XMR), Ripple (XRP), Dash (DASH), Ethereum Classic (ETC), Stellar Lumens (XLM), Zcash (ZEC), Augur (REP), Melon (MLN), Iconomi (ICN), Dogecoin (XDG), Tether (USDT), EOS (EOS) and Gnosis (GNO).
The great thing about Kraken is that not only does it offer a large choice of cryptocurrencies, you can also buy and sell many of these “altcoins” (usually used to refer to any cryptocurrencies that aren’t Bitcoin) for fiat currencies like USD, British Pound (GBP), Euro (EUR), Japanese Yen (JPY) and Canadian Dollar (CAD).
On other exchanges that offer less popular altcoins, you can usually only buy and sell them using other cryptocurrencies such as Bitcoin, Ethereum and Litecoin.
However, unlike Coinbase, Kraken doesn’t support buying cryptocurrency with credit and debit cards. Moreover, verification for Kraken accounts can take some time.
Lastly, Kraken has recently seen a degradation in its services, with users complaining about poor customer service and performance problems such as Distributed Denial of Service (DDoS) attacks affecting website availability.
The first non-American exchange on this list, CEX, is based out of London and was founded in 2013. On CEX, you can buy and sell Bitcoin, Ethereum, Bitcoin Cash, Bitcoin Gold (BTG), Dash, Ripple, Stellar Lumens and Zcash using fiat currencies like USD, EUR, GBP and Russian Ruble (RUB).
While Coinbase is not operational in the majority of the world’s countries, CEX’s coverage is much more extensive, and allows withdrawals to accounts in countries as far away as Bangladesh, India and Nepal.
Moreover, like Coinbase, CEX offers the purchase of cryptocurrencies with credit or debit cards. However, CEX’s selection is much more extensive than that of Coinbase, which currently only allows for the purchase of Bitcoin, Ethereum, Litecoin and Bitcoin Cash using a credit or debit card.
Also, while users often complain about Coinbase’s customer service, CEX offers customer support around the clock.
Bitfinex is one of the world’s largest cryptocurrency exchanges by 24-hour trading volume (#4 as of March 19, 2018).
Its high trading volume is great for experienced traders since high trading volume means a more even spread or difference between bid (buy) and ask (sell) prices of cryptocurrencies.
However, its size has made it a target in the past. In April 2016, Bitfinex was hacked and 120,000 Bitcoin was stolen (valued at $72 million at the time).
Although clients were eventually compensated, this security breach as well as Bitfinex being cut off by its bank, Wells Fargo, has led to a loss of trust in the exchange. Bitfinex also does not accept US customers.
In spite of all these problems, Bitfinex is still a go-to for many cryptocurrency users, as evidenced by its high trading volume. This is thanks to features like multiple order types, a customizable interface and more, all of which are especially useful for advanced traders.
Changelly is based in Prague, Czech Republic and allows users to convert cryptocurrencies within seconds as well as buy Bitcoin with a credit card (Visa or Mastercard). Fees are reasonable at 0.5% per transaction.
While Coinbase is easy to use, Changelly might be even easier, with users entering the amount of cryptocurrency they have and receiving an amount in a different cryptocurrency with a click of a button.
However, credit card fees for buying Bitcoin on credit are higher than those of Coinbase (a 5-10% Changelly fee and a 5% credit card processor fee vs. 3.99% for Coinbase).
Also, credit card purchases are not instantaneous as they are with Coinbase and while the Changelly site says, “exchange cryptocurrency at the best rate”, this isn’t always the case and you can sometimes pay a premium for convenience.
Nevertheless, Changelly is highly recommended for users who want to easily and quickly convert from one cryptocurrency to another.
Binance has quickly become the biggest exchange in the world for buying and selling altcoins. In fact, it’s currently the largest cryptocurrency exchange in the world by 24-hour trading volume. That’s extremely impressive considering that Binance was only launched in 2017.
The selection of cryptocurrencies on Binance is incredibly vast, which is great for users who want to buy and sell more than just Bitcoin, Ethereum, Litecoin and Bitcoin Cash (the cryptocurrencies offered by Coinbase).
However, one cannot use fiat currencies like USD to buy cryptocurrency on Binance and you need to have Bitcoin, Ethereum, Binance Coin (BNB) or Tether to make trades.
