If you’re either in a position to “trade” one of the “crypto” currencies, or have a number of “coins” you’re looking to sell, the way to do it is through a “digital asset exchange”.
Whilst these are entirely private, and certainly not regulated, it may be difficult to identify which ones are actually worth putting time (and money) into. The trick is to use ones which are not just popular but also backed by legitimate investments etc.
To briefly explain how they work, in much the same way that many of the “forex” trading exchanges work, you’re able to use a central system (platform) to firstly monitor the price of, and then buy/sell quantities of particular commodities.
Whilst the tracking element of the system is provided free of charge, the sales & transfer process is handled with varying rates of commission. This commission (in forex sometimes as high as 3% or 5%) in the new world of “crypto” will be around 1%, depending on which service you use.
Before proceeding, it’s important to note that “digital” asset exchanges are NOT regulated.
This means that they do not have to abide by any of the “rules” which govern any financial institution in the western world. Banks, solicitors and financial advisors ALL need to have adequate insurance and follow particular rules as to their profession.
Not following these rules will put them in VERY deep trouble, probably including jail (for fraud). Whilst it’s not “illegal” to use unregulated services (such as the digital asset exchanges), you must appreciate that due to their unregulated nature, there is no legal safety net if anything goes wrong.
This tutorial is meant as a guide for educational and entertainment purposes ONLY. We are not registered with any financial or regulatory body, and as such we need to stress that we are not qualified to give financial or legal advice.
The following should explain and overview of how to get set up with the 5 best digital asset exchanges…
How Digital Asset Exchanges Work
“Digital Asset Exchanges” are a relatively new phenomenon, developed off the back of the rise in trading capacity & value of the many “crypto” (cryptographic) currencies (including the likes of “Bitcoin”, “Ethereum” etc). Find out about the Bitcoin Hard Fork by clicking the link.
Whilst the jury’s out on the real value of “crypto” currencies, it hasn’t stopped people from trading them to the point that the likes of Bitcoin etc are now entering “bubble” territory.
Irrespective of the validity of the trading, the deal is the same. In order to “trade” the “coins”, you need to use a digital asset exchange. If you’re not familiar with the world of trading, it’s best to consider these similar to ebay or amazon but for commodities.
The idea is that people come to the “market” with particular commodities, and the “exchange” provides the infrastructure (location, process, security, management) through which the commodities can be purchased and sold.
Whilst forex (foreign exchange) exchange platforms have existed for a long time, as have a number of other exchange platforms, digital asset exchanges are a relatively new affair.
The way that “digital” asset exchanges work is to take the “digital” asset and make it available in an open market. This market – just like the forex or stock markets – is tracked with third party data (to give an accurate price), thus allowing participants to buy and sell the assets they need.
Whilst most of the digital asset exchange services in existence today are relatively successful, the main problem that’s caused a lot of controversy is their lack of regulatory approval. You can learn more about bitcoin exchange values here.
Almost none of the existing digital asset exchanges (most of which are focused on “crypto” currency) are able to validate themselves to the SEC etc, thus making it quite risky to use them for transactions. Having said this, some of the largest – namely Coinbase – have received several million dollars in venture funding and are considered highly reliable.
Ultimately, to “trade” “crypto” currency (IE “Bitcoin” etc), you basically need to get a “wallet” from one of the many “Bitcoin wallet” providers.
From here, you’ll be able to either add new “coins” to the wallet, or buy them from the exchange. We aren’t in a position to explain how you would do this profitably… but that’s pretty much the core of it (very simple).
It must also be noted that since “digital” means files, EVERY “coin” you sell or buy is just an encrypted file. No two ways about it – regardless of which “coin” you buy, you’re still downloading or uploading “files” to a big server that a company operates.
The most important thing is being able to deal with a reputable exchange company:
5 Best (Most Reliable & Trustworthy) Digital Asset Exchanges (2017)…
There are several important factors when considering which digital asset exchange to use.
Firstly, you need to ensure they are a valid operation with an appropriate level of trust in the marketplace. Since several exchanges went bust (most spectacularly MtGox), you need to ensure you’re able to use one that you can rely on to be there when you need it.
