How do you choose a Bitcoin exchange? What do these platforms do? Do they cost money? Which one is the best for personal use and which is best for businesses?
These are just a few of the questions that can send the brain into overdrive for newcomers to the cryptocurrency movement. Not only are there so many things to consider before deciding on a Bitcoin exchange, but there are so many similar-looking ones that it can be hard to make sense of the differences.
Rest assured that despite how time-consuming and technical it may seem, the answers are quite simple and easy to follow if you wish to understand more about cryptocurrencies. In the case of Bitcoin, there is no one perfect exchange for everyone. Instead, each of the best Bitcoin exchanges offers particular benefits for certain individuals.
What this article aims to do is familiarize you with cryptocurrency exchanges, how they work, why they’re needed and why it matters which one you choose. As you will see, some of the Bitcoin exchanges reviewed here are dedicated to helping small investors while others are capable of moving large amounts of money on a daily basis.
To help you pick one of the best Bitcoin exchanges for your needs, we’ve outlined the strong suits and drawbacks of each.
What are Cryptocurrency Exchanges?
Before you go looking for the best Bitcoin exchanges you should first be sure to have a full grasp of what these platforms stand for. Here is how crypto exchanges work in general and what you can expect from one.
A crypto exchange is where both buyers and sellers of cryptocurrencies, in this case Bitcoin, do their transactions. As a seller you can create your own listing and wait for others to buy from you.
As a buyer you have the option of either depositing altcoins or fiat money which you can then use to buy BTC from other users.
The platform, or rather the company behind it, acts as an intermediary third party that matches buy and sell orders from users. Because there are two main types of orders, market and limit orders, the platform works at finding results that match your specific needs.
Imagine that you want to buy BTC at a lower price than the current market value. You’d place a buy limit order and chances are, someone else might be trying to unload some BTC under market value that matches your limit or below. The platform will match your order with one that fits your order.
Also, in the case of limit orders the exchange also serves as a safety net as it prompts both sides to provide authentication before validating the transaction so as to avoid accidental transactions.
Not all exchanges offer both limit and market orders. You must keep that in mind as it also applies to the best Bitcoin exchanges.
Knowing exactly what your goals are with cryptocurrency has a lot to do with what exchange you end up using. Some inherently favor small-time investors while others are made for large-scale transactions in the tens and hundreds of millions.
Another factor that will play a major role in your decision regarding Bitcoin exchanges is what type of deposits and withdrawals they allow. Despite what you may think, not even the best Bitcoin exchanges guarantee that you can use your credit card or PayPal account.
Furthermore, there is a chance that some will enforce high fees for users that trade using fiat money instead of bringing in pure BTC or altcoins such as Ethereum or Dash.
The list of crypto exchanges is large but luckily the best Bitcoin exchanges are well established and there are only a few to list. There will always be that one among them that is a perfect fit for your needs or your aspirations, but that is a decision only you can make.
To help you with this decision, here is a list of the best Bitcoin exchanges for casual traders and small investors as well as for experienced traders and very wealthy individuals with fortunes in cryptocurrencies.
The first name that pops into everyone’s head when it comes to the best Bitcoin exchanges is without a doubt Coinbase. The company is the leading broker of Bitcoin and is available in over 30 countries around the world. Their popularity is unquestionable despite a lot of recent negative feedback.
What you get from Coinbase is a very well-designed user interface. The platform is highly intuitive which is why it attracts so many newcomers.
What started as an online service for an online wallet now also caters to mobile users without compromising security options. Both web-based and mobile platforms use the same multi-signature security feature to protect against unauthorized transfers of funds.
What most people look for in any of the best Bitcoin exchanges is the option to instantly transfer Bitcoin between resident users. Think of it as the way in which PayPal facilitates transfers of funds with no fees between family members or how Payoneer allows free-of-charge transactions between Payoneer members.
