Finding the right Bitcoin trading platform is no easy task. There are a lot of variables to consider including verification times, fees, methods of payment, reliability, customer service and security.
Exchanges are rapidly evolving and changing their fee structures and security protocols, rendering it almost impossible to stay up to date. To compound the problem, the cryptocurrency industry is very new and so are all of the exchanges.
Even the very best exchanges that have been online since the beginning have been hacked, have suffered from glitches or have other issues. It is just the nature of the industry itself, which tends to be messy and unregulated with little in the way of established procedures or protocols.
Despite these difficulties, choosing a trading platform it is an important task that could save you up to 5-6% if you do some research and are prepared to make a little extra effort to avoid fees.
Bitcoin Trading Platforms – What to Look For
Finding the right Bitcoin trading platform depends on what you are looking for, and it is generally a tradeoff. The first thing you need to look at is cost.
If you are making a large purchase of Bitcoins then you can actually be charged between 4-10% for credit card purchases, depending on the particular exchange. And then there could be additional charges for withdrawals, so it is important to be clear about how much it costs before you make your purchase.
Some exchanges are not very clear about their pricing structure and tend to have many hidden charges, which could end up costing you 12% total. This is simply not a good investment strategy. The exchange will also need to support your payment method, whether it is credit card, ACH transfer or SEPA transfer.
Credit and debit card purchases are always more expensive than bank transfers. This is because card networks charge 2-3% for these purchases and the exchanges will also need to charge to make a profit.
The second thing to look out for is the exchange’s security measures. Most in the cryptocurrency sphere have heard of the Mt. Gox scandal, where 850,000 Bitcoins were either hacked or stolen. The majority of these Bitcoins have not been reclaimed.
At the time it was the largest and held to be the most secure Bitcoin exchange in the entire world. Security protocols have certainly come a long way since this happened but security is still of paramount importance.
Larger and older exchanges will generally have the most robust security. The majority of Bitcoins should be held in cold storage by the exchange so that even if the online site gets hacked the hackers will only be able to steal a limited amount.
But the exchange still has to be trustworthy, as you are still relying on a third party exchange to be honest about what they are doing.
These are the two main concerns: cost and security. These should be the two main criteria when considering a Bitcoin exchange, but there are others.
For those who are new to Bitcoin and cryptocurrency in general, then it’s probably best to start with a beginner-friendly exchange, with a nice user interface without any complicated graphs. The process should be smooth and intuitive and with obvious and large buttons to buy and sell Bitcoins.
As elementary as this is, it happens to be lacking in many Bitcoin exchanges, where they are geared towards high volume traders who like candle stick graphs and fancy trading features.
In terms of customer support and verification times, all Bitcoin exchanges are guilty of being equally bad, with the possible exception of Kucoin which has a surprisingly effective and quick customer service team available on its Telegraph Chat.
Coinbase is probably the best Bitcoin trading platform for a number of different reasons. It is the most secure and the cheapest exchange around, though this does depend on what your buying and selling preferences are.
On top of being the cheapest and most secure, it is additionally very intuitive, aesthetically pleasing and beginner friendly. Coinbase is based in the US and was created in 2011, at the beginning of the cryptocurrency adventure. It has an impressive track record.
Coinbase charges 3.99% for credit card Bitcoin purchases which is very low by exchange standards and charges 1.49% for ACH transfers as well as SEPA transfers.
Many believe that this 3.99% is too high, but this has nothing to do with Coinbase and everything to do with the 3% that it typically applied by banks for credit card purchases. Bank transfers take as little as 1-3 days generally, which is quite quick, while card purchases are instantaneous.
There is an easy way to pay nearly zero fees on Coinbase. All you have to do is deposit funds to your Coinbase wallet via bank transfer in Euros or USD.
You can transfer these funds to the Global Digital Assets Exchange (GDAX), the Coinbase exchange and then enjoy paying .25% for taker and 0% for maker orders.
