A bitcoin exchange is a business that allows the trading of digital currencies for other assets such as traditional fiat money or other cryptocurrencies. For their work, they take part of the transaction fee deducted from trades and withdrawals within the exchange.
Check out a few simple facts you do not know about bitcoin exchange:
#1 Immediate transfers
Bitcoin exchanges are available to handle the problems associated with individual buying and selling of bitcoin. The businesses connect buyers and sellers on a real-time basis speeding up bitcoin transactions across the world.
#2 Allows a 24/7 system
Unlike stock exchanges which have limited time periods of trade, Bitcoin exchanges provide support for traders, buyers, and sellers on a 24/7 basis. With Bitcoin instant exchange, time is of no effect to the continuous trading of cryptocurrencies.
#3 Bitcoin exchanges also support other cryptocurrencies
It’s important to note that cryptocurrency exchanges are not limited to only one cryptocurrency. A majority support major currencies such a Ethereum, Litecoin and Tether among others.
#4 Allows purchase of one cryptocurrency with another
Perhaps one of the greatest features in bitcoin exchanges, they allow the user to change his type of preferred cryptocurrency. This is especially helpful for individuals who prefer to leave their coins within the Exchange by allowing one to purchase a lower and more stable coin for storage.
#5 Bitcoin exchanges are either centralized and peer to peer exchanges.
Centralized exchanges are run by third parties who provide support and corrections within the exchange. On the other hand, peer to peer exchanges without a middleman.
#6 You can send Bitcoin from one bitcoin exchange to another
To transfer your bitcoins from one exchange to another, all you have to do is find out the target exchange bitcoin deposit address. Go to the withdrawal section of your current account and withdraw to the target exchanges bitcoin address. The form of trading is called arbitrage and can also be done with other cryptocurrencies.
#7 There are 4 types of exchanges
They include:
Traditional bitcoin exchanges
These type of exchanges are similar to the traditional stock exchange where trading is based n the current market price of the cryptocurrency. The exchange acts as the middleman and charges a fee for every transaction. Except for Bitcoin, the exchanges also deal in fiat currencies such as the Euro or the dollar.
Cryptocurrency brokers
Brokers in the cryptocurrency markets are web-based bitcoin exchanges similar to the currency exchange at an airport. The exchanges allow users to buy bitcoins and sell at a given price often set by the broker.
However, the price is not just an arbitrary number but a little less than the current price of the crypto assets. Popular cryptocurrency brokers include exchanges such as Coinbase and Shapeshift.
Direct trading platforms
In a few jurisdictions, trading is limited to direct trading. This involves peer to peer trading between users. The platform does not use fixed market prices allowing buyers and seller to set their own prices.
The platform then matches compatible sellers and buyers. When using this method, its important to check market prices from other sites to ensure the asking price is right.