Currency is truly turning digital in the cryptocurrency revolution. These new forms of money are easily traded online, and there are some great platforms available for doing just that. Here are some of the top platforms where you can buy Bitcoin, Ripple, and other digital currencies and trade them with anyone in the world.
Centralized Cryptocurrency Exchanges
The most well-known exchange platforms are centralized exchanges. These are companies that buy and sell cryptocurrency and also allow their users to trade with each other. The platform takes a cut of each trade and other fees to earn a profit.
The reason these exchanges are so popular is that they are easy to use. They are great for beginners and allow you to buy Bitcoin with the payment types that you are used to. You can whip out your card or bank details and be set up to buy cryptocurrency in a matter of days. They also off a similar user experience to traditional trading platforms, with recoverable accounts and user-friendly apps.
One example is CEX.IO, an exchange with a lot of experience facilitating the trade of all kinds of cryptocurrencies. Users sign up, verify their identity, and can start trading on the platform easily. Many different cryptocurrencies are available right out of the box, and you can even cash-in your cryptocurrency to your bank account when you’re done trading crypto. Funds you have in your wallet are secured and insured by the exchange. If you misplace your login credentials, it’s possible to recover your account.
Some other examples include Coinbase and Binance. These are popular exchange platforms for digital currency with similar features to CEX.IO
There are some downsides to this kind of exchange. First, you aren’t really in control of your funds. When you load your cryptocurrency onto your exchange account, you are essentially handing control of your money over to the exchange. You are trusting them to look after it, and protect it from hacks and theft.
There have been countless cryptocurrency thefts from centralized Bitcoin exchanges. Sometimes the exchange will cover the loss to keep the trust of customers, other times they aren’t able to. It’s up to you to pick an exchange with a great reputation to look after your funds.
There’s also thorough identity verification checks on most of the centralized exchanges. You can be sure that your name, ID cards, and bank details are all on record for your account and are linked to all of your cryptocurrency trades. This is a big sticking point if you want to go about your trading business with any kind of anonymity.
Another downside is the high fees you can pay at many of these exchanges. Rates for buying with a credit card can be significant.
Decentralized Cryptocurrency Exchanges
Decentralized exchanges take a whole different approach to currency trading. They don’t want to really be the middleman at all. Instead, decentralized exchanges look to hand the power over to the users. They build technological trading platforms that allow users to trade cryptocurrency with one another automatically, and often for free.
One interesting example of this type of platform is Waves DEX. It’s a decentralized platform that allows users to exchange all kinds of digital currencies peer-to-peer, with no middleman. The platform is blockchain-powered and uses the Waves cryptocurrency to power its transactions.
Bisq is another example of a decentralized trading platform. Bisq also allows users to trade between digital tokens and government-issued fiat currencies. All without any registration. It’s built as a peer-to-peer network that uses Tor. This means that it’s very resilient to attacks or control from government regulators.
Uniswap is another example that offers automated trading of digital tokens on the Ethereum network. Like most decentralized exchanges, the platform’s commitment is to free trade, rather than profits.
Decentralized exchanges offer better identity protection and have very low costs compared to their centralized counterparts. However, here are some harsh downsides to using these exchanges.
The first thing that most people come across is user experience. Without the big revenues from transaction commissions and fees, most of the decentralized exchanges don’t have much money to invest in refining a fantastic experience for their customers. The result is slow, clunky exchanges that get the job done (most of the time), but are difficult to use. They are improving rapidly, but this is still a big problem, especially for beginner users.
Another is liquidity and ease of buying cryptocurrency with traditional payment options. Most decentralized exchanges don’t allow you to trade fiat currencies. The ones that do are somewhat restricted. You’ll have a very hard time buying Bitcoin easily and safely on a decentralized exchange with traditional payment options and government-issued fiat currencies.
Another thing to note is that you have to take much more ownership of your money when you use this kind of exchange. Often, you’ve got to pick the person that you’re trading with. There’s sometimes a risk that the person won’t be trustworthy. You are also responsible for your cryptocurrency private keys at all times.
Other Types of Cryptocurrency Exchanges
There are other types of peer-to-peer exchanges that don’t operate on a blockchain. LocalBitcoins is more of an online marketplace for buying and selling Bitcoin with other locals. If you want to buy Bitcoin, you can simply search for a seller that meets your requirements for payment and connect with them to execute the trade.
The interesting thing about this type of exchange is that you can use cash. As with the decentralized exchanges, it’s often possible to trade without any formal identity verification, so you can trade anonymously.
Whichever platform you decide to go with to trade your digital tokens, remember to always proceed with caution. Countless people have lost significant sums of money on all types of exchanges described here. Make sure the platform you are using has a solid reputation for safety, and you’re aware of all of the risks before you start trading tokens.