If you pay attention to the rapid paradigm of the development of digital currencies, they can be called with confidence the currency of the future generation. Despite the fact that cryptographic virtual money has appeared quite recently, it has already proved itself as a constantly progressing element of the world economy. Decentralization of the financial market with a minimum of intermediaries and fast transactions attracts more and more people.
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For those who are engaged in mining, trading, or simply want to earn money through working with cryptocurrencies – you need to understand the principles of the functioning of cryptocurrency exchanges. After all, in conditions of mass decentralization, the exchange is the very place where the overwhelming number of coins are concentrated, which are in circulation.
In this article, let's talk about how to choose a stock exchange for the implementation and exchange of cryptocurrencies, what criteria should be prioritized, what to look for; we will understand the principles and algorithms of working with exchanges and, of course, we will learn how to correctly use these financial services.
Cryptocurrency exchange – what is it?
The specifics of the functioning of the crypto-exchange platforms: the exchange of certain types of cryptocurrencies for others, or the exchange of virtual coins for fiat ones, with the more familiar words – buying and selling coins for ordinary (fiat) money, or for other types of digital money.
Exchanges work on a "pair" principle, that is, there are pairs of currencies that can be exchanged (sold, bought), they are separately listed on the Internet platform of any stock exchange. For example, if the user wants to change Bitcoin to Ethereum, then it is necessary to look at the website if there is such a pair for exchange – BTC-ETH. If present – the exchange can be made, otherwise – you need to look for another exchange. With fiat money, things are the same - in order to mark the currency for fiat funds, you need to find a suitable pair in the list. For example, a pair of Bitcoin-Dollar, or Bitcoin-Euro, Ethereum-Ruble, etc.
Earn such exchanges on the commission, and therefore it will be present in any case. Sometimes the commission is levied only for the exchange operations, but it happens that the percentage is withdrawn even when money is credited to the exchange wallet. The average indices of commissions are about 0,2-1,5%, but sometimes (especially if the exchange is made for fiat money) can reach even 8%.
Features of exchanges that should be taken into account
There are more than a dozen exchanges. They are all different and have individual characteristics.
Features that should be considered:
- The level of commission fees for the realized operations and enrollments.
They are collected every time a customer buys or sells a cryptocurrency. On all exchanges, they are different, although they fluctuate in approximately the same framework. In order to work with the crypto-exchange was the most profitable – pay attention to whether the commission is too large.
- Reputation and popularity of the stock exchange.
This is one of the most important items that can guarantee not only success with the exchange, but also the safety of use. It is not worth investing in an unfamiliar exchange – it could be a trick of swindlers who, after transferring funds, can steal a stock exchange wallet. Before you start working with the exchange, be sure to read the reviews of other users on the forums.
- Tools, statistics, analytics.
The presence of convenient additional tools can greatly simplify the work and help correctly calculate the moves for trading, or the more profitable sale of coins.
- Requirements for users (verification).
Compare your own capabilities with the requirements of the exchange. Some such platforms have very strict rules. For example, the Kraken Exchange, where a newcomer will not be so easy. Beginners are better to pay attention to exchanges of the type of Bittrex – here you can buy or sell currency to even non-verified customers.
- Acceptable payment options.
Not all exchanges support many payment systems. Pay attention to the options offered by the exchange so that you do not find yourself in an unpleasant situation. This is due to the fact that some platforms are operating, both with bank payment systems, and with financial resources through the cryptocurrency; and some are limited to only one option.
- Cryptocurrencies that can be sold-bought.
It is recommended to pay attention to whether the necessary trading pairs are present on the exchange, especially if you are going to work with the exchange of some one, a specific cryptocurrency.
- Indicator of total liquidity of the trading platform.
This means a constant level of activity on the stock exchange. The higher the liquidity indicator, the higher the probability of making a purchase or sale faster.
- Openness of the exchange platform.
It so happened that some exchanges crypto currency simply do not allow customers from certain specific countries.
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The algorithm of work on the stock exchange – how to become a participant of crypto-exchange platform?
The algorithm for making financial exchanges on the exchange is quite simple. It can be considered in only a few mandatory steps.
The first step is registration on the stock exchange. As a rule, registration will not be very different from the usual registration on the website or some other service. The user simply indicates his personal data in order for the system to identify his identity and create a User Wallet. There will be stored all enrolled, as well as exchanged money, coins.
The second step is the transfer of funds. It is necessary in any case. If you plan to credit your account with a cryptocurrency, then most of the time it happens absolutely free of charge, but commission fees can be charged for crediting the fiat money. About what level of the commission and what means are accepted – it is informed on the exchanges Information on how to correctly enter funds, as a rule, is in the tips to users.
The third step is the establishment of a order for a financial transaction. This is a kind of application for purchase-sale-exchange. The client has the opportunity to independently leave an application on what cryptocurrency, for what price and in what volume he would like to sell (buy, exchange). After completing the order, other users who are registered on the exchange will be able to see the ad and respond to it for the conclusion of the transaction.
Editor: Yuliya Soroka