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Cryptocurrency exchange made simple!

Cryptocurrency
07.11.2020
267
Cryptocurrency exchange made simple!

With the advent of the first crypto exchanges, the development and distribution of digital assets has been greatly simplified. Before that, users had to invent various plans and perform unimaginable maneuvers to exchange Bitcoin for fiat. The idea of ​​using electronic money was still in its infancy, and many crypto enthusiasts couldn’t even imagine the possibility of paying for travel or goods with crypto or its trading.

Our team launches a series of articles where we will highlight the main ways of working with cryptocurrencies, exchanges, exchangers and other industry tools.

Today, the digital economy is as simple and convenient as the traditional one, since they have a lot in common. There are platforms for exchanging and trading assets, many forums for communication. Even states are mulling over digitalization of their own national currencies. Cryptocurrency exchanges are an important element in the industry functioning, and we will get acquainted with their features.

What is a cryptocurrency exchange and how to work with it?

Cryptocurrency exchange made simple!

Cryptocurrency exchanges are online platforms for trading digital assets. They are intermediaries between buyers and sellers, the services of which are rewarded in the form of commissions. The cost of cryptocurrencies on such websites is formed based on the level of supply and demand.

By registering on the exchange, a trader deposits his account with assets and can open or close transactions for the crypto purchase and sale.

Usually trading platforms are similar to each other. The photo below is an example of how the Binance’s trading dashboard looks like:

Cryptocurrency exchange made simple!

The first column shows the volumes of transactions. Sales are highlighted in red, and purchases are highlighted in green. There is also the value of a trading pair on the right, and a form for opening a deal on the bottom. The fourth column lists the possible pairs with the cryptocurrency and their price changes, as well as the last deals.

Exchanges with demo

Coming to the exchange, it is absolutely not necessary to invest real money in it. For example, some of the companies offer to start trading using a demo account. Thanks to it, novice traders can learn the functionality of trading platforms, learn how to use tools, open and close deals, set stop losses.

Here are some resources providing demo account:

The easiest way to try trading without registrations is to create a notebook and record the time and amount of the transaction, and then check whether it was profitable or not. But you can also open a demo account. Today, almost all trading platforms provide such an opportunity, and some of them even help traders. Binance, for example, has a series of technical analysis tutorials, and Bittrex has subscription trading books available to users.

Ways to make money on exchanges

The easiest way to make a profit is to buy assets when they get cheaper and sell when they get more expensive. The price difference that the trader grabs is called the margin. If there is no money on the account, you can use margin trading with leverage, that is, borrow from a broker to open a deal.

The next method is to lend funds to another user. The platform will be the regulator in this situation. In most cases, crypto exchanges launch referral programs that allow you to earn money by inviting friends and acquaintances. If they register on the platform and start trading, users receive a percentage from  referral transactions fees.

For those who are not ready to constantly analyze charts, there is an option of investing in cryptocurrencies. You can store assets on almost any platform, but it’s safer to keep them in a separate cold wallet. Having chosen the most attractive cryptocurrencies for yourself, you can invest in them for the purpose of further exchange at a higher rate.

Referral programs

Cryptocurrency exchange made simple!

One of the most popular methods of making money on trading platforms is partnership with a company. Otherwise, it is called referral programs. So, for example, a client of a crypto exchange invites other users to use the company’s services via personal link, and in return he or she receives a percentage of the commission that his referral paid for concluding a transaction.

These campaigns vary on different platforms. Somewhere referrals are divided by level and the percentage is charged only for those who were invited by the client himself, that is, from the first line. In other companies, rewards are calculated from all attracted users.

In some cases, the user receives interest for the turnover considering a certain period of time or specific amount. The most profitable referral program will be one where rewards are paid for an unlimited period.

Arbitration

Cryptocurrency exchange made simple!

Exchange arbitrage has minimal risks. It is used not only by crypto enthusiasts, but also by many hedge funds, as this method stands out for its simplicity and affordability. Arbitration involves the purchase of assets with an almost instant sale.

To do this, a trader needs to keep two accounts on different exchanges. For example, a cryptocurrency is trading in the $10 area on one platform and $10.02 on the other. In this case, you just need to buy the asset on the exchange, where it is cheaper, and send it to the one where it is more expensive.

For this type of earnings, you should consider the strategy and calculation of benefits, taking into account commissions, since they can absorb the margin. You can also trade using bots. They don’t need food or sleep, and therefore can work around the clock. Moreover, bots react to emerging signals much faster.