Withdrawing will cost you in the region of .20 Euro or .25 USD to your bank account. When you go through the process to avoid all of the fees you lose some of the easy intuitive nature of Coinbase that makes it beginner friendly. GDAX is geared towards high-volume traders and not Bitcoin beginners.
Coinbase is also the most secure exchange in the world, according to many. It has never been hacked despite being one of the first cryptocurrency exchanges in the world.
It has served millions of customers and exchanged billions of dollars of cryptocurrency, and its userbase is growing rapidly.
Dollar deposits are FDIC insured and cryptocurrency deposits are insured by a third party. 90% of the cryptocurrency funds are kept in cold storage armed with guards and security protocols.
A team of Silicon Valley cyber security experts are maintaining the network while Coinbase is closely watched by regulatory authorities. Your funds are as safe in Coinbase as they are anywhere.
Security aside, Coinbase is currently suffering from a credit card glitch which caused its customers to be overcharged. This is not necessarily the fault of Coinbase, as banks tend to be clamping down on card purchases of cryptocurrency in the USA. But the question remains as to why only Coinbase was affected. At least Coinbase is refunding its customers, slowly but surely.
Coinbase is the best in a poor industry, and its customer service team is sadly lacking. The issue is that you could be waiting for weeks to get verified and to withdraw funds. If good customer service really matters then the only option available to you right now is Kucoin, a new exchange based in Hong Kong.
But all things considered it is the cheapest, most secure and best looking Bitcoin exchange available. It also supports the 3 major currencies (USD, EUR and GBP) and all the major payment methods.
Binance is a new type of exchange that is disrupting the industry and is becoming more and more popular. Binance was launched in 2017 in China and it owes its huge success largely because it created its own coin, called Binance coin.
This coin is a form of speculative investment in the exchange itself and can appreciate in value, and using the Binance coin (the “BNB”) treats users to a 50% discount on already cheap fees.
Binance charges .1% fees which can be reduced to .05% when you trade using their coin. When using their coin, it has the lowest fees in the industry.
Binance offers a large variety of cryptocurrency trading pairs, including coins such as IOTA and Bitcoin Gold, which are difficult to find on other exchanges.
The main selling points of Binance are that the fees are ultra low and that the BNB acts as a form of investment. If you really looking to make money then Binance could be the way to go, as it could have a lot of upside potential as it eats up market share from the larger exchanges.
Unfortunately, Binance fails somewhat in the security sphere. Information about fund security is not available on the website, which is not a good sign.
And it is not what anybody could call an old or established company, being formed less than a year ago, though the management team does seem quite accomplished. You must first buy a cryptocurrency to deposit on the exchange and then start trading.
Binance is geared towards cryptocurrency traders as opposed to beginners, and the interface is definitely not intuitive. If you want to make money fast then Binance is one of the best there is (aside from Kucoin, explained below).
If you value security and a nice user interface then look elsewhere, perhaps at some of the larger and more established exchanges. The cryptocurrency industry is volatile and insecure enough without choosing a dubious exchange that makes no promises about fund safety.
Local Bitcoins was started in Finland in order to facilitate over-the-counter transactions of Bitcoin. Local Bitcoins offers something different to other large exchanges.
There are practically no customer support issues, because Local Bitcoins works very effectively and does not run into any of the typical issues due to the way that it operates.
Verification is quick and easy, unlike pretty much every other platform. The user interface is also quite intuitive and is suitable for beginners, being easy to navigate. It is extremely easy to use with no charts or graphs.
It is not like other exchanges where the prices are set. Instead, sellers place ads on the platform and outline the conditions of the trade. Buyers then choose their sellers.
Local Bitcoins is all about choice as it has the most payment methods and a large variety of buyers and sellers. Local Bitcoins is not a trading exchange but rather a peer-to-peer exchange. It is between the buyer and the seller.
Local Bitcoins uses an escrow system that makes trades completely safe. Once you purchase from a trusted seller on the platform your funds are not going anywhere, and you are not going to get scammed.
You can review the seller to see how many completed trades he or she has and how many people trust him or her. There are over 50 different payment methods (try finding that on trading exchanges) and no limits on transactions.
