With so many different options available, it can be hard to pick the right cryptocurrency exchange for buying and selling cryptocurrencies like Bitcoin and Ethereum.
Today, we’ll review Poloniex, also referred to as “Polo”, a Delaware-based exchange that is currently the #16 cryptocurrency exchange by 24-hour trading volume (April 12, 2018).
Launched in January 2014 by CEO Tristan D’Agosta, Poloniex is a cryptocurrency-only exchange that offers numerous trading pairs of Bitcoin (BTC), Ethereum (ETH), Monero (XMR) and Tether (USDT).
Many Altcoin Trading Pairs
As mentioned previously, Poloniex has a ton of trading pairs of BTC, ETH, XMR and USDT. These popular cryptocurrencies can be traded for numerous altcoins (coins that aren’t Bitcoin) including the likes of Ripple (XRP), Dogecoin (DOGE), Bitcoin Cash (BCH), Dash (DASH), Ethereum Classic (ETC), Zcash (ZEC), Lisk (LSK), OmiseGO (OMG) and much more.
High Altcoin Trading Volume
A lot of the altcoins listed on Poloniex have high trading volumes, which means there is higher liquidity, making it easier to buy and sell altcoins on Poloniex compared to on other exchanges.
Not Beginner Friendly
Poloniex is not as user-friendly as other exchanges, such as Coinbase. The interface is geared more towards experienced traders who know their way around an order book, stop-limit orders and so on.
While Poloniex is not necessarily user-friendly for users who are new to trading digital assets, it does offer more advanced features like margin trading for users who want them. Through Poloniex, users can trade on margin and leverage loans from other users to acquire larger positions in cryptocurrencies.
Offering Loans to Other Users
Conversely, if users want to lend out money instead of borrowing it themselves for margin trading, they can lend funds to other users and earn interest.
Lenders should keep in mind that Poloniex takes a 15% fee of all interest earned when they place their loan offers onto Poloniex.
Detailed Trading Views
Like the margin trading and loan features already mentioned, detailed trading views are another feature that Poloniex offers that might be useful for experienced traders.
Poloniex users can see all the details with things like multiple-option candlesticks, multiple time frames, Bollinger bands and Fibonacci levels. These options are available for all of Poloniex’s trading pairs.
Different Order Types
Another feature that Poloniex offers for more experienced users is different order types.
While exchanges like Coinbase just offer buy and sell options that use prices set by Coinbase, on Poloniex users can buy and sell cryptocurrencies while setting their own price (though whether or not the order will be fulfilled depends on Poloniex’s market). Also, users can place more advanced orders, such as stop and limit orders.
Relatively Low Fees
Similar to exchanges such as GDAX, Poloniex’s fees are relatively low compared to exchanges like Coinbase, where users might be paying more in fees for convenience.
Poloniex employs a maker-taker fee structure. Makers are those whose order is the first on the order book for any given trade while takers are those who “take” the maker’s order during the trade.
Since makers are the ones who “make” the liquidity on Poloniex, they are offered discounts on fees (relative to takers).
However, maker-taker fee structures usually benefit both makers and takers because since makers are incentivized to outbid each other to benefit from lower fees on trades, market spreads are usually tighter, which benefits takers.
As of March 20, 2016, Poloniex’s fee structure is based on volume tiers and can be found here.
Available in Many Countries
Poloniex is currently available in over 100 countries, which could be good for users who can’t get onto bigger exchanges because of geographical restrictions. Furthermore, according to parent company Circle, there are plans to expand Poloniex’s operations even further.
Since Poloniex doesn’t touch fiat currency, there is much less regulation and red tape that the exchange has to deal with, which affects other exchanges looking to operate in multiple jurisdictions.
Low Withdrawal Limits
One of Poloniex’s biggest downsides is that the withdrawal limits are low for investors and traders who want to move around a lot of money.
Users cannot withdraw more than $2,000 a day unless they go through multiple steps of verification, which could affect users who are trying to take some of their profits off the table quickly.
No Withdrawal Fees
While withdrawal limits are low, a plus side to Poloniex withdrawals is that withdrawals don’t incur any fees. However, users should know that cryptocurrencies like Bitcoin might have network fees that have to be paid by the user for using Bitcoin (these fees are unrelated to Poloniex). Deposits are free of charge as well.