This feature is not a part of every cryptocurrency exchange service and even some of the best Bitcoin exchanges will sometimes charge you within their own network even though you have to wait a few days for the funds to go through. Coinbase makes this process instant which allows its users to have a lot of freedom with payments on the platform.
Bitcoin deposits are insured although there have been some reports that it takes a long time for support to provide information and refunds. Another good policy that Coinbase uses is allowing multiple fiat deposit options as well as plenty of withdrawal options.
Contrary to popular belief, some of the best Bitcoin exchanges will only deal in Bitcoin and altcoins and don’t allow you do deposit other currencies to buy or sell. This is another reason why Coinbase has an edge on the competition.
Coinbase’s limits on the amount of Bitcoins you can buy per week are subject to change without notice. However, the limit will usually be around US $1000 for all users with verified credit cards.
Although many consider Coinbase to be friendlier towards Ethereum enthusiasts and newcomers in general, it’s worth mentioning that up to now Coinbase is responsible for over US $4 billion in Bitcoin transactions. If that doesn’t speak enough to their interest in providing an excellent Bitcoin exchange platform then nothing ever will.
What earns Coinmama a place among the best Bitcoin exchanges is their very good reputation and UI. You may have heard that Coinmama charges high fees on purchases and that they shouldn’t be trusted, but that couldn’t be further from the truth.
The 6-7.5% fees are actually much less today compared to what they were a few years back. Improvements to the platform and added support for credit cards have brought down the fees to almost a third of what they were initially. Furthermore, the company is continuously working on lowering commissions even more.
Another improvement made by Coinmama is the addition of instant transactions and access to Bitcoins. In the past the company only allowed Western Union deposits, which was great in a way considering how limited or strict the competitors were. Now that credit cards can be used on Coinmama there is no longer a waiting period that depends on a wire transfer.
Sadly, there are still some Bitcoin exchanges that move that slowly and this can often cause people to lose a lot of money on transactions. Consider how volatile Bitcoin has been for the past two years and you’ll understand why instant transactions are a key part of the best Bitcoin exchanges.
So all things considered, how does Coinmama rank among the best Bitcoin exchanges? The platform’s performance, security, reputation, and support are as high as any of its competitors.
Although they may still exercise some slightly higher than average fees, as far as newcomers are concerned they offer all the security one needs in Bitcoin trading and they come with none of the drama or baggage of the more popular Coinbase.
BitFinex is almost synonymous with the dangers of investing in cryptocurrencies. For most Bitcoin buffs and enthusiasts, BitFinex is known as the crime scene for the second largest Bitcoin theft ever.
In the spring of 2016, the platform was hacked and lost around 120,000 BTC. It was estimated that BitFinex users lost well over 70 million dollars at the time.
With such a grim past how come it made this list of the best Bitcoin exchanges? Keep in mind that despite its popularity, Coinbase is perhaps the most bashed exchange platform on cryptocurrency forums around the world, and yet they still make things happen.
With that in mind, if there was ever a company that could learn from past mistakes it is BitFinex. The improved security protocols developed and implemented after the highly publicized theft are almost unparalleled.
Another reason why BitFinex is among the best Bitcoin exchanges is the fact that their platform encourages all-crypto exchange. That means that not only can you trade in Bitcoin but also to and from other cryptocurrencies popular or less popular.
You’re free to speculate how the market is going to look or do your best to reshape it as long as you have the funds to do so.
While you may still be stuck on the theft from 2016 and leaning towards services such as Coinbase or Coinmamma, here’s one more thing you should know about BitFinex: It really favors the hardcore traders.
If you’re looking to amass wealth and you’re not investing in Bitcoin just to have some fun over the weekend, BitFinex is one of the very few places for this.
Most of the best Bitcoin exchanges have very strict limits on how much a user can trade on a weekly or monthly basis. Those limits can vary wildly between the thousands or tens of thousands of dollars. By now you have probably guessed that BitFinex gives you more freedom than its competitors.
