A cryptocurrency exchange is the platform on which cryptocurrencies are exchanged for fiat or other cryptocurrencies. In these online exchange houses is where the market price is generated that finally marks the value of cryptocurrencies based on supply and demand.
Ethe name of cryptocurrency exchange or cryptocurrency exchange, It refers to a generally virtual space, in which cryptocurrency buying and selling actions are carried out.
Many exchanges also allow trading with shares or any other type of financial title accepted by the community that makes it up. The end of these is simple: allow the user or trader, participate in a market in which you can obtain profits thanks to the price variations that occur in it. All thanks to the fact that these assets are operated using the free market value associated with each one.
Thanks to the existence of exchanges, it has been possible energize the economic and financial life of cryptocurrencies. Now it is possible to easily exchange fiat money for cryptos or vice versa, from anywhere in the world. All this with commissions that are relatively low when compared to other traditional exchange methods.
A bit of history about exchanges
Since the appearance of Bitcoin in January 2009, cryptocurrencies have rapidly revolutionized the world.
The October 11 of 2009, Martti malmi makes the first exchange of bitcoins for fiat. This action led to the creation of the first Bitcoin exchange, the well-known New Liberty Standard.
Little more than a year after its appearance, in March 2010, it was developed bitcoinmarket which was a proposal presented in the forum Bitcointalk by the user dwdollar.
Bitcoinmarket presentation at Bitcointalk
The user dwdollar he presented on January 15, 2010, your project bitcoinmarket As follows:
“I am trying to create a market where Bitcoin is treated as a commodity. People will be able to exchange bitcoins for dollars and speculate on the value. In theory, this will set a real-time exchange rate, so we'll all have an idea of what a Bitcoin is currently worth, compared to a dollar."
This development paved the way for other similar projects to begin to be born.
In July of the same year, he was born Mt.Gox. This exchange would quickly become the largest cryptocurrency exchange in the world. However, in mid-2011 he was hacked and robbed of 2.000 Bitcoins. Later, in April 2012, Martti Malmi created eurobtc.com, another Bitcoin exchange that allowed the purchase and sale of BTC using SEPA transactions.
However, in 2014 Mt.Gox would suffer another attack with a more nefarious scope, forever marking the history of cryptocurrency exchanges. At that time they would be robbed 850.000 BTC, a total of $460.000.000 USD. This fact would bankrupt Mt.Gox.
Despite these problems, cryptocurrency exchanges have been growing in number and evolving in quality, security, and services. Up to the current point where there are many options, such as the one offered by our platform Bit2MePro. All of them born with a very clear objective: offer quality options to cryptocurrency traders around the world.
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:
centralized 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 not private platforms, since the user must disclose their identity to participate in it. An example of these platforms can be Binance, Creak, Coinbase o Bitfinex.
Normally, 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 exchanging one cryptocurrency for another, no charge is made. But In the case of bank transfers or other means of payment, it can be free at a cost of up to $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.
These operating limits exist to avoid operating with very small quantities. In this way, it is avoided generating many small operations, which would not obtain any real economic benefit for the parties.
Cryptocurrency brokers
Cryptocurrency brokers are spaces that allow users quickly exchange your cryptocurrencies for others of your 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 for the most novice users. An example of this type of services is Shapeshift, Changelly and Bit2Me.
OTC (Over-The-Counter) Platforms
OTC platforms are another type of cryptocurrency exchange. These platforms bear a strong resemblance to traditional OTC platforms. That is to say, offer peer-to-peer exchanges between buyers and sellers.
This guarantees a direct negotiation between the parties. In addition, they guarantee a high level of privacy and the ability to negotiate a price for assets outside of the market. In Bit2Me we have Bit2Me OTC, an OTC platform that you can easily access.
Cryptocurrency funds
The funds are initiatives for the management of investments in cryptocurrencies, managed by professionalss, which allow you to buy access to cryptocurrencies through the fund. The positive thing about this type of funds is that a user can buy or sell cryptocurrencies very easily. All this without the user having the need to store or buy them themselves.
In reality, the purchase or sale is a simple negotiation of one 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, their management. And it is that the funds are not under your control, so in case of theft or mismanagement you may lose your funds forever.
In addition, those who manage them are not always experienced professionals.
decentralized cryptocurrency exchange
The Decentralized exchanges or DEX they are a direct evolution of traditional exchanges. They work in a very similar way to the latter, but they have the ability to work in a decentralized way. This means that there are no intermediaries and the platform is self-sustaining due to its programming.
Furthermore, DEXs usually have high levels of privacy and can even be anonymous.
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.
Some very relevant decentralized cryptocurrency exchanges are balancer, Corners, AAVE y uniswap, all of them emerged in the middle of the known DeFi boom.
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