No Fiat Currency Support
Of course, as a cryptocurrency-only exchange, Poloniex doesn’t offer support for fiat currencies like the United States Dollar, Euro, Japanese Yen and other similar currencies.
This could prove inconvenient for users that want to buy and sell using cryptocurrencies since if they want to buy or sell using government-issued currencies, they will have to do so elsewhere.
Poor Customer Support
Although this is an issue with nearly all cryptocurrency exchanges as of late due to overall increased interest in crypto and support teams being overwhelmed, Poloniex is one of the worst offenders amongst cryptocurrency exchanges when it comes to poor customer service.
The unofficial Poloniex subreddit is littered with complaints about deposits, withdrawals, verifications and other issues that have gone unanswered for months.
Clearly, this level of support is not acceptable for such a large exchange that handles large amounts of users’ money.
However, via a recent press release, Poloniex, which was recently acquired by Goldman Sachs-backed payments company Circle, said that from late February 2018 to early April 2018, the combined Poloniex-Circle team was able to reduce their support backlog from 159,000 tickets to 76,000 tickets as well as adding 6 agents to their support team.
While users still seem to complain about Poloniex’s customer support, it is possible that the support team could turn the situation around in the future.
As of now, users can contact Poloniex support via Poloniex’s support center or try to resolve their issue by referencing the numerous articles in the support center.
No Mobile App
Unlike exchanges such as Binance and Coinbase, Poloniex does not have a mobile app for users that want to use Poloniex on the go. However, users can still access Poloniex from their phones by using the mobile version of the site.
Like other cryptocurrency exchanges, such as Mt. Gox, Bitfinex and Coincheck, Poloniex has suffered from security breaches. It was hacked in March 2014, which led to a 12.3% loss of all Bitcoin Poloniex held at the time. When the hack happened, Poloniex’s service was frozen for a day.
A day after, service was resumed, but Poloniex CEO D’Agosta decided that the best way to deal with the lost Bitcoin was to take an even amount from all user balances to make up for the 12.3% of Bitcoin lost.
While users were unhappy with the way that Poloniex chose to deal with the hack, the exchange did end up paying back all of its users.
Also, Poloniex does implement security features, such as two-factor authentication (2FA) for login and withdrawals as well as email confirmation for withdrawals for users that remain concerned about using Poloniex after it got hacked.
Moreover, the Poloniex hack happened right after the exchange was founded, and the exchange has yet to suffer any security breaches since.
Nevertheless, having a hack on your record is not good for any exchange that expects customers to trust it with their funds, even if Poloniex claims to take additional security measures like storing most customer deposits in cold (offline) storage, monitoring exchange security 24/7, and not operating on fractional reserves.
Ties to Traditional Finance
Though this isn’t a problem for all, Poloniex does have indirect ties to traditional finance, namely Goldman Sachs through Poloniex’s parent company, Circle, which is largely funded by Goldman Sachs.
A lot of cryptocurrency users and enthusiasts are distrustful of traditional financial establishments such as banks, and view cryptocurrency as an alternative to the traditional financial system.
Identity Verification Requirements
Along with ties to traditional financial entities, which often know a lot about user activity, Poloniex as of December 2017 has required all of its users to verify their identity.
Many cryptocurrency users are adamant supporters of privacy. When the identity verification announcement was made, the verification only applied to new Poloniex users.
However, within the same month Poloniex came out and said that all users must verify their identities or risk having their accounts closed.
- No service for people from the US states of New Hampshire, New York and Washington.
- Any commentary on social media about Poloniex is the property of Poloniex (it’s not clear how this is enforceable).
- Stop orders might not execute (this is very worrisome for traders who want to minimize losses using stop-loss or stop-limit orders).
- Users cannot take Poloniex to court for any issues that arise while using Poloniex’s services.
- Related to the above, users cannot participate in any class-wide arbitration or class action lawsuits against Poloniex.
- Poloniex has the right to deactivate user accounts if users are suspected of engaging in illegal activity (users have 90 days to transfer their tokens but given that users have had their withdrawals held up for months, this measure is worrisome).
Founded in 2014, Poloniex is one of the older cryptocurrency exchanges still around. While its ranking in the list of top exchanges (by trading volume) has fallen in recent times, it still remains a great place to trade altcoins, especially for experienced traders.