Secondly, you need to validate the owners & operators of the exchange. Bitcoin has been famed for its duplicity in the likes of money laundering etc, mainly due to its anonymity. As such, you need to ensure that you’re dealing with a company that preferably validates your identity, but also ensures that your details are fully protected.
Thirdly, you need to ensure that you’re using a system which not only allows you to keep up with the latest price of the various “crypto” currencies you follow, but also provides a variety of other digital asset price trackers too. Whilst not essential, it’s a good indicator of a quality company to see they’ve actually invested into a wider spectrum of assets than “crypto”.
With this in mind, we’re able to observe the various exchanges best for use in 2017:
The most popular and – arguably – the most successful “crypto” currency exchange is “Coinbase”. Set up in 2012 and the recipient of several rounds of Silicon Valley venture capital, its 13million users attests to its reliability and validity…
Besides operating its own “wallet” (which isn’t that big of a deal but still shows they have decent engineering talent), Coinbase is currently the only “crypto” / digital asset exchange which provides instant bank integration for when users buy or sell various “crypto” coins. This article brings up important points about such things.
The biggest point about Coinbase is that it actually takes a lot of steps to validate the identity of anyone using its platform. This was welcomed by many in the cryptocurrency community as a way to improve both the image and security of the community.
In Q4 2017, it was announced that Coinbase had over 13,300,000 users worldwide, making it by far the most popular digital asset exchange “trusted by millions”.
A London-based digital currency exchange, Cex.io was launched in 2013 and boasts over 500,000 users. The exchange, like several others, grew out of one of the largest “mining” pool for Bitcoin – Ghash.io – and has built on its success to become one of the only exchanges to trade many different forms of “Crypto” currency, most lately including the likes of Dash.
One of the main attributes of Cex.io, partly due to its London pedigree, is that it is very focused on providing security and financial stability to its clients.
For example, the exchange is registered as a Money Services Business within FinCEN (USA), as well as having obtained PCI (Level 2) compliance (which is a big deal). PCI compliance essentially means that the service is able to store credit card & other payment information safely & securely.
The service also follows a number of FCA (UK Financial Conduct Authority) guidelines on user privacy and identity protection. Overall, a very highly rated service.
Launched by the “Winkelvoss” twins (of Facebook fame), Gemini has steadily grown in both stature and popularity, since its inception in 2015.
Gemini’s only supported fiat currency is US dollars, and it only trades Bitcoin and Ethereum. Gemini does not charge deposit or withdrawal fees, and levies a low flat rate of 0.25% for trades, to both the buyer and the seller.
Almost certainly aimed at “middle America”, Gemini’s focus is to bring its platform to the myriad of people who’d benefit from the system but may be desuaded from the inherently technical nature of the other exchanges.
This is also compounded with the twins’ attempts of achieving a variety of regulated statuses for the brand, most notably with its development as a ‘New York state limited liability trust company’, which makes it regulated by New York’s Department of Financial Services.
Transaction fees for the system are low and the twins have worked to create a veritable service through which reputable people can get involved with the various “crypto” markets. Whilst only operating in 45 states presently, the service is set to grow rapidly as more states come on board through 2018.
This exchange was built and hosted in the Czech republic, putting it out of the jurisdiction of many US securities & financial agencies (bad sign). Whilst a relatively reliable service, it has some quirks and a number of drawbacks which you should know about before considering to use it.
Built from the popular ‘mining’ platform MinerGate, which provides a merged mining pool across Windows, Mac, Linux and Android operating systems, Changelly grew from its 2013 launch to around 500,000 reported users.
While Changelly focuses on exchanges between different cryptocurrencies, users can also purchase cryptocurrency with US Dollars or Euros; fees on transactions standing at 0.5%.
Honestly, it’s best to stick with Coinbase if using this system as it’s more aligned with some of the core values required from a larger company, namely a focus on validating the identity of buyers and ensuring that its services are as effective as possible.
Whilst many people would have put this further up the list, a number of issues have plighted this otherwise highly reliable & recommended exchange. Founded in 2011, it quickly grew due mainly to its links to high finance, famously providing the “bitcoin” functionality for Bloomberg terminals.
The service is used by many higher level financial traders, with a number of acquisitions also providing an underlying base of growth. Highly stable and very effective, it’s able to accept all forms of currency and provides exchange access for the likes of Bitcoin, Ethereum, Litecoin, Ripple and Dash.