Bitcoin is the highest-valuedcryptocurrency of the year. Its popularity and acceptance are soaring to new heights every week. Backed by a fantastic new technology called the blockchain, it is opening new avenues to conduct secure transactions. In this article, we explain how and where to buy and sell Bitcoinssafely.
What is a BitcoinExchange?
The world of Bitcoin does not have a direct link to the fiat currency used in our offline/online world. It is a separate entity, free of borders and controlling authority. One of the easiest ways to get Bitcoin is to buy them on a CryptocurrencyExchange. Just like a ForeignExchange deals with multiple foreign currencies, a CryptocurrencyExchangespecializes in trading cryptocurrencies like Bitcoin, Litecoin, Ethereum, Dash, Ripple, etc.
Exchanges bring together the buyers and sellers on to a platform where they can transact with ease. Bitcoin being the largest of all cryptocurrencies is the most heavily traded currency. A BitcoinExchange can be in the form of a trading platform (like Coinbase), a marketplace (like LocalBitcoins)or even aBitcoin ATM where fiat currency can be changed into the digital currency.
Several Exchangeshave lootednaïve customers. So it is essential to research Bitcoin Exchanges before giving them any money.
How to find a suitableBitcoinExchange?
Must have characteristics:
Reputation: Check the reputation ofa BitcoinExchange before making a deposit. BitcoinTalk or Reddit are two good sources to check for chatter about an Exchange. Investopedia or bitcoin.com are two other places to research and find a reliable Exchange. Avoid making a decision based on the opinions of a “review” websites since often these review sites are run by scammers hunting for scapegoats.
Good to have characteristics:
Payment methods: An exchange which has multiple payment options would be easier to deal with than the one with limited ways of transacting. Generally, depositing money from a credit card requires identity verification and costsa bit more due to chances of fraud, chargeback and bank fees.
Fees: Each Exchange will charge a fee forsometypes of transactions. Instead of going only for the cheapest one, choosean Exchange that gives better value based on the number oftransactions, volume, conversion, etc.
Exchange rates: Similar to Forex currency changers, a few Exchanges have a higher price than others. Shop around for a better price, keeping in mind other fees associated with making a transaction.
Verification Requirements: Almost all Exchanges in the US and the UK need ID verification. Verification could take a few days and may requireadditionalpaperwork for high-value transactions. There are a few Exchanges that allow anonymous transactions too. Balance the need for anonymity with the safety and security of the funds.
Geographic restrictions: CertainExchanges restrict trading facilities to people living in a particular country. Check if a specificExchange will transact with your location before opening an account.
Here are the top threeBitcoin Exchanges that have a good reputation.
- Kraken: Kraken is one of the biggestBitcoin Exchanges and has a majority of its transactions in Euros.The company is partnered with the first cryptocurrency bank. Apart from Bitcoins, the Exchange also trades in Ethereum, Monero, Ethereum Classic, Augur REP tokens, ICONOMI, Zcash, Litecoin, Dogecoin, Ripple and Stellar/Lumen. The Exchange has a good reputation, fair exchange rates and low transaction fees. But,it is not suitable for beginners and also has limited payment methods.
- Bitstamp: BitStamp is a Europe based first generation Exchange with a large customer base.Theyoffer excellent security and have afully insured cold storage. Apart from its excellent reputation and low transaction fees, it is available worldwide. But it is not beginner friendly and has high deposit fees.
- CoinSquare: A Toronto based company created to cater to Canadians’ Bitcoin needs. It is one of the few Exchanges that offer direct conversion from Canadian dollars to Bitcoins. Apart from Bitcoins, they also deal with Bitcoin Cash, Ethereum, Dash, Dogecoin, and Litecoin. The CoinSquare platform is easy to use, and their fees are also To make sure the utmost safety of their vaults, they have a 95% cold storage policy.
- CoinBase: Coinbase is one of the most popular Exchanges offering trusted brokers and a fantastic trading platform. It trades primarily in Bitcoin, Ethereum and Litecoin. They have limited payment methods and support transactions only with a few select countries.
What to do with Bitcoins?
People buy Bitcoin for three main reasons. Some people buy Bitcoins to purchase goods and services online. Starting from Starbucks coffee to putting a deposit on a house, many places acceptBitcoin as a valid currency. Others buyBitcoin as an investment tool. Bitcoin’s price has surged from 10,000 CAD to 18,000 in just a week’s time. So, many people have added Bitcoin to their investment portfolio to make the best use of the surging prices.
There are a few people who use Bitcoinpurely for trading in them, i.e. speculation. Bitcoin’s price undergoes constant ups and downs giving an opportunity for many traders to make money.
As always, it is crucial to make adecision based on one’s specific circumstances. Bitcoin’s volatility makes it good for speculation.
People should make a decision that works best for them when dealing with Bitcoin. It is an exciting new currency and technology with a lot of promise for the future when handled with care.