Nevertheless, Binance is a great platform to get hold of some altcoins and has tons of great features. Binance has both basic and advanced view options for inexperienced and experienced traders alike.
Moreover, it even has its own token (BNB), which if used, gives users discounts on trading fees, which are already pretty low.
BNB can also be used to invest in initial coin offerings (ICOs) offered through Binance’s Launchpad program. The projects in the ICOs are then automatically listed on Binance, which allows users to buy and sell these new coins from these projects instantaneously.
Moreover, unlike Coinbase which is limited in the jurisdictions that it services, Binance is available worldwide.
Local Bitcoins is a bit different from the Coinbase alternatives mentioned thus far. Based out of Finland, Local Bitcoins has been around since 2012 and is designed for users who would rather buy and sell Bitcoin peer-to-peer, online or off.
Local Bitcoins merely acts as a middleman between local buyers and sellers and provides an escrow service (funds are released when trades are confirmed as completed). There are no fees for using Local Bitcoins other than Bitcoin network transaction fees, which are based on how congested the Bitcoin network is at the time of transaction.
There are tons of payment options available like paying with cryptocurrency, cashier’s check, cash by mail, cash deposit, Chase Quickpay, credit card, Amazon Gift Card, Apple Store Gift Card, Ebay Gift Card, Starbucks Gift Card, Steam Gift Card, Google Wallet, wire transfer, Moneygram, OKPay, Paxum, Payeer, Payoneer, Paypal, Square Cash, Transferwise, Venmo, WeChat, Western Union, Xoom, cold, hard cash and more!
Unlike lots of cryptocurrency exchanges such as Coinbase, which require lots of identity verification, Local Bitcoins is better for those who place a premium on privacy and anonymity, as users only have to register with their email (though verifying your identity can make others on the platform trust you more and make them more likely to deal with you).
However, users can often pay a premium for this privacy, as prices on Local Bitcoins tend to be a bit higher. Also, there are a decent number of scammers on the platform, but dealing with only reputable buyers and sellers largely mitigates this problem (everyone has a reputation score).
Mycelium Local Trader
Mycelium Local Trader is part of the popular Mycelium Bitcoin wallet application and is similar to Local Bitcoins in that it connects buyers and sellers of Bitcoin who are close to each other using GPS.
Like Local Bitcoins, no ID is required and users can buy and sell Bitcoin without an exchange, such as Coinbase, tracking all of their activity and potentially reporting it to tax authorities like the IRS (Coinbase did this because of a court order they received).
Another alternative to Coinbase for buying Bitcoin is using Bitcoin ATMs. Like Local Bitcoins and Mycelium Local Trader, using a Bitcoin ATM is more anonymous than going through an online cryptocurrency exchange such as Coinbase, as users can use physical cash to buy Bitcoin and not have all of their activity logged and tracked.
One simply deposits fiat currency, such as USD, GBP, or EUR into a Bitcoin ATM and receives a slip of paper (paper wallet) with a Bitcoin wallet address (to receive funds) and private keys (to access the wallet elsewhere, such as through an online wallet service like Exodus). Alternatively, users can scan a Bitcoin address that they already have to have their funds sent there.
Since one doesn’t necessarily need a credit or debit card to use a Bitcoin ATM, this option along with Local Bitcoins and Mycelium Local Trader are perfect for those who would rather transact outside of the traditional financial system and/or those who don’t have access to banking services (characteristic of many people in developing countries).
Nevertheless, while Bitcoin ATMs might be more convenient and anonymous than going through Coinbase for some users, Bitcoin ATMs are not yet widely available in lots of countries. Fees are also usually on the higher side and some ATMs even require some form of ID, which ruins the anonymity factor.
In the 6 years since its inception, Coinbase has quickly become one of the world’s biggest cryptocurrency exchanges and has developed a reputation for being convenient and easy to use.
However, no exchange is perfect. For those looking for alternatives because of reasons like unavailability in their country, high fees, user tracking, account closures, substandard customer support and more, there are tons of great alternatives including, but not limited to GDAX, Gemini, Kraken, CEX, Bitfinex, Changelly, Binance, Local Bitcoins, Mycelium Local Trader and Bitcoin ATMs.