Local Bitcoins has it all. The main downside is that fees can be a little expensive, as Local Bitcoins charges 1% on all trades which is passed on to the buyer by the seller. But you can find deals, and the best dealers will often charge as little as 1% premium on top.
The range of cryptocurrencies is limited to Bitcoin, and this is possibly the biggest drawback. But if you are looking at buying Bitcoins exclusively then Local Bitcoins is possibly the best option. Just remember to use Two Factor Authentication and not to store too many Bitcoins on the platform if selling.
Kucoin is similar in many ways to Binance and its business model is practically the same. It has its own coin called the Kucoin Share (KCS) and is a Chinese exchange that started in September 2017. Within 3 months it had over 200,000 users, and it now has over 500,000 users.
Like Binance its popularity has exploded and the price of the KCS has shot up. Owners of KCS are paid dividends in the form of over 70 different alternative cryptocurrencies which could be a great speculative investment.
Kucoin is very beginner friendly and it’s easy to set up and get verified, unlike with many of the other US-based exchanges. Kucoin lists ICO tokens before other large exchanges.
Kucoin and Binance are much faster and more innovative than their larger counterparts such as Kraken, Bitstamp and Bitfinix. Kucoin is also pretty much the only cryptocurrency exchange that has an efficient customer service team via Telegram Chat.
Kucoin offers incredibly low fees on all its orders: 0.1% for both maker and taker trades. The KCS can give up to a 30% discount though some users are reporting that this is difficult to do and it is not working properly.
Kucoin could be a spectacular investment right now. Its daily volume is at around $250 million while Binance is at $6 billion, and they are very similar services.
Binance has also blocked new users until it has the capacity to take them on, and this could bode quite well for KCS. However, lower fees can often come with an added risk of lower security.
Like Binance, from a security perspective Kucoin is simply not secure, and it is a straight risk vs. reward decision.
Another way it’s similar to Binance is that you will have to purchase your Bitcoin elsewhere and deposit them on Kucoin. You cannot buy them directly from the platform as it does not accept fiat currency.
Bitstamp is based in Luxembourg and is one of the largest Bitcoin exchanges by volume. It facilitates instant buy-sell orders for USD to Bitcoin pairs with deposits and withdrawals available in many different currencies.
This exchange offers trading using limit orders where a predetermined price can be set for buy and sell orders. Bitstamp has earned a strong reputation in the Bitcoin world and is very safe. The minimum fee rate on Bitstamp is .5%, but this rises as the volume increases.
The minimum withdrawal fee for any international withdrawal is $15. Bitstamp offers a wide variety of payment methods. The exchange charges 5% for credit card purchases and SEPA withdrawals are subject to a 0.90 Euro charge.
Bitstamp has above average support in the cryptocurrency industry and have an excellent user interface, though it is not the place for beginners. One of the advantages of Bitstamp is that its customer service team is a little better and the platform is better maintained in general than its big competitor, Coinbase.
However, the fees are a little steeper and the interface a little less appealing, so it is always a tradeoff.
Bitcoin Platform Summary
There are currently a large number of ways to invest in Bitcoin, and other exchanges include Litebit.eu, CEX.io, Coinmama, Changelly, Shapeshift, Changelly, Bitfinix and many more. Every exchange will have its advantages and disadvantages.
Remember that for ultimate security you will want to store your Bitcoins on your own computer instead of on an exchange. The difference can be 0% to 10% depending on what way you choose to buy your Bitcoins.
If you want to buy Bitcoins, the cheapest way is to simply transfer funds to Coinbase via bank transfer and then transfer these funds to the GDAX exchange, where you can pay next to nothing.
However, you will have to get used to the challenging GDAX interface and could potentially be waiting weeks for an inefficient verification procedure. What this means is that you will not be able to withdraw your funds until verification.
Alternatively, you can purchase from ShapeShift or Changelly and get your Bitcoins instantly instead of in 6 weeks times. The 6-10% fee might just be worth it.