How to start studying and choosing an exchange

Cryptocurrency exchange made simple!

Working with cryptocurrencies is fraught with risks, and therefore it’s important to start trading after training. You can get started on Binance platform, which has an impressive training campaign. You can also pay attention to Bitrix. Both cryptocurrency exchanges are distinguished by large trading volumes and a user-friendly interface.

Here are some of the main criteria to rely on when choosing a company:

  • fees for withdrawing funds and replenishing the account;
  • trading volumes will indicate the company’s liquidity. The higher the better;
  • Safety is also important. The platform must have at least two-factor authentication and the ability to restrict access to your personal account from certain IP addresses. Attention should be paid to the way the exchange stores assets. Better if they are in cold wallets;
  • ease of use and availability;
  • publicity of the company. If it is open, often mentioned in the specialized media and notifies clients about changes, then you can trust in it.

Cryptocurrency exchanges

Cryptocurrency exchange made simple!

Companies can be classified according to many parameters: whether account verification is needed, whether it is possible to trade with fiat, spot or futures, decentralized or centralized.

In total, there are at least 380 trading platforms in the world that allow you to trade cryptocurrencies. Before choosing one, check out the rankings on CoinMarketCap, where companies are categorized by trading volume, number of trading pairs and participants. Experts advise giving preference to those that are registered or regulated where the trader is from, since in case of any difficulties, the user can count on the protection and support of the state.

It is also important to consider how much time the company operates: the longer a company exists, the more you can trust it.

The next point to check is the level of protection. Ask how the company stores assets. If they are in cold wallets, the likelihood of hacking and money theft is very small. You should also pay attention to the available ways to protect your account. Besides two-factor authentication, there should be other tools. For example, setting up a list of white IP addresses from which you can log into your personal account.

Commissions are also extremely important. No reputable exchange charges fees for asset entry. Also, in most cases, organizations lower the interest rate when the trading level increases.

Next, we will consider the most popular exchanges and methods of depositing/withdrawing assets.

Binance

The company was founded in 2017 by a group of crypto enthusiasts and today ranks first in the top 10 cryptocurrency exchanges. It doesn’t work on the territory of the CIS countries, and therefore it’s impossible to verify the account on it. However, despite the contradictions in the idea of digital ​​anonymity, Binance exchange still remains the leader in the virtual money market.

For unverified users, the asset withdrawal limit is 2 BTC per day. For the rest — 100 BTC.

You can deposit assets from a crypto wallet or fiat account. To do this, move the cursor over the “Wallet” button in the menu at the top of the website and select “Spot Wallet”. In case of replenishing the wallet with cryptocurrency, you need to specify the asset and transfer coins from the open account.

If the user wants to replenish the exchange wallet from a fiat account, it is necessary to go through verification.

Cryptocurrency exchange made simple!

Depositing usually takes a minute, after which you can start trading.

The transaction on all exchanges is carried out according to the ordinary scheme:

Cryptocurrency exchange made simple!

In the first line, the trader must indicate the desired value, in the second — the number of coins for sale.

Another reason to give preference to Binance is a smartphone application for trading. Thanks to it, you can follow the progress of the transaction from anywhere in the world.

EXMO

This crypto exchange is also one of the most popular options for novice traders and pros. It has relatively small trading volumes — $15 million per day, however, there are trading pairs with fiat, a convenient referral program, and the other day in its release EXMO announced the abolition of commission on transactions carried out in USDT.

The marketplace wallet can store 8 types of traditional currencies and 52 cryptocurrencies. You can also top up your account there, but for this you need to go through mandatory verification.

The opening of an order here occurs in a similar way to the previous method: the user specifies the amount of the sale/purchase and the expected cost of the transaction.

Cryptocurrency exchange made simple!

In addition to trading, the exchange allows you to earn money using a referral program and receive cashback for using EXM in transactions.

The company allows you to work not only through the website, but also with the help of mobile services.

Summary

Cryptocurrency exchange made simple!

Most crypto exchanges almost don’t differ from each other in terms of interface, and therefore the most successful choice would be companies that don’t skimp on bonuses for their clients and set high commissions. The most popular crypto exchange at the moment is Binance, but the market is developing so quickly that it is not surprising when unknown companies break out into the leaders in a short period of time, and therefore newcomers should also not be deprived of attention.

Author:Елена

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