What is the cryptocurrency exchange - an introduction to the new cycle

What is the cryptocurrency exchange and how can it help us? High risk, but also a directly proportional chance of earning. The trend for cryptocurrencies continues, and it grows especially during the rises on popular instruments. Inspired by recent increases on Bitcoinie, we start reviews of exchanges and cryptocurrency exchange platforms. To begin with, let's take a look at how they work, what they are, and what are the main principles of trading digital coins.

What are cryptocurrencies?

Slowly, even a wider group of society receives information that cryptocurrency is not only Bitcoin. Currently, there are over 2,1 thousand virtual tokens in the world and their number is constantly growing. A complete list can be seen here.

Read also: How big is the cryptocurrency market?

They all work on a similar principle. They are based on peer-to-peer technology, which was established in January 2009. It started, of course, with Bitcoin - this currency has no issuer or regulator. The source code, on the other hand, is open and transparent. All transactions are recorded, so everyone can check the amount of the exchange. They show the Bitcoin address of both parties to the transaction, but it is not known who it belongs to - unless the owner shares it with someone. This registry is based on the increasingly popular blockchain technology (blockchain). Bitcoins are "produced" by looking for the so-called blocks - by trial and error. Whole groups of "miners" deal with it thanks to computers with enormous computing power. However, it will end in a while, because the number  Bicoin is planned in advance for 21 millions.

How the cryptocurrency exchange works

Like the STP / ECN trading platforms on Forex market or online exchange offices. With the difference that coins and tokens are traded on them. They are all only intermediaries and only offer trade between people who use their services.

An account can be set up by anyone with an e-mail address and bank account. In the vast majority of them, no one asks for personal data, so hackers often use cryptocurrencies for settlements. Verification of account holders, however, must be carried out by stock exchanges in which you can also trade in traditional currencies. The registration and verification process itself may vary depending on the jurisdiction and regulations under which it is subject (or if it is not subject to any). Sometimes the whole process is simplified and the analysis of clients is more and more often used, especially in the case of entities from countries where cryptocurrencies are regulated to some extent.

How to choose a cryptocurrency exchange - safety first

It is no secret that from time to time we can read about the closing of the next cryptocurrency exchange. generally this happens overnightit also happens that clients do not even have the option of withdrawing money.

Currently, there are about 300 cryptocurrency exchange platforms in the world, of which about 1/3 are considered to have an established position. They comply with the international AML regulations (Anti Money Laundering) and KYC procedures (Know Tour Customer), which gives even a substitute for certainty that the company is trying to run a responsible business.

It is also worth paying attention to what security the given cryptocurrency exchange uses. Even the best of them are attacked by hackers (e.g. Bithumb exchange), but in this case you need to carefully study the regulations, which should ensure protection of funds. In short: if a hacker steals a cryptocurrency, the stock market will be robbed, not the customer. However, it is often different.

A cryptocurrency exchange that will allow you to earn

Another thing is to maximize the profit that we can count on. We can only achieve it if we offer the largest possible selection of tokens and coins. However, too much is also "unhealthy", because in this way it is easy to invest in a cryptocurrency that was created solely with the intention of fraud. Exchanges must therefore select cryptocurrencies before making them available for trading.

Be sure to read: Australia is fighting illegal ICO projects

Attention should also be paid to the volume that guarantees the liquidity of transactions, but in this case we can not trust in the information provided by the creators of the exchange, because usually these data are significantly overstated, what the last Tie report proved.

The amount of commission is also significant. As a rule, it is 0,2%, but you can find stock exchanges, where it is lower by half, which may be very important for speculators with many transactions.

For some time now, you can also be a part of cryptocurrencies with Polish brokers. This is certainly a safer solution than in some foreign stock exchanges, but the number of instruments is quite limited. Most often these are only the most well-known and liquid cryptocurrencies.

In the following articles, we will familiarize you with the most popular cryptocurrency exchanges and we will try to review them for you.