Cryptocurrency trading has become more and more popular over the past few years. This digital marketplace is used for buying and selling bitcoins using different fiat currencies or altcoins. There is no third party involved when paying with bitcoins; the trade only involves the buyer and seller and is therefore very practical. The term “cryptocurrency exchange” is often used in the cryptocurrency world and simply means trading one type of cryptocurrency for another cryptocurrency (or fiat currency).
In other words, depending on the exchange, it is either like a stock exchange or a currency exchange; buyers and sellers are offered a platform to trade different assets which their valued based on the current market prices. Normally, these cryptocurrency exchanges offer you conventional fiat-to-crypto transactions as well as offering crypto-to-crypto trades. In this article we will inform you about everything you need to know about cryptocurrency exchanges.
There are three types of cryptocurrency exchanges:
Trading platforms are an easy and accessible way to connect cryptocurrency buyers and sellers to each other. So, cryptocurrency exchanging platforms are specific websites that allow the selling, buying, or trading crypto-currencies for digital and other traditional currencies like Euro and USD
Broker exchanges are made between a buyers, sellers and the broker. These exchanges allow the buyer to buy cryptocurrencies for a set price. This price is set by the broker; this price is usually the market price plus a small premium. An example of this type of exchange is Coinbase.
These platforms offer direct peer-to-peer trading between buyers and sellers. Direct trading platforms do not have a set price; each seller has their own exchange rate. The buyer and seller have to come to a mutual agreement, to make an exchange.
In order to be able to make cryptocurrency exchanges, there are a few rules and regulations that need to be followed. These laws differ per country, but generally follow regulations concerning the protection of the customer.
Two of the most important laws in every country are the “Anti-Money Laundering” (AML) laws and “Know Your Customer” (KYC) laws. AML laws exist to make sure that illegal activities related to money do not come across as legal activities.
KYC laws ensure that buyer as well as seller know who they’re dealing with. By doing this, the customer, the business and the business transactions are protected. In order to regulate these things, most exchanges ask traders and users to link their account to their personal bank account.
When picking an exchange, there are certain aspects you need to consider. First of all, it is very important to look at credibility. An exchange needs to be able to show that they are trustworthy. Secondly, you should look at fees and payments. Always make sure that you know what you are signing up for in terms of fees and which methods of payment are used. Lastly, be aware of the restrictions and regulations.
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