Discover the Secrets of Exchange Crypto
The meaning of exchange crypto refers to a place where these transactions take place in exchange for fiat currencies or other cryptocurrencies. In these online exchanges, the value of cryptocurrencies are based on supply and demand.
These platforms (websites, usually mobile apps) allow users to buy and/or sell cryptocurrency by exchanging it for other digital currencies or using traditional fiat assets. Some exchanges accept deposits via credit card, bank account, or wire transfer, while others only trade cryptocurrencies. Some offer withdrawals from their wallets, some don’t, and there are multiple currencies, fees, and apps.
There are also more sophisticated exchanges that allow users to trade cryptocurrency derivatives or decentralized exchanges (DEXs) that allow user-to-user trading without intermediaries.
Its purpose or objective is simple: to allow users or traders to participate in a market where they can earn money due to price changes that occur in it. This is all because the above assets are driven by the free market value associated with each asset.
Thanks to the existence of exchanges, it is possible to facilitate the economic and financial life of cryptocurrencies. It is now possible to easily exchange fiat currencies for cryptocurrencies and vice versa from anywhere in the world. All this with relatively low commissions compared to other traditional trading methods.
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A Bit of History About Exchange Crypto
Since Bitcoin’s appearance in January 2009, cryptocurrencies have rapidly changed the world. On October 11, 2009, Martti Malmi converted Bitcoin to fiat currency for the first time. This action led to the creation of the first Bitcoin exchange known as New Liberty Standard.
Bitcoin Market was developed just over a year later, in March 2010, from a suggestion by the user dwdollar on the Bitcointalk forum.
User dw dollar introduced his Bitcoin Market project on January 15, 2010 trying to create a marketplace where Bitcoin is considered a commodity. People could exchange bitcoins for dollars and speculate on their value. In theory, this would set a real-time exchange rate so everyone would know how much a bitcoin is worth against the dollar.
This paved the way for other similar projects. In July of the same year, Mt.Gox was born. The exchange will soon become the largest exchange crypto project in the world.
However, in mid-2011, it was hacked and 2,000 bitcoins were stolen. Later, in April 2012, Martti Malmi created Eurobtc.com, another Bitcoin exchange that allowed BTC to be bought and sold through SEPA transactions.
But in 2014, Mt. Gox received another attack on a more violent scale that forever stained the history of the exchange crypto project. At that time, 850,000 BTC will be stolen, a total of $460,000,000. This fact will gradually lead to the bankruptcy of Mt.Gox.
Despite these problems, the number of exchange crypto is growing and developing in terms of quality, security, and service. All these opportunities were born with a clear idea: to provide quality opportunities to cryptocurrency traders around the world.
Exchange Crypto: Maker and Taker
We will look at two basic concepts in exchange crypto: Maker and Taker.
Maker: It is the person who creates the offer. They are usually very interested in the platform and the platform tries to lure them with a cheaper commission. They drive the market and, like traditional markets, bring liquidity to the market.
Taker: In this case, we are looking for people who accept exchange crypto offers. So there are two effects, on one hand, they reduce liquidity, but on the other hand, they increase the trading volume, which is what the platforms are interested in. They usually pay a higher commission than the maker.
Types of Exchange Crypto
Exchanges can be divided into five broad categories, each with different characteristics, capabilities, and goals. However, they all have one thing in common, they are all platforms designed to make it easy for users to participate in exchange crypto.
For this they have technical analysis tools, a large number of indicators and even offer fundamental analysis services. All this to provide the best tools for traders to do their job and make the best decisions at any time in the market.
In this sense, we can mention the following types of exchange:
Traditional
Such exchanges include platforms that users can access to buy and sell tokens based on market prices. They are usually highly regulated platforms that comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) standards.
This means that they are not private platforms, as users must reveal their identity to participate. Examples of these platforms could be Binance, Kraken, Coinbase or Bitfinex.
Traditional exchanges typically charge a fee for their services and set certain capital limits for participation on their platforms. For example, Coinbase charges 0-0.25% for pending/unconfirmed transactions. In addition, the fees for deposits or transfers on the platform depend on the methods used for such operations.
There are no fees for the use of cryptocurrencies. But if it is a bank transfer or another payment method, it is from $0 to $25. These values can change between exchanges, so it’s best to read the fees for each platform. These commissions are used to keep the platform running and generate income.
Another point in favor of this exchange crypto platform is the minimum amount required to operate within the platform. The minimum amount for Coinbase is 0.001 BTC, 0.01 BCH, 0.01 ETH or 0.1 LTC.
Therefore, the minimum trade amount on the platform using Litecoin as an option would be around $7. These operating limitations exist to prevent you from operating in very small amounts. In this way, many small operations that do not bring real financial benefit to all parties are avoided.
Cryptocurrency Brokers
Cryptocurrency brokers are a place that allows users to quickly trade cryptocurrencies with others as they see fit. They focus more on offering exchanges that give users access to a specific cryptocurrency.
Therefore, they are designed in a very simple way so that they are easy to use for most beginners. Examples of such services include Shapeshift, Changelly, and Bit2Me.
OTC Platforms (Over the Counter)
OTC trading desks are another way we measure cryptocurrency trading. These platforms are very similar to traditional OTC trading platforms. This means that they allow peer-to-peer transactions between buyers and sellers.
This guarantees direct negotiations between the parties. They also guarantee a high degree of privacy and the ability to negotiate asset prices outside of the market.
Cryptocurrency Fund
These funds are professionally managed cryptocurrency investment management schemes that allow you to buy cryptocurrency through a fund. The positive thing about this type of funds is that users can buy and sell cryptocurrencies very easily. All this without users having to store or buy it themselves.
Indeed, buying or selling is a simple negotiation of a share or portion of the cryptocurrency portfolio of said fund. The disadvantages of this system are the lack of privacy on one hand and the lack of governance on the other. Also, these funds are not under your control, so if they are stolen or mismanaged, you could lose them forever. Furthermore, the people who manage them are not necessarily experienced professionals.
Decentralized Exchange Crypto
Decentralized exchanges, or DEXs, are a direct evolution of traditional exchanges. They work in a similar way to the latter, but have the ability to work in a decentralized manner. This means that there are no middlemen and the platform is self-sufficient due to its programming.
On top of that, decentralized exchanges usually have a high level of privacy and even anonymity. Decentralized exchanges became a reality thanks to the rise of DApps and the ability to decentralize and program advanced computing functions through smart contracts.
Decentralized exchange cryptos that have become very popular include Balancer, Curve, AAVE, and Uniswap, all of which emerged during the famous DeFi boom.
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