Types of cryptocurrency exchanges
Exchanges can be classified into five large groups, each with different characteristics, capabilities, and objectives. Despite this, they all share something in common, they are all platforms designed to facilitate the participation of their users in the cryptocurrency markets. For this they have tools technical analysis, a great suite of indicators and they even make available fundamental analysis. All this thinking of offering the best tools so that the trader can do his job and make the best decisions at all times within the market.
In this sense we can mention the following types of exchanges:
This category of exchanges includes the platforms that users access to buy or sell tokens according to the market price. They are usually highly regulated platforms, which meet the standards of KYC (Know your client) y AML (Anti-Money Laundering). This means that they are platforms that are not private, since the user must disclose their identity to participate in it. Example of these platforms can be Binance, Creak, Coinbase o Bitfinex.
Usually Traditional exchanges charge for their services and establish certain capital limitations to participate in their platform. For example, Coinbase has commissions ranging from 0 to 0,25% for trades. maker / taker. In addition the charge for deposit or transfer within the platform it depends on the medium used for such operations.
In the case of using cryptocurrencies, no charge is made. But In the case of bank transfers or other payment methods, it can be free of charge at a cost of $ 25 USD. These values can change between exchanges so it is a good idea to read the commission policies that each platform has. These commissions serve to maintain the operation and generation of income of the platform.
Another additional point on exchanges is the minimum amount necessary to operate within the platform. In the case of Coinbase, the minimum amount is 0,001 BTC, 0,01 BCH, 0,01 ETH or 0,1 LTC. That would leave the minimum amount at about $ 7 to be able to operate within the platform using as an option Litecoin.
These operating limits exist to avoid operating with very small quantities. This avoids generating many small operations, which would not obtain any real economic benefit for the parties.
Cryptocurrency brokers are spaces that allow users to quickly exchange their cryptocurrencies for others of their choice. They are more focused on offering an exchange that allows the user to access a certain cryptocurrency. Due to this, they are built in a very simple way in order to facilitate their use to the newer users. An example of this type of services is Shapeshift, Changelly and Bit2Me.
OTC (Over-The-Counter) Platforms
OTC platforms are another way in which we can appreciate cryptocurrency exchanges. These platforms bear a great resemblance to traditional OTC platforms. That is to say, offer peer-to-peer exchanges between buyers and sellers. This guarantees direct negotiation between the parties. They also guarantee a high level of privacy and the ability to negotiate a price for assets outside the market. In Bit2Me we have Bit2Me OTC, an OTC platform that you can easily access.
The funds are initiatives for the management of investments in cryptocurrencies, managed by professionals, that allow buying access to cryptocurrencies through the fund. The positive thing about this type of funds is that a user can buy or sell cryptocurrencies in a very simple way. All this without the user having the need to store or buy them properly. Actually buying or selling is a simple negotiation of a part or share of the cryptocurrency investment portfolio of said fund.
The negative aspects of this system are that they lack privacy on the one hand, and on the other hand, its management. And it is that the funds are not under your control, so in case of theft or mismanagement you may lose them forever. Furthermore, those who manage them are not always experienced professionals.
Decentralized type cryptocurrency exchange
The Decentralized exchanges or DEX they are a direct evolution of traditional exchanges. They operate in much the same ways as the latter, but have the ability to operate in a decentralized manner. This means that there are no intermediaries and the platform is self-supporting due to its programming. In addition to this, DEXs often have high levels of privacy and even anonymity.
Decentralized exchanges became a reality thanks to the appearance of DApps and the ability to decentralize and program advanced computational functions thanks to the use of smart contracts. At Bit2Me, we have Bit2Me DEX a decentralized exchange platform that works thanks to the power of 0x y Ethereum and that allows to make exchanges of the type atomic swap.
Other decentralized cryptocurrency exchanges that are gaining prominence are Balancer, Curves, AAVE y Uniswap, all of them emerged in the middle of the known DeFi boom.