BitFinex lets you trade millions per month. You can also buy as much as you want or, to put it better, buy as much as you can at any given time. The taker fee exercised by BitFinex is 0.1% and it is applicable to operations involving $30 million or more per month.
Despite its troubled past, BitFinex is still the gold standard for experienced traders and it’s unlikely that the lack of support for fiat currency will ever kick it off the list of best Bitcoin exchanges.
This is not the most beginner-friendly platform because, much like BitFinex, it caters to experienced traders. However, the reasoning behind this is not because Bitstamp favors only large transactions but rather the age of the platform.
Bitstamp was one of the first ever Bitcoin exchanges and to this day it has managed to stay alive despite tough competition, and it is still one of the best Bitcoin exchanges.
Their security features are as strict as they can be and to back that up they have an impeccable record with no hacks or reports of being shut down or overwhelmed by transactions. Despite their advanced user interface and small number of acceptable payment methods, Bitstamp is without a doubt one of the safest choices if not the safest out of all the best Bitcoin exchanges.
There are some more things you should know about Bitstamp before deciding to go for it solely on the impeccable security record. As part as their security protocols and policies, new users have to provide a plethora of information for verification.
If the sole reason you’re involved in cryptocurrency investment or trading is anonymity, then Bitstamp, despite being one of the best Bitcoin exchanges, is not for you. Furthermore, their fees look amazing on paper but they are also tilted towards large volume traders and not casual investors.
What started in 2014 as a French-only Bitcoin exchange is now the largest European-only Bitcoin exchange. Coinhouse caters to both Bitcoin and Ethereum users and has a limit of €10,000 per month in all transactions.
They also use a very interesting fee system. While your first purchase will generally have a 10% fee attached, your second one of a minimum value of €500 will have a 9% fee. Purchases of over 10,000 have the lowest fee of just 6% which brings it on par with Coinmama.
Although it may seem like these fees and trading limits are not too attractive, keep in mind that for the European space this is the number one in the list of the best Bitcoin exchanges. They have excellent security features, very fast transactions (though not instant), and their support team is always available to reply to your queries.
Support is underrated when it comes to the best Bitcoin exchanges, and only truly stressful situations ever get mentioned like in the case of Coinbase. Because this exchange has lowish transactional limitations, it is clearly made for casual investors and traders. You can also tell by their very intuitive user interface and ease of access.
This is why their top-notch support staff gives them even more bonus points. Since newcomers are bound to have questions and a lot of issues with choosing the most appropriate deposit method, setting orders and so on, the best
Bitcoin exchanges for beginners are those that offer around-the-clock support on any issue, big or small. Coinhouse is a powerhouse and its only real downside is that it only deals in Europe.
Global Alternative Special Mention – Kraken
Kraken is a popular cryptocurrency exchange that is regarded by some as one of the best as it offers support across four continents. However, the reason it is not considered for this list of the best Bitcoin exchanges is their confusing fees system.
Although Kraken is also aimed towards busy and experienced traders, their user interface is not as unfriendly to beginners as some of the other large exchanges. Once you input all the requested information and pass the verification, you can use a ‘Simple Order’ form that essentially simplifies the process of buying and selling at market value.
That being said, Kraken is centered on large transactions on an international level as it deals with anywhere between 10 to 12 million in transaction value on a daily basis. If you have the time to give their fees section a thorough reading, maybe you won’t mind the internal mess as much as others did.
However, there are better options for large-scale trading that are much quicker and more transparent in fees and taxes. As with most of the best Bitcoin exchanges, whether or not you like Kraken is a matter of personal taste and for some a matter of familiarity.
Based on your location in the world you have a few options to choose from. With that out of the way, you have to set serious goals regarding your venture in the world of cryptocurrency before you settle on an exchange.
Testing out multiple platforms with small amounts of money to see which one you like better can be insanely costly especially when dealing with Bitcoin. Hopefully, going for one of the best Bitcoin exchanges mentioned in this article will make your first experience more pleasant